Source: Mnangagwa saves Samsung deal | The Financial Gazette July 7, 2016
KOREA-based telecommunications manufacturing giant Samsung’s deal to set up a television and refrigeration assembly plant in Zimbabwe nearly collapsed due to corruption and bureaucratic bungling in government, a senior civil servant has revealed.
Samsung opened the plant early this year after the country had been chosen as a licensed producer to manufacture and distribute Samsung Electronics products.
The move resulted in government reviewing downwards duty on imports of television, refrigerator and freezer components from 60 percent to 25 percent to improve the competitiveness of locally-manufactured products after a request by the new plant’s shareholders.
The plant was established in partnership with a local firm, Cranbal Investments, in November under a US$10-million deal.
But that deal had faced collapse until an official in President Robert Mugabe’s office requested the intervention of Vice President, Emmerson Mnangagwa.
Deputy secretary to the President and Cabinet, Ray Ndhlukula, revealed last week that he had sought the intervention of Mnangagwa after government bureaucrats had nearly sabotaged Samsung’s plan to set up the plant in Zimbabwe.
The revelation highlights the depth of corruption in government, and appears to confirm President Mugabe’s earlier statements that many of his lieutenants were demanding bribes to approve projects, particularly those by foreign investors.
“We had challenges with the Samsung deal,” said Ndhlukula at the Zimbabwe National Chamber of Commerce (ZNCC) congress held last week in the resort town of Victoria Falls.
“I had to intervene for them to get the papers. I personally called Vice-President Mnangagwa seeking political muscle,” he said, suggesting that sleaze had almost cost the deal.
Samsung, which started as a small export business in Taegu, Korea, has grown to become one of the world’s leading electronics companies, specialising in digital appliances and media, semi-conductors, memory, and system integration, according to information from its website.
Today, Samsung’s innovative and top quality products and processes are recognised worldwide, with the company expanding its product lines and reach.
Interestingly, the business was primarily focused on export trade, selling dried Korean fish, vegetables, and fruit to Manchuria and Beijing when it started. In little more than a decade, Samsung — which means “three stars” in Korean — would have its own flour mills and confectionery machines, its own manufacturing and sales operations, and ultimately evolve to become the modern global corporation that still bears the same name today.
It is now a multinational conglomerate headquartered in Samsung Town, Seoul.
Samsung has been making aggressive forays into Africa. The technological giant employs about 307 000 people across 84 countries.
The Samsung plant is expected to create more than 100 jobs for the people of Zimbabwe.
At the ZNCC congress, the speaker of Parliament, Jacob Mudenda, warned government officials to change their attitudes to enable the country to attract the much needed foreign direct investment (FDI).
“We have a problem of excessive bureaucracy in this country,” said Mudenda.
“The Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim-Asset) seeks to bring about results based management approaches but the cancer (bureaucracy) is still there. We need a change of mindset in this,” he said.
Zim-Asset is the government’s current economic blueprint. Mudenda also expressed concerns over delays in automating the Zimbabwe Investment Authority’s One Stop Shop Investment Centre (OSSIC).
OSSIC is expected to increase efficiency on investors’ application processing and communication with government departments.
It will bring under one roof a number of key institutions that include the Deeds Office, the Reserve Bank of Zimbabwe, the Ministry of Mines, power utility ZESA, Environmental Management Authority, local government and the immigration department, to expedite the processing of investment permits and other approvals.
In 2010, Zimbabwe set up a one-stop -shop at the Zimbabwe Investment Authority to improve the speed at which investments are handled.
However, the system is not fully operational as government departments have only seconded officers to OSSIC who do not have decision making powers to issue licences.
“In August last year, the President announced that by end of December 2015, the One Stop Shop Investment centre must be there (automated). But where is it?” he asked.
“This is the gateway to investment in Zimbabwe. Without it how do you promote investment? Our bureaucracy needs to be more pro-active.”
The implementation of the strategy remained in limbo for nearly three years with little progress and it has missed numerous deadlines.