The world is changing fast and to keep up you need local knowledge with global context.
We hear about the ‘African Growth Story’ regularly, about a continent brimming with opportunity, potential and a people who are fast moving into more economically viable sectors. It seems that there is a global race to establish capital to benefit from the upside on the last untapped market on the planet. Despite being aware of a sense of anticipation on the continent and those invested in it, it is not every day that we hear about the people who are driving this growth. The entrepreneurs who are cementing themselves in their countries, changing lives and turning a profit. Mohammed Dewji is a real-life example of soaring success on the continent and in his home country, Tanzania. His company, MeTL is booming on the continent and has just raised $200 million of working capital finance, giving a shining example of the way African entrepreneurialism can be implemented successfully in a land of opportunity that is often seen to be outweighed by risk. South Africa could learn a lot from the example that Mohammed and his company are setting – a truly inspiring story of growth. – LF
GUGULETHU MFUPHI: Zambia China Mulungushi takes down Joint Venture Limited. Shareholders have leased the company’s assets to Mohammed Enterprises Tanzania Limited Group. This, after it closed its doors on June 30th, back in 2007. Joining us now for more is the man himself, Mohammed Dewji, Chief Executive of MeTL Group in Tanzania. It’s good to have you with us. Before we get into the deal that you’re conducting in Zambia and maybe even here in South Africa, walk us through. Who is Mohammed Dewji? Some people might not be too familiar with the name.
MOHAMMED DEWJI: Well, I was born in a small town in Tanzania called Singida. I grew up, did my primary education in Arusha, went to an international school in Dar es Salaam and did my secondary education. Then I went to the U.S., went to Georgetown, studied finance, and got a job with JP Morgan Investment Banking. I wasn’t making too much money then. I came back to Africa to join the family business.
GUGULETHU MFUPHI: And that family business is a huge conglomerate now, which is accessing capital across sub-Saharan Africa and maybe even the globe.
MOHAMMED DEWJI: Yes, when I joined MeTL Group, we were doing $13m revenue and this year, we are projecting $1.5bn. We contribute three-and-a-half percent of Tanzania’s GDP and employ 24,000 people.
ALEC HOGG: That’s a great story, but is it a story that’s applicable in South Africa with labour legislation and minimum wages?
MOHAMMED DEWJI: In Tanzania and in Africa in general, as far as the wages are concerned, they’re very low. That comes back to areas like textiles where, if you want to expand you (a) need cheap power, (b) you need to have the raw materials in terms of cotton, and (c) you need to have cheap labour to be able to compete with the likes of China and India.
ALEC HOGG: I was reading through the Berkshire Hathaway annual report of 1985, which I think you probably read. If you haven’t, it’s Warren Buffett’s story on how he got into textiles and how he got out. In ’85, they finally did remove after being in there since 1962. He said it doesn’t matter how technologically advanced they were, they could not compete because of lower wages. I guess that does give you a massive advantage going into the future as well.
MOHAMMED DEWJI: Yes, I agree with you. Now, as you know, two-thirds of the population in Africa are under the age of 25, so there’s a huge unemployment issue. Textiles are very labour orientated, so when you go to governments and say ‘I’m going to employ thousands of people’, they will stand up, give you a red carpet, do anything, and set policies to support you.
ALEC HOGG: Except in South Africa because here, we want decent jobs. Are you not giving decent jobs to people?
MOHAMMED DEWJI: Well yes, of course. There are decent jobs in terms of middle management.
ALEC HOGG: Any job is a decent job. That would be my retort.
MOHAMMED DEWJI: Well, a job is a job. It’s better to be at work than to be at home with no income. That’s the way I see it.
GUGULETHU MFUPHI: Well, you mentioned that your company has obviously contributed quite strongly to the economy in Tanzania. Is that changing since you’re also a Member of Parliament in that country?
MOHAMMED DEWJI: We have silos, so we do trade. We do all imports/exports of soft commodities, and export of all cash crops such as coffee, cocoa, sesame seeds, yellow gram, and pigeon peas and (2), we’re into manufacturing in a big way. We have 31 industries, everything from edible oil, cooking fat, margarine, and grain milling to plastics. We’re now competing with Coca Cola in Tanzania, and then we have agriculture, insurance, and petroleum etcetera. Yes, of course, the GDP size is increasing and my revenues are increasing as well, together with the GDP, which is great. However, we now have a regional strategy in investing money into ten sub-Saharan African countries with high GDP growth and good population, and that’s where we see the next growth that’s going to come as far as MeTL is concerned.
ALEC HOGG: It’s interesting. You’re getting some of that money from RMB. You signed the deal this morning.
MOHAMMED DEWJI: Yes. We’re actually signing it this afternoon.
ALEC HOGG: But you’ve agreed.
MOHAMMED DEWJI: Yes, so it’s $200m – working capital finance. I’ve been having a problem accessing capital in Tanzania. When I got back from university, the banks were so small. Let’s say the paid-up capital was $2m and the maximum they could lend you was 20 percent of that, which was $400,000.00. I realised that I wasn’t going to get to where I am today, if I don’t go and access proper capital so RMB, together with Nedbank City and RABO have syndicated $200m working capital. They’ll finance my cotton, edible oil, cocoa beans etcetera.
ALEC HOGG: It’s a wonderful partnership. You’ve gotten it right on the continent. South Africa has capital, but unfortunately, for South Africa it seems to be exported through industries like yours. Just tell us about the latest deal that you’ve done in Zambia. The Chinese were involved. They’ve given up.
MOHAMMED DEWJI: What happened there is there was big confusion because the government was in partnership with the Chinese As with many textile mills that I’ve taken over – in Tanzania, I have three (the one I took over in Mozambique) – these were all owned by the government. Government cannot run businesses. That’s clear. They messed up, and so it accumulated huge amounts of debt. I think there was $48m debt on it. I personally went to see it. This is a huge factory. I think the government must have invested $170m to build this infrastructure. The Chinese tried to run it and some corners were cut, (nothing was said) but the thing totally failed. Because I have the experience – and when I say experience, I do ginning. I do spinning. I do weaving. I do processing, moisturising, dying, and printing. It’s funny that you talk about South Africa.
I came to South Africa to buy machinery for knitting that went bankrupt. I’m going into garmenting now as well, so I have the expertise. They came, and visited all my factories and saw that (a) I have the capital, and (b) I had the experience to deliver and they have a lot of cotton there. Why not value add and employ a lot of people. When I said I’m going to commit to employ 2000 people, it was amazing. They were very happy.
ALEC HOGG: I wish you would talk to some people in this country because it’s clear. In our country, we’re saying government wants to become more involved in business, so we’re just going to go through exactly the same processes that have happened everywhere else in the world.
MOHAMMED DEWJI: Yes, I think we have to look at avenues and industries that create jobs. That is why I always say yes, I like making money like any capitalist does but together with that, I like to do businesses where I can employ people. I love doing agriculture because I can employ people. Our vision as a group is that by 2017/2018, we want to have a R5bn revenue business with 100,000 jobs. This is direct employment, so on our African continent, you have indirect people that benefit out of that.
ALEC HOGG: They told us to go, but I need one more question. You’re in the Johannesburg Stock Exchange. Would you list your company here?
MOHAMMED DEWJI: Yes. Currently, I’m undervalued. When I think that my valuation reaches a point where I’m satisfied, why not? This is the first place I’ll come.
ALEC HOGG: I look forward to it, Mohammed. Thank you. It was inspirational.
MOHAMMED DEWJI: Thank you very much, sir.
GUGULETHU MFUPHI: Well, that was Mohammed Dewji. He is the Chief Executive of MeTL Group.