General Electric will invest about $2billion in Africa by 2018 and double the local workforce in what chief executive Jeffrey Immelt calls one of the world’s most-promising markets.
“Africa is one of the most important growth areas, purely from an economic standpoint,” Immelt said at a media event for the start of the US-Africa Leaders Summit in Washington being hosted by President Barack Obama.
“It’s early. It’s in very early days for Africa, so there’s still a lot yet to be done and the notion of having the summit here says that it’s important.”
GE won about $8.3billion in orders in Africa over the last year as it accelerates operations in a continent where Immelt said sales were “almost zero” in 2000.
Revenue there last year was $5.2billion, according to GE, which estimates that Africa’s basic infrastructure needs could generate $90billion in investment opportunities.
The Africa spending planned by GE will go to develop facilities, improve supply chains and train workers, according to a statement from the company. GE’s Africa business includes supplying locomotives for Nigeria and aircraft engines for Kenya Airways.
The local payroll will swell to 4,000 people during the next few years compared with about 2,000 now as the company expands into the continent’s eastern nations, according to Jay Ireland, GE’s Africa chief executive.
“We’ve doubled it in the last three years and we’ll probably double it again,” Ireland said. “All those investments need people, so we’ll be adding.”
The US-Africa Leaders Summit is aimed at boosting economic ties to help nurture growth in the continent that boasts the world’s lowest income and, according to the African Development Bank Group, the fastest growth. Foreign direct investment in sub-Saharan Africa rose 16% in 2013 to $43billion, close to a record level, according to the World Bank.
“There’s still tremendous opportunities,” said Immelt, who toured Africa in January. “There’s still huge deficits of electricity and infrastructure that we can invest in.”
Last year, GE announced one of its largest-ever power-plant orders when it signed gas-turbine deals totaling $2.7billion from a unit of Sonelgaz, Algeria’s national electricity and gas company.
Algeria is one of the biggest countries in Africa for GE investment, Immelt said.
Angola’s government announced plans in June to buy $1billion of trains and power generators from GE. The deal was part of the US’s Power Africa initiative, a privately funded plan announced last year by Obama to increase access to power in sub-Saharan Africa.
In March, GE was one of four winners of a 50 billion rand ($4.7billion) train-engine contract to supply locomotives to Transnet, South Africa’s state-owned ports and rail operator.
“The last few years oil and gas dominated our order flow,” Ireland said.
“This year transportation, which is our locomotive business, is going to be one of the bigger ones.”
GE’s Middle East and Africa region is one of just two, with the Pacific Basin, to have increased sales over the past five years, according to data compiled by Bloomberg.
GE agreed in June on a $17billion deal to acquire the gas-turbine operations, electrical-transmission businesses and other energy assets of France’s Alstom.
The US manufacturer will also benefit from the hydro business of Alstom, which Immelt called “very complementary.”
The acquisition, which GE expects to close next year, would expand the company’s energy offerings and put it in a stronger position to help develop Africa’s power grid, said Nicholas Heymann, a New York-based analyst at William Blair & Co. who rates the shares as market perform.
“They have everything A-to-Z now” in power equipment, Heymann said in an August 1 interview. “They’re really clicking on that front.”
Global capital spending by GE amounted to $51.03billion over the past four fiscal years, according to data compiled by Bloomberg.
It had $49billion in assets in the Middle East and Africa at the end of December, the data show.