Why Mi-Fone wants to establish a mobile phone manufacturing plant in Nigeria

African start-up and mobile phone maker, Mi-Fone, says it is finalising plans to establish a US$30 million manufacturing plant in Nigeria. Alpesh Patel, chief executive officer of Mi-Fone, said the assembly plant would come on stream by the end of the third quarter of 2013.

Patel pointed out that the sheer size of the Nigerian market was enough incentive for them, or any other manufacturer, to establish an assembly plant in the country.

“We know there is a lot of talk about other phone brands coming into Nigeria with plans to build a plant. We are very serious about our plans. We want to bring what we are doing in China here. Nigerian labour costs are much cheaper than China. There is a big push in Nigeria for increased employment. There is a big push for localisation. I think we need to play our part in ensuring that these objectives are attained,” he said.

While there is already notable and rising smartphone penetration of the Nigerian market, Patel strongly believes that “this market has more than enough room for new players”.

He added that Mi-Fone’s entry strategy would be to focus on the smartphone segment. “Our job