Africa Business News: Entrepreneurs. Investments. Banking & Finance. Emerging Markets. Start-Ups
Wednesday, 7 August 2013
The Young African Millionaire Lighting Up Tanzania
It’s 1:15 pm on a blistering hot Wednesday afternoon in Dar Es Salaam. Patrick Ngowi is seated in the lobby of the Hyatt Regency Hotel, patiently waiting for me to keep up with our lunch appointment. We had planned to meet for 12:30, but I had lost track of time.
Patrick Ngowi, CEO, Helvetic Solar
“You are finally here, my brother,” Ngowi smiles as he rises from his chair to welcome me as I approach him.
For a 28 year-old Tanzanian who has built an $8 million (revenues) solar energy company, Ngowi certainly looks the part. He is impeccably dressed in a black suit, with the tip of Mont Blanc pen hanging out of his suit pocket. And he’s got a Mont Blanc watch adorning his left wrist and Brioni shoes to match.
Ngowi has a remarkable story. He is the CEO ofHelvetic Solar Contractors – a Tanzanian company that supplies, installs and maintains solar systems throughout the northern circuit of Tanzania. The company sells everything solar from photovoltaic (a.k.a. “solar”) panels and water heaters to battery banks, generators and back-up units.
But what’s even more interesting is the fact that Ngowi has had success at such a young age. Ngowi got his first taste of business at 15 when as a high school student he started selling top-up vouchers. Mobile phone companies like Vodacom, Tigo and other had only just established operations in the country and the only place to find recharge vouchers were in the shopping malls and exclusive phone shops. There were very few distributors or super dealers in Arusha, a mid-sized commercial city that serves as the gateway to the northern circuit where Ngowi lives. Ngowi noticed that most people in his neighborhood who wanted to top-up their phones had to travel significant distances to buy airtime. Spotting opportunity, Ngowi raised Tsh 50,000 (about $50) from his mother and bought top-up vouchers from the big dealers. Since he was still in high school and couldn’t devote much time to the business, he mobilized fuel station pump attendants in the local community to sell the vouchers. He made a small margin on each sale and kept at it for the next two years.
“It was a business on the side, nothing serious,” he says in retrospect, “but I loved the fact that I was making money and I was becoming a bit independent. The very foundation of the little success I’ve achieved was formed during those years. I learned about profit and loss, about margins, about marketing and hiring the right people– I learned so many things at that stage.”
When he finished high school, Ngowi took a gap year before going to the university. The mobile phone revolution was in its infant stages, and phones were still relatively expensive. Young Tanzanians like himself wanted to own a phone but couldn’t afford the exorbitant price tag on the locally available ones. It was during this period that he made a leisure trip to Asia and discovered trendy yet inexpensive phones. Spotting yet another opportunity, he took an $1,800 loan from his mother and started making regular trips between Tanzania and Hong Kong, buying mobile phones and accessories from low-cost manufacturers and selling them to the Tanzania’s gadget enthusiasts.
“Before long, we were making a lot of money. I was only 18 and a half years old at the time but I was doing an annual turnover of $150,000. Life was good.”
It was during his frequent trips to Hong Kong and China that he discovered solar panels and learned about renewable energy for the first time.
Tanzania has critical energy infrastructural challenges. At the time of Ngowi’s frequent Asian trips, the national power grid coverage in Tanzania was only about 10%. Most companies, government agencies and wealthy families depended heavily on generators.
“The electrification issue was a major one and I just figured out that Tanzanians might be receptive to an alternative energy source,” Ngowi says as he sips his drink.
There was opportunity, and Ngowi wanted to delve right in, but his parents insisted that he completed his education. Ngowi comes from a family of academics. Both his parents are lecturers, and their orders were crystal clear.
“Right from the time I started the Recharge voucher business, my mother told me that I had to complete my education. Dropping out of school was not an option, and she made it clear from the beginning,” Ngowi says.
At 19, Ngowi had to abandon his business and carry on with his studies. He had already become fascinated with China and solar energy. With some of the money he had accumulated from his business, he enrolled at the Denzhou University in China where he studied renewable energy. It was a perfect marriage. He was already in love with China, and curious about renewable energy and the prospects it offered in his native home.
