Recently, General Electric (GE) announced the construction of a full-fledged manufacturing and assembly plant in one of Nigeria’s leading tourist cities, Calabar. Following this development, the American conglomerate has made moves to ensure that the suppliers servicing the facility have the necessary financial resources to do so; this will be achieved by a new financing agreement established with five Nigerian banks in order to provide up to $500 million for the suppliers.
This development is right in a number of ways. First, it ensures there are no drags or gaps as a result of funding. Secondly, it further underscores the commitment of GE to Africa’s largest economy. Also, it creates a huge economic chain reaction ushering in economic gains for the country and the indigenous firms that will supply the necessary building resources.
GE will use its substantial purchasing volume to underpin the banks and their financing facilities; each of which will provide a line of credit from $50 million to $100 million. The five banks include Fidelity Bank, Citibank, Zenith Bank, UBA and Ecobank. In addition, GE is working with the Nigerian Content Development Fund (a subsidiary of the NCDMB) to provide further financing options and enhancements.
CEO of GE Nigeria, Dr. Lazarus Angbazo, said the move represents a watershed in supplier financing and efforts to boost government’s local content policy in the Oil and Gas and other sectors. He also assured that the beneficiaries from the scheme will be new and established Nigerian firms. Hinting that there is more in store for such firms, he said; “with the investments in the Calabar plant, GE plans to significantly increase its supplier base from 40 local suppliers to 100 within the next five years.”
Dr. Olusegun Aganga, the country’s Minister of Industry, Trade and Investments, shared his optimism about the development and lauded the parties for their commitment to stimulating industrial growth in Nigeria. He called for even more creativity out of the Nigerian financial services industry “to bring the same range of competitive financial products for small businesses as exist across the globe.”
Going forward, GE plans to invest over $1 billion in Nigeria over a five-year period. The Calabar plant will be receiving $250 million for to cover capital expenditure, while about $800 million will be spent incrementally on local sourcing of goods, services, and labour. When complete, this would be the biggest investment undertaken by GE for the sub-Saharan African region to date.
By Emmanuel Iruobe
