It is a season of good business for outdoor advertising companies in Kenya as campaign fever sweeps across the country ahead of the March 4 general elections. Billboards have been erected across the country, as politicians make last minute efforts to sell themselves to the people. How we made it in Africa’s Dinfin Mulupi caught up Stanley Kinyanjui, founder and CEO of Kenyan outdoor advertising company Magnate Ventures, to find out more about the opportunities, challenges and trends in this booming industry.
What is driving growth in the outdoor advertising segment?
The major reason is the robust growth within the economy. This business also booms when there is competition among brands. We are finding it very interesting moving forward, especially in the alcohol and beverages market. It looks like East Africa Breweries Limited (EABL) and SABMiller are set for battle. Other players like Keroche Breweries and Distell seem to want a bigger share of the market and PepsiCo has just come in. As brands compete and the economy grows, we should see increased spending in outdoor advertising.
Right now, it is all about campaigns ahead of the March 4 elections. There are some counties that are so competitive such that from last October the majority of the sites had been paid for. While brands target people with spending power, thus opting for locations in up-market areas, politics is about numbers with locations in low income areas being popular. About 30% of our holding is currently leased for election related communication.
Describe some of the challenges you face in running this business.
Kenya will have 47 counties after the elections, which poses a regulatory challenge for us. Each of these counties will have different regulations and tariffs. Recruitment and retention of staff is also challenge. At one point, after training and networking with authorities and customers, employees will want to run their own businesses because the bar of entry in the industry is not very high. In Kenya, the entrepreneurial spirit is very high. This is, however, not a bad thing because that way the economy grows.
We are seeing more foreign companies entering the outdoor advertising space. What are your thoughts on this?
Kenya is becoming the hub for business in East and Central Africa hence attracting a lot of foreign businesses, which then improves growth in our industry. Kenya is uniquely positioned because of good infrastructure, massive foreign investment, favourable climatic conditions and good schools, which attract expatriates.
Besides outdoor advertising, which other sectors does Magnate Ventures find attractive?
We want the company to grow in its core business, but also diversify into other growth areas. In the last three years, we have also been investing in opportunities in real estate. We have formed a division that has been doing property acquisition. For the next fifty years, infrastructure will be big in Africa. We have a created a division that deals with infrastructure to exploit the opportunities within that sector. There are a lot of opportunities in infrastructure that we want to tap into, because it is a growth area.
What advice would you give to other budding entrepreneurs?
What matters most is your idea and energy. Capital is never really an issue. Somehow you will always be able to get the money. Have the energy, discipline and resilience to see it through. In terms of management, I run this business with my younger brother and co-founder Robert, and when decisions need to be made we do not have a lot of bureaucracy. We have also strengthened our managers to take care of the business day to day. We give the managers support in strategy, vision and execution when they face challenges.
What’s next on the horizon?
We want to grow our business in Rwanda, Uganda, the DRC, Ethiopia and Burundi. Ethiopia is interesting because they have a lot of regulations that don’t allow foreigners to invest in advertising. There is a memorandum of understanding that was signed between Ethiopia and Kenya and it is providing us with an opportunity to enter that market. It has growth potential because it has a 100 million population. We are also looking to make acquisitions in these new markets.