Two years ago, the first U.S.-Africa Business Forum drew the attention of the world to the promise of Africa. Governments and organisations discussed and debated opportunities in infrastructure, innovation, and workforce development, and together committed more than $33 billion in deals, investments, and financing to accelerate African growth.
GE, which has operated in Africa for over 100 years, committed at the 2014 event to invest $2 billion in facility development, skills training, and sustainability initiatives across Africa by 2018. Today, ahead of the second U.S.-Africa Business Forum, GE is proud to announce significant progress against these commitments, as well as several new initiatives.
Jay Ireland, president and CEO of GE Africa, said: “Meeting Africa’s needs takes leadership and cooperation This week’s U.S.-Africa Business Forum signals the strong commitment by both African and U.S. companies and governments to collaborate for economic growth.  GE is proud to remain a steadfast partner in Africa’s sustainable growth and will continue to invest in people and infrastructure across Africa.”
Nabil Habayeb, president and CEO of GE Middle East, North Africa, and Turkey said: “Building on our decades of presence in the region, we have specifically focused on supporting North African nations to strengthen their energy, healthcare and transportation infrastructure – sectors that are mission-critical for sustained growth.

In addition to delivering advanced digital industrial technologies that enhance productivity and efficiency, our emphasis has been to create thriving innovation ecosystems and promote local capacity building. Led by the success of these initiatives, we are taking our partnerships to the next level to accelerate growth and progress.”

Building Infrastructure
Africa is home to 12 of the world’s 20 fastest-growing economies, and its manufacturing, services and technology sectors are fueling markets around the globe. Improving access to core infrastructure will equip more Africans to tap its vast potential.

1. GE’s installed base across Africa totals more than 93 gigawatts of power. We have added approximately 11 gigawatts to the grid since 2014, and 2.74 gigawatts are currently under development by GE in Power Africa projects

2.  GE has spent $15m over the past two years on projects representing roughly 2GW of power in Nigeria and Ghana. Today, we are excited to announce the signing of the PPA and related agreements for the Ghana 300 Bridge Project, which will power the equivalent of 700,000 homes in Ghana.

3. In Egypt, the government needed help to avoid outages during Ramadan in 2015.  GE delivered 2.6 gigawatts enough emergency power to supply 2.5 million homes — in 9 months, the fastest project of that size we have ever done.

4. In Algeria, GE has created 3 joint ventures across the energy spectrum.  Webroke ground in 2015 at GE Algeria Turbines (GEAT) and are preparing the site; we expect it to be operational by 2018.

5. In Nigeria, we launched a $20M Healthymagination Mother & Child initiative in 2016 with USAID, the Nigerian Federal Ministry of Health, and the National Primary Health Care Development Agency. Two million expectant Nigerian mothers are set to benefit from the program by 2020.

6. GE is supporting Kenya’s Managed Equipment Services (MES) project in line with the country’s transformation strategy. One of the largest healthcare modernization programs to date in Africa, we have so far upgraded radiology departments at 96 Ministry of Health hospitals. Early results are positive; access to radiology services improved by 50 percent across three pilot hospitals in the first five months after the new equipment was installed.

7. Through partnership agreements in Nigeria, Kenya, Ethiopia, Ghana, and Angola, we support their development agendas in power generation, healthcare, and transportation. We were even named one of Nigeria’s most strategic investors this year.

Localised Solutions

GE is working with partners in Africa to drive sustainable development and solve local challenges by investing in technology, building capital markets and developing technical skills within communities:

1. GE launched its first Africa-based innovation center in South Africa in 2016. The Africa Innovation Centre, according to GE Africa president Jay Ireland, will be a “collaborative work space” aimed at “driving innovation in Africa for Africa.”

2. The Centre, which serves as the Africa HQ for GE’s growing Healthcare business, also houses the first Healthcare Customer Experience Centre in Africa, which is designed to mimic different care areas in a hospital environment.

3. GE inaugurated the brand new $13 million GE Healthcare Skills and Training Institute, an education facility for healthcare professionals, in Kenya in 2016, as part of its MES commitment. Through the new facility, GE has committed to training over 10,000 healthcare professionals from across Kenya and East Africa by 2020.

4. The $19M supplier development fund we outlined in 2014 is operational, and 18 small- and medium-sized businesses are now receiving business and technical services.

5. In collaboration with the U.S. Africa Development Foundation and USAID, today GE continues its commitment to the “Power Africa Off-Grid Energy Challenge”. The initiative has awarded 50 grants of up to $100,000 each to local enterprises to develop and expand off-grid solutions in Ethiopia, Ghana, Kenya, Liberia, Nigeria, Tanzania, Rwanda, Uganda and Zambia.