While at Denzhou, Ngowi started an informal exporting business. He had previously built relationships with a few friends in the construction industry so he had a lot of orders from them.
“It was a fairly interesting experience. Everyone knew you could get things at more affordable prices. Builders here in Tanzania wanted everything from tiles to building materials- and they wanted it on the cheap.” At that time, there weren’t as many people making frequent trips to China as there are today, and as the word spread, many builders and traders in Arusha would send Ngowi money to purchase materials and other goods for them. He’d purchase the equipment, load it in a container and send it down to them and made his margin.
“That’s how we built capital in the business.”
By the time he had finished with his studies, Ngowi had built up enough capital. He loaded his own consignment of solar and thermal equipment, and armed with his bachelors degree in renewable energy, he headed back to Arusha to set up his own business.
“The first store we opened was very small but it was in a good location. We marketed ourselves aggressively- marketing our products to schools, governments, hospitals and just about everyone else- convincing them to use our solar panels,” Ngowi explains.
It was not easy at the beginning. Solar was a relatively new energy source to the vast majority of Tanzanians and so business was not moving as rapidly as he had hoped.
“For the first few months, sales were very slow.” Ngowi recalls that during his low moments, he sought solace in his mother – a woman he describes as the most powerful force in his life.
“She just kept me going, always giving me words of encouragement. There were times I felt like I was in the wrong business, and I just thought I should count my losses and back out. But Mama asked me to continue. Sometimes it’s very important that you have someone who believes in you,” he says with philosophical flair.
Ngowi kept marketing his business, sending proposals to everyone he could think of. With time, and as the media championed the cause for alternative energy sources, business began to pick up for Ngowi.
His company, Helvetic Solar was the only company based in Arusha offering solar products. “Whoever needed solar in Arusha had to come to us. Our other competitors were in Dar Es Salaam, but it’s a distance away. We had the market.”
Business picked up tremendously for Ngowi from 2007. As his company installed solar panels and related products for smaller clients, the word spread across to contacts everywhere. Soon, government agencies, Non-Governmental Organizations and multinational corporations started asking Helvetic Solar to provide them with solar products.
It’s been on a growth path ever since. In 2011, the company did $2.8 million in revenues, then $6.8 million in 2012. The company is in line to do $10 million revenues this year. Some of Helvetic’s major clients include the United Nations, the Tanzanian Army, WorldVision, and the Lutheran Church, among others.
Ngowi is expanding outside Tanzania. Helvetic now supplies solar to a number of government institutions in Rwanda. “It’s great for us because neighboring governments issue tenders, and they look at your portfolio and the clients you’ve catered to, and they see we’ve got a good track record and excellent products. So it’s easy for us to get awarded contracts,” Ngowi explains.
While Ngowi has made a small fortune in renewable energy contracting –an estimated $5 million, he is reinvesting his fortune in real estate and tourism. He owns stakes in a couple of hotel lodges in Arusha, and he’s expanding his property portfolio. His success has earned him a number of accolades. KPMG East Africa named Helvetic Solar Contractors the Fastest Growing and Number One Company in a survey of the Top 100 Mid Sized Companies in Tanzania for the year 2012 – 2013. Ngowi was recently nominated for Africa’s Young Person of the Year award by The Future Awards – a popular annual award that has been referred to as the ‘Nobel prize for young Africans’.
Ngowi laments the difficulty in accessing funding as the biggest challenge in doing business in Tanzania. “It remains a key problem simply because most of our financial institutions require collateral, and usually you have to oversecure your loan. Sometimes you’re over securing by 65%- 70%. It’s not easy,” he says.
“I wish we could have a proper banking structure where you could get funds based on the contracts you’ve been awarded. Also, there’s a massive infrastructure deficit – and skill. I deal with electrical engineers and you need to change into solar engineers and the skills are very difficult to get here so sometimes you need to import them,” Ngowi adds.
But challenges aside, Ngowi is motivated for even bigger success. He plans to make Helvetic Solar a $100 million company within the next five years. And Ngowi, a devout Christian who credits much of his success to divine providence, tells me it’s very possible. “If God has brought me this far, I know he’s going to take me there,” he says matter-of-factly.