Why South Africa’s first smartphone factory failed

South Africa’s first smartphone factory failed due to a lack of uptake in its products, fewer government tenders for its devices than it had anticipated, and the impact of the Covid-19 lockdown.

Following several reports of the Mara Phones facility near Durban being put up for auction by its funders, the company has provided an official statement to MyBroadband on the matter.

Mara Phones Global CEO Chris Corsi and founder and board member Ashish Thakkar said the ambitious plan to launch a facility in South Africa was “untenable” due to the pandemic and lockdowns that followed four months after opening.

The executives confirmed that the facility would be auctioned.

The company will work with Standard Bank and the Industrial Development Corporation, the financial institutions that provided R1.5 billion for the facility’s setup and operations, to support the “transition”.

“Unfortunately, the lack of uptake in the South African domestic market coupled with a shortfall in tender materialisation and lockdowns has prompted this course of action,” Mara’s executives said.

“As in other countries, the pandemic really affected South Africa and our business as a result too.”

Mara Phone Factory (25)
Mara Phones factory near Durban on its opening day.

The company did not reveal whether it would continue to import Mara Phones into South Africa.

It also did not comment on what would happen to the Mara Phones Experience Store that opened in Maponya Mall in Soweto in November 2020.

IOL reported that staff at the shop said they were unaware that the factory had closed down.

They could not offer customers repair services, did not know where their new stock would come from, or whether the store would stay open.

The sale of the factory and all of its contents comes two years after its grand opening by President Cyril Ramaphosa and several government officials in October 2019.

The factory’s failure comes despite a R101.3-million tax break afforded to it for qualifying as a so-called “Greenfield project”.

Mara also received the status of preferential brand in the government’s RT15-2021 communications contract.

That meant various state institutions had to give preference to Mara’s smartphones over rivals like Samsung and Huawei if their employees wanted to take out one of the packages that formed part of the agreement.

Mara Z smartphone

In stark contrast to what happened in South Africa, the Mara Phones factory in Rwanda has performed strongly since its opening around the same time in October 2019.

“Mara Phones Rwanda has and is consistently in production over this period and has a strong local, regional and export market which it will continue to develop and grow both regionally and globally,” Corsi and Thakkar stated.

“Mara Phones Rwanda has developed a new and strong product roadmap targeted at the MEA [Middle East and African] markets with extremely competitively priced 4G devices with very high quality, as well as developing products for the US and EU markets including 5G devices.”

Rwanda’s management of the Covid-19 pandemic has received high praise from international health officials.

Based on the feedback from Mara Phones, Rwanda’s lockdown did not require the closure of its facilities, unlike South Africa.

According to Park Village Auctioneers’ Keith Greene, the South African factory never reopened after the initial lockdown.

However, Mara Phones managing director Sylvester Taku told MyBroadband in September 2020 that operations had resumed, and that they had retained all workers.

But even before the Covid-19 pandemic became a factor in South Africa, many questioned what new value Mara would be able to offer the market, given that there was already a myriad of high-quality budget smartphones on the market at the time of the factory’s launch.

Now read: Huawei P50 Pocket foldable coming to South Africa — The details

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Why South Africa’s first smartphone factory failed