6. In 2016, GE’s and the Miller Center for Social Entrepreneurship launched a program to train and mentor African social entrepreneurs addressing maternal and/or child health. The program selected its first cohort of 17 social entrepreneurs, who will gain support in strengthening their business models, refining business plans, reinforcing organizational development, managing talent, and learning how to scale sustainably.

7. In Egypt, GE and the Ministry of Communications and IT launched the GE Egypt Digital Innovation Challenge in September 2016. Entrepreneurs can submit digital solutions for industrial challenges in healthcare, transportation, and energy until November 30, and winners will receive a cash award of EGP 100,000, as well as an opportunity to receive training to develop their software solution on Predix.

Capacity building 

GE investing in capacity building that will ensure sustained growth by providing skills training and developing leaders through partnerships with local governments, schools, and hospitals:

1. GE employs more than ~4100 workers across 35 countries in Africa. Since the U.S.-Africa Business Forum in 2014, GE has received over $11B in orders. In 2015, GE saw $6.4B in revenue across the continent.

2. Since 2014 GE upgraded GE facilities in South Africa and Nigeria; opened new facilities in Kenya and Ghana; and launched offices in Ethiopia, Mozambique, andCote d’Ivoire.

3. In 2014, the GE Foundation announced a $20M commitment to advance maternal and child health in Africa, through the extension of programs supporting the Sustainable Development Goals to eradicate preventable maternal and infant mortality. Nearly 800 health workers have been trained so far through biomedical equipment technician and nurse anesthetist programs.

4. The GE Foundation further committed in 2015 to its Safe Surgery 2020 Initiative, a $25 million-dollar, 3-year commitment to accelerate access to safe surgery in low- and middle-income countries. The Initiative launched in Ethiopia and will expand to Tanzania next.

5. GE and the GE Foundation’s 2014 investment in Pink Ribbon Red Ribbon has trained 30 technicians in equipment repair and maintenance in Ethiopia. The program is launching a biomedical center of excellence there.

6. GE has facilitated leadership development and helped develop curricula at Regional Leadership Centres for President Obama’s Young African Leaders Initiative (YALI). GE staff members also serve as mentors to youth in the program.

7. GE expanded its GE Garages program into Kenya in 2015, collaborating with Gearbox and Seven Seas Technologies help build a skilled workforce and drive entrepreneurial development in the country.

According to the World Bank, 35 of 47 economies in sub-Saharan Africa took at least one step in making it easier to do business in their country in 2015. Rwanda implemented a credit-scoring service; Kenya launched government-run company registration services; Madagascar strengthened minority-investor protections; and Equatorial Guinea took the registration procedure for new businesses from 16+ steps down to four, and the processing time from 120+ days to 10.

As new businesses are created and developed, and oil-based economies work to diversify in the face of low oil prices, business-to-business (B2B) opportunities throughout Africa will thrive. In their report, Lions on the Move II: Realising the Potential of Africa’s Economies, McKinsey Global Institute stated an increase in the number and size of African businesses means that, “While the consumer story has generated headlines, the relatively unsung business-to-business market represents an even larger opportunity.”

McKinsey expects B2B demand to grow by US$1tr, bringing the figure to $3.5tr by 2025. African companies spent $2.6 trillion on the B2B market in 2015 – 40% of which was in South Africa and Nigeria.

“Half of that total was spent on input materials, 16% on capital goods, and the remainder on a wide range of services, including business and financial services, transportation, and information technology and telecommunications services,” according to the report.

This spending pattern is expected to continue in the coming years, with spending on services growing fastest, at 3.5% annually.

Factors Driving the Opportunity

In the report McKinsey lists three factors that are expected to drive company spending over the coming years. The first is structural changes, and has to do mainly with the formation of new businesses and intra-Africa trade.

The report predicts that as more legislation and reforms such as Equatorial Guinea’s are put into place, productivity and the opportunity to scale and access funding across Africa will increase, and in turn, so will the demand for B2B services.

Additionally, cross-border trading within trade blocs will spur local production and services, and ultimately, once again, B2B spending on the continent.

The second factor listed by McKinsey is ‘Urbanisation and business clustering’. The appearance of more and more business clusters throughout Africa is thanks to its rapid urbanisation. According to McKinsey, these clusters, “Stimulate productivity, innovation and creation of new businesses,” in turn further increasing the need for B2B spending.

The third and final factor is changes in technology. The many pros that technology brings businesses – including lower cost, automation and digitisation – could leapfrog companies in sectors such as retail and wholesale, opening up new markets.

