Safaricom Reveals Plan To Set Up Smartphone Factory In Kenya

Safaricom has revealed that it is setting up a factory in Kenya, which will assemble between 1.2 million and 1.4 million smartphones a year, making it one the biggest players lining up to implement President William Ruto’s plan of producing Africa’s cheapest gadgets.

Appearing before the National Assembly’s Finance and Planning committee on Tuesday, the telco put up a spirited fight against new taxes on mobile phones as contained in the Finance Bill, 2023, arguing that it will be impossible to achieve the target price of a $50-smartphone (Ksh6,900) since the proposed taxes will raise the cost of locally assembled smartphones to Ksh11,500 ($83).

“If we were to work with the president’s vision of a 50-dollar phone, we need to address the question of import, excise and output VAT (Value Added Tax) for me to save Ksh4,000 ($28.99) and bring down the cost from Ksh11, 500 to Ksh7,500 ($54.35),” Safaricom Head of Venture Karanja Gichiri told MPs during public hearings on the Finance Bill.

He said the telco, which imports four million phones every year, is working on an assembly line but the taxes would make the project unviable.

“Today we have one local assembly line that recently started. The most expensive part of the phone is the microchip that runs the 4G network within the phone. We have sourced and the appropriate base for a good phone is $40 (Ksh5520) driven by the chip and components.”

“After that, the assembly of the phone will cost Ksh300 ($2.17) including factory profit margins. We want to pass the cost-benefit to the consumer,” he said.