Discussing Agriculture, Transport and Logistics in Tanzania with Alex Duffar of Bravo Group

Interview with Alex Duffar, Group CEO at Bravo Group

What is your overview of Bravo Group and what are your competitive advantages?

Bravo Group is made up of 300 employees. We are a company that has existed in Tanzania for about 10 years. We are a holding company which effectively has three entities that work around strategic pillars in the country. The first pillar is logistics, the second is agriculture, and the third is health and safety. Our competitive advantage is the diversity and the focus that we have in each of these sectors. A lot of holding companies are not specialized enough in what they do. We see ourselves as solution providers. We are not the type that will own large factories and will invest in assets very heavily to be able to provide services to our customers. Those services tend to be onward logistics services for import and for export within landlocked countries. For agriculture, we are providing services to mechanization in the agricultural sector where we provide sales, service, and support to our customers through 12 of our branches. We invest a lot in people, which is the intangible element of our services. Health and safety is more of a specialty service that is in East Africa and Tanzania as a result of the work that we do.

What makes Bravo Group stand out from the competition?

Bravo Group is extremely diverse. We push for change and innovation. We are a company that has a huge amount of young, strong, dynamic people. The average age in the company is roughly 38, which would be something that you would find more in the telecoms industry. We are in the digital space, as well as very traditional sectors, such as agriculture with Agricom. Secondly, we are in logistics with our company Bravo Logistics. We are quite responsive to change especially with Bravo Logistics. We stand on our feet by being able to one day move from one activity of transporting copper to discharging 10,000 metric tons of much needed fertilizer that is required for all the agricultural activities that are performed in Eastern Africa. We are in line with what the country is trying to achieve. We are very responsive and very aggressive in a positive way when it comes to the execution of the services that we have.

What is your assessment of the agricultural industry in Tanzania?

What we are trying to focus on as a mission is to invest in quality resources and strategic partnerships, such as the partnerships that we have with our customers. We are not a very large company, but we are capable of doing big things.

Tanzania, in terms of agriculture, is massively underplayed. The country has certain metrics that make it quite unique. Tanzania is about double the size of Kenya. It has three climatic conditions, some of which share the same conditions of countries in Southern Africa, such as Zambia and Malawi, with different rain patterns. The northern side of Tanzania shares the same patterns as Uganda and Kenya. Seasonality is better managed in Tanzania when it comes to agriculture for different crops and it shows a continuum for a lot of investors that are coming into Tanzania. The main problem with Tanzania when it comes to it being completely underplayed is the fact that the country is so big. Logistics is quite important when it comes to managing the throughput of a crop harvest that needs to come out of the country. Classically, Tanzania has been the number one producer and the number one exporter of rice and maize in the East African market. Today, we see more equipment being imported into Tanzania. Roughly, it is a 30% growth rate year on year, where we see equipment being imported through the port to satisfy farmers. The biggest base of agriculture interests is in owners and farmers, mostly people which will hold about four hectares of land on average. Today, the predominance is the smallholder farmer. With our company Agricom, the focus has always been with the smallholder farmer. That is why we have 12 branches and are growing easily 4 to 5 more per year. We work with smallholder equipment as opposed to most of our competitors which are in the commercial space with huge units that typically are used in 1,000 to 2,000 hectare investments. Those investments will always have an outgrower project which will involve smallholder farmers because it is a remit in order to get agricultural outputs to benefit the local communities directly. There is potential, but the issue is the execution.

Is Bravo Group’s contribution to the industry focused on equipment rather than growing certain crops, or is it a combination of both?

Because of Bravo Logistics, we have also assisted moving a lot of crop around the country. We have moved a lot for the World Food Program abroad as well. With crop that is local, we move rice to Kenya. More importantly, when we talk of Agricom itself, we have been in the mechanization space which needs to be understood as a form of not just giving equipment, but also performing training. We have previously been able to secure World Bank funding in order to train operators in the field. We continue to provide training in the field when it comes to combine harvesters with some of our principals, such as Kubota. We use that as a way to have people understand how equipment is used. Ultimately, that equipment is going to yield a crop harvest of a certain tonnage per year, which effectively is something that can be financed because it is ticketable and it is recognized by banks. Therefore, understanding the performance of equipment is quite important. We are not only equipment providers. We are in a value chain portion which is mechanization that is an input into that field. We are moving down the line as a company into trying to work towards other equipment that better manages the post-harvest. We have gotten to a point that we know how much crop our farmers are producing and that is why we are able to link them up with asset financials. In the future, we will be trading our own commodities. We are looking at improving the structures that we have in order to start sourcing our own crop from the farmers that we sell equipment to, even to the point of warehouse receipting their crop with the same financiers that we work with already on their equipment.

Is the logistics in connection with the agricultural side or it is solely on its own?

