Safaricom Unveils Plan to Set up Smartphone Factory

Safaricom has disclosed that it is opening a plant in Kenya that will assemble between 1.2 million and 1.4 million smartphones annually.

As one of the major actors lining up to carry out President William Ruto’s goal to execute the production of Africa’s cheapest devices, it now ranks among the main competitors in the race.

The telco made an impassioned argument against new mobile phone taxes before the National Assembly’s Finance and Planning committee on Tuesday.

It claimed that the proposed taxes would make it impossible to reach the target price of a $ 50 smartphone (Sh6,850), as the cost of locally made smartphones would rise to Sh11,500.

“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 Sh4,000 and bring down the cost from Sh11, 500 to Sh7,500,” Mr. Karanja Gichiri, Safaricom Head of Venture, told MPs during public hearings on the Finance Bill.

He stated that although the telco, which annually imports four million phones, is working on an assembly line, the project would be financially unviable due to the taxes.

“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 driven by the chip and components.”

“After that, the assembly of the phone will cost Sh300 including factory profit margins. We want to pass the cost-benefit to the consumer,” he said.