NewsWest AfricaGovernments need a big dose of simplification - Jeff Immelt


Posted on Monday, 27 April 2015 12:55

Governments need a big dose of simplification - Jeff Immelt

By Tolu Ogunlesi in Accra

Jeff Immelt, Chief executive officer, General Electric. Photo©Eric Baudet/Divergence-Images.ComGE's planned $1bn investment to make Nigeria a manufacturing, service and innovation hub has started with its Calabar plant. But governments must cut the red tape, says CEO, Jeff Immelt.

When Jeff Immelt took over as chairman and chief executive officer of General Electric (GE) in September 2001, four days before the 11 September attacks, Africa was–as he put it in his 2013 annual letter to shareholders – "off the radar".

Whether it was China or India or Europe or Japan or Mexico or Latin America, I never knew anything until I got off my ass and actually went there

The company was present, no doubt – it has been operating in Nigeria for more than 40 years – but it managed to carry out its business without putting down roots.

Things started to change around 2008.

"I began to see that we would never be able to develop Africa fully unless we committed more to localisation," the chief executive said in an interview in GE's office in Accra.

"Whether it was China or India or Europe or Japan or Mexico or Latin America, I never knew anything until I got off my ass and actually went there.

"And we as a company never knew anything until we actually had people on the ground. From far away, you see risks that don't exist and you never see the opportunity that's right there."

Immelt's travels in Africa have shown him what GE can do.

"I was in South Africa on Sunday and Monday, got [to Ghana] yesterday. I opened up the newspaper in South Africa: emergency power shortage. I come to Ghana. I open up the paper: emergency power shortage," he says.

"In the end, these countries need what we have, and are going to continue to need what we have, so we just have to position ourselves so that when all the stars align, we'll be there positioned to supply that."

It is this premise – of a continent of huge infrastructure gaps yet buoyed by the "three very powerful forces" of improving standards of governance, plentiful natural resources and rising individual wealth – that underlines Immelt's Africa vision.

The company, a conglomerate that manufactures train engines, turbines and home appliances, earned $5.2bn from its Africa operations in 2013 – a tiny fraction of the more than $150bn the company records in annual revenue.

This is still impressive considering the negligible figures from the turn of the 21st century.

Between 2011 and 2014, GE doubled its Africa business, doubled its employee numbers to about 2,000 and plans another doubling over the next few years.

Immelt sums up the continent's risk-reward profile as "volatility on an upward trajectory".

Being confident of the potential Africa offers means having a clear idea not just of what GE will do, but what it will not.

Regarding the possibility of bringing GE Capital into the picture, Immelt says: "I don't think so. I think in financial services there will be other people that do that in Africa."

The long view

Can a corporation the size of GE view Africa in any other terms than what it can contribute to the bottom line?

Immelt puts up a vigorous defence of GE.

"I think there's a philosophy that we have, which is that a true global company doesn't just sell things, they build capability. You have to know how to make money in a country and for a country. We know how to do both."

He adds that the company's ongoing construction project in Calabar, in Nigeria's Niger Delta region, is testament to that.

"When you look at Calabar, it's really about making a commitment to Nigeria, being a local partner, being there for the long term."

On a January 2013 visit to Abuja, Immelt signed a memorandum of understanding with Nigeria's trade ministry for a planned investment of $1bn by GE over five years to make Nigeria a "hub for manufacturing, service and innovation".

Jay Ireland, GE's Africa chief executive, outlines the "multiplier factor" that the company envisions the Calabar project will bring to the domestic economy as follows: "The key thing we're focusing on in Nigeria for one is building up the supply chain.

3In most developed markets, every GE job translates to eight supply chain jobs. We're lucky if we're getting one to one here. In Calabar, we've qualified about 28 local suppliers. We've done the same thing in South Africa. We're in the process of looking at the same thing [in Ghana]."

Local partners

In December 2014, GE signed a deal with construction firm Julius Berger Nigeria to build the Calabar plant.

The company is also working on the GE Garages project in partnership with Dangote Group.

A GE Garage is an engineering and innovation outpost that the company runs with local partners.

Immelt describes it as "an outreach to SMEs [small and medium-sized enterprises] to see how we can build skills".

Having done business in Africa for several years, Immelt says that governments on the continent "need a big dose of simplification", and that this is the only debt they owe the private sector.

"Nobody in business should ask for a special advantage, but things shouldn't be so hard – to build a power plant, a factory or a rail line or a school.

"Every government should look at itself in the mirror, including the United States, by the way, and say am I really easy to do business with, am I really solving the problems for my society?" ●

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