Bankers Association for Finance and Trade

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BAFT Africa Council2nd Africa Bank-to-Bank
ForumJune 30 July 1, 2009Nairobi Serena Hotel
Nairobi, Kenya
Driving Trade and Growth through Investment in
Infrastructure A Perspective from GE
Lazarus A. Angbazo President CEO GE Sub-Sahara
Africa
Bankers Association for Finance and Trade
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Introduction

• The financial crisis has come at a time when
  Africa was turning the corner, steadily building
  foundations for higher growth and poverty
  reduction
• Although initially decoupled from the worst of
  the financial crisis, the after shocks are now
  affecting the real sectors
• Through development partnerships and balanced
  solutions, GE is mobilizing a platform for
  renewed sustainable growth in Africa

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We are GE
a global infrastructure, finance, and media
company taking on the worlds toughest challenges.
Media
Finance
Infrastructure
Our Strategy
Leverage Strengths
Build Relationships
Drive Innovation
Be Global
Grow customer and partner relationships worldwide
Use GEs size, expertise, financial capability,
and brand
Lead with technology and content innovation
Connect locally, scale globally
No. 1 Infrastructure company in AfricaBusiness
in Africa (2008)
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• Impact of the Crisis on Africa

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The impact on GDP has lagged the financial markets
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Other key performance indicators are also
deteriorating

• Current Accounts From a comfortable overall
  current account surplus for both 2008 and 2007,
  the continent will record an overall deficit in
  2009
• Reserves FX reserves rapidly declining
• Budget Deficits Overall budget balances will
  worsen for the continent, going from a global
  budgetary surplus of in 2008 to a deficit in 2009
• Inflation persistently high for basic goods

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Consequences
Financial Crisis Impact on Sub-Saharan
Africa Many oil exporters and more financially
developed markets will be hit hard.

• Financial Sector No collapses yet but
  non-performing loans rising, liquidity tight,
  risk premia rising
• Industrial Sector Many new investments on hold
  but other still moving ahead
• Infrastructure Huge gaps between supply and
  demand remain so projects still planned
• Funding Huge funding gaps are evident in all
  sectors and threaten future growth

Investment in the upgrading modernization of
Africas fragile infrastructure is being severely
hampered by the crisis
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• GEs Strategy for Africas Infrastructure
  Challenge

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Broad portfolio of technology products, services
financing.
GE Technology Infrastructure
GE Energy Infrastructure
GE Financial Services
Healthcare
Power Generation/ TD
Commercial Finance
GE Money
Aviation
Oil Gas
Energy Financial Services
Transportation
Aviation Financial Services
Security Fire Safety
Water Waste Management
Healthcare Financial Services
Lighting
GE Equity
Mining
Electrical Distribution
GE Asset Management
Global Development Strategic Initiatives (GDSI)
Consumer Appliances
...with global execution experience
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A 3-pronged Strategy for Africas Infrastructure
projects
Solutions Identification
Development Partnership
-




With Customers
Solutions
Transactions
Infrastructure Demand in Africa
Technology Knowledge Trasfer
After Sales Support
Regional
Development
Triangle
Local EPCs / China, Others.
GE
Financing Capability

• Assist development of bankable projects

• Leverage ECAs, DFIs, Multilaterals Private
  capital

• Deploy GE Capital-Mubadala

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Development Partnership

• ABUJA, Nigeria, May 26, 2009
• GE the Federal Government of Nigeria signed a
  landmark company-to-country agreement.
• Areas of collaboration include
• railway infrastructure development
  rehabilitation
• oil and gas processing, distribution and
  transportation
• electric power generation
• water and wastewater treatment
• Healthcare
• aviation
• integrated safety and security systems

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GE Africa supporting Nigeria Vision 2020 through
Rail Restructuring
Solutions Identification
Development Partnership
-

• 25 locos in 2009, plus option for 75 in 2010-2011
• Bundled spare parts, training 14 year MS
• Accelerated delivery schedule
• Structure to customer budge and capacity

• Phased approach to massive restructuring
• Joint planning team and development process
• Building local technical, managerial and
  leadership capacity
• Leveraging GEs infrastructural competencies for
  nationwide development

Financing Capability

• Approximately 100MM (up to 600MM with option)
• 85 financing offered (EXIM-ENDS)

Not just a concept, but a true and tested strategy
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Municipal Water Supply Scheme Example PPP
Transaction
(1) Federal Capital Territory (FCT)
(4) Private Company (Concessionaire)
(3) Lending Institutions (Debt)
(2) Financial Sponsors (Equity)
Sponsor Support Agreement
Loan Agreement
Bulk Purchase Off take Agreement

• FCT Selects Concessionaire (PPP)
• Equity Investors invest in project
• Lenders provide Debt to Capital Structure
• Private Company responsible for Design/ Build/
  Equip/ Manage System/ Facility (e.g. BOT)
• FCT signs Bulk Off take Agreement with
  Concessionaire to guarantee revenue stream
• Local Governments set Tariffs and charge end
  users through Municipal System
• End Users are billed by Local Government and pay
  for water usage

(5) Federal Capital Territory
(6) Local Governments
Tariff Charges
Consortium members
(7) End Users/ Consumers
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Municipal Water Supply Scheme PPP Consortium
e.g. TBD
Engineering Procurement Construction (EPC)
Construction, Project Management, OM etc
Original Equipment Provider (OEM)
Banks and Lending Institutions
Equipment
Financing
Private Company (Concessionaire)
e.g. Local Banks, ECA Financing Sources etc
e.g. General Electric
Investment Capital
Investors and Sponsors
e.g. FCT, Development Finance Institutions etc
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• Conclusion

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Infrastructure Development Partners will need to

• Create total solutions inclusive of equipment
  supply, financing, operations and knowledge
  transfer
• Collaborate across private public sector to
  optimize resources and expertise
• Invest in project ownership, operational
  capacity building and development of execution
  expertise jointly with partners.