BUSINESS DAY TV: Siemens aims to power up some of Africa’s economies
Joe Kaeser, CEO of Siemens, speaks to Business Day TV about the business opportunity in Africa’s electrification the intro
BUSINESS DAY TV: Siemens has announced that it has signed an agreement with Uganda and Sudan to support development in the areas of power supply, industry, transport and healthcare. Joining me to discuss the details is Joe Kaeser, the CEO of Siemens.
Joe … so walk us through the rationale between selecting Uganda and Sudan specifically.
JOE KAESER: It could have been any other African country, honestly. We are really taking another immense step to actually help the other countries who want to rebuild their economy and also society. And what we typically do in the beginning is we need to make sure they have reliable affordable and sustainable energy. It gets pretty dark at night if there is no electrical power, which is the baseline of any economic development. And then you’ve got to look into the infrastructure.
How you can most efficiently move people and goods especially in the agricultural environments such as in Africa for the most part where you need to bring the groceries very quickly to the consumers, because otherwise they’re rotting, and there’s a lot of inflation from the agricultural sector, which is no good for the economy. So very important as a second step.
And then you basically start industrialising and localising manufacturing, and that’s how you build economies up to a very meaningful and efficient ecosystem. And of course all this matters because the more people you have, the more demand there is and so therefore these have been the focus points we are working together in the form of a partnership to help them rebuild their economies.
BDTV: So what does the deal include exactly? Is it skills development, is it infrastructure support, are you supplying equipment? What do they get out of it?
JK: We are actually supplying electrical power, generate it and literally bring it to the people so that we make sure that we not only efficiently produce power, but also transport and distribute it in an efficient way so that there are no power losses along the way. So that’s in essence what it is. Of course we also deliver mobility, automation making sure the trains and the locomotives are going well and are being efficiently managed.
And then in order to make this a big success there have to be qualified people running those operations, so we have been offering support in vocational training in order that we can help young people get educated and trained so that they can do the job along the way.
BDTV: So you’re obviously very bullish on Africa and the potential that you’re seeing here. What kind of impact will it have on your order intake perhaps?
JK: First, I’m not the type of guy, although I have a financial background and used to be a chief financial officer for a long time, I’m the type of entrepreneur who looks at the numbers first and then looks for things to be done. If you really look at the whole world today, the African continent has almost 1-billion people and is growing very fast, a lot of very young people. The African continent is one of those areas which might be forced to participate in the global migration, it’s about when climate change happens, there just happens to not be a future for people.
If they don’t feel like there’s a future, if they don’t have the will and the wish that there will be a better life than being at home, they start migrating to someplace else for a better life, into the Middle East, into Europe and elsewhere and mostly when they come back they’ll say, "oh dear, if I had all that I would have stayed home". So we need to help them to get this vision and this will to create a better future by actively participating in building the country.
And so this is about, what does it take to build it, how can we help, also not just to make money. Of course, we need to make money but also how can we develop society? Because it’s very important for the long-term aspects of managing a company in a global way, in a sustainable way. And that’s the intent that we have.
We know that through power generation, we can transport power literally to the people through the grid network that we have, mobility systems, all sorts of trains from urban transport to if they can even take metros, whatever it takes, we can do that. We can localise manufacturing so that people also have value added in the country. There is a lot that we can do.
So now we need to interact with governments and ask what is it as the government that you want to do for your people, how do you want to develop your country and then we’ll see exactly how we can contribute to that so that always at any given point in time there is a mutual benefit to everybody. Not just say, alright, deliver, take the money and thank you for coffee and cake and run away. It’s not what you do in a responsible way.
This time could really be a time which works with a completely new starting point because the German government — Chancellor Merkel, I really have to say in an admirable way said, look we need to go and help Africa — and she was actually taking this as a Group of 20 (G-20) top priority and she will be putting that at the top of the agenda for the G-20, and that’s the reason because some countries said economic development monies or equipment to rather use it for themselves. Of course, if its terrible money but then I think every developed nation has a responsibility to help others, solidarity, caring, those are also roles, not just Germany first.
It is about creating a better world and this is what people will be remembered for, not how much money they made at the account of other nations or rather companies. So we go together this time, German companies Siemens, first and foremost because they’re building exactly what is needed first, together with the German government who will co-finance big projects. And in this co-financing of big projects we also do help small and medium enterprises, the so-called Mittelstand, which is so famous for its efficiency, to take them along and help them. One of the very great examples to illustrate that is our so-called Egypt megaprojects.
Two years ago we were negotiating with the Egyptian president about building 14GW, which is 14,000MW of power for the country. Ninety-one-million people need a lot of power and he said to me, "please help me because I want to rebuild my country", and I said "okay, we will", and so we were going through it altogether, we did a handshake, which brought in €2bn for those three power plants on pricing compared to the best prices he was paying for those power plants, which was a massive contribution, and we did it.
So we are building the three big power plants, each of them having 4,800MW, which is huge because the biggest power plants that have been built in the world — about four times a nuclear power plant so you can see what this is. By doing that we took over 163 German small and medium enterprises with us, to build these power plants.
Also we empowered and educated 70 local companies to help us do it. So what you do is you have these big projects, bring along the small and medium ones and also create a localised supply chain in the country, and that’s how you build the skills on a very precise, very concrete big project. Once you’ve got that many people — some of the German medium enterprises said "hey, we are established now in Egypt, why don’t we just stay there?" They would never have gone there because there would have been too much risk, they would not have known how to do it and so we could bring that along and educate localisation.
That’s how you develop the workforce, that’s how you also bring some process alignment to it and it’s pretty cool. And we could do that with almost any country in Africa. The reason that Uganda and Sudan were the ones where we started this type of infrastructure development … it could have been any one.
BDTV: It definitely sounds like Siemens is putting at the heart of everything they do, African solutions for Africa….