Kenya launches smartphone factory – Nigeria stifles its own manufacturers

KENYA has opened a plant to assemble smartphones locally, but Nigerian authorities are asphyxiating their own manufacturers.

Neon Smarta and Neon Ultra will be assembled at Althi River, Machakos, Kenya, at a retail price of $50 (KES 7,500). The phone assembly plant is a joint venture between Safaricom and Faiba, including a local partner named East Africa Device Assembly Kenya Limited (EADAK). 

The new smartphone is sold at Faiba shops, and at Masoko, an online platform that sells phones and accessories.

In an event monitored by Economy Post, President of Kenya, Mr William Ruto, promised to create the enabling environment for the factory and other enterprises in Kenya to thrive.

“We are going to make sure there is a peaceful environment that supports investment. I told them before that I would make sure policies were supportive and the government would lead the way by being a market for their products. Today, that promise has been fulfilled,” he said.

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Chairman of EADAK, Mr Joshua Chepkwony said, “This assembly plant will support the government’s agenda to enhance digital inclusion in the country. We have been able to achieve affordability through a collaborative approach that comprises industry partnership and favourable government policies.”

As the event was taking place in Kenya on Monday, October 30, Nigerian manufacturers were ruining their day due a cacophony of policies that had set their sector backwards. Phone manufacturing creates a number of jobs in the value chain, which includes research and development, designing, component sourcing, assembly, quality control, packaging and shipping, as well as marketing and sales.

Kenya going Vietnam way

Kenya is, by the establishment of a local smartphone maker, going the way of Vietnam, which manufactured 210.5 million mobile phones in 2022, according to the Ministry of Industry and Trade. In 2022, Vietnam exported phones and accessories valued at over $57.9 billion, according to Statista.

A report by Tradimex said that the southeast Asian nation had exported phones worth $142.93 billion by October2023.

Kenya is eyeing the Vietnam miracle by supporting local phone production. The country plans tp export phone exports to earn foreign exchange and boost the local economy.

Nigerian manufacturers struggle

In contrast, Nigerian manufacturers are struggling. Kenya’s benchmark interest rate stood at 10.5 percent by October 2023. Its manufacturers borrow at rates between 12 and 14 percent. In Nigeria, however, the case is different.

According to the Manufacturers Association of Nigeria (MAN), the average lending rate to the manufacturing sector from commercial banks was 24 percent in the first half (H1) of 2023 as against 22 percent in the corresponding half of 2022.

Capacity Utilisation in the Nigerian manufacturing sector in the H1 of 2023 fell to to 56.5 percent from 57.9 percent recorded in the corresponding half of 2022. On the other hand, capacity utilisation in Kenyan industries is 63 percent, according to the United Nations Conference on Trade and Development (UNCTAD).

About 6428 jobs were created in the Nigerian manufacturing sector in the H1 of 2023, representing a 32.8 percent decline when compared with 9559 jobs generated in the first half of 2022, according to MAN.

There is an increase in the shutdowns in the Nigerian manufacturing sector, with more than 50 firms closing down between 2017 and 2022, according to Punch.

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Some of the firms that have closed down in 5 years are: Quick Born Industries, Surest Foam Limited, Mufex, Framan Industries, MZM Continental, Nipol Industries, Rols Industries, Moak Industries, and Stone Industries. Others are Louis Carter Limited, Sky Aluminium, Grief, Errand Products, Technoflex, Gorgeous Metal, Mother’s Pride, including the Industrial and Foam Equipment, Deli Foods, Universal RubberErrand Products, Technoflex and Universal Rubber, according to Punch.

“We shut down because the cost of raw materials tripled due to foreign exchange crisis in the country. We had no alternative than to close down,” Chief Executive Officer of Moak Industries, Mr Olatunde Akintunde, told Economy Post.

Chief Executive Officer of Kenfrancis Limited, Mr Francis Okereke, said his company shut down owing to the foreign exchange crisis in the country. He further said that his firm was hard hit by the currency crisis that revved up prices of imported raw materials.

“The dollar crisis hit us hard because most of our raw materials were imported. A lot of manufacturers are closing down and the government needs to evolve policies to support the sector. This is one sector that can solve the forex challenge, to a greater extent, and it needs an urgent government intervention,” he added.

MAN said in its H1 2023 Economic Review that, “To ensure effective implementation of the plans to support the manufacturing sector and MSMEs, the government should provide streamlined processes for accessing credit and preferential terms that are suitable for different types of businesses.”

MAN further urged the government to prioritise forex intervention for raw materials and machinery for industries while improving forex allocation to the industrial sector.

“There is a need to develop a roadmap for improved power supply, including off-grid solutions and private sector-driven independent power projects. We must promote renewable energy sources such as solar and wind while resuscitating national refineries for local fuel production,” MAN further said.

Yakubu Ibrahim
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