Leading telecommunications firm Safaricom has announced that it will be setting up a new factory from which it will assemble its own smartphones.
According to development plans by the telco, the factory will produce 1.2 million to 1.4 million smartphones every year.
The plan to set up the factory was revealed on Tuesday when Safaricom appeared before the National Assembly’s Finance and Planning committee.
“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,” Safaricom’s Head of Venture Karanja Gichiri said.
“After that, the assembly of the phone will cost Sh. 300 including factory profit margins. We want to pass the cost-benefit to the consumer.”
Karanja had appeared before the committee on behalf of Safaricom to lobby against the proposed new taxes on mobile phones that are contained in the controversial Finance Bill 2023.
Karanja told the committee that the proposed taxes will raise the cost of locally assembled smartphones to Sh. 11,500.
In addition to these costs, Karanja added, Safaricom will have to deal with last-mile connectivity afyer assembly of the smartphones, where it will be required to part with another Sh. 1,400 while the output VAT for the device is Sh. 1,500.
“This brings the final price to Sh. 11,500 with the manufacturer taking only Sh. 300,” he said.
He added that other drivers of cost are taxes on transporting the phones to the port of Mombasa. He said thay Safaricom spends an additional Sh. 2,300 for a Sh. 5,000 phone mainly due to by import duty and excise duty.