Samsung Electronics expects its recent stellar revenue growth in Africa to slow sharply this year as the continent begins to succumb to the delayed effects of global economic weakness.
The South Korean company has achieved African annual revenue growth of up to 60 percent in recent years through its aggressive sales push on products from phones to fridges, televisions and air conditioners.
However, Africa’s economic growth of more than 5 percent through the crisis has come largely on the back of national infrastructure programmes and the head of Samsung’s African business, George Ferreira, said that access to funding and credit remains subdued.
“Africa definitely has felt the pinch of the world; still with growth but definitely a slowdown in that growth,” Ferreira told Reuters in Johannesburg, adding that Samsung expects African revenue of around 10 percent.
Samsung is in talks to build an assembly line in Angola, Ferreira said, aiming to tap one of the continent’s burgeoning economies and add to existing assembly plants in Nigeria, Sudan, Ethiopia and Senegal and a manufacturing operation in South Africa.
Angola is sub-Saharan Africa’s second-largest oil producer and has achieved rapid economic growth since a 27-year civil war ended in 2002.
“It’s a country that’s transforming and it will be a good opportunity to do something on the lower west coast of Africa,” Ferreira said, pointing out that the plant would also serve neighbouring nations such as Namibia, Congo, and Zambia.
Mobile phones remain Samsung’s biggest money-spinner in Africa, where it has a 35 percent share of a market expected to achieve 100 million handset sales this year.
Samsung’s African workforce has more than tripled to about 1,100 people in the past four years, Ferreira said, adding that its expansion will focus on the continent’s growing consumer base as more Africans migrate to urban centres for jobs.
Management consultancy McKinsey says that Africa’s consumer spending on shopping, banking, telecoms and tourism could grow to $978 billion by 2020, from $570 billion in 2010.
“Malls are popping up everywhere and we are concentrating (our marketing) around where people gather at weekends,” Ferreira said.
Source: Reuters