Rachel Keeler speaks to Deo Onyango, GE’s Director for Commercial Development East Africa, about the company’s investment and CSR plans for the region.
What is GE’s overarching strategy for East Africa?
Let me start with the question: Why Kenya? Kenya is a hub for growth in East and Central Africa. Also, the infrastructure development plans in Kenya are aligned to the type of long-term sustainable technology that GE has. Our main areas of interest are going to be energy, water, health care, security, transportation, and aviation. However, most of what GE does applies to the infrastructure deficiency in East Africa. There is also enough knowledge and experience within the company that we can draw upon to meet various unique infrastructure challenges. And that is why our strategy in East Africa is three-pronged: We’re looking at identifying unique solutions for specific infrastructure deficiencies; providing sustainable technology; and lastly leveraging the company’s global reach to access financing.
Can you highlight how some of GE’s core areas of interest apply to the East African region?
Energy: Energy is important in order to meet Kenya’s Vision 2030 in addition to the new resource [oil and gas] discoveries in Uganda and Tanzania. We believe Kenya can and should be a center of excellence for renewable energy for the whole of Africa. It has huge potential for geothermal energy; the Rift Valley provides a very strong wind corridor and the country has some of the highest solar ratios. Being a largely agrarian region, there is also plenty of biowaste that can be turned into energy. GE is number one, I dare say, in providing technology for this purpose through Jenbacher engines that turn biogas into electricity.
We think with this technology it is possible to create more efficiencies around agricultural production, which accounts for 32% of East Africa’s aggregate GDP. Creating energy efficiency at that scale would also make it possible to support development in other areas of the economy.
Water: East Africa’s coastline provides opportunities for a desalination plant. A good example of this is the city of Algiers, where a GE-led plant at the moment supplies nearly 2m residents with a reliable and drought-proof source of fresh water. Now that’s a significant investment, but through the same reverse osmosis membrane technology used in the desalination plant, there is potential to supply all of East Africa’s coastal cities and hinterlands with fresh water.
In inland cities like Nairobi, Kampala, and Arusha, we are looking at the reuse and recycling of water resources. Part of GE’s Ecomagination objective is to use our technology to reduce global water use by 20% over a period of time.
Health Care: In East Africa, you have the problem of reactive health, where people wait until they’re sick before they seek medical support. Having pioneered diagnostics and imaging health infrastructure at GE, our push is for a paradigm shift toward an early health model focusing on early diagnosis, intervention, and prevention. This will require the revitalization of health infrastructure across East Africa. So we are looking to provide our technology solutions from the bottom up: from clinics, to dispensaries, to district hospitals and provincial hospitals.
On the CSR side, through our “Developing Health Globally” programme, we have focused on rural health and referral hospitals. In Kenya, at the Nyanza hospital, we have been able to install a CT scanner that will serve over 1m people annually. At the Jinja Referral hospital in Uganda, we have put in a completely new fully equipped ICU unit and also a fully equipped HDU recovery area.
What kind of financing solutions does GE bring to infrastructure projects in East Africa?
Using GE’s name, our history of integrity, and our project finance and development experience, we are able to bring together partners who are willing to work with us to solve the infrastructure deficiencies that we have in this region.
In Africa, most infrastructure development opportunities are greenfield projects, which tend to require a number of different entities to influence the completion of the project. Our goal is to structure bankable projects and maximize the interest of multilateral institutions like IFC, DFIs, and EXIM banks which by nature reduce the risk of a project. That in turn encourages greater interest from local and international commercial financing institutions or emerging market private equity investors.
In addition to bringing together financing partners, GE also works to bring together the kind of minds, engineers, procurement and construction companies that will ensure that we are delivering a total solution as well as transferring knowledge. We believe that at the end of the day, we want an engineering and procurement company (EPC) that is local. This EPC partner would have full access to GE training and expertise, and would get access to a whole lot of GE support, continuously, for the life of that infrastructure solution.
Many people question how committed the Kenyan government is to cutting out corruption and pursuing efficient infrastructure development programmes. How does GE assess political risk in Kenya, and how does the company approach working as a partner with the government?
