IBM Opens First Lab in Africa to Push Growth on Continent

International Business Machines Corp. (IBM), the world’s biggest computer-services provider, opened a research lab in Nairobi, its first in Africa, as part of an expansion to gain customers in the continent.

IBM, based in Armonk, New York, said today in a statement that it’s setting up the unit to work with the Kenyan government on developing local solutions for water shortages and traffic congestion. The move also adds to its on-the-ground expertise to help sell products and services to companies and governments across the continent, Uyi Stewart, a researcher for IBM in New York, who worked on the deal, said in an interview.

“It gives us that innovative arm to leapfrog everybody else when doing business in the country,” Stewart said.

Chief Executive Officer Ginni Rometty, who is in Nairobi to meet with President Mwai Kibaki and other government officials today, is betting that growth markets like Russia, Brazil and Indonesia can contribute toward 30 percent of revenue by 2015, up from 22 percent last year. In Africa, IBM is present in more than 20 countries, compared with four, two years ago.

“There is big demand for increasing the level of sophistication of all levels of life in the African countries,” said Takreem El-Tohamy, IBM’s general manager for the Middle East, Africa and Pakistan, in an interview. “There is big development and big focus driven by political stability, economic stability and a big social drive from rural areas to cities.”

Develop Skills

The Nairobi research unit is IBM’s 12th worldwide and is an extension of its plan to train workers in Africa in an effort to aid economic development on the continent and increase the company’s customer base. IBM also has agreements to develop skills in African nations including Ghana and Tanzania.

IBM didn’t disclose its investment in the Nairobi lab or give projections for revenue from it. Its other research labs are in the U.S., Australia, Brazil, China, India, Ireland, Israel, Japan and Switzerland.

The company’s expansion in Africa is part of a drive to add $20 billion in revenue by 2015. That goal includes winning contracts to make cities and infrastructure more efficient through data analysis and cloud computing.

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net

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