The fruit of a true family and entrepreneurial saga, the diversified Tunisian group Loukil (€520m in revenue in 2018), with its 34 subsidiaries operating in 13 different African countries, has an utterly unique business model in the country famous for its jasmine.
A supplier of antenna towers for telecom operators in Mauritania and solar generators in Burkina Faso, Walid, the youngest of the Loukil brothers, perhaps never imagined working in this kind of profession before he joined his father’s company in 1998, but he had to learn the ropes eventually. At 45 years old, Walid has become the deputy general manager of a company with just under 4,000 employees. Alongside his brother, Bassem (aged 54), chairman and CEO – both the second generation of the company founded by Mohamed Loukil in 1976 – the two form a very close duo and always consult one another before making any strategic decisions. However, it took them a long time to get to this point. Walid’s initial experiences abroad were far from a coincidence: they were part of a full-fledged strategy with the aim of toughening up Walid while also expanding the Tunisian company’s operations on the African continent to conquer new markets and find new outlets for the products its plants manufactured in Tunisia.
The company certainly far exceeded the original ambitions of Mohamed Loukil, who was some 20 years earlier one of the first Tunisians to get into the soil treatment product (fertilisers, pesticides, etc.) and agricultural machinery businesses. In fact, the firm’s entire history is emblematic of a pioneering and entrepreneurial spirit that would also lead Mohamed Loukil to become one of the first Tunisian businessmen to work with Japan, from which he imported Kubota tractors.
In 1981, the company opened its first plant in Sfax – the family’s hometown – which has today become a full-fledged industrial centre specialising in boiler making and steel structures. When Bassem joined the company in 1992 after attending university in the United States, he immediately launched an IT division that marketed computer software and equipment. Ten years down the road, in the early 2000s, the Loukil group diversified by adding a mobile phone business, branded as Fono, selling computers and phones. In 2008, the company strengthened its industrial capability by acquiring Ateliers mécaniques du Sahel (AMS), a leading player in the Tunisian household faucets and goods market. It added yet again to its industrial capability via the acquisition of GIF Filter, a company specialising in the production of fuel and oil filters, in Grombalia in 2013. Today, Loukil’s operations span sectors such as agriculture, construction and energy. In addition, the company is a reseller in Tunisia for automotive brands including PSA, Foton, Mazda and Renault Trucks. A 35% shareholding of its automotive distribution business is even listed on the Tunis Stock Exchange under Universal Automobile Distributors Holding (UADH).
When Bassem, the oldest Walid brother and Loukil’s chairman and CEO, took over the conglomerate in the early 1990s, it already had ten subsidiaries. Bassem’s idea was to go one step beyond diversifying its business: he wanted to expand its operations to sub-Saharan Africa. To do so, he used one subsidiary in particular, SODEX. Created in 1986 by his father, SODEX was set up to export a portion of production to other countries in Africa and to the Middle East for strategic reasons. According to Walid, “having a diversified group at that time gave the company political security, especially in light of the pre-revolutionary situation.”
During the rule of Zine el-Abidine Ben Ali, who was President of Tunisia from 1987 to 2011, the Trabelsi family (his in-laws) dominated the country’s economy and had the unfortunate tendency to put obstacles in the way of companies that did not cooperate with them. Once “Zaba” (Ben Ali’s initials) came to power, the Tunisian state began issuing vehicle import approvals in a completely arbitrary manner and which were limited to a one-year period. Loukil would suffer the consequences, as it limited its vehicle imports to less than 3,000 vehicles a year on average.
Above all, the pan-African venture would prove to be a tremendous opportunity for growth and diversification outside of its relatively limited domestic market (Tunisia had 11.5 million inhabitants in 2019), to such an extent that today, the continent represents a highly significant share of Loukil’s overall business (nearly 40% of revenue). Walid travels around the continent four to five times per month to manage the group’s various projects, which the Tunisian says is a formidable challenge: “Unfortunately, there is no network linking Tunisian banks with sub-Saharan African ones. For example, there are no SWIFT codes. And Tunisian banks have virtually no subsidiaries operating in the rest of Africa.” Other obstacles include an absence of direct shipping links with the continent’s other economic hubs and difficulties in understanding business law implemented at the local level.
These systemic problems led the two brothers to found the Tunisia-Africa Business Council (TABC) in 2015. The council, which promotes relations between sub-Saharan African and Tunisian entrepreneurs and business leaders, aims to strengthen trade between Tunisia and the rest of the continent. Through this “toolbox” that also serves as a lobby, the Loukil brothers have become advocates for simplifying trade in Africa. This represents a real break with traditional business practices in Tunisia, which have historically focused on Europe. The TABC intends to favour a collaborative approach: week-long projects in a sub-Saharan African country involving delegations of a few dozen entrepreneurs who participate in a series of “B2B” meetings with local players.
And Loukil serves as a role model: since 2010, it has continued to accelerate its expansion on the continent by developing its farm equipment and telecom network business activities in Mali and Côte d’Ivoire. Today, it operates in 13 African countries.
After seeing its revenue jump from €152m in 2006 to €520m in 2018, the company achieved critical mass, allowing it to take on economic projects across its entire value chain. It developed a capacity to mobilise an entire ecosystem ranging from lenders to farmers, all of which is supported by relevant skills. Today, Loukil’s African business segment is mainly focused on the telecom (antenna towers, etc.) and industrial equipment sectors. Some 15% of its total sales are generated in the region (West Africa) and it has subsidiaries in Côte d’Ivoire and Burkina Faso, as well as offices in Togo, Mali and Chad.
However, the top business of the moment is vehicle distribution. In June 2019, Loukil signed two agreements via UADH, which accounts for almost 40% of the group’s revenue: one with Groupe PSA and the other with Libyan petroleum product retailer OLA Energy (formerly OiLibya), a major player on the continent. The agreements provide for the deployment of the Eurorepar Car Service network as well as for the establishment of Eurorepar Car Service repair shops at OLA Energy service stations, initially in Côte d’Ivoire and Senegal, with a potential expansion to other sub-Saharan African countries. “And why not become a dealer in other countries such as the Democratic Republic of Congo, Guinea and Côte d’Ivoire, just like CFAO did?” Walid said.
Despite the group’s wide-ranging expansion and the changes in governance this entails, the Loukils continue to see the company’s family-driven nature as an advantage. Moreover, they are eager to work and share their experiences with other family-owned companies on the continent, such as Djibouti’s Coubèche and Cameroon’s Groupe Arno (for Arnopoulos), which the brothers met during the two most recent editions of the AFRICA CEO FORUM. “This event gives us the opportunity to meet reliable, high-level partners with whom we can speak on an equal footing,” Walid said. They discuss issues specifically impacting family-run companies, including governance, succession and executive recruitment. Loukil has a particularly unique story to share with its 34 subsidiaries based in 13 African countries.
For example, to keep the company secure, the group’s subsidiaries have been structured in such a way that they are legally independent from one another. Each one is headed by a chief executive officer who comes from outside the family and is audited by Loukil Management Conseil. The board of directors is also open to outside executives, although it remains chaired by Mohamed Loukil, the pater familias.
Now that Bassem’s 24-year-old son Mohamed has joined the company to work on expansion efforts alongside his uncle, the group has three generations of Loukils. We said it was a family affair and we meant it!