How a Zimbabwean startup is going regional
In November 2022, a Zimbabwean digital services firm acquired Altron’s Botswana and Altron Mozambique businesses.
The company behind the acquisition is Tano Digital Solutions (TDS), until recently a largely unheard-of ICT company run by a group of tech-savvy Zimbabweans with international experience.
Already present in South Africa, the fully Zimbabwean-owned and managed digital solutions firm is finalizing acquisition deals in Namibia and Kenya.
From five people in 2019 to current staff of 100, the tech company currently realizes an annual turnover of 600 million rands ($35 million). Now it is set for even bigger growth, with the continent as its market.
We talked to Tano Digital Solutions managing director Wallen Mangere to find out more.
When was Tano Digital Solutions founded, and what was the motivation behind its founding?
My co-founders and I have a technological background. I ran the IBM mid-market business for Africa and the Oracle business in the Southern African Development Community (SADC). I also spent about 18 years working in the US for tech firms.
On returning to Africa, my partners and I realized there was a gap in locally grown techpreneurs. So we started six years ago in South Africa after we realized it was a more mature market. But in 2019, being Zimbabweans, we thought it was an opportune time to open up a location there. Zimbabwe had an even greater gap in terms of the different aspects of tech companies from an infrastructural perspective, software development, and application or systems integration. We got into Zimbabwean right before covid-19 hit.
The motive was to fill the gap in technology by introducing ourselves as a locally grown, Black-owned and managed company in the space.
What funding and investment platforms did you benefit from as you were starting?
We used our savings and very few financial instruments. We leveraged credit systems from our customers. But mainly to start the business, to get the infrastructure and furniture, it was basically out of pocket.
What was the initial reception to TDS in the Zimbabwean market?
We thought we wouldn’t last in terms of our tenure in Zimbabwe. Still, our customers appreciated the option of having a new formidable service provider in the infrastructure and application space.
Customer adoption and customers coming to us and using our services are what has precipitated this growth and success that we have had in Zimbabwe. Our team grew from five people in 2019 to close to 100 currently. We have expanded in all aspects.
How did you acquire the Altron business in Botswana and Mozambique?
We have always had expansion aspirations, and it was either going to be organic growth or through acquisitions. While we were putting our plan together, the opportunity to acquire Altron in Botswana and Mozambique came about.
What motivated us more to procure Altron was that this business came with a different product set and offering. We now own the Botswana business 100%, and the purchase brought us a financial services option. All the banks in Botswana are now our customers. We provide and service 99% of the ATMs there.
That part of the business also brought in the Xerox copier machine business, where we do document management systems and electronic and digital management solutions.
What we are doing is increasing our product offering and increasing our footprint in the African space. For example, our Mozambique business comes with significant Oracle products, which we don’t have in our product stake. We are now a formidable Oracle partner in Mozambique with the skills, and it comes in with the networking infrastructure part of the business.
What are some challenges you have been facing doing business in Zimbabwe?
We got a lot of resistance from existing players. They tried to play dirty tricks to get us out of business and undermine us.
The current economic environment in Zimbabwe is also a challenge. For example, we import a lot of our equipment and getting foreign currency from the auction system is a challenge. Getting customers to pay you in forex is also a challenge. If you look at it up until recently, most government departments were paying in local currency at the bank’s local exchange rate, which is quite far away from what the street market is saying regarding exchange rates.
Then, the ever-moving economic target from an exchange rate perspective, even for the local currency it’s a problem.
If you price something today at 100 bonds (a form of legal tender, or money, in Zimbabwe, pegged to the US dollar) and it takes four months to procure that thing, by the time you deliver it, the exchange rate will probably be at 400, and the customer is committed to paying 100. You can stand to lose money.
Retaining and maintaining skills is also quite a daunting task. We aim to keep our employees happy, remunerating them properly and motivating them.
How have you scaled up your business with all these challenges?
We ensure we put in the correct provisions in managing customer payments. The customers are also operating in the same environment, so from a payments perspective, we base our pricing on a US dollar price at the current rates. If you are paying in Zimbabwean currency, you pay us the US dollar equivalent at the current exchange rate at the time.
You must do certain things to ensure you are not prejudicing yourself regarding pricing.
From a solutions perspective, we are the only SAP (service provider) currently in Zimbabwe, and obviously, we have to pay SAP license and maintenance fees in US dollars. We work with our customers to ensure that they either apply to the Reserve Bank themselves or remit some of the license fees to SAP to mitigate that risk on the currency side.
We’ve also partnered with other companies from Zimbabwe for the Robotics Process Automation Software. We focus on more than just SAP. We do infrastructure - IBM, Lenovo, and HP from an infrastructure perspective. From an application security perspective, we partnered with companies where we do quite a bit of cybersecurity. We realized that we have to partner with guys who have been in the industry for longer or are specialists in such areas and are thriving.
What are your plans for the future?
We are finalizing acquisitions of two other African countries. We will be in Namibia and Kenya by the end of February or early March. Meaning we will be in six countries in Africa.
For a company that started operating recently, being in six countries and turning over 600 million rands is a big accomplishment. But again, it’s been a deliberate acquisition and expansion idea we have had from the beginning.
The original version of this article was published by bird-Africa no filter.
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