With General Electric now playing a major role in the advancement of Nigeria’s Industrial sector and the overall economy, Crusoe Osagie writes that the United States now appears ready to contend with nations like China and India in reaping the attractive returns in Nigeria’s difficult operating environment
Apart from the major oil companies Mobil and Chevron and all the ancillary businesses these two oil and gas giants have brought to Nigeria, large corporations of United States origin have not been known to pitch their tents in this country.
This is not to say that large US corporations do not do business in Nigeria. Microsoft, Apple, Google, Intel, Coca Cola, Procter and Gamble, among others, all have their bases in Nigeria but only to the extent that it would allow them trade.
Apart from Procter and Gamble, which runs a factory in Ibadan, Oyo State, the others pretty much just set up administrative offices in Lagos and coordinate sales and marketing activities remotely for their companies from there.
But elementary economics teaches us that no nation actually transforms industrially when all it gets from advanced economies are trading outlets. Before technology can be transferred, large corporations from great nations liken the United States of America and Britain must have roots on the ground.
They must set up high-tech manufacturing plants operated in conjunction with local engineers and transfer knowledge. They must have beyond virtual presence in the country; they must risk something, actually.
This understanding is what has made the renewed presence of US technology giant General Electric’s fresh investment in the Nigerian economy quite novel. With the kind of investment now being injected by the company, it is clear that GE and indeed the entire United States, belief in the future and survival of the Nigerian state and its economy.
GE has been in Nigeria for many decades and over the course of these decades, the company has built a very large platform that covers all sectors of GE businesses across the globe – Oil and Gas, Power and Water, Energy Management, Aviation, Healthcare, Transportation, GE Capital and Home & Business Solutions.
GE businesses in Nigeria represent the biggest GE platform on the continent of Africa where about one third of the entire GE Africa business comes out of Nigeria. In the past two years, the company has renewed focus in Nigeria with businesses spanning across major infrastructure sectors.
GE footprint in Nigeria consists of about 400 employees with offices in Lagos and Abuja; it also has service facilities in Port-Harcourt and Onne and currently serves over 100 public and private sector customers and partners in Nigeria.
To demonstrate its commitment to Vision 20:2020 GE in 2012 expanded its landmark country-to-company agreement with the federal government of Nigeria by signing investment MoUs for project development in power, healthcare, and transportation sectors of the economy essentially to expand local capabilities and stimulate a total infrastructure overhaul.
The Calabar Manufacturing Plant is GE’s $1 billion investment in a service and manufacturing facility in Calabar, Cross River State, Nigeria. This is its biggest investment in sub-Saharan Africa till date, and only the second of its kind in the world.
This $1 billion investment is over the next five years and it is aimed at strengthening the firm’s local presence with the new service and manufacturing facility, as well as an additional investment in its service workshops at Port Harcourt and Onne, Rivers State.
The company’s investment plan include a $250 million capital expenditure that will make Nigeria a regional hub for manufacturing, service, and innovation with an improved ability to support a broader range of product lines in power generation as well as oil and gas exploration and production. The company will also spend an additional $800 million over the next 5 years in local sourcing of goods/ services, labour, staff welfare and training.
The planned investment is expected to create 2,300 jobs, 300 of which will be direct employees and the remaining 2,000 indirect jobs created through GE suppliers that will support its expanded operations.
The manufacturing giants also plan to build a training facility on its manufacturing site to ensure on-going employee development. The company will provide one-year to four-year training programmes locally and internationally for repair engineers, welders, fabricators, machinists and special processing.
The company is collaborating with Cross River state educational and community leaders to implement curriculum, instructor development and equipment enhancements that will support the development of top notch vocational school graduates.
Nigerians will make up 90 per cent of the staff and management of the planned manufacturing facility while GE’s local supplier base is expected to increase from 10 to 100 local suppliers and this investment will significantly increase the local content of GE’s operations in Nigeria by increasing local ownership of equipment, in-country project execution expertise and use of local legal, financial and engineering services.
