Why Nokia, Samsung, LG can’t manufacture handsets in Nigeria

• Unfavourable business environment
Ben Uzor Jr


Nigeria’s poor business environment, manifest by absence of proper intellectual property (IP) protection controls and dearth of public infrastructure, remains the critical drawback discouraging foreign investments in the area of establishing mobile phone factories in the country, global handset makers have said. If Nigeria does not swiftly address these impediments to enterprise growth and development, phone makers such as Samsung, LG and Nokia have warned, investments in mobile phone factories will remain an illusion, inspite of the country’s enormous mobile device market.

This is coming on the heels of a recent proclamation by the minister of Communication Technology, Omobola Johnson, at a presidential retreat with the private sector recently, that Nigeria’s competitive telecommunications landscape and its attendant potentials were enough incentive for global phone manufacturers and SIM (Subscriber Information Module) card manufacturers, to set up factories in the country. Prospective financiers and investors, according the phone makers, are more often than not, apprehensive that their investments could be negated by these barriers.

The delicate process of making phones, especially smart phones, they say, requires a high degree of technological advancement, which Nigeria currently lacks. “Assembling of phones is a delicate industry and smart phone manufacturing is even more delicate. “In my opinion, countries that lack requisite labour laws, IP protection controls, basic infrastructure such electricity, and have a high operational costs, are least considered when decisions are being made, with regard to investments in local factories”, Fady Khatib, regional director, hand held phones; Samsung West Africa, told Business Day in an interview.

Lanre Ajayi, past president, Nigerian Internet Group (NIG) agrees with Khatib that poor business environment remains a fundamental challenge hindering investment, not just in the telecoms markets but in other sectors of the economy. “In countries like China, Thailand, governments of these countries build industrial and technology parks with requisite infrastructure such as power, broadband internet etc. All an investor needs to do, is come with a good idea and technology and start business. They have a one stop shop, where issues relating to land use, registering the business are all addressed.

“If an investor sees a country with this type of business environment, do you think that investor will want to come to Nigeria? Our government must strive to create a conducive business environment that would be attractive to investors. I support the minister’s call for these phone firms to invest in factories in Nigeria, going by the enormous profits they make here. They should be able to plough back some of their profits into the country. This market is huge and if they set up plants here, chances are that they will make more revenue. The government is working tirelessly to address these challenges.

“Our government needs to find ways of making the country attractive to foreign investors, such as granting tax rebates and so on”, Ajayi said in an interview with Business Day. Osagie Ogunbor, communications manager for Nokia West Africa told Business Day yesterday that such decisions (establishment of phone factories) are taken as a matter of business expediency. “I believe that phone makers can still grow the Nigerian economy without establishing a phone factory here. We are employing many Nigerians directly and indirectly. We have a platform that encourages indigenous applications developers.”