Siemens to invest €200bn in Africa by 2012 as it targets sales of €3bn

Global technology group Siemens announced on Friday that it would invest €200-million (about R2-billion) in Africa by 2012, about €100-million of which would be directed to South Africa, in a bid to create the platform for a trebling of sales on the continent over the next two years.

Speaking in Gauteng on the occasion of the 150th anniversary of the formation of Siemens in South Africa, the group's global CEO Peter Loescher said that the company was targeting to grow its African sales from the current level of €1-billion (R10-billion) to €3-billion (about R30-billion).

He indicated that particular emphasis would be given to increasing the renewable-energy sales, but that he also saw significant opportunity across the German group's core sectors, which span industry and water, energy and healthcare.

Siemens Southern Africa CEO Stuart Clarkson indicated that the investment in Southern Africa would have a strong energy dimension, but that a good portion of the capital would also be directed towards skills development.

South Africa was currently experiencing electricity shortages, which in 2008 led to a protracted period of load shedding. This precipitated the first full closure of the gold-mining industry since the Anglo Boer War, as was followed by a period of voluntary rationing by large industrial users.

The South African government is currenlty drafting a second integrated resources plan for electricity, known as the IRP2010, which should outline the anticipated power generation mix for the next 20 years - a period which South Africa could need to double its installed base to nearly 80 000 MW.

Much of this initial expansion would be driven by State power utility Eskom, which was due to announce details of its final funding plan for a R550-billion-plus capital programme during July, with coal-fired plants dominating the preliminary build phase.

However, it is widely anticipated that renewable energy, which can be deployed relatively rapidly and in modules, would feature strongly in the IRP2010, opening the way for the creation of independent power producers, some of which could deploy Siemens' wind and solar solutions.

"Africa has a huge potential for solar energy and other renewable energy. Yet 530-million Africans currently have no access to electricity. If nothing is done about that, this figure could reach 600-million in 20 years," Loescher stated, adding that the group's energy portfolio spanned the entire conversion chain, from renewable and fossil-fuel based power generation, to efficient power distribution systems.

"We were the first to bring renewable energy to South Africa. That was in the 1890s with hydroelectric power," Loescher reflected.

Clarkson noted that the company already had six manufacturing facilities in South Africa, but that, owing to the increased demand for domestic manufacture in State-linked procurement, the group was considering new manufacturing and assembly prospects.

He again emphasised renewable energy as a manufacturing prospect, but said that South and Southern African could also provide an important base for the group's transmission and distributions systems.

The group, which is also regarded as Europe's largest engineering company and conducts business in 190 countries, recently upgraded its 2010 operating profit outlook to €7,5-billion, from €6,5-billion.

Loescher said that, while he could not comment on the company's financials, owing to closed-period constraints, the company was definitely not planning its business around the prospect for a double-dip recession, as was being mooted by some commentators.

But the performance of emerging markets, including Africa, would be a key driver, with Siemens calculating that the African markets its serves would represent total volumes of nearly €30-billion a year by 2012. Its initial target, therefore, was to capture 10% of those markets.