Beyond what is known about the country, and whatever viewpoints there are about corruption, GE would stand by its integrity. And by integrity I also mean ensuring we provide the best technology and sustainable solutions for the country. To that extent, we do strongly believe it is possible to do business in this environment and not be affected by other externalities due to the significant need for sustainable infrastructure technology here.
We applaud Vision 2030 as a master plan that shows exactly where this country wants to go. That makes it easier for us to align ourselves and our technology with specific elements of the vision and pursue partnerships that develop the capacity within the government to drive the achievement of this vision.
At the African Cities of the 21st Century forum held in Nairobi on 14 October 2009, there was a consensus among participants that there is a strong need from the Nairobi City Council and Ministry for Nairobi Metropolitan Development for communication and advocacy about what they were doing from their side. There is a significant amount of development and movement happening towards Vision 2030. At the forum, we had Nairobi Water people who talked about their plans with regards to water reuse, and also waste and sewage treatment, which is a significant area for us in terms of technology. These discussions may be at the policy and planning level now, but there are strong indications that the government is willing to act on its plans.
And at the same time, GE is available to provide guidance, visually, in terms of what we have done around the world – for example with waste treatment in Durban, or with desalination in Algiers -, so that stakeholders in Kenya and throughout the region can see what is possible.
How can GE help introduce a more standardised approach to public-private partnerships for infrastructure projects in East Africa?
If we look at how to structure any one of these projects, GE will be bringing in engineering procurement companies, we will be providing overall consulting, and also providing the technology, and at the same time we will be leveraging our expertise to attract funding. That is pretty much the same kind of PPP template that you would find anywhere across the world. So it is within our realm to support governments in Kenya and East Africa to ensure that they end up having that standard approach. The key element though is always willingness, and being able to identify what exactly the deficiency is, and therefore who are the right partners to help provide solutions.
Where do you see the most business coming in for GE in East Africa in the near term?
In terms of where would be the best place to tap into and get the best revenue for example, we do not have that kind of focus. We started in Kenya in 2005, when we identified Kenya as a key platform to develop our business in East Africa. That was simply because of the way Kenya is positioned as a trade hub for the whole region. We look at East Africa as a region, and we are looking to work with all of East Africa.
At the African Cities forum in Nairobi, we focused on four main areas, which are energy, water, health care and security. Now those without a doubt will be the key areas where we can actually do a lot of things. In each one of the countries in East Africa – whether it is Rwanda, Burundi, Ethiopia, Kenya, or Tanzania -, we will always be able to touch on those four areas. It is very hard to say which is better than the other. It is easier for us to talk about it in terms of the holistic infrastructure solutions that we can provide for this region’s overall economic growth.
What is GE’s approach to making new technologies and renewable energy projects affordable in East Africa?
One of the initiatives that we have across all of our technologies is affordable modernisation: how to make all of the different technologies that we have more affordable and modernise them in a way that befits the environment that they are operating in. In Africa, we are using Ghana as our main test country for different types of affordable technologies.
With regard to renewable energy, the Kenya government through the Ministry of Energy has put together very clear feed in tariffs with obvious considerations for affordability, penetration, incentives and economic sustainability of investors. This provides a good starting point to ensure affordability and makes renewable energy projects attractive for investors and infrastructure development companies such as GE throughout the East African region.
Does GE plan to look at smaller scale projects that might involve working with SMEs in East Africa?
Sure – a good example is our security solutions. In 2008, we opened the first security dealer franchise shop in Africa, through a partnership with an SME in Nairobi: Unisafe Ltd. We also had a forum in May for renewable energy where we showcased our Jenbacher biogas solutions. We had individuals who owned small businesses and others there who were very interested in the technology and wanted to partner with GE. So yes, there are opportunities to work with SMEs.
But clearly, if you are looking at the scale of infrastructure deficiency in the region, you’re going to have to question – where do you apply yourself? Do you try to apply yourself to the whole strata of the economy, or can you create that basic level of infrastructure that would allow SMEs to thrive? And I think where we apply ourselves is really providing that strong basis of sustainable infrastructure across the whole country and the whole region that will allow SMEs to thrive in the future.