The company has held three supplier fairs in Lagos, Abuja and Calabar where over 80 local engineering companies were assessed. Following this assessment and verification, the first set of 10 companies whose capabilities met GE’s needs for the planned facility were brought on-boarded into the supplier development programme.
The local supplier fairs are also being supplemented with international fairs in Amsterdam, China and Houston to attract tag-along investments by GE’s global network of suppliers in Europe, Asia and the Americas, with the added benefit that these investments will accelerate skills and technology transfer through joint ventures with Nigerian companies.
GE Global Supply Chain Lead, Phil Griffith, noted “this investment will significantly increase the local content of our operations in Nigeria by increasing local ownership of equipment, in-country project execution expertise and use of local legal, financial advisory and engineering services. When this project is completed, our annual spending on these basic services that will be locally sourced is expected to increase to over $60 million.”
GE and Nigeria’s Power Sector
The company signed an MoU with the federal government to help develop an additional 10,000 Megawatts of power over the next ten years, a show of serious commitment. GE will make equity commitment as well as project development expertise to repower existing brown field facilities.
The Papalanto (Phase II) thermal power plant, incorporated into the National Integrated Power Projects (NIPP) with the Power Holding Company of Nigeria, has a current installed capacity of 335 megawatts (MW). The plant’s output is strategic to Nigeria’s national electricity grid, which targets generated output of 10,000 MW within two years and 40,000MW by 2020, as part of the Nigerian government’s drive to boost the country’s power supply.
To achieve these targets, GE Power & Water has supplied four gas turbines to Papalanto, and addressed project management and synchronisation challenges. As a prime mover-supplier on 90 per cent of new power generation sites, GE Power & Water is demonstrating its ability and track record of, harnessing skills and building capacity to address the power generation needs of Nigeria. These capabilities will be essential in strengthening continued partnerships and promoting greater investment in Nigeria.
About 60 per cent of all the installed power generating capacity in Nigeria today is GE technology, so it has a very long history of building the foundations of where the power sector industry is today and in fulfillment of the Power MoU it has partnered local companies namely- Transcorp, Geometric, Honeywell, Oats Global and Ibom through a Joint Development Agreement to bring incremental power to the national grid.
Beginning, GE entered into an agreement to support the modernisation and expansion of Nigeria’s locomotive fleet with the supply of twenty five locomotives, which are helping to drive the economy today.
Also, in partnership with the federal government and the Nigerian Sovereign Wealth Fund, the company is now in the process of confirming the feasibility of localising a locomotive assembly in Nigeria to meet the expected explosion in cross-country and cross-border freight shipment as Nigeria’s economy and regional trade continue to grow.
Such an investment will confirm Nigeria as a regional logistic hub and centre-of-excellence for rail transport technology. The Nigeria Railway Corporation (NRC) chose GE as a strategic partner in its renewed commitment to rebuilding its rail assets.
Health Care, Oil and Gas
Another example is in the Healthcare sector where GE has partnered Me Cure Healthcare Limited, in delivering healthcare infrastructure. This year, the company opened a state-of-the-art facility located in Lagos that offers diagnostic services utilising GE equipment. In Nigeria, adhering to the country’s Local Content Law that require welding to be performed exclusively in Nigeria, GE sent welders for training on specialty connectors and pipes.
Last year, a state of the art gas testing tank was built and two new 75 tonne cranes installed at the GE Oil & Gas site in Onne River states. The tank was the first of such testing facilities in the country. This investment meant a 20-strong Nigerian ‘New Generation’ technical team at Onne could start work on the first ever part assembly of high technology subsea mining equipment known as “Christmas trees”.
In recognition of these giant strides, GE Oil and Gas Subsea Systems business achieved a Nigerian Content Equipment Certificate. Valid for 12 months, the certification is only awarded to companies who demonstrate good progress in the development of manufacturing capabilities in Nigeria.