ICT: Why OEMs prefer manufacturing Nigeria bound products abroad

Shocking details are beginning to emerge on why several fast moving electronic devices especially smartphones and other Original Equipment Manufacturers’ (OEMs) products targeting Nigerian market are not manufactured in the country.

For example a report said while it is not necessarily of substandard status, over 90 per cent of phones sold in Nigeria are produced and imported from China.

Another fact revealed during the launch of Phantom 8 by officials of the company in Lagos on Wednesday was that the group had a mega producing factory in Ethiopia from where products coming to Nigeria and other African countries are made.

Whereas not up to five per cent of the products are consumed in Ethiopia, over 45 per cent come to Nigeria after creating jobs in Ethiopia.

On why it is so, an official of Tecno Mobile Nigeria and Deputy Marketing manager, Mr. Attai Oguche said “There are certain business decisions that are taken by directors and top stakeholders that are not meant for officials of our status”.

However, he was quick to say that setting up a production plant in Nigeria may not be out of place in near future even though the company is doing a lot in country.

Only earlier in the year, Microsoft canceled its well publisised construction of twin data centre worth about $30bn.

The company anchored its sudden decision on lack of enabling infrastructure and poor manpower in Nigeria.

Giving details of why foreign companies whose products are controlling the Nigerian market are locating their plants outside, Chairman of GSM Village, Ikeja, a phone market in Ikeja, Chief Simon Onyeka, said a lot of economic challenges force OEMs away from the economy even though Nigeria remains the market to beat in Africa.

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He revealed that “Virtually, over 90% of phones come from China- both fake and original phones. This is so, because, the cost for labour is cheap, they have their factories there. These phones are also being produced under the supervision of the original owners”.

Continuing, Onyeka argued that even though Nigeria can can be said to have cheap labour when compared to other emerging economies, “the system of government and economic environment do not favour the production of equipment like phones”.

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“Some of these impediments include: lack of good infrastructure, unstable power supply and inadequate security which are the reasons, companies such as Samsung, prefer to establish in South Africa and Ghana instead of establishing in Nigeria.

Nigeria currently holds the ace in Africa’s phone market due to its population and rising quest to become connected by everybody. As at 2014, about 167,371,945 phones were shipped to Nigeria.

According to a telecom engineer at Ikeja Computer Village, Mr. Okey Uzomba, what is discouraging OEMs from sitting plants in Nigeria include the intractable electricity, which he said many Nigerians feel that former Lagos State Governor and Minister of Power, Works and Housing, Mr. Babtunde Fashola has failed woefully in handling.

He said “Our hopes of getting near steady power was high when Fashola was named the minister in charge, but two year after, he has failed Nigerians without any form of apology”.

“Apart from power, these foreign device manufacturers are very skeptical on the prevalence of momentary policy overturn and interferences by government directives.

“Another factor is the monetary policy regimes of the country which has made it hard for a serious investor to set out and follow any form of long term investment plan without fear.

About two years ago, RLG, one of the global telephone manufacturer entered Nigeria and sited its plant in Osun State. Investigations show that the company has been finding it hard to measure up to market performance.

Analysts say inability of existing local manufacturers to breakeven can be linked to why new investors in that market segment are still elusive and far from the country.

At this point, the sad experience of Omatek Computers collapse comes to mind. The company started having issues with Bank of Industry (BoI) accessed to boost energy saving device production which failed to succeed, thus leaving the bank with on other option than to sealed up the company production premises along Oregun Road, Ikeja which was used as collateral in the loan request.

The matter got even worst when the founder and chief executive, Engineer Mrs. Florence Seriki died at the heat of the debt crisis.

However, other OEMs like Zionx had been driving the campaign for the government to promote local content so that production can grow.

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