A great example of this is the emergence of mobile money.

But this isn’t limited to retail and wholesale. McKinsey sees the increase in demand for B2B services over an extensive array of diversified markets. Sectors like construction, with its continued boom in Africa, will need more materials and various metals; manufacturers will need various machinery as the sector expands; IT companies will need electronics and hardware; and automotive businesses will need parts, for example.

Small Business a Key Sector

According to the report, “Smaller companies with annual revenues of less than $500 million account for more than 60% of Africa’s total B2B spending. In Ethiopia and Tanzania, these smaller firms generate more than 90% of B2B spending, whereas in Kenya and Nigeria, that figure is more than 80%.”

On the other end of the spectrum, in 2015 South African firms with annual revenue of more than $500 million accounted for 93% of the country’s $600 billionn B2B market. These larger companies also made up 48% and 41% of the 2015 B2B market in Algeria and Angola respectively.

Fragmented markets such as agribusiness and construction require a wide approach in terms of sales, due the extensive resources required for each to function. Additionally, small businesses constitute the majority in Africa, and function on bespoke offerings, and targeted services and sales plans according to their needs. McKinsey recorded that last year, 90% of the B2B demand in agriculture and agri-processing originated from smaller businesses.

For local and global firms looking to cash in on the B2B opportunity in Africa in the coming years, tailored offerings that address various clients across the continent are tantamount if they wish to see profitable growth.

—Justin Probyn

Annual IT spending in the Middle East and Africa (MEA) is forecast to reach $110.94 billion this year, representing year-on-year growth of 5.1%, according to the latest ‘Worldwide Semiannual IT Spending Guide: Vertical and Company Size’ from International Data Corporation (IDC).

The global technology research and advisory services firm expects the market to total $133.56 billion in 2020, expanding at a compound annual growth rate (CAGR) of 4.8% over the 2015–20 forecast period.

Overall IT spending reached $105.51 billion in 2015, with consumers accounting for just over $50 billion of the total, or 47.6%. The consumer sector exhibited strong growth over the 2012–15 period, with spending increasing at a CAGR of 19.1%; however, IDC expects that rate to slow considerably to 3.5% for 2015–20, with faltering smartphone demand largely to blame.

“The high rate of growth seen in the consumer sector over the last few years was driven by a surge in demand for smartphones, with the devices accounting for a majority share of consumer spending,” says Jebin George, a senior research analyst for industry solutions at IDC Middle East and Africa. “However, market saturation and a challenging economic climate have led to a slowdown in demand for new smartphones, a trend that is expected to continue over the coming years.”

Spending by the business sector is expected to total $57.69 billion in 2016, with IDC forecasting a five-year CAGR of 6.0% through 2020. The telecommunications ($12.88 billion), finance ($9.27 billion), government ($8.85 billion), and manufacturing ($7.13 billion) sectors will account for the largest share of spending this year.

However, the fastest-growing sector over the coming years will be healthcare, with IDC expecting IT spending by the industry to increase at a CAGR of 7.9% over the 2015–20 forecast period.

“Organisations across the region are increasingly focusing on reducing costs and driving efficiency improvements as they try to come to terms with the prevailing economic environment,” says George. “Businesses no longer see IT as a cost center, but rather as an enabler of innovation and efficiency, and this change in perspective is helping to drive IT spending growth in the region.”

In terms of size, IDC expects large businesses (more than 500 employees) to account for 56% of total business IT spending in 2016. Medium-sized businesses (100–499 employees) will contribute close to 20% of the total, while small businesses (less than 100 employees) will account for the remainder.

Hardware traditionally dominates IT market spending, and IDC expects this trend to continue with hardware accounting for 69% in 2016. However, looking forward, the growth in hardware spending is expected to be slower than for other technology categories, with IDC forecasting a CAGR of 3.3% for the 2015–20 period. Consumers and telecommunications organisations will remain the source of greatest opportunity for hardware vendors.

Spending on IT services and software is expected to be more buoyant, with IDC anticipating respective GAGRs of 7.5% and 6.4% through 2020. The strongest demand for IT solutions will come from the finance, telecommunications, and government sectors.

The ‘Worldwide Semiannual IT Spending Guide: Vertical and Company Size’ is IDC’s flagship all-in-one data product, capturing IT spending across 100+ technology categories and 53 countries. It provides a granular view of IT market spending from country, industry, company size, and technology perspectives. The comprehensive database delivered via pivot table format or IDC’s custom query tool allows users to easily extract meaningful information about various technology markets and industries by viewing data trends, relationships, and making data comparisons across more than 3 million data points.