Khato Holdings – growing Africa on time and within budget
(Source: Engineering News)
With plans to expand further in Africa, South African black emerging design and construction company Khato Civils expects that, in three to five years, 20% of its workload will be attributable to South Africa, while 80% will be based across the rest of the continent.
Khato Civils CEO Mongezi Mnyani says there are many lucrative projects under way on the continent and believes that the company has the capacity and capabilities to add value to the countries where bidding processes are in progress. “We will be one of the key roleplayers on the continent,” he declares.
Khato Civils, a Khato Holdings company, has grown from a Construction Industry Development Board (CIDB) grade 4 to CIDB grade 9 company, since being bought by Malawi-born chairperson Simbi Phiri in 2010, when the company was focused on securing projects in the water sector.
Khato Civils CFO Pride Phiri notes that many African countries have been independent for a long time but have not succeeded in supplying their citizens with a clean water supply and adequate sanitation facilities.
“Our vision is for the content to change the way things are happening. There is a lack of sanitation facilities in Africa. We have the water resources, but we are unable to clean this water for human consumption,” stresses Simbi Phiri.
But, he admits that the supply of potable water should not solely be the mandate of Africa’s governments and calls on business and engineers to make a difference instead of placing the responsibility entirely on the shoulders of administration.
Simbi Phiri started the company in response to projects taking too long to reach completion, with companies appointed to deliver a two-year contract taking seven years to finalise the work.
“I think we can go out there and change the industry and have demonstrated that projects can be completed within the timeframes specified by engineers,” he emphasises.
Today, Khato Civils has grown its competence beyond its passion for the water sector to include the construction of road infrastructure and buildings and mechanical and electrical work, competing with major construction companies such as Group Five.
Now looking to enter the energy sector, Khato Civils seeks to diversify its portfolio further and believes that, with the leadership it has in place, it is in a position to conquer the continent. “Khato Civils and its sister company, multidisciplinary engineering consulting firm South Zambezi, are here to stay, but not only to contribute towards the growth of the company but also to that of the continent.
Khato Civils CFO Pride Phiri agrees that there is potential to grow Africa, adding that projects currently trending on the continent, besides water infrastructure, relate to the need for roads to promote interconnectivity and the potential to grow renewable-energy infrastructure to deliver much-needed power supply to support Africa’s economic development.
As Khato Civils’ numbers man, Pride Phiri asserts, however, the importance of staying within budget and on time, especially when working on State-funded projects, as governments need to answer to the public when projects surpass their estimated cost and delivery date. He states that exceeding a budget “could potentially derail the supply of much-needed service delivery” in Africa, with Mnyani adding that these projects also need to be of a high quality to ensure their sustainability and the satisfaction of the end-user for the long term.
Growing in Africa
Declaring the future of the company as “very bright”, Mnyani admits, although, that he foresaw resistance from the company’s employees with regard to Khato Civils’ expansion into Africa. However, instead, the company has received an overwhelming response from employees wanting to step out of their comfort zones and be challenged by projects being undertaken by the company in other African countries.
In line with its expansion goals, Khato Civils has registered a business in Ghana, where it is focused on bidding on road infrastructure, water and energy projects. “We are finalising a few proposals to be considered by the government of Ghana,” says Mnyani.
Khato Civils has also set up a country office in Botswana, where it has 60-million pula of equipment and has bought a 4 ha site on which to construct its head office in the country. Mnyani explains that the building plans are in the last stages of being approved by council, with the development, he says, emphasising the company’s interest in the country for the long term.
“Yes, we are a business, we are here to make a profit, but our approach is to leave a legacy where we operate and help governments achieve their core objectives in line with the sustainable development goals of the United Nations,” he avers.
Mnyani states that Khato Civils has tendered for numerous projects in Botswana, which are currently under evaluation and should be awarded before the end of the year.
“We are confident that, in light of our capabilities and capacity, there are definitely going to be projects coming our way. The Botswana government has made it very clear that companies within the Southern African Development Community should be given the opportunity to participate in projects that have traditionally been awarded to European entities. Botswana has become a much more strategic market for us; it is just two hours away by plane.”
Botswana is one of Africa’s stable democracies, but is also attractive in terms of its financial viability, says Mnyani, highlighting the country’s strong history of diamond mining and Khato Civils ability to serve the needs of mining industry through its solid capabilities in construction.
Khato Civils has also registered a company in Namibia, where it is finalising proposals on housing and road infrastructure projects.
In Malawi, the company is working on a $500-million contract in joint venture (JV) with South Zambezi to construct one of the country’s mega water supply projects, namely the Lake Malawi Water Supply Project.
