Early venture funding in Africa
From his very early years, the founder of the A.P. Moller Group, A.P. Møller, was consistent in letters and speeches about his life and business ambitions; your actions should benefit the country and society as such.
This consistency forms ‘the spirit of A.P. Møller’; the business should be developed over time to have a positive impact on society while being kept well consolidated financially. Profits were important to continue the growth of the enterprise, whereas dividends were secondary.
The A.P. Moller Group has developed from a one-ship steamship company to a group of enterprises with global reach, and the following is part of that story.
Danish sugar in east Africa – impacting a society
Some may wonder what motivated A.P. Møller’s investment in 1930 in some rather infertile land in the Tanganyika Territory (today’s Tanzania) with the aim of growing sisal and sugar. Both literally and metaphorically, it seems off the charts for a shipping company.
But the combination of being able to fund a new venture and trust in people with experience in the area led to the vision that perhaps agricultural products out of East Africa might form the base cargo for a new shipping line initiative.
In due course, The Tanganyika Planting Co. became the largest privately-owned enterprise of its time in Tanzania.
The formal establishment of TPC – an abbreviation also used internally in the A.P. Moller Group when referring to the plantation business – took place in Copenhagen, Denmark. However, the practical work of cultivating sugar cane and producing sugar took place near Mount Kilimanjaro. In 1936, by which time the sugar factory was fully operational, the sugar extraction process was more efficient, and within a few years the factory succeeded in generating its first profits.
Production and earnings remained stable until 1951, the year A.P. Møller personally visited the plantation for the first time. Following this, he initiated a programme to expand production, and over the nearly 30 years that followed TPC became a mainstay of the local community and an influential establishment in the new United Republic of Tanzania.
Besides supplying a large percentage of the country’s sugar, thereby saving Tanzania considerable expense on importing this commodity, TPC offered its employees a wide range of health and welfare services.
The expansion in the 1950’s led to a growing number of employees and a similar growing need for modern, efficient health services. A hospital with European-standard equipment was opened in 1960. By 1975, when more than 11,000 people lived at the estate, the TPC Hospital treated nearly 200,000 separate ailments and illnesses, corresponding to 550 people treated each day.
As a side effect the number of days of absence from work due to illness fell from 50% in the 1950’s to a mere 1.5% 20 years later – a figure significantly lower than comparable figures for European workforces.
The hospital was operated as an integral part of the company, and it was immensely important to TPC’s reputation, locally and nationally. Yet the most important result from establishing the TPC Hospital was its positive impact on general health in the local community, along with its contribution to the understanding in newly independent Tanzania of the links between health programmes and outcomes.
Elementary schools for children and facilities for adult education were set up and funded by TPC but run by the state or volunteers. Like in the Danish context in the shipping company and at the shipyard, vocational programmes were established to train plantation and factory staff to advance to managers and supervisors.
This contributed to the social progress achieved not only on the plantation itself, but also generally in Tanzania. Developments in the country after it gained independence led to increasingly strict political regulation of TPC, and finally to the divestment of the company to the Tanzanian government in 1980.