R1-billion electronics factory shutting down because we “refused deal with minister’s husband” – CEO

The R1-billion Yekani Manufacturing factory in East London is shutting down because it reportedly “refused to sell a controlling stake to the husband of communications minister Stella Ndabeni-Abrahams”.

This is according to a report in the Sunday Times.

The report stated that Siphiwe Cele, Yekani’s owner, was introduced to Thato Abrahams by the IDC as a potential investor – who would buy a majority stake in the business for R1 billion.

Cele reportedly refused the offer, after which his business started to suffer. He approached the government for help to save the company, but received none.

According to the report, minister Ndabeni-Abrahams said she only learnt about the investor meeting two weeks ago.

It went on to state that Cele, Abrahams, and the IDC arranged a meeting to discuss the possible investment in April 2018. Ndabeni-Abrahams was deputy communications minister at the time.

Cele claimed that the investment depended on Abrahams being appointed CEO of Yekani and being allowed to choose his own chief financial officer. Yekani declined the offer.

“Cele said that after Yekani turned down the overture from Abrahams, the Eastern Cape government failed to provide the financial help he requested,” states the Sunday Times.

The minister’s spokesperson told the Sunday Times it was “disingenuous to blame the minister’s husband for the challenges faced by Yekani”.

Abrahams has also denied wanting to buy a stake in Yekani.

The big launch

Yekani’s electronics factory was opened by former Minister of Trade and Industry Rob Davies in the city’s Developmental Zone in June 2018.

The 28,000 square-metre facility was set to produce a number of electronic products, including mobile phones, tablets, laptops, and decoders.

In January 2020, however, reports surfaced that the company was in big financial trouble.

Liquidation processes had been initiated after Yekani was unable to make payments to Standard Bank for a large loan.

Workers at the factory had not been paid in five months, either, and the facility did not resume operations this year.

“In the event that Yekani is put under final liquidation, approximately 500 direct jobs will be lost,” the company told MyBroadband.

It did not detail the issues which led to the situation, but claimed it had made “huge efforts” to reach a positive outcome to the financial challenges.

Phones and laptops

While Yekani reportedly assembled TV decoders as part of its operations, it is unclear if the company ever sold any of the smart devices it was meant to produce.

This includes its Trend and Balance smartphones and a range of laptops.

When it launched in 2018, the company said it aimed to be the largest smartphone company in South Africa, with “Yekani-branded mobile phones”.

However, when MyBroadband asked South Africa’s leading technology retailers whether they had ever sold or stocked Yekani laptops or smartphones, these retailers said they had not.

Takealot, Incredible Connection, and Massmart – Game, Makro, Dion Wired – were among the companies contacted.

Following the questions, Yekani sent out a statement claiming that as its liquidation matter is sub-judice, it is unable to provide further details or comment on any media reports as it “runs the risk of prejudicing or interfering with the pending court proceedings and its outcome”.

The Sunday Times report stated that not only is Yekani facing a claim from Standard Bank, but that suppliers to Yekani have not been paid for months.

SA Post Office contract

The report added that to save the company, Cele is now looking for investors from Nigeria and Canada to provide funding.

Additionally, Yekani has reportedly secured a R700-million contract with the SA Post Office to produce set-top boxes.

It also has a contract with Swiss company Landis+Gyr, which makes smart meters, said Cele.

“Due to the provisional liquidation order, all work for Landis+Gyr has ceased,” he said.

Now read: Tech jobs bloodbath in South Africa

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R1-billion electronics factory shutting down because we “refused deal with minister’s husband” – CEO