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.
----REGISTER for my Innovation for Growth Workshop, Lagos, Sept 2018.
---Visit our Store for my books, cases, frameworks and more. Now, enjoy our consolidated subscription for all contents (past, present and future).
-- We offer Advisory Services (tech, strategy & Africa).