Aston Lukoye
- Safaricom has unveiled plans to set up a smartphone factory in Kenya
- This will reduce the expenses of importing smartphones
Safaricom, Kenya’s leading telecom company, has unveiled its plan to establish a smartphone assembly factory in the country, with an annual production capacity of 1.2 million to 1.4 million smartphones.
The move aligns with President William Ruto’s initiative to produce affordable gadgets in Africa.
However, Safaricom has expressed concerns over proposed taxes on mobile phones, stating that they would hinder the goal of achieving a $50 smartphone. The taxes would increase the cost of locally assembled smartphones from the target price of Ksh 6,850 to Ksh 11,500.
Safaricom aims to address the issue by focusing on import duties, excise taxes, and output Value Added Tax (VAT) to reduce costs. The company imports four million phones annually but plans to establish a local assembly line to lower expenses.
They have identified a base price of $40 for a quality phone, primarily driven by the cost of the microchip that operates the 4G network within the device. The phone assembly is estimated to cost Ksh 300, including factory profit margins.
In addition to assembly costs, Safaricom would need to bear the expenses of last-mile connectivity, amounting to Ksh 1,400, and an output VAT of Ksh 1,500. Consequently, the final price of the smartphone would be Ksh 11,500, with the manufacturer earning only Ksh 300 per unit.
Safaricom emphasized the need to address these taxes to achieve the desired cost reduction and make President Ruto’s vision of an affordable smartphone a reality.
