DON'T MISS : Talking Africa Podcast - Gates Foundation CEO: 'Stop stockpiling & deploy vaccines to Africa to avoid costly new variants'

Tata International Africa wants acquisitions to extend John Deere distribution

By David Whitehouse
Posted on Friday, 10 September 2021 15:29

An engineer installs an application on a John Deere tractor in Nanyuki, Kenya February 4, 2020. REUTERS/Njeri Mwangi

Tata International Africa (TIA) wants to make acquisitions of John Deere dealerships to extend their Zambian distribution partnership, the CEO of Tata International Africa, Len Brand, tells The Africa Report.

The company is discussing the plan with John Deere, the maker of tractors and agricultural equipment, and will first target dealerships in East African countries, Brand says from South Africa. TIA bought distribution rights for John Deere products in Zambia in May, adding to the agreement it already had in Ghana. “We will continue down that Zambian road,” Brand says.

Population growth means that Africa needs to increase the amount of food produced by the world’s least mechanised agriculture sector. According to the Oxford Business Group, about 75% of sub-Saharan agro-processing enterprises operate on an artisanal and semi-artisanal scale and so are constrained by low productivity. The OECD says sub-Saharan Africa’s self-sufficiency for major food commodities is decreasing overall, as the population is increasing faster than the growth in local food supply.

Brand argues that development must be based on a “business relationship” rather than aid. He sees the mechanisation of agriculture as an “untapped market” and key to the solution.

  • Tata is currently testing an affordable mechanisation concept in Nigeria, for which he has high hopes.
  • Brand says he should know by November whether the concept works.
  • Zambia’s economy has structural problems, which can’t be put right overnight, Brand says.
  • However, the country’s agricultural economy is doing better than other sectors and is “quite lucrative”, he says. “We see good opportunities” in the country.

Commercial vehicle finance

Tata International is the trading and distribution arm of India’s Tata Group. The company began African operations in Zambia in 1977. It is now present in 12 African countries and operates in automotive, agricultural equipment and chemicals.

  • TIA is also interested in expanding its trucks and bus business into countries that neighbour its existing presence, Brand says. This would be through partnerships, rather than acquisitions.
  • The company’s financial year runs from April to March. As of August, TIA is slightly ahead of its full-year target of 30% sales growth, and is “well ahead” in terms of its undisclosed profit target,  Brand says.
  • The next three months “look pretty solid,” he says.

This year, the company expanded its commercial vehicle finance product, already available in Tanzania, Kenya, Nigeria, Ghana and Zambia, to South Africa. In March, TIA signed a partnership with NCBA Bank Kenya to finance Tata vehicles nationwide.

  • TIA has applied for licenses to extend its commercial vehicle financing business to Uganda, Senegal and Côte d’Ivoire, Brand says. He hopes to be able to enter the new markets at the end of the year.
  • Banks see commercial vehicle finance as too risky, Brand says. According to him, the business is “doing really well” and he cites Tanzania, the first country where Tata started offering such finance.
  • The commercial banks there were reluctant to enter the market, but have now changed their minds and are starting to try to compete, he says.

Bottom line

TIA sees vehicle distribution and finance as long-term African growth markets.

Understand Africa's tomorrow... today

We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.

View subscription options