General Electric (GE) the blue chip American infrastructure solutions provider says it has held talks with some officials of the incoming Buhari administration on how the firm can play a role in quickly plugging Nigeria’s massive infrastructure deficit, especially in the areas of power, healthcare and transportation.
“We have been in meetings with top officials of the new government on how we can align with their ambitious plans to address Nigeria’s critical infrastructure needs,” said John Rice, Vice Chairman of GE, in an interview with BusinessDay at the firm’s headquarters in Abuja, Nigeria’s capital. “We can help with foreign sources of capital and may also put some capital into projects directly. Electricity is key and Nigeria also needs a freight rail system,” Rice, said.
GE specialises in developing technology solutions for infrastructure projects in oil and gas, power generation, healthcare, transportation; rail transportation as well as aviation. Its energy infrastructure segment – a critical need for Nigeria – offers wind turbines; gas and steam turbines and generators and integrated electrical equipment and systems.
The company had revenues of about $3 billion in 2014, in Africa with the Nigeria business responsible for 25 percent of the total. Africa’s largest economy needs at least $20 billion a year, or up to $200 billion in the next ten years to finance its huge infrastructure deficit,according to the Urban Development Bank of Nigeria.
The biggest challenge for the incoming Buhari administration will be reconciling campaign promises that include the construction of 3,000km of superhighway as well as service trunks and building of up to 4,800km of modern railway lines with crude oil prices that have slumped some 50 percent in the past year.
The fall in oil prices which provides 70 percent of the states revenue has meant a squeeze in the government’s ability to fund capital expenditure, with most public construction projects cancelled or mothballed. Growth in the first quarter of 2015, slowed to about 4 percent, from on an annual basis compared with 5.9 percent a quarter earlier, as the oil sector shrunk by 8.2 percent, the National Bureau of Statistics said in a statement last week.
GE, which has about 600 employess in Nigeria is not dissuaded by the lower GDP growth rates, according to Rice. “We still see underlying demand and our project pipelines are healthy. Oil at $60 is not too bad,” Rice said. Public – Private partnerships and capital may be the way to go to build out Nigeria’s required infrastructure, as opposed to a big stimulus, according to Rice.
Nigeria would benefit from its low debt levels if it did tap international capital markets, according to Razia Khan, head of Africa economic research at Standard Chartered Plc. “From the perspective of Nigeria’s current debt ratios (c. 12% of rebased GDP), there is room to borrow, and engage in a large stimulus programme,” Khan said in an email response to BusinessDay questions.
No matter the direction the new government intends to go, GE is committed to investing in Nigeria, according to Rice. “Nigeria is too important not to invest in,” said Rice. “I think the new government also understands that the people’s expectations are quite high and are focused on delivering on that.”
