Positive steps

• On partnering with locals: “We would love to see ourselves partnering with local companies to provide more of the consultancy and implementation of the security plans and oversight to ensure adherence to international standards and best practices, as well as continuing to support the international diplomatic and military presence and multi-nationals. There is a role there where we can work with local companies to collaborate to bring their own service provision up to an international standard, whilst preserving an enduring role for our own organisation.”

• On investing in the region: “I think people and companies want to come back in but the investment rationale is considerably more complicated today. Many companies that invested in Kurdistan have lost money in the past 10 years. Although this is an issue of timing, good governance is also important. The KRG has always been very supportive and creative in terms of encouraging the international community to invest, but their toolbox today is more limited.”

Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Oliver Westmacott below.

What is your assessment of the current business and investment climate in the Kurdistan Region?
There have been positive steps in terms of settling unpaid revenues with some of the operators – including Pearl Consortium, Genel Energy and DNO – which clearly demonstrated the regional government’s goodwill. We find ourselves now, however, still in an extremely challenging economic and political climate, in which we continue to seek the investor engagement that was present in the KRI [Kurdistan Region of Iraq] pre-2014 from operators and the tier-one international oil companies.
It remains to be seen whether Western oil majors will return, but it is encouraging to see significant new engagement from the Russian oil majors in particular. For the KRG, a delicate political balancing act of foreign government-backed investment will become important policy decisions.

What is your view on the referendum and the external barriers imposed on the region by its neighbours?
My feeling is that there is a very real risk that 15 years of economic progress and development is under threat with a policy of isolationism which the KRG’s neighbours may well enforce. This will be one of the biggest challenges to investment.
For us, our business in Kurdistan this year will be twice the size as it was last year, which is good news. We have taken over security services for the British Consulate and have been awarded a contract by the US State Department for the new consulate site they are building on the edge of Erbil.
We are also seeing some of our old infrastructure clients coming back in and being comfortable enough with the security environment to work for both the central government and the KRG, and our oil and gas service company clients continue to be active.
The KRG is well poised to be instrumental in driving the reconstruction of Mosul and the wider northern Iraq, with Erbil and Dohuk being logical hubs for this.
We are not yet seeing the tangible commitment from neighbouring countries or the wider international community to fund this reconstruction effort, which will create significant jobs locally for this effort. We worry about where the money is going to come from because there is so much donor fatigue in relation to Iraq, but it will happen on some scale. Whether or not it is to the scale that everybody hopes for, there will still be a significant amount of activity and the KRG should be well positioned for that.

Could the referendum and its impact distract the KRG from its efforts towards reconstruction and the fight against Islamic State?
There is no question that the referendum has been a distraction from the fight and from reconstruction. The KRG needs to be focused on ensuring that the referendum is seen as positive and a stabilising force to give people ever more comfort to invest and to grow their operations.
The key point here is that the referendum is not the start of independence, but the clock starting to tick. It has brought a period of instability that which the KRG needs to be very focused on reassurances to the international investor community, in tandem with any formal process to initiate a process for independence.

How has the quality of security provision improved in the region in the past four years and what are your expectations going forward?
While a little bit of our growth will come from the private sector, most of it will come from a greater commitment by the international diplomatic and development community in Kurdistan. What is important for us and for the KRG is that we are seeing more permanent consular representation in the region. As the world leaders in the complex environment of diplomatic security, we see further opportunities for growth in this area.
Having permanent representation in Kurdistan is a maturing of the engagement of the international community. In terms of the progress of security provision, we have seen the almost-complete disappearance of international security companies from Kurdistan. We are the only one left in any meaningful way beyond certain niche support to the US Government. We remain highly committed due to our extensive and deep-rooted experience and believe in the long-term prospects for the KRG market. Though we have also experienced significant revenue losses, we have taken the long view and are confident of our long term commercial viability in the region.
Regarding the quality of services provided, there are many more local security companies in Kurdistan today than there were before, with the quality of several now quite competent on the guarding front in particular, which is good for Kurdistan.
On the consulting and technical security fronts in terms of technical and electronic systems, site assessments and risk analysis of a standard required by international financial institutions and insurers, there is in fact a greater need than ever for global best practices given the elevated risks involved today.
I see this as an opportunity for companies such as ours to perform more consultancy and management functions to partner with Kurdish security companies and less to compete directly for low-margin, commoditised guarding contracts. For critical infrastructure security contracts and those for the embassies, consulates and more conservative multinationals that have real security concerns – where accredited, auditable standards and procedures remain a priority – we continue to expect demand for our services.

Where would you like to see GardaWorld reinforcing its presence in the region?
We would love to see ourselves partnering with local companies to provide more of the consultancy and implementation of the security plans and oversight to ensure adherence to international standards and best practices, as well as continuing to support the international diplomatic and military presence and multi-nationals. There is a role there where we can work with local companies to collaborate to bring their own service provision up to an international standard, whilst preserving an enduring role for our own organisation.

