Hipora: Loss Prevention and Security Services in Kenya and East Africa

Interview with John Wanjohi, CEO of Hipora

What is your assessment of the sector? What are the latest trends? Is the market competitive?

The market is competitive because there is a huge entrance of foreign supermarkets in Kenya such as Carrefour, ShopRite, etc. Fortunately, though, they are our clients. When there is heavy competition in the market, there are also many more challenges, particularly because the same investors who are coming into Kenya are recruiting from the same country. So, the competition for job employment is high. In our business, we are very focused on the integrity of the employees who are employed by our client.

Can you explain what you do in the sector?

We are unique because from the start, our recruitment system is more thorough than most other employers. We do background checks, we get a great deal of documentation before we recruit staff, and we subject them to integrity testing to ensure that they are far above the normal employee.

As a service provider for the sector, we offer loss prevention and security services. Most of our clients are the supermarkets and manufacturing companies. One of the things that is challenging is the kind of people they employ because they do not do a lot of background checks. When one person leaves one employer and goes to another, the second employer does not do a background check to find out how they left their first employer. We can identify those rogue employees. We are very focused on integrity issues. We partner with clients who want us to assist them in loss prevention and we give them staff who are trained for that. Most of the clients who have not engaged our services are losing a lot of inventory through theft, collusion between staff and suppliers, collusion between clients and suppliers, and collusion between staff and customers, especially in the supermarkets where you have customers buying goods from the supermarket. Even in manufacturing, you will find that most of the people who are buying goods from the manufacturers collude with the staff inside the business. We are useful because we can give them trained personnel who are able to prevent the losses between the staff of the client and the suppliers or the customers.

Are there other companies in the sector that offer similar services?

When we started this company in 2009, we were on our own for about three years until a few small players entered the market. These competitors are companies that were started by my former employees. They are not huge competitors for me because they do not have the infrastructure that we have. We do a lot of training. My managers are all trained in South Africa. We have our own training center so it is not difficult to grow our newcomers into better managers.

How well do your clients know about the services you provide? Is there a need to inform them?

Most of the clients do not know about the need for loss prevention in their businesses. We have not done a lot of marketing of our services because our main clients understand our business and they understand where we come from. With most of the manufacturing companies that are our clients, we realized that they were suffering losses because they were the same suppliers who supply supermarkets. In the supermarket, we found that they are supplying goods that have shorts and excesses. After tracing back, we realized that the suppliers had problems with the dispatching of their goods. This means that there are goods leaving the dispatch area without being checked. Now, we do a survey for the supplier or the client and we give them an in-depth audit of their business. We sit down with them and show them where they have gaps, where they are lacking the proper controls, where they are suffering, where they are losing, and we give them the services they need.

What makes you different from other companies?

We are unique because from the start, our recruitment system is more thorough than most other employers. We do background checks, we get a great deal of documentation before we recruit staff, and we subject them to integrity testing to ensure that they are far above the normal employee. They go to training for three weeks. Sometimes we can recruit 100 people and end up with only 20 after this training. If there is any nonconformity in their documentation, we will not recruit them. We also subject them to polygraph tests if we suspect something is not right. It is not admissible in court here in Kenya, but we use it for internal purposes. That way, we can select and screen the best staff. We also do a lot of supervision of our staff. If we give a client five people, they are assigned a supervisor every week to ensure that they are performing standard operating procedures. We also rotate our staff. We do not keep them in one place for more than three months so they do not become familiar with the staff of the business. That completely avoids compromising and collusion. When we recruit them, they understand that they can be moved from one area to another. We also look at certain age brackets. We do not want to recruit very young or very old people. We aim for between 26 and 35. That is the age where people know what they want in life. If you recruit a person who is 20, they may not know what they want and those are the people that wash out. There are a lot of things that we do which are not done in other companies. We believe in our staff and believe that we have employees with high integrity.

What other sectors do you provide services in?