Historically, it has been on its own. Now, we are moving toward creating an approach to get it closer to agriculture. Today, Tanzania is the port of call for Malawi when it comes to virtually 80% of its exports of soybeans. We handle roughly 1,000 to 2,000 metric tons of soybean exports. This means picking it up in bulk and packing it into containers according to certain conditions for the country that we are exporting to. Today, we do not do enough of our own crop which Agricom provides equipment for. That equipment is being used for land preparation or for post-harvest management. This is something that we need to connect more with, because we are already doing it for others in foreign countries, when locally we could actually be doing it for ourselves. We are moving more into that space. We have already started with rice, which is a major export component. As combine harvester leaders in Agricom, we command 87% of the market, selling roughly 200 units a year. We effectively can see this from something that is used mostly by contractors with all the crop that they genserate. That allows us to look at how we can improve the quality of that crop and how we can manage that crop base better, either by transporting it, or warehousing it, or providing value addition services through our warehouses.

Is there a brand name for the locally produced rice?

We do not have a specific brand name yet. There are two main regions for rice in Tanzania which produce notable amounts that are exported within the East African region. Tanzania’s rice competes with Pakistan’s and India’s rice when it comes to trying to place rice in East Africa. When the pandemic began, there was a big crisis and questions in certain countries in our region about whether they would be able to assure the food security that they needed in the pandemic. Many Heads of State purchased large volumes from Asia because of the surplus. The significance of those actions undermines the production and harvest capacities that Tanzania has because of its export capacity. There is a massive gap in Kenya in terms of rice. When it comes to branding, Tanzania has a lot of improvements to make. That is why the government is focusing a lot on agri-processing. This is also why we are trying to focus more on value addition by cleaning the rice and making sure the rice has more value to it, so that it can get quicker to the value addition processors who can bag it and then export it. Mbeya rice which is part of the Southern Highlands of Tanzania coming out of farms such as Kapunga, or rice that is coming from the area of Isaka which is in the Lake Zone, are notably known to most of the regional markets. Today, rice is also taken to Zambia all the way to Zimbabwe. At the same time, we are seeing rice that is around Lake Victoria that gets taken all the way to Uganda into Rwanda and into Kenya through traders. Tanzanian rice as a product is well known. It is unfortunate that we have not had the time or the focus as a country to create a brand that would be made in Tanzania. We are focusing on making sure that we add value to that.

Are there any other products that Bravo Group is focusing on?

Sunflower is quite a relevant crop. Today, sunflower has a very similar growth curve to teak. It is exponential. Pricing is sustained because there is a massive gap locally and imports need to bridge that gap. Currently, with one of our main historical branches called Kibaigwa in the central part of Tanzania in Dodoma, we sell equipment to very specific, organized farmers which would be purely on sunflower as a crop. There are very few providers of equipment that only focus 350 tractors on sunflower farmers who have offtake agreements. This may be more present in more mature markets like South Africa, but not in places like Kenya or North Africa. The pitfalls with sunflower are the size of the seed, irrigation schemes, and finding the right offtakers that are willing to understand what quality means and invest in the inputs for those farmers.

How has Bravo Group taken advantage of the increase in import and export in Tanzania to boost business in general?

We handle 40,000 metric tons a month of import and export cargo. When it comes to imports, we are not working much on agricultural commodities, while on the exports, we handle a lot. Roughly 10,000 of those 40,000 metric tons are agricultural commodities. The next element in exports is mostly metals, where copper makes up a significant amount. Finally, there is general cargo which would be for export. On the imports, a significant amount is general cargo. We also handle a lot of importing of vehicles that are destined to mines in DRC and Zambia or to distributors.

Do you have more links to other sea ports around the region?

We have customers such as Vivo Energy in Kenya where we handle a lot of their goods from clearing to managing the goods all the way through to Zambia via Mombasa. The central corridor in East Africa, which is typically Mombasa to Nairobi, is now becoming quite sophisticated with its railway but also more costly when it comes to execution. Now, Dar es Salaam is proving to be quite a competitive port. That is also why our focus is more with the southern corridor, which continues on to DRC, Zambia and Malawi. We call this the Tanzam. There is also the central corridor in Tanzania that runs into Rwanda and feeds into Burundi and on to DRC, where the bilateral agreements between Burundi and DRC have triggered the fall away of things such as import duties and VAT exemptions, which are quite relevant now. These things show that Tanzania is becoming more competitive given the volumes that we are now receiving through Dar es Salaam. You can see examples of this in South Africa with what has happened over the past six months in terms of insecurity and the dangers that it presents for high value cargo or dangerous cargo. We have traders who are now focusing on ports such as Dar es Salaam in order to secure their loads and the throughputs that they need. Very few ships are coming into Richards Bay today and they are instead turning their eyes to Dar es Salaam to see if we have the capacity to handle ships of 45,000 to 50,000 metric tons for fertilizer or sulfur, which has never been seen before.

