Over the years, mobile phone manufacturers have promised to establish phone manufacturing plants in Nigeria, owing to the high growth of telecoms business in the country, but such promises have turned out to be empty. Emma Okonji looks at the challenges militating against the genuine intention of Original Equipment Manufacturers (OEMs)
No Trace of Manufacturing Plants
The Nigerian telecoms market has been adjudged the fastest growing market in the world, signing on over 94 million subscribers on its networks within a period of ten years. The market has not only created jobs for millions of Nigerians directly and indirectly, it has equally generated income for government through payment of taxes and spectrum licences.
Apart from the positive impact the market has created in the lives of subscribers, empowering them to communicate at will with persons in near and distant locations, the market has equally enhanced the business growth of Original Equipment Manufacturers (OEMs) that are involved in mobile phone manufacturing.
The boom in the telecoms sector no doubt has rubbed off on OEMs, with phone manufacturers like Nokia, Samsung, LG, to mention but a few, smiling to banks from the sales of mobile phones in the Nigerian telecoms market.
OEMs have even devised means of manufacturing several new models of phones within a space of six months, adding styles and additional features that will ever entice the Nigerian subscriber to go for the latest phones in town. The frequent release of new model phones into the Nigerian market has made Nigerian subscribers gone crazy with phones such that people are watching out for new releases of phones to buy, especially the high-end phones.
Mobile phone market is becoming so lucrative in the Nigerian telecoms market, that the market is experiencing influx of mobile phone device, both of standard and sub-standard, authorised and unauthorised, and Nigerians are busy changing phones in quick succession.
Nokia for example, sold its one billionth phone mark in the Nigerian market and it gave it the widest publicity, using the Nigerian mass media.
Since the volume of sales of mobile phone is on the increase, just as subscribers’ number is on the increase, it is quick to conclude that most of the phone manufacturers have a branch of their manufacturing plants in Nigeria, but such is not the case with the nation’s market.
Every single phone used by Nigerians is produced from outside the country and shipped into the country by businessmen or by the manufacturers, and people are asking why manufacturers like Samsung, Nokia, and LG cannot have manufacturing plants in Nigeria, where the bulk of the market is.
Reasons for the Delay
Responding as to why there is delay in setting up phone manufacturing plant in Nigeria, Head, Public Relations for LG Electronics, Mr. Paul Mba, said: “There is no policy restraining LG Electronics from establishing mobile phone manufacturing plant in Nigeria, explaining that the love of LG for Nigeria would have been enough to motivate them in doing just that, but for poor electric power and low infrastructure development.
According to Mba, “the level of infrastructure is improving and may not pose much problem, but the issue of power is so glaring that it will not allow manufacturing business to thrive in the country.”
He explained that LG Electronics had last year, came up with a scheme for the Nigerian tertiary institutions, where it awards scholarships to 400 and 500 level students of the University of Lagos and the Yaba College of Technology, with plans to absorb such students for IT training and offer them employment after the IT training. All these, he said remained part of LG’s Corporate Social Responsibility (CSR) for Nigeria, since it is obvious that certain factors were limiting plans to set up manufacturing plant in Nigeria.
For Samsung, the Head of Product Marketing, Mr. Jude Omozegie, who spoke in line with LG, said cost of labour is high in Nigeria, coupled with epileptic power supply, which he said, remained a major hindrance to the establishment of phone manufacturing plant in the country.
Communications Manager for Nokia, Mr. Osagie Ogunbor, said the decision to site a Nokia manufacturing plant was not taken at country level, but at a global level.
He explained that Nokia had the efficient global distribution system that allows its hones to be visible in countries, adding that the location of its manufacture plant did not really matter to the company.
President of the Association of Telecoms Companies of Nigeria (ATCON), Titi Omo-Ettu, said establishment of mobile phone manufacturing plant was an issue of demand and supply on one hand and the environment on the other. “People do not know the opportunity that abounds in the Nigerian market, but as they begin to come in, they see the huge market opportunity and their business model will change.
