Why Siemens sees a business opportunity in Africa’s fast growing cities
Cities will play a critical role in Africa’s economic future, says Siegmar Pröbstl, CEO of Siemens Africa.
Speaking during a press conference in Durban, South Africa, Pröbstl noted that Africa’s urban centres will be responsible for around 69% of the continent’s growth between 2007 and 2025.
In 2010, Africa was the world’s least urbanised region, with only 40% of the population residing in cities. However, Africa is fast catching up, and is now the continent with the most rapid urbanisation. The African Development Bank reckons that 65% of Africans will live in cities by 2060.
“By 2025, it is estimated that the GDP per capita of cities such as Luanda and Casablanca will almost triple. In major cities such as Lagos, Cairo and Johannesburg, this figure will double,” said Pröbstl.
While urbanisation is often associated with rising incomes and better living standards, it can also have a negative impact if it is not supported by adequate infrastructure. “Unless immediate and decisive policy action is taken, rapid urbanisation could be more burden than opportunity for the region. The infrastructure requirements alone to sustain the continent’s current rate of growth are staggering,” said Pröbstl. It is estimated that Africa will need to invest US$93 billion every year to meet its infrastructure needs.
Germany-based Siemens is, however, seeing a business opportunity in helping Africa’s cities cope with the challenges of urbanisation.
Siemens’s global business was traditionally split into three broad categories – Industry, Energy and Healthcare – but the company has now added a fourth sector, namely Infrastructure & Cities. According to Pröbstl, this is a market worth $400 billion annually. “Siemens is committed to helping find solutions for the challenges cities face. We know the technology already exists today to help drive these improvements toward a sustainable existence,” he said.
Siemens has also announced plans to dramatically ramp up its African operations. It will invest $260 million to boost local manufacturing and to strengthen its sales teams on the continent. “As an integrated technology company Siemens is able to provide answers that Africa needs to tackle many of its infrastructure challenges . . . From wind turbine technologies that produce clean energy to technologies that can get electricity to the 560 million Africans who don’t have access,” said Pröbstl.