January 31, 2013 / 4:56 PM / 5 years ago

RPT-UPDATE 1-Nigeria says signs $1 bln MoU with GE for factory

* Nigeria trying to diversify beyond crude oil exports

* Africa’s no.2 economy has huge infrastructure challenges

By Camillus Eboh

ABUJA, Jan 31 (Reuters) - Nigeria signed a memorandum of understanding with General Electric on Thursday for $1 billion in investment over the next five years into a factory in the southeast, the trade ministry said.

The government of Africa’s top energy producer is keen to try to diversify its economy away from oil and gas and into sectors like manufacturing.

GE has been increasing its exposure to Nigeria, Africa’s second biggest economy, which is growing at around 7 percent, but faces major infrastructure bottlenecks.

The company signed an MoU with Nigeria in March to help beef up the West African country’s woefully inadequate power grid.

Yemi Kolapo, special assistant to trade minister Olusegun Aganga, said in a statement the initial investment would be $250 million, followed by incremental spending of at least $1 billion in the following years.

“The deal ... is expected to create 2,300 jobs and make Nigeria the regional hub for GE’s manufacturing service and innovation in Africa,” he quoted CEO Jeff Immelt as saying after signing the deal.

“The days for exporting raw materials and jobs are gone. This is a new Nigeria, and a new Africa.”

The factory will be built in a free trade zone in Calabar, in Nigeria’s oil-producing southeastern Niger Delta. The statement did not say what it would manufacture, but GE’s main interest in Nigeria is in the electricity sector.

Nigeria aims to develop 10 gigawatts of additional electricity-generating capacity over the next decade, but it is estimated to need $100 billion of investment in the next decade.

A lot of MoUs are signed with Nigerian authorities that go nowhere, but the trade ministry was confident.

“This investment will support our industrial revolution plan,” Aganga was quoted as saying.

“No nation ... has moved from being a poor nation to a rich one by exporting raw materials without a strong industrial base. Nigeria has the raw materials and market to become not just number one in Africa but among the top 10 globally.”

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