“Again you have to get the right environment to attract foreign investment in Nigeria. Doing business in Nigeria is expensive and that is why many businesses are moving to Ghana from Nigeria because of the stable political environment and the friendly government policies. We have to get the right policies in this country,” Omo-Ettu said.
He however advised phone manufacturers to see the huge potential in the Nigerian telecoms market and to tap into such huge potential.
Giving reasons why it will be difficult to establish manufacturing plant in Nigeria, Omo-Ettu said it would be suicidal for investors to plan a manufacturing plant on the use of standby generating plants. “The risk is even higher if the product of manufacture is precision equipment which electronic components are. Manufacturing must have a business case. It is not a patriotism matter,” he said.
What Government Must Do
Omo-Ettu called on government to fix public power system, as investors need not be lobbied because they are waiting by the borders since they know that the market is here, going by our numbers and the vibrancy of our people. “It is high time we told these officials who tell our people they are going overseas to attract investment to stop wasting our money and to stop deceiving our people. You do not go to anywhere to attract investment because what attracts investment is the environment, not discussions. Besides, it is investors who discuss with themselves. Government officials do not have anything to discuss with investors. Theirs is to make the system work at home, police our borders and defend our people and our corporate integrity,” Omo-Ettu said.
In Omo-Ettu’s view, ATCON’s solution is to keep engaging government on working towards getting a secure public power system in the country. “We shall mark them closely, stud-for-stud, dribble-for-dribble, where we see them going in the wrong direction as we are doing now. And if by end of 2013 they do not provide acceptable level of electricity for our industry, we shall sue Federal Government to court to press for damages for destroying our investments. It is good to alert them now.
“Enough is enough. They will be culpable because we have provided them with alternative advice of a roadmap.
Any person who is part of the decision to allow an aspiring Minister of Power who said he needs three years of four years tenure to fix our electricity to still be that Minister is culpable. And we shall prove that in Court.”
Sale of Unauthorised NCC Typed Approved Phones
Although Nigeria is yet to boast of any phone manufacturing plant, there are several brands of phones that flood the telecoms market. Some are NCC Typed Approved phone, while others were smuggled into the country.
Given the consequence of allowing phones that are not NCC Typed approved into the market, NCC said such phones have adverse effect on the network, thus giving room for poor quality of service to persist.
Worried by the situation, NCC has commenced action to raid phone manufacturers who out of cheap labour, manufacture sub-standard phones from their manufacturing plants outside Nigeria and smuggle loads of such phones into the Nigerian market.
The Enforcement Unit (EU) of the Nigerian Communications Commission (NCC) recently sealed the shops, offices and warehouses of two mobile phone dealers for distributing and selling mobile phones that were not ‘NCC Typed Approved’.
The phone dealers, Ken Xin Da Mobile and G-Tide Mobile, located in Computer Village in Ikeja, Lagos, were selling mobile phones in wholesale and retail for the past six months, smuggling brand new phones into the country- phones that did not pass through NCC’s technical test and were not approved by NCC for the Nigerian network.
Addressing journalists shortly after the raid, Head of Enforcement for NCC, Mr. Efosa Idehen, said the commission had on September 14, 2011, written the two mobile phone dealers, inviting them to a meeting with the NCC, and made follow up calls, reminding them of the implications of the type of business they were into, but none of them responded.
He said enough time was given to them to address the issue, but that they deliberately refused to listen to NCC.
Head, Media and Public Relations for NCC, Mr. Reuben Muoka, said NCC had a list of seven defaulters in Lagos, but noted that the commission was carrying out the enforcement gradually.
According to Muoka, the dealers, most times, smuggle substandard phones into the country and sell them at cheaper rates.
He pointed out that such phones constitute nuisance to the network operators and to the subscribers. He said such phones do not only affect the telecoms’ networks and cause poor quality of service, but equally cause burning sensation on the ears of subscribers when the phones are used for few minutes call.
He advised other dealers of mobile phones and telecoms’ equipment to subject all equipment and mobile phones to NCC’s test and get certificate of ‘Typed Approved’ phones, before selling them in Nigeria.