Multinationals now turning Nairobi into hub for Africa

Nairobi is fast becoming the Africa home of choice for multinational companies.

Some of the multinationals that have recently set up shop in Nairobi include General Electric, Google, IBM, Visa International, Pepsi, Nestle, Foton Automobiles, World Bank’s International Finance Corporation (IFC) and South Africa’s FirstRand Bank.

The IFC’s office in Nairobi has been elevated to a regional hub that will serve 26 countries in Eastern and Southern Africa, according to the regional director, Jean Philippe Prosper.

“IFC’s choice of Kenya highlights our commitment to the region,” Mr Prosper said.

US-based General Electric Company, the world’s leading producer of large and small jet engines for commercial and military aircraft, has announced plans to move its Africa corporate headquarters from South Africa to Nairobi.

Pepsi-Cola, the world’s second largest food and beverage company, has also announced plans to build a Sh2.4 billion manufacturing plant at Nairobi’s Ruaraka area to serve the region.

Other companies taking on the cue to set up shop in Nairobi include Nestlé and Dow Chemicals.

Pfizer, the US-based pharmaceutical company, and Posterscope, an outdoor advertising firm, have unveiled plans to establish Nairobi as their regional hub.

President Kibaki affirmed this when he recently commissioned the opening of an information technology research lab mooted by the Kenyan Government and IT solutions provider IBM.

“This is a timely establishment that reflects Kenya’s path to being a middle status country in the near future and Nairobi’s ability to develop, attract and retain multinational businesses for the continent as a whole,” said President Kibaki.

Wolfgang Fengler, the World Bank’s lead economist for the country, says Kenya has in the last decade continued to attract multinational companies, thanks to an expanding population of working age, access to the sea and the hinterland, a developing education system and better macroeconomic policies.

General Electric Company formerly ran two corporate offices in Africa – one in Cairo, Egypt, and another in Johannesburg. Both offices will now be downgraded to operational hubs with Nairobi as head office.

GE President Yibrah Tesfaghi said that Nairobi will now be responsible for corporate-level decisions for the company’s African business and will spearhead the company’s hunt for new businesses on the continent.

Mr Tesfaghi said Nairobi was increasingly becoming a business hub due to its developed telecommunications infrastructure and airport services.

Three years

The past three years have seen other global heavyweights in the service industry such as Google, PwC, advertising agency WPP, Bharti Airtel, Huawei and Procter & Gamble among others announce plans to make Nairobi their headquarters for Africa.

Unlike in manufacturing – where cheap power, water and raw materials are key for business – the global services industry thrives on extensive and reliable airline connections, a comfortable but affordable location, fast Internet connection and a deep pool of skilled talent which Nairobi can provide.

FirstRand is now the fourth bank from South Africa to open offices in Nairobi in the past four years.

The bank’s head of Africa operations Jabu Khethe said they believe there was a gateway of business that exists between India and Africa coming through Kenya.

The services industry needs fast Internet connectivity. This has seen Visa, the global payments company, opening a new regional office in Nairobi.

Visa Group President of Asia Pacific, Central Europe, Middle East and Africa Elizabeth Buse says the hub will serve as a platform to coordinate its financial services to clients in the region.

Visa’s Nairobi office is expected to serve 20 countries in sub-Saharan Africa.

Multinational firms like Google are also finding it easier to recruit in Nairobi where they say there is a deep and broad pool of talent from banking to technology.

Get talent

“It seemed to be the easiest place to get the talent that we needed,” said Joe Mucheru, Google head for sub-Saharan Africa, on why the technology company first set up in Kenya before spreading to other sub-Saharan countries.

The formation of a Common Market in East Africa is helping create a strong internal market with a population of 130 million and a middle class estimated at 30 million consumers.

Multinational auto firms have also established assembly plants in Kenya’s capital city.

China’s state-owned manufacturer Foton Motors has opened an office, joining Toyota East Africa and India’s Tata to unveil such assemblies.

Ministry of Information and Communications Permanent Secretary Bitange Ndemo last week said that deliberations were under way that will see the rolling out of 4G network across all the 47 counties.