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The story of Bro-Group is your typical Ugandan ingenuity and resilience against all odds, strung together by a dose of optimism for a better new day.
In 1990, two brothers, Jeff Baitwa and Oscar Baitwa, set out to build a courier and freight forward business.
Between 1994 and 2007, the brothers built the idea into Bro-Group, a thriving logistics enterprise with three subsidiaries⏤ Threeways Shipping Co, Threeways Distribution, and Transtrac.
On 6th January 2006 Uganda struck commercial quantities of oil and gas on its mid-western border with the Democratic Republic of Congo stimulating increased investment into especially further exploration and well appraisals. This further opened up more opportunities in the oil and gas, which further drove the company’s fortunes. As such the period between 2007 and 2011 saw more expansion in capacity⏤ more trucks, trailers and equipment like cranes.
More work flowed in and the company’s revenue grew.
By the end of 2014, oil and gas production licenses had been awarded for the Kingfisher and Tilenga Project, sending the sector into a pre-Financial Investment Decision (FID) frenzy.
A Final Investment Decision (“FID”) is a point in time when a Company, together with its investors/sponsors and lenders decides to proceed with the investment in and execution of a Project. An FID is only taken by a Company once all Project investment criteria are met and internal approval is received from its Executive Committee or Board; and where external financing is required, its investors and lenders.
A 2013 pre-study by CNOOC, Total Energies and Tullow Oil- the then joint venture partners in Uganda’s oil and gas project, estimated that USD100 billion would be invested in the Eastern Africa region (Uganda, Mozambique, South Sudan, Tanzania, Kenya, Ethiopia and the DRC over 15 years towards exploration, appraisal and production activities.
Uganda alone was looking at an investment of up to USD 15 billion.
The study reported that during construction alone 600 buses and new trucks were needed to lift approx 850,000 tonnes of equipment to meet the logistical needs of integrated basin development.
To be party to this huge opportunity, local companies were told, they needed to invest in building capacity ahead of the FID.
Keen to establish leadership in Transport, C&F Services, Heavy Lifting and Other related solutions segment, Threeways had been on an investment drive. Part of the money used in the expansion was borrowed.
Then the FID didn’t happen. On February 1st, 2022, Total Energies EP Uganda, CNOOC Uganda LTD, UNOC-The Uganda Oil Company and the Tanzania Petroleum Development Corporation (TPDC) announced the final Investment Decision. (FID)
The delay in signing the FID had however put the business into a cash squeeze. The company couldn’t meet its obligations with Standard Chartered Bank. Consequently, the company had to be placed under receivership in 2017. Kabiito Karamagi, the Managing Partner at Ligomarc Advocates, was the receiver.
A receivership is a legal process where a court appoints a third party, known as a receiver, to manage the affairs of a business or property when it is in financial distress or facing legal challenges. The receiver is tasked with preserving the assets of the entity under receivership, managing its operations, and possibly liquidating assets to satisfy creditors’ claims. The goal is typically to protect the interests of creditors, investors, or other stakeholders while resolving the underlying issues affecting the entity.
Rebuilding a Ugandan-owned world-class regional supply chain business
During this time, Baitwa started shopping around for equity partners/investors. The search ended up with Daniel Pettersson, the former country Managing Director of Lafarge/Hima Cement.
Daniel and his investment team invested an initial USD1.5m (5.6bn) for a minority stake. This money went towards defraying part of the USD 3.7 million debt. This also helped the company to have the receivership lifted in 2019.
Getting out of receivership also helped the company win some valuable contracts in the oil and gas industry.
But as fate would have it, as the company was getting back on its feet, COVID-19 struck the global economy at the tail end of 2019, reaching Uganda in March 2020. The whole world went into shutdown.
The post-COVID-19 reopening in January 2021, came with even much better news: the signing of the FID in April 2021.
With the reopening of the economy and the oil and gas FID, came market stability, new oil and gas contracts as well as new opportunities in the construction and power generation sectors.
Threeways Shipping won 5-year contracts valued at USD70 million. This started in September 2022, increasing the company’s fortunes, creating corporate stability and setting a strong foundation for a strong future and increased stability.
The admission of Daniel Pettersson as a shareholder partner came with much more than a capital infusion. It came along with very much needed hands-on expertise in the business⏤ reason why he was appointed Co-Managing Director in January 2023.
With him, he brought over 20 years experience of in doing business around Africa.
Before joining Bro-Group, Daniel spent 12 years with the French Group Lafarge, of which 5 were as CEO / MD of Hima Cement, a Lafarge subsidiary company in Uganda. Rwanda was also under his territory. At Hima Cement, he is credited with turning around the business by almost doubling the EBITDA in his first two years.
During his time at Lafarge, he gained a deep knowledge base in business development and strategy as well as in mining, heavy industrial operations, large-scale logistics operations as well as distribution and retail.
Daniel’s knowledge and expertise, paired with Jeff and Oscar Baitwa’s own, form a hard-to-beat combination set to take Bro-Group Ltd into a promising future.
Bro-Group Ltd is a holding entity that owns 100% of each of the subsidiaries, notably Transtrac Limited, Threeways Distribution Limited and Threeways Shipping Services (Group) Limited and 50% of Grindways Logistics Ltd. All three entities actively provide logistic services to the Oil & Gas industry within East Africa under the Tilenga, EACOP and Kingfisher Oil and gas developments.
Enhancing governance
To further consolidate the gains made by the company, as well as solidify its position as the leading player in the Regional supply chain industry, the Bro-Group in October 2023, appointed a new Board of Directors.
Chaired by Mr. Hannington Karuhanga one of Uganda’s most distinguished business leaders, the board also has Mrs. Olive Lumonya, Mr. Moses Kiwanuka and Mrs. Charlotte Kazoora. Mr. Oscar Baitwa, Mr. Geoff Baitwa and Mr. Daniel Pettersson also sit on the board.
Commenting about the composition of the new Board, an enthusiastic Mr. Karuhanga, said that this was “the right team to lead this business as we embark on this new phase”.
“At Bro-Group, we intend to build a world-class regional supply chain business, that is proudly Ugandan-owned,” Karuhanga said.
Mr. Karuhanga has 37 years Of experience working in the Commodes Trade and Agribusiness sector. He is the founder and Chairman of Grainpulse Ltd, a fully integrated agribusiness dealing in coffee export and value addition, grain processing and human nutrition, soil health and fertiliser blending and animal feed processing.
Karuhanga has served as Non-Executive Director of Letshego Holdings Botswana⏤ a Pan-African financial services entity, Lion Assurance and Uganda Coffee Development Authority. He also served as the Chairman of the Board at Stanbic Bank Uganda, Uganda Railways Corporation and Hima Cement Limited. He is currently the Chairman of the Board at Airtel Uganda, Capital Radio and a Non-Executive Director of Sanlam Life Assurance Uganda.