Investment preparation project, researching the opportunities for a dairy equipment company in Tanzania
The Dutch are entrepreneurial and like to do business across the border. The Dutch government helps Small and Medium-sized Enterprises with this. The RVO (Netherlands Enterprise Agency) follows Herco Hekking an exporter of dairy processing machines to Tanzania, originally from Overijssel, the Netherlands, now active in Tanzania on his journey.
> For Dutch Article written by RVO go here.
“A doer rather than a thinker.” That is how Herco Hekking – the owner of Ante B.V., a family business with 7 employees – describes himself. Ante together with Jurry Hekking Metaal B.V markets dairy processing equipment. Together, they manufacture and sell relatively simple and low-maintenance dairy processing equipment to mid-sized dairy farmers. Ante focuses specifically on farms in Africa and Asia. “As a Dutch company, we are relatively expensive for customers in those areas compared to our competitors in India and China. To stay competitive, we offer not only new but also refurbished equipment, including service and repairs.”
Finding new business opportunities
This is not the first time that Ante B.V. has set up a branch abroad. The company is striving to set up branches in 15 countries in Africa, Asia and South America. Ante owns a 50% share of the branches and local partners own the remaining 50%. "Our customers are farmers, cooperatives, associations and NGOs who are happy to use our services and maintenance,” says Mr Hekking.
We want to achieve this by setting up and implementing an investment preparation project, supported by the Demonstration (DHI) program of RVO, which is a special kind of business plan. The outcome of the research funded by DHI would demonstrate whether investment in a local branch in Tanzania would be feasible.
Seeing and seizing opportunities
If you are anyone in East Africa, then you own a farm, according to Ante B.V.. And there is plenty of fertile ground and sun to make crops grow. "Our customers are farmers and they want to reach people,” says Mr Hekking. The question is how. By turning to the RVO, the company received a subsidy to start a DHI demonstration project in Tanzania.
Late 2019, Hekking applied for a DHI subsidy from the RVO. “At that time, we were already exporting equipment to Tanzania and facing an increasing demand for service and maintenance.” This led to the idea of opening a branch facility for assembly and servicing in Dar es Salaam. “From there, we could potentially train maintenance technicians to carry out maintenance work on our equipment in Kenya, Uganda and Rwanda as well. The branch facility staffed by Tanzanian colleagues could be managed by a Tanzanian partner.” One problem: the cost of setting up this kind of local hub is around € 250,000 – quite a lot of money for a relatively small company like Ante. “We wanted to find out if our idea was technically and economically feasible, so we applied for a subsidy to support an investment preparation project.”
The building where Ante B.V. carried out its pilot project had electricity, water, tiles and large refrigerators. Mr Hekking says, "The main thing is that Dar es Salaam, a city with almost 5 million residents, is just across the street. In other words – our customers”. Containers with machines were placed in the building, so that potential customers could see that Ante’s machines have added value and are cost-effective. "It worked well. It became a hub where sales took place," Mr Hekking explains.
"The main thing is that Dar es Salaam, a city with almost 5 million residents, is just across the street. In other words – our customers”. – Mr. Herco Hekking
Surprises
Mr Hekking states, "I expect that the risk of buying a building will be too great and that we will be better off renting a piece of land. Luckily, the results of this project will not affect our existing activities in Tanzania."
For 4 months, Ante’s employees conducted all kinds of researches. They asked themselves questions such as: what do we need in the workshop? What are the safest supply routes for materials? Which legal aspects will we need to consider when establishing a local branch? How do we find the right people, and how do we train them? A business plan based on the results of this research is currently being made. Hekking will be able to use this plan to request funding. “We now know that opening a local branch will be worth it. We have teamed up with a local partner to set up business in a leased building.”
The biggest surprise they encountered was the knowledge already present among the technicians. “They had a great deal more expertise than we expected. That is why we not only intend to export new equipment from the Netherlands to Africa, but have the local employees refurbish used equipment and prepare it for sale, too. We expect that this will enable us to double our revenue in Tanzania within 3 years.” In other words: mission accomplished.
A tip from Ante
Hekking has some advice for SME owners with international ambitions: “When you travel abroad for business, always stop by the local embassy or trade representation. The people working there have professional expertise and can help you by giving you useful tips or contacts that you may not have thought of yet. Once they know you, they will get in touch when they come across local opportunities. Also, take advantage of the subsidy schemes – they are not just for big businesses. DHI can help you to take the next steps.
For the full articles see the website from RVO more information about the financial instruments, the dairy sector or any other agricultural questions for the Agricultural department and the Agricultural Counsellor feel free to contact us via dar-lnv@minbuza.nl . For the latest updates on activities, new articles and more follow us on twitter on @NLAgiTanzania and you can subscribe to our newsletter by sending us an email. For any other questions for the Netherlands Embassy in Dar es Salaam, this website links to the general contact information.