What are your major success stories as a company?

We have been around for almost 15 years. We started in 2005. In 2006, our first clearing license was obtained. In 2008, we did our first UN project where we handled all the removal of equipment that they had in places such as Burundi and Malawi, shifting them offshore, and handling all the clearing as well. At the time, we only had a fleet of 25 trucks. There were roughly 300 pieces of equipment and 700 containers. In 2012 and 2013, we won the Arc Europe Gold Award for innovation and the Gold Commitment and Tech Award in innovation. In 2014, we started working with fertilizer and secured our first license which was worth 2.4 billion shillings. From that point on, we started acquiring significantly more trucks to be able to lower the cost of operation and not have to fully depend on subcontractors. We went from handling 50 trucks a month plus a subcontracting base of roughly 40 trucks to where we are today. We have worked with customers such as C. Steinweg Bridge, where we handle a lot of their vessels. C. Steinweg is an international global company in clearing and forwarding specializing in commodities. Access World is one of our large customers that belongs to Glencore. We work actively on their imports and exports. Today, we are to be able to have a structure where we currently have 100 trucks. At the same time, we handle a subcontracting capacity of 400 trucks a month on top of our own 100 trucks. We now have roughly 50,000 square meters of facilities that we manage. We are also moving into cold chain services. We offer a new service in vessel management, handling all the discharge, clearing, the necessary truck allocation and gating. We handle roughly 5,000 to 7,000 metric tons per month of mostly fertilizers.

What is the vision for Bravo Group in the next three years? What would you like to achieve?

We are trying to be the apex of customer service as a vision throughout the services that we are offering from agricultural services to farmers, to our stakeholders, to financiers who are trying to place money. It is not easy to put money into agriculture. It is quite risky at times when you look at it in depth. But when it comes to the logistics, we are trying to provide innovative logistics solutions. Today, not many people are providing cold chain solutions as a service. It is mostly seen in the end to end supply chain. For example, the bottling companies will have their cold chain and the fisheries will have their cold chain because they own the input side and the output side of the value chain. We would rather want to provide it as an onward service to support customers. What we are trying to focus on as a mission is to invest in quality resources and strategic partnerships, such as the partnerships that we have with our customers. We are not a very large company, but we are capable of doing big things. The big things come along with the fact that these customers have been with us for more than five to ten years; therefore, putting together strategic partnerships is relatively easy because we know each other quite well and we may have done it before on the basis of an opportunity.

What is your inspiration? What drives you to do what you do?

The first thing is that it is never about just the company. It is about what that company is trying to achieve in the market that it is in. I have been in Tanzania for eight years. I have worked in agriculture and real estate. I have been on multi-country mandates as well, managing multi-country profits and losses. You truly need to understand how deep the potential is in Tanzania, which goes far and beyond what countries such as Kenya, which I have worked in, and Uganda and Rwanda can offer. It is the hunger to unleash that potential which drives my appetite, to try and see companies which are 100% local content, such as Bravo Group, turning into real players that can achieve high impact things in Tanzania. Farming and agriculture is one area. Logistics is the pulse of the economy. Among Kenya, South Sudan, Ethiopia coming up, and Uganda historically, in comparison, Tanzania serves a surrounding population base of 250 million people not counting Tanzania itself. Being in the limelight of working on a company that is trying to improve efficiencies, be better at what it does, and impact those economies in its midst, and at the same time having leadership roles when it comes to either combine harvesters, tractors that we offer or manage, and have strategic relationships with two of the largest copper exporters in Sub Saharan Africa, it is quite relevant to always question ourselves on how we can accelerate this and how we can we make this bigger. That is where the challenges come and where you really want the people to fall in place because you know how quickly the company could take off.

Do you have a final message for investors coming to Tanzania?

There is a need to really focus on the new remit of what Tanzania stands for. As a country, over the past three years, Tanzania has not been very strong on its mission to investors. Tanzania is definitely open for business. It is showing itself internationally. It is a tough country because it is very big. There are many opportunities so it is very easy to dilute yourself; whereas in countries like Kenya and Uganda, you fall in place quite quickly because there is already a lot that has been done. There is a lot to be done in Tanzania and the government is really making it easier to make investments. I strongly encourage neighboring countries to create a rapport with Tanzania and more importantly, for foreign companies to really look at our corridors and the agro potential which is significant. Fortune 500 companies like BASF already stipulate Tanzania as a mega country. We are heading toward close to 60 million in population, and by 2050 it is set to hit the 100 million mark. You can understand what can happen when you talk of a rise of the middle income. We have seen it before in Nigeria and Ethiopia. In the next 20 years, we are going to see certain sectors like agriculture and logistics be at the center of that.

For more information, please visit: bravo.co.tz and agricom-africa-ltd.

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