General Electric Company
) recently offered an overview of its long-term investment plans in
Africa on the eve of President Obama's address at the U.S.-Africa
Leaders Summit 2014 in Washington, DC. The Summit, hosted by
General Electric, is likely to be attended by several African and
global government officials, policy experts, NGOs, entrepreneurs
and business leaders for a conference on investment, innovation and
infrastructure in the region.
Why Focus on Africa?
Over the years, General Electric has played an integral part in the
development of the region either through strategic partnership with
diverse firms or through indigenous efforts. These include
infrastructure developments for easy access to basic amenities and
improved facilities for an overall upliftment of the socio-economic
Backed by prudent investment decisions, Africa has yielded $5.2
billion in revenues in 2013 to emerge as the most promising growth
region for the company. In addition, General Electric also procured
over $8.3 billion in orders last year across Africa to justify the
continued faith the conglomerate had on its money-vending
In order to have sustainable growth in Africa in a mutually
beneficial relationship, General Electric intends to focus its
investment on three strategic areas: infrastructure development;
localized solutions; and capacity building. To achieve these
objectives, the company remains committed to supply aeroderivative
gas turbines in Algeria and Nigeria to improve grid reliability
during peak demands and generate uninterrupted power. The
Distributed Power business of the company further extended its
commitment to bring online 5,000MW of new electric generation
capacity across six countries in association with the regional
private and public sector players.
General Electric's "Country-to-Company" agreement with the
Government of Nigeria will continue to develop infrastructure
projects while transferring skills and technology to local talents.
The company will also supply $650 million of energy equipment and
$350 million worth of railway machinery to Angola. (Read:
GE to Supply Angola $1B Rail & Energy
). At the same time, General Electric will invest $20 million over
the next five years in health programs in Nigeria, Kenya, Ghana,
Rwanda, Uganda, Malawi and Tanzania in order to improve the
healthcare facilities in these African countries.
Strategic Investment Areas
Infrastructure development in Africa is one of the primary
strategic investment areas of the company and represents a $90
billion opportunity. General Electric generates a quarter of
Africa's gas power, and nearly 70% of the electricity distributed
across Algeria. Moving forward, the company has an ambitious plan
to build technical expertise and infrastructure capacity across
various commercial and healthcare sectors in Nigeria, develop
Customer Innovation Center for skills development in South Africa,
and develop and expand off-grid power solutions in Ethiopia, Ghana,
Kenya, Liberia, Nigeria, and Tanzania.
The company has even tweaked its global offering to obtain
localized solutions. In order to ensure a holistic development
through capacity building, General Electric offers skills and
hands-on training through partnerships with local governments,
schools and hospitals. These, in turn, create a pool of local
talent and improve their work placement opportunities, thereby
benefiting the overall economy of the region.
Over the last couple of years, General Electric has expanded by
about 15% each year in growth markets. During the last reported
quarter, orders from growth markets were up 6% as six out of nine
regions witnessed revenue rise. The company also expects huge
infrastructure orders to the tune of $10 billion in 2014 from Latin
America on the back of surging demands for improved facilities for
basic amenities and well-being. (Read:
GE Envisions $10B Infra Orders from Latin
General Electric presently retains a Zacks Rank #3 (Hold). Some
better-ranked stocks in the industry include Federal Signal Corp. (
), China Merchants Holdings (International) Company Limited (
) and CLARCOR Inc. (
), each of which carry a Zacks Rank #2 (Buy).
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