In the manufacturing sector, their losses are huge particularly because they normally produce in bulk. We help them with inventory management which means we have to do stock counts every day to make sure their stocks are in order. That is a huge problem in most companies because the internal systems they use sometimes do no align properly with their business. For example, a manufacturing company may have 500 cartons of product, but the system shows 200 which means there is a large variance. The stock in the system and the stock that is physically available do not match. Those are the small areas where would-be thieves find an opportunity. Whenever we get a new client, the first thing we do is a stock evaluation together. By the end of the day, they will know how much of each product they have dispatched and it will match what is in the system. Anytime they dispatch goods, it must match in the system. If there are returns, it must match in the system. That is a specific area we try to focus on fixing for the client.

What is your international reach?

We are in Uganda doing security for the Java Group, which is involved in hospitality and restaurants. We call this retail security because it deals with the hospitality industry. We also have clients like Bata who are shoe producers. In Tanzania, we have clients who are supermarkets and a manufacturing company called BDS. We use the same concept from Kenya in the other countries where we are present. A few years ago, before one of our supermarket clients went under, we had over 60 staff in Uganda and 70 staff in Tanzania. But we had to retrieve our staff. We are now reenergizing ourselves to return in a bigger way because the concept is still fresh and no one else is doing what we do there.

Are you planning for further expansion internationally?

We are first going to polish out East Africa before we go to other countries like Rwanda, Malawi, and northern Africa. We should finish out East Africa in the next two years and then we can expand. Our vision is to cover all of northern and southern Africa.

Are you looking to attract investors?

Now, the concept of strategic investors is very common in Kenya. We do not want to say that we are not open to that. When you bring in an investor, they bring new synergy to the business, more knowledge, the market share grows. That is something we have been looking into since last year. We have been in discussions with three different investors. We hope to finalize discussions before the end of the year. It is not an issue of bringing in money, rather it is an issue of bringing in new ideas and technology throughout our business to greater heights.

Do you use a specific technology that makes you stand out?

There is a technology that we are using which makes us stand out from any other competitor in the market. This is our online reporting. For our clients to be satisfied with our services, we give reports on a daily basis, for example, how much loss we have prevented. If I have just caught someone trying to steal 20 cartons, that is a prevention from my side. I have just prevented my client from losing 200,000 Kenyan Shillings. That kind of report must be given to the client in real time. Previously, we would receive reports from the double checker that there were 20 cartons which went out illegally, returns that never came back, damages which had occurred in the dispatch process. Now, we are introducing an online reporting whereby our staff are empowered by having a smartphone to make their reports. If there is noncompliance, they can take a picture, send a report to the control room in our office, and the client will receive that information. There is no other company in Kenya or East Africa who is doing that. That has given us an upper hand. We are rolling this out in November and we are excited that our clients will be able to now get real time reports on any discrepancies that we may find.

What are some of your success stories that illustrate your capacity?

There are several clients who we have good stories to tell about. One client almost lost a whole container of goods. But, because of our business intelligence solutions, we tracked the vehicle which had been taken out of the route as they were about to take the goods out of the truck. The driver and the people who were carrying the goods were arrested and taken in by the police. Those goods were worth over half a million Kenyan Shillings or 5,000 USD. We have also been able to assist a client who was having fuel siphoned from their vehicles. We planted our own investigators and they tracked the vehicles to where they were being siphoned. They were losing money every day because they have over 60 trucks. Every time they passed through, they would siphon the fuel and then go on the route. We managed to crack down on that.

Project yourself to the medium term, three years’ time. What is your vision for the company?

We have helped a lot in job creation. Before we lost our supermarket client, we had 1,200 staff, but after that we went down to 450. Now we are moving back up and we are creating more job opportunities for the country. Currently, we have taken less than 5% of the market share. In the next five years, we want to be able to penetrate into even the county governments. We have 47 counties in Kenya and the county governments lose a lot of money through loss of inventory, lack of proper controls, lack of asset management, lack of inventory management. Asset management is one of our key strengths. When we go to the hospitals in the counties, we often find that things like the dispensation of drugs are not properly done. We control inventory whether it is drugs, spare parts, etc. I foresee that there is big business for us in the 47 counties. We need to start with one county first and we are approaching Nairobi county so we can then continue to the rest.

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