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Phone Manufacturers Dump Nigerian Factory Plans by smog2500: 5:46pm On Feb 18, 2019 |
There are indications that some foreign original
equipment manufacturers of mobile phones
have abandoned their plans to establish
factories in Nigeria citing entry barriers into the
market as the problem.
Despite experiencing market acceptability for
their products and having growth prospects in
Africa ’s largest market for mobile devices , some
of them have developed cold feet towards the
establishment of the production centres in the
country .
Makers of major mobile phone brands like
Tecno , Samsung , Nokia, Motorola, and
Blackberry had in the past indicated interest in
establishing production plants and had
promised to create millions of jobs . But findings
by our correspondent showed that siting
manufacturing facilities in Nigeria was no
longer on the table for the OEMs.
Findings also revealed that the market shares
of some of the OEMs had been eroded by the
emergence of cheaper phone brands.
Statistics from Euromonitor showed that
mobile phone brands owned by Transsion
Holdings , maker of Tecno , Itel and Infinix, have
the highest market share in the country.
The 2018 report indicated that Tecno had 41
per cent market share , Itel had 25.8 per cent
market share while Infinix ranks fourth with
8 .5 per cent market share .
According to the data , Nokia ranks third in the
Nigerian market with 8.7 per cent market share
while Samsung devices are the fifth fast -selling
brand with 7 .6 per cent market share .
Contrary to the market reality of the past when
OEMs tinkered with the idea of setting up
phone manufacturing plants in Nigeria , the
possibility appeared to have become very slim
if not obliterated.
For instance , the Chief Executive Officer ,
Samsung Electronics Africa , Mr Sung Yoon ,
during a visit to Lagos last year , stated that the
company would not establish a factory in
Nigeria due to its low market share ,
infrastructural deficit and grey market in the
country .He said the company had manufacturing plants in Vietnam ,
China, South Africa and Korea, adding that
producing mobile devices required over 400
components that had to be imported .
James Rutherfoord , who was the vice -
president /managing director , Nokia West and
Central Africa at the time , had in 2013
reportedly said the idea of establishing a phone
factory in the country did not make any
economic sense , though Nigeria was its strategic
market on the continent .
“At this point in time , it is a difficult one
because most of our component suppliers, all
the people that make chips , batteries and all
the other components of the devices are not
around here. They are all in the Far East. So it’s
very difficult to create a factory very far away
from them .
“It goes beyond Nokia just waking up and
deciding to open a factory in Nigeria. We need
the whole ecosystem of people producing the
components to be very close, otherwise , we will
have products that cost higher .”
While Transsion Holdings had yet to respond to
media enquiries as of press time on Sunday , it
was gathered from reliable sources that the
company still had plans to set up a factory but
the unfavourable business environment was
delaying its plans.
Speaking on the barriers to entry into the
Nigerian market, the President , Association of
Telecommunications Operators of Nigeria, Mr
Olusola Teniola , identified some barriers to
market entry as import duties , stamp duties ,
taxes and levies that were imposed on imported
components of mobile phones .
According to him , the removal of the barriers
will encourage investment by phone
manufacturers in the country .
Teniola explained that the infiltration of
counterfeit mobile devices that offered lower
prices through the porous borders of the
country was creating unfavourable competition
for manufacturers that had to bear a lot of
costs to produce phones.
He said , “The issue of fake phones , which
represents 10 per cent of the phones that are
readily available in the market, also acts as a
barrier and a dissuader for manufacturers to
come in .
“When you have smugglers bringing in
substandard products , they can now under -
price those that have actually had to take on
the costs of running their businesses in Nigeria
plus the cost of manufacturing in Nigeria .
“You cannot go below a certain price because it
will be below your cost. So , smugglers of fake
phones come in and go below your cost because
they are not registered; they do not pay taxes
in Nigeria and they don’t pay import duties
because they smuggle their phones into the
country . So , their prices are way below . That is
a threat .
“This will kill the manufacturing industry,
especially when the government is trying to
encourage OEMs to come into the country . The
government needs to remove and give
incentives because there’ s literally a high cost
to OEMs. We need the government to assist by
giving the concessions for a period of time. We
need the Standards Organisation of Nigeria, the
Nigerian Communications Commission and the
Nigeria Customs Service to collaborate to fight
the menace of fake phones that are smuggled
across the borders of Nigeria .”
The Head, Corporate Communications , Zinox
Technologies, Mr Gideon Ayogu, acknowledged
that Nigeria had a difficult business
environment compounded by infrastructural
and institutional gaps .
According to him , local players are facing the
same challenges as foreign operators in the
industry.
He lamented inadequate government support ,
lack of incentives, delay at the ports as some of
the challenges they faced regularly.
He said , “Interestingly , the Information and
Communications Technology sector reflects a
microcosm of the challenges in the wider
Nigerian business climate . Despite the
increasingly global relevance of technology – a
development that has further been brought into
stark reality with the identity of the top five
most valuable companies in the world, all of
which are technology companies – the ICT
sector in Nigeria suffers from a glaring lack of
government ’s support .
“Crippling bottlenecks and costly delays
encountered with the importation of essential
hardware and components, the huge cost of
doing business , the near -absence of enabling
regulations and other incentives such as tax
breaks, all make it difficult for OEMs to thrive .”
He advised phone manufacturers to acquire the
knowledge of the Nigerian business
environment in order to navigate the
peculiarities of the country ’s corporate
environment and the cultural nuances of the
citizens to survive .
The National Information Technology
Development Agency had on several occasions
wooed investors at international conferences ,
telling them of the advantages that made doing
business in Nigeria attractive .
“We are interested in investors willing to
establish world -class Original Design
Manufacturing factories in Nigeria to guarantee
quality components for local assembly ,” the
Director- General, NITDA , Dr Isa Patanmi, said
while addressing investors at the 2018 Gulf
Information Technology Exhibition in Dubai . |
Re: Phone Manufacturers Dump Nigerian Factory Plans by OLUWABIG(m): 7:42pm On Feb 18, 2019 |
[url][/url] Buhari at his best again |
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