For many observers, Africa is rising. For others, the continent’s challenges still seem too daunting to talk about “Africa rising”. Over the next four weeks, The African Exponent will share Africa’s economic state and potential as viewed by Africa’s leading political, business and non-profit leaders.
Below is a story of how a small Tunisian distributor of agricultural equipment turned into a global conglomerate and household name in the MENA region and beyond.
This story is shared by Mr. Bassem Loukil, the Chairman and CEO of The Loukil Group.
The Loukil Group was founded in 1976 by Mr. Mohamed Loukil as a distributor and manufacturer of agricultural equipment. Later it expanded into other strategic fields such as construction machinery, universal spare parts, cars, telecom and real estate. Overtime, the group acquired and sometimes launched several manufacturing facilities to include stainless steel products, sanitary equipment, automobile and industrial filters most on its list of products. At the time, most of these products were sold as exports.
Today, The Loukil Group is made up of 35 companies and employs close to 4500 people in seven African countries and parts of Europe. The group’s expansion in Africa started in 1998 and was intensified over the last 5 years after the Tunisian revolution. This local and international expansion has led to the unparalleled success of the group. Over the last 4 years, the annual sales growth has been an average of 25% and certainly, there is still room for growth.
Growing the Loukil group was not an easy task, of course, and lots of strategic thinking had to be done so as to choose the right products and services that would be the source of growth not only in the local market (size of only 11 million people), but also at the international level.
We focused mainly on the products we manufactured and controlled.
After the 2011 revolution, we decided that it was important to be a dominant player in at least 3 industries in which we had the expertise and competitive advantage.
Automobile – We have three brands and we have been the number one distributor in the country since 2014.
Telecom – We have integrated solutions in distribution, retail network, equipment manufacturing and services.
Manufacturing – The Loukil Group has the largest manufacturing capacity in Tunisia, with close to 2000 employees only in this sector.
Our achievements were made possible thanks to a clear vision based on an in depth analysis of Tunisia’s market potential after the revolution. This analysis helped us realize the key sectors that would most likely offer the highest growth opportunities. We had to anticipate the eventual turnaround and recovery of the economy under the new set of rules which enhanced competition and minimized the influence of corruption and political favors in business.
These rules instilled in us the confidence that recovery was coming sooner and we just had to be ready for it.
Like they say, “It is in hard times that we have to invest.”
Our entire management team shared this vision with us and they all committed to this strategy. They were all driven by their eagerness to show the world what they were capable of doing well when given the chance in a free economy.
Today, our main objective is to become the number one business group in Tunisia in terms of sales, profits and presence on the African continent by the end of 2016 (we are currently number three).
In order to keep on growing and maintain our leadership position in all the fields we are involved in, we put together a strategic planning team (a think tank) to look for and identify new trends, new products and new markets for the different business units of the Group which are now organized under 4 mini holdings covering all 4 major sectors of activities of the Group: automobile, industry, telecom & IT and services.
To secure the future growth of certain affiliates, partnership agreements with international companies were signed in the last 5 years and new joint ventures were launched at the beginning of 2015 to enter new activities. This is part of our diversification strategy as we anticipate some major shifts in key areas of the Tunisian economy.
As per our presence in African markets, we decided late in 2012 to invest in some key markets to secure our presence in them and make sure that our products stay competitive and take advantage of the great growth potential these markets offer.
This is a step every major company needs to take in order to succeed in Africa: have a local presence and grow it with time. African markets are very different and a local presence will give you a competitive advantage over your competition.
A key issue faced by all major groups operating in Africa in implementing this strategy is access to qualified human resources. This is arguably one of the biggest challenges faced in African markets. We had to recruit managers, mainly from the European markets (Tunisian and other African nationals), train them in existing companies and then assign them to these new projects. Without this policy, international companies have little chance of succeeding even in what we refer to as “developing countries”. Despite Africa’s significant business potential, access to qualified labor is a serious problem for local and foreign companies.
Whatever the challenges might be, Africa remains the continent with the greatest growth potential for the next 20 years and for any company to experience a double digit jump in its sales, it has to look seriously at this vast market. They just need the time to study each market’s potential individually and identify the proper products and services they can offer and adapt their business models accordingly. Standardization will not work in Africa. Flexibility, patience and endurance are the key elements for success.