R1.5 billion down the drain — South Africa’s first smartphone factory goes on auction

Just over two years after its launch, South Africa’s first smartphone factory is going on auction.

The Mara smartphone assembly plant near Durban was opened by President Cyril Ramaphosa in October 2019 and punted as a state of the art facility that would help create thousands of jobs.

Mara Phones set up the factory using half of R1.5 billion in funding from Standard Bank and the Industrial Development Corporation.

The remaining amount was to help ensure its continued operation.

Mara claimed the facility could assemble 1.2 million smartphones for the domestic and regional market and already employed 200 workers at its opening.

The models made at the factory were affordable smartphones such as the Mara X, Mara Z, and Mara S.

Cyril Ramaphosa at Mara Phone Factory (3)
President Cyril Ramaphosa holds a new Mara smartphone in his hands during the opening of the factory near Durban in October 2019

But now its funders have demanded the factory’s sale through Park Village Auctions, suggesting they are trying to salvage what they can from the facility.

Auction documents have revealed that the plant and its contents are being sold — lock, stock, and barrel.

The auction lot includes the plant, manufacturing and testing equipment, smartphone components, and the completed phones kept in its storage facilities.

“The line is in very good condition and could be reworked to make other electronic components,” said the auctioneers.

Among the equipment noted are a reflow oven, calibration and RF testing hardware, battery simulators, and a power generator.

Other items included in the sale are computers, screens, peripherals, and office furniture.

The auctioneers told BusinessInsider that local and international buyers have expressed interest in buying the factory, including one call out of India.

Mara Phone Factory (2)
Equipment at the factory during its opening

It was unclear what led to the sale of the factory and whether this was due to the brand’s inability to gain traction in the South African market.

The Mara X and Mara Z smartphones sold for between R3,000 and R4,000 at launch.

But South Africans have a wide range of capable but affordable smartphones in this segment, including many models from well-established Chinese manufacturers such as Xiaomi, Vivo, and Huawei.

Standard Bank told MyBroadband it could not comment and referred all queries to Mara.

Mara Phones previously failed to respond to our questions about how many smartphones it had managed to sell in the country at various points in time.

The company did not respond to our latest query about the factory’s sale either.

The fate of Mara’s factory workers and those at its experience store in Maponya Mall in Soweto, which was launched in November 2020, is also unknown.

Mara Experience Store Maponya Mall South Africa

Mara has manufacturing facilities in other African countries, but it was unclear whether it would continue selling its smartphones locally.

Although its South African website was still live at the time of publication, all three Mara models on offer were out of stock and unavailable to order.

The factory’s sale also brings up another question — what will happen with Mara’s status as a preferred smartphone brand for the government’s RT15-2021 contract?

National Treasury has stipulated that preference would be given to locally-manufactured brands for state employees who took out mobile packages via the contract.

As Mara was the only company assembling smartphones in South Africa at the time of the contract’s finalisation, it automatically topped the list of preferred manufacturers.

Another flop

The sale of the Mara Phones factory comes after the flop of another smart devices manufacturing facility — Yekani Manufacturing’s R1-billion plant in East London.

In that instance, the company had failed to repay Standard Bank for a R200 million loan, which led to the bank applying for the plant’s liquidation.

Yekani challenged the liquidation in February 2020, and a court suspended the process pending a hearing over a possible business rescue of the company.

Since that time, there does not appear to have been any developments in this regard, and the factory has remained closed, with 500 workers out of a job.

Numerous South African retailers told MyBroadband they never held stock of any smartphones, tablets, or laptops Yekani had claimed to manufacture.

The factory did make Explora decoders for MultiChoice for a period, but the broadcaster also stopped doing business with it.

Update: Mara responds — 9 February

Mara has answered questions about the factory’s failure.

Read more: Why South Africa’s first smartphone factory failed.

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R1.5 billion down the drain — South Africa’s first smartphone factory goes on auction