Jembas was founded in 1989 before the government announced its intention to revert to a market economy. Therefore in a planned economy, prospects for private businesses were extremely unsure.
What were the opportunities you were looking to seize when you founded the company ?
I have always considered Angola to be my home because I was born and raised here. Later I went to Geneva and worked for Caterpillar Africa, Europe, Middle East and returned to Angola in 1984 as their general manager in Angola.
Having grown up in the country and having an appreciation for the development that was expected to take place, I decided to set up a business in October 1989 with my partner Mr. Claude Maeder. Our idea was to begin by developing power production through diesel and gas generators and secondly telecommunications services. At the time, whatever the needs of the country, they were all going to go through the supply of energy, water and telecommunications.
Being in a planned economy, your business must have depended on government contracts.
Already then we had oil companies in the country like Chevron, Texaco and Elf so there was some private enterprise. The rest of course was largely state controlled which meant the government was our main business partner. In fact, to this day, our main customer still is the government since we provide cities, hospitals, the newspapers and many other government facilities with power and telecommunications.
Did you expect to grow as fast as you have?
Yes. I was not surprised by the rapid growth because right from the beginning, instead of concentrating on import export activities like everyone else, we concentrated on the service side. We knew that if we did not maintain our installations, we would become yet another import-export company.
Can you tell us what you initially invested to create Jembas?
We began by investing our own small private funds that we had saved over the years working in Europe and Africa. Our strength was that we had already worked in this market and we knew where the needs were. We made a realistic assessment of our own personal abilities and skills as well as our professional capabilities. We were a small group of 'hands on' people with complimentary skills who had a good feel for what we could achieve.
Today, which of your activities accounts for the largest share of your turnover?
Electric power distribution and production followed very closely by wireless telecommunications. Right now we try to be least dependent from other sectors of the economy for supplying our operational and logistic needs. We have our own catering and lodging facilities, we raise poultry, grow as many fruits, vegetables and other plants as we can. We keep substantial stocks of fuel, water and supplies and we stock large amounts of spare parts. This of course is contrary to all modern thinking which prioritises outsourcing but in Angola at the moment, we must rely on ourselves to satisfy our needs.
Can you tell us what your turnover is and how many employees you have?
We started with three, today we have any number between 800 and 1000 depending on our project requirements. We have sister companies and affiliates indifferent parts of the country. Our main customer continues to be the government. A government entity might be prepared to buy a complete turn key project or it might be interested in a new power station for a town. If we were to be only involved in power generation and telecommunications we might miss some opportunities. The moment our activity slows down our costs rise dramatically. At this time in Angola's history, we unfortunately cannot depend on banking support or cheap and easily obtainable credit lines.
In which activity are you concentrating most of your investment?
Power generation and telecommunications. We are also developing a third area of activity, construction. We avoid outsourcing as much as possible so when we get an order for a power station we do the study, the application, the proposal, the supply, the installation and the contract services. We also build the facility and this has led us to do more building than we actually need for our projects so we have started supplying projects that are not ours, conventional and prefabricated building services. We have another sister company, Lon Top, in association with a Swedish company called Top Housing.
Jembas has a very important role in power generation in the area of Luanda. What proportion of Luanda's electricity grid is generated by Jembas?
Luanda's electricity is generated by the Cambambe Hydroelectric plant which, at this time, has a capability of up to 160 megawatts depending on the water level of the river. At times, the hydroelectric turbines are under repair or the power lines are in overhaul which means that there is a need for emergency power stations. So we have installed a total of five turnkey projects which are totally government funded. Put together they have a generating capacity of approximately 80 megawatts.
How will your business be affected when the new 560 megawatt dam at Capanda goes on line as from 2002?
The Capanda Dam is a mega project that will bring power to the cities of Malange, Ndalatango and Luanda. However electricity distribution to the whole country will not be a reality for many years. In Luanda the problem of the poor distribution network will remain which means that there will still be a lot of work to be done in the area of emergency power stations for the cities. For example, Luanda was built for 400.000 people. Today Luanda's population is between 3 and 4 million people. In colonial times, domestic elctricity consumption was below today's needs because very few people had airconditioning and the quantitiy of household appliances and gadgets that exist today.
So do you see your line of business growing over the next 5 to 10 years along with the introduction of electricity from the Capanda Dam?
Yes, the government has been making a good effort to develop the country's water and power distribution infrastructure. As the country becomes more peaceful, they will be increasing the funds available for road, bridge and rail reconstruction so there is going to be a need for a lot of power out there.
| Today Foreign Direct Investment (FDI) is flowing into the Angolan oil industry. Is Jembas also involved in any FDI venture with a partner from overseas?
Investment we make are basicaly done with our own resources. They have been done step by step as we have had the financial capability to engineer them. We have had very good partners from some of the big manufacturers such a Kohler of the USA or Neilsen of Germany who make credit facilites available to us thus releaving us of immediate payments on equipment.
Who are your principal competitors?
Today the government is encouraging private enterprise so we have a lot of companies that have come into our market in the past five years. We have a large number of competitors in power generation, in telecommunications which makes us look at our quality, services and prices in order to stay ahead of them.
In the area of power generation we have competitors connected to asian manufacturers from India and Korea. We also have very well known competitors such as Caterpillar and others. New companies are using Asian products with unbeatable prices.
How do you stay competitive?
A customer's tendency is to look at the initial price of a product or of a service. However customers are becoming aware that having the after sales services and parts is more important and that is where our strength lies.
What is your market share of the power generating business in Angola?
We think we have about 50% market share in the category of generators that are greater than 200KW.
Is Jembas the only large Angolan company representing other foreign manufacturers in the area of power generators?
No, for example our biggest competitor is Barlows, Caterpillar's largest distributor in the world, but they are of South African origin.
We are going to change subject and move on to Jembas' interest in developing tourism, an infant industry in Angola. The group already owns and runs a holiday resort on the island of Mussulo off the coast of Luanda. When did you choose to invest in tourism in Angola?
We began building the Pelicano-Onjango project with local materials and a more 'African style' in 1993 and inaugurated the hotel in 1996.
How interested are you in investing in the development of Angola as an international tourism destination?
We would be very interested to participate with hotel chains in making Angola an international destination for specialised tourism. Deep sea fishing for marlin or sail fish is very good in Angola and the Namibe desert also spreads over into Angola. These are attractions for the specialised international tourist that could be developed.
To finish off, over the past ten years the government has alternated between policies aimed at introducing market forces into the economy and a series of conservative backlashes. Over the years, which have been the key reforms that have helped you develop your business in Angola?
The government has transferred a lot of responsibility to the private sector which is not an easy thing to control. That might explain why they chose to put the brakes on from time to time because the private sector was not always ready to meet the challenge as a whole.
However, the banking sector has become much more efficient and proficient. You have competition between the banks, you have a currency which is properly supported by the central bank. Some years back there was huge inflation and you had to do business in the local currency. That has changed and we are now able to buy foreign currency very easily to import the goods we need.
You said yourself that you self finance your projects. It seems strange that a successful company such as yours has no access to corporate finance from banks in Angola. What is your comment on that?
That is a question of availability. This has not been something we have been able to have access to either because of the high cost of interest payments or because of the lack of such credits in general.
Isn't there a possibility for Jembas to seek structured finance from some of Angola's new banks such as the BAI or the BCA?
Yes, there is that possibility. It depends on our customer because he has to come up with the collateral. We as the supplier cannot take the risk of supplying the customer and financing him at the same time. We can help the client to find the finance be we cannot be his banker. The collateral has to come from whoever is the beneficiary of the project.
To finish off, what challenges lie ahead for Jembas?
They are multiple. We are developing new areas and the markets that we already are in. We are building a regional base for Southern Angola in Lobito, and we already have facilities in Namibe, Soyo and Cabinda as well as one in Luanda. We have also invested heavily in our own telecommunications and computer facilities. All our offices in Luanda from Mussulo Island to the city centre and to the base in Viana are connected by a system that integrates our computer network.
The challenges are going to take place as many more companies arrive in Angola with big investment so our engineering and servicing capabilities have to improve and we must develop our partnerships with outside groups.
The challenges are going to come in the form of many more companies coming to Angola with big investment so our engineering and servicing capabilities have to improve and we must develop our partnerships with outside groups. |
