Samsung Explains Why It Cannot Build Factory in Nigeria

Samsung Explains Why It Cannot Build Factory in Nigeria

The head of Samsung Electronics Africa, Sung Yoon, has explained why Samsung cannot manufacture its products in Nigeria. Of course, there is nothing new in the exposition except that Samsung has elevated the pulpit where it came from. Samsung may be in a fierce competition with Tecno, but the truth remains that even if it is #1 in Nigeria, in the smartphone business, the company would not build any plant in our nation. For all I know, Samsung is not a charity, and smartphones made in Nigeria would be more expensive than those imported from Korea.

To make a smartphone, you need about 350-450 components; none is made in Nigeria. Why import 350 different supplies into a country when you can bring in one product?

Sung noted the grey market which is a big issue in Nigeria. He also explained the poor state of our infrastructural readiness which would be challenging for an electronics company. Of course he did not forget the big one: return on investment. You can have returns in Nigeria if you invest minimally (just do business development). But when you invest big by building factories, you could lose all. That is really his message.

I do hope government commends Sung Yoon for saying it the way it is. Traditionally, foreign companies would speak in political-correctness tones to avoid annoying our governments. They would quote 180 million citizens, praising our developmental efforts, and packaging all with fake promises.

Largely, with our size, we do not really need to invite any company to build factories in Nigeria. If the market efficiency improves, businesses would know when to do that. Right now, without electricity, it is only companies with no fiduciary responsibilities that would put millions of dollars to setup plants in Nigeria. The existing factories are practically looking for exits. And because most factories are not run by true charities, we have minimal luck.

Samsung Electronics has said that one of the reasons for not establishing a manufacturing plant in Nigeria is because its market share in the country is not big enough. Sung Yoon, the Chief Executive Officer of Samsung Electronics Africa, made this known during an interactive session with journalists on Thursday in Lagos. Mr. Yoon said that though Samsung was the leading consumer electronic company in Nigeria, its share of the Nigerian market is smaller to South Africa’s. …

According to him, other issues that affect the building of manufacturing plant in the country are infrastructure, Return On Investment (ROI) and grey market. ”We are trying to be a local company here. Building factory depends on return on investment and efficiency of the economy. There are lots of grey products coming into the country and this will affect the return on investment,” he said.

 

Yet, there is a way Nigeria could fix this problem. It has to provide stable and adequate electricity. That is the lowest denominator in our economy. By 2019, it would be the 20th year of uninterruptible democracy, a commendable milestone except that no government has a clue on how to fire up a bulb, at scale, in Nigeria. It is fair to discuss power improvement under President Buhari in past tense as it seems the government has no real plan.

But power would come momentarily. Yes, I expect power to magically improve from Jan 2019 because election would be around the corner. Obasanjo did that trick, President Jonathan executed same, and Buhari would continue the tradition. But after election, it would be all promises. Why can’t Nigeria have electricity? It is very painful that men would come to work, only to sing praises for power to come, and yet power has refused to come.


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15 thoughts on “Samsung Explains Why It Cannot Build Factory in Nigeria

  1. How Nigeria keeps doing the same thing and expect different results is amazing, in the least. We are not doing enough to make Nigeria a globally competitive market for today’s lean-oriented businesses and brands. Who suffers? The Nigerian people of course. It has remained the same song, or perhaps the same dirge. Sad.

    Reply
    1. “We are not doing enough to make Nigeria a globally competitive market” That is a good summary. I am very happy the way the South Korean said it. It was blunt and I hope that changes how govt looks at development.

      Reply
  2. “Traditionally, foreign companies would speak in political-correctness tones to avoid annoying our governments. They would quote 180 million citizens, praising our developmental efforts, and packaging all with fake promises”

    This have added to our problems, because our leaders seem to value these foreign organization’s assessment/opinion more than its citizens, so when they are lied to- they cudos themselves.

    But if they would be told the truth like this Korean, perhaps they would realize how silly they have been.

    Reply
  3. Gen1:3 ” Let there be Light”
    Let God be our leader’s role model, he started by illuminating and powering the universe. Why cant we learn from that?

    Nigerian leaders have been cluelessly working in the dark, let them put On the power first, and other things would majorly fall in places.

    Reply
  4. Until Somebody fixes Nigeria power problem for the long term everything they do in government is just a Joke.

    Any company manufacturing company coming to Nigeria now and those presently operating will end up exploiting the Nigeria people with high prices of their products, or a reduced version of what you get elsewhere at the same price or less.

    Reply
  5. I am a Nigerian working as a business development manager for a Dutch manufacturing firm. Nigerians and African often ask us why we cannot invest in a factory on the continent and sadly this has been my argument for the last 2 years!

    Reply
      1. Edward Demiraiakian · Edit

        I could not have said it better! Don’t forget graft. Inspectors and tax officials with their hands out. The political instability which leads to investment insecurity.

        Reply
  6. From South Africa –

    Ndubuisi. Good for you. As a fellow African I listen at Donald Trump in the USA saying that we have #$%@hole countries and I cringe – not so much for his naked racism, but the fact is that it is based on a lot of truth. Why can Africa, with its wealth or people and raw materials (Nigeria – Oil) not rise up above these opinions and become sought after economic destinations that can say the same of USA!

    Why are so many of out indigenous knowledge-holders (trained & skilled people) leaving for greener pastures in environments like the USA? We just do not seem to create space for them to flourish and aide in building our nations.

    Ironically, while Africa south of the Sahara (That is Nigeria and SA included) post above average economic growth figures, one just wonders where all that growth is channeled to – to our leaders pockets or to building infrastructure that can blast our continent onto center stage in the economic World.

    China was demonstrating (maybe a bit over inflated) economic growth for many year. So has Malaysia that 30 years back was exactly where we (still) are. Have our leaders studied the reasons for their growth? NO (or not yet)

    Carry on being Politically unpopular. Thanks for Samsung doing the same. We need more honest mirrors to be placed in front of our political leaders so that they can see that “the King actually is naked” (that they are fooling themselves.

    And may the electorate learn that they can make changes at the ballot, but also in everyday standing up and declaring their displeasure in the way their needs are being ignored.

    Keep up the good work.

    Reply

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