Mnyani says the JV is finalising details with regard to mobilisation and will start construction in December this year or January 2018.
The project will pump and deliver 50-million litres of potable water from Lake Malawi to Lilongwe City every day to address challenges that have affected the lifestyle and livelihoods of the city’s two-million residents.
The water supply project, consisting of about 124 km of pipe, is billed as Africa’s largest water transfer project under construction and is expected to be completed by 2019.
The project will create in excess of 400 jobs and a lot more spin-off opportunities for small and medium-sized enterprises, states Khato Civils.
However, the biggest project undertaken by the company to date is the engineering, procurement and construction of the about R3-billion Giyani water and sanitation revitalisation project in Limpopo, South Africa; another JV with South Zambezi.
Mnyani says the project, which will see an estimated 345 km of pipe laid, is about 90% complete, with the company hoping to finalise the project by March next year.
“The programme is required to immediately address the short-term water and sanitation challenges in the Greater Giyani local municipality as well as provide medium- and long-term solutions to the water and sanitation challenges within the Mopani District municipality.”
Mnyani enthuses that the project was initially supposed to take five years to complete, but Khato Civils is on track to finish the project in three years. Khato Holdings employs more than 2 000 labourers through the Giyani project at present.
“We pride ourselves on completing projects in record time. However, we want to make sure that work is carried out with speed while upholding a high standard to ensure that the client is pleased with the results.”
Khato Civils prides itself on bringing new dimensions to projects by investing in the latest available technology and has built up a strong fleet of equipment over the years, which it owns.
The company’s heavy plant equipment includes special-purpose equipment such as excavators, tractor-loader-backhoes, tipper trucks, flatbed trucks and trenchers.
“We don’t believe in hiring equipment as breakdowns will inevitably result in delays. By having our own mechanics and workshop, where all our plant comes for maintenance, we are also able to uphold our standards and timelines,” Mnyani says.
The workshop also includes a mobile team that is always ready to provide support at any given time to the company’s different teams located at various sites.
This workshop is based at the company’s new office, in the Midway Industrial Park, in Kosmosdal, Centurion, which Khato Civils moved into in March after building started in April/May 2016.
Consolidating the location of its previously scattered personnel has enbled Khato Civils to have greater sight of its entire value chain, eliminated competition, prevented delays in decision-making and enabled the identification of problems and the immediate intervention with regard to solving these problems.
Having its financial, project management, human resources and commercial divisions, which work closely with each other, under one roof, Khato Civils has also adopted an openplan office design to further improve communication and facilitate less bureaucratic decision-making.
Also located at the site of the new Khato Civils office is South Zambezi, “which is responsible for the design of all the projects we undertake”, Mnyani notes.
“Since we have moved to the new building, we have seen a considerable improvement in terms of timelines with regard to decision-making, the productivity of our staff members and have implemented and invested in information technology (IT) infrastructure to improve communication with our offices outside of South Africa,” he points out, adding that this IT infrastructure has improved the rate of requisitions, enabling orders from these offices to be approved in one day.
The new office space also includes a warehouse to enable Khato Civils to buy in bulk. “If you have buying power you must use it,” Mnyani says, highlighting another way the 100% black-owned company, reduces expenses, besides pushing hard to finish its contracts before schedule to ensure that “we cut costs”.
Investing in People
Emphasising its staff, comprising more than 500 permanent employees, as its most valuable asset, Mnyani says Khato Civils looks after its employees, noting that the company has a high retention rate.
“We all have a job to do and appreciate everyone’s input into that job,” says Mnyani.
“We run the company holistically, therefore, there is no wastage of resources. I think we have the best people,” adds Simbi Phiri.
Mnyani says as a result of Simbi Phiri’s philosophy, which emphasises discipline Khato Civils employees take pride in their work and look after the company’s assets. “In this business, there is opportunity for wastage, steeling and the abuse of equipment.”
Further, Khato Civils also believes in investing in the improvement of the livelihoods of the people surrounding its projects.
“We are a big company, but we do not operate in isolation. Almost 80% of the people – the core labourers involved in our projects – come from the communities surrounding our projects. We train them to effectively operate our equipment and how to do the work that is required.”
In terms of corporate social investment, Mnyani says Khato Civils has spent more than R5-million on initiatives linked to its Giyani project. The company’s initiatives include renovating a school for the disabled and improving its sports grounds, as well as upgrading sports clubs, police stations and schools to ensure that learners are taught in a conducive environment.
In Malawi, Khato Civils has renovated clinics, police stations and schools, as part of its efforts to plough funds back into the communities where it is active.