Samsung cautious on Zim

HARARE - Despite targeting a $10 billion growth in Africa by 2015, Samsung Africa Electronics (Samsung) says it will not optimally invest in Zimbabwe due to restrictive legislation which repels investment.

James Kim, Samsung’s southern Africa business strategic director, said the rising electronics giant would “love to invest more” in the country, but investment is not sustainable at the moment.

“We do have brand shops in Zimbabwe, we have expansion plans but, the political and economic instability need to be addressed to give us security as an investor,” Kim said at the Samsung Africa Forum in Cape Town where the technology giant launched its new products for the year.

“We want to engage government so that we can double our growth. If we invest huge amounts without government support we will be on the losing end, for example government needs to counter Samsung imitations through legislation so that market penetration is easy,” he said.

African countries contribute a little above five percent to the group’s bottom-line.

In countries like South Africa, where Samsung has explored full investment capacity, its footprint is evident in gross domestic product improvements.

While a trading group investment in Zimbabwe is not sustainable at the moment, Kim said “as soon as the government puts in place measures which protect our interests as the investor, we will set up more units.”

This comes as Zimbabwe is enforcing its indigenisation law which compels foreign-owned companies with a net asset value of at least $500 000 to cede 51 percent shareholding to locals.

The empowerment law – which has dampened foreign investment into the country – does not exempt any business.

Of late, Indigenisation minister Savior Kasukuwere has upped pressure on foreign-owned banks to comply, after indigenising mines.

At the moment, Samsung is among the most used smart phones in Zimbabwe with a market presence of approximately 48 percent.

However, the brand has been hit by imitations of the original.

Parallel importers smuggling the imitations evade tax officials and other importing regulations, thus Samsung’s quest to involve government.

“Investment should be project specific. With the help of the Zimbabwean government through laws that protect the investor we will double or even treble our investment injection in Zimbabwe,” Kim added.

Approximately 80 percent of Zimbabwe’s population is unemployed against a literacy rate of 96 percent.

Poor government regulation and policy inconsistency have been fingered as the major reasons behind foreign investors shunning the country.

Gavin Clare, Samsung Electronics Zimbabwe managing director, is optimistic that after the election process is over, investment inflow will increase significantly.

“There is potential in Zimbabwe, once there is resolve on the political situation which is wearing down the investment, growth will be realised,” Clare said.

“For a country with such resources, both human and economic, nothing will stand in the way after political stability has been achieved,” he added.

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