Where do you see more opportunities emerging for security services?
We see continued opportunity in supporting the international diplomatic community and look forward to the reconstruction effort of Mosul commencing. We also look forward to the international oil and gas community returning. Introducing new technologies to the security sector, particularly for distribution (such as bulk liquids monitoring) and remote site monitoring are significant drivers of growth in other markets of ours, especially East Africa, which we hope to see take hold in the Kurdistan Region.
There is a lot of value we can bring to help clients improve efficiency and keep operating costs down, especially in the oil and gas sector.

Will the Kurdistan Region’s recently proposed gas export pipeline create additional opportunities for security companies?
We hope so. There is a balance between the perceived efficiency of the KRG using government resources for oilfield policing versus privatising security which, if run well, is generally more efficient and reduces short-term payroll cashflow requirements for the KRG.
The oil and gas security pendulum had swung from many security services being provided by the private sector to services being provided by the KRG, which in some cases actually ended up being more expensive for them than when it was privatised.
We hope there is now more of a role for public-private collaboration as the landscape of operators and service companies evolves in the next few years.

Is Islamic State still a legitimate threat for operators to keep in mind?
Despite the major successes of the Peshmerga and Iraqi forces in defeating ISIS across Northern Iraq, there remains serious intent by the group and other affiliated terrorist cells to carry out attacks within the KRG, both against government targets and targets perceived to be of strategic importance.
One of the great success stories of the KRG going back to 2003 has been the containment of the terrorist threat in the region by the security and intelligence services. They have been exceptional, working closely too with the international community, particularly the US.

What are your key objectives for 2018 and expectations for demand in the region?
We hope we will see more engagement from the private sector. We hope to see the oil and gas operators start renewing investment in some of their field development plans.
With this, we expect to see many of the international service companies return to the region, particularly those that have retained a reduced presence demonstrating commitment to the market during the recent economic downturn – most of which we work with either in the KRG or in other markets. When they return to Kurdistan – and we are still working with a few currently in a small capacity – we hope that we can capitalise on the momentum of renewed market expansion.
We see less direct opportunity in terms of pure growth of our company directly with the operators because I think most of the effort will be subcontracted to the service companies, who are an integral part of our oil and gas strategy.
We have tenders outstanding with several of the major operators that have been long delayed in their award.
We are expecting to have more than 1,000 personnel in Kurdistan in 2018, up from about half that number this past year.

How important is the Kurdistan Region likely to remain in GardaWorld’s international portfolio?
The KRI is still very much an integral part of our spirit and culture. It is where I founded the international division of GardaWorld. Very sadly, it is not currently a major contributor to our business, but I remain hopeful that it will again become so. We have a billion dollars of annual business now across the Middle East and Africa and I would be delighted for Kurdistan to be a material part of that once more!

What was the impetus behind your acquisition of KK Security and which countries in Africa are you interested in expanding to?
GardaWorld is now very focused on expansion into Africa, in addition to continuing to build our business in the Middle East. We now have our own infrastructure in 20 countries across the region. Buying KK gave us the number-one position in East Africa to support a number of our clients from the Middle East as well as bring in a whole diversity of new clients.
It has enabled us to firmly enter the agricultural space, where we now do a lot of agricultural security guarding on large farms such as sugarcane plantations. It has also enabled us to expand a lot into the mining sector, gold and copper mining security in particular.
On the diplomatic security front, it has enabled us to take on another 45 embassies, bringing our portfolio now to more than 80 embassies across the Middle East and Africa. It has also enabled us to enter the tourism space, a new sector for us, providing security for a number of the leading hotels. Lastly, there is healthcare, where we are providing security for a number of hospitals and pharmaceutical companies in East Africa.
It has been a highly strategic acquisition for us, both in terms of footprint, expanding our client base, and expanding our service offering. Another point that may be interesting for Kurdistan in the future is that, in East Africa, there is a very real market for alarm response, which means operating like a privatised police force. We have thousands of residential customers who have panic alarms in their homes and we provide guards for their private homes and the quick reaction response service. We do medical as well as security response. We operate ambulances and fire trucks. We see some real potential for expanding into these critical wider security offerings in the KRG.
With KK, we have taken on another 23,000 employees, so we now total 30,000 staff across the Middle East and Africa, which has brought a whole new volume to our business, where efficiency and rigorous business processes are critical. We are also making a number of other acquisitions across East Africa, Central and West Africa to add density to our business.
Our aim is to be the number-one or number-two player in every country where we operate, so we are buying smaller businesses in these markets to gain market share. Kenya is the biggest market in East Africa and is where KK’s HQ is. Tanzania is a very important market for us and is the second-biggest. It is important for both the mining, oil and gas, tourism and healthcare sectors. We are also in Uganda, Rwanda, Burundi, DRC, Malawi, Mozambique and Somalia and we are expanding into West Africa, building on our current footprint in Nigeria and Mali as well. We are the largest player in Libya by some margin, where we work with the major IOCs and with many of the oil service companies. We hold many of the large diplomatic contracts including the EU and British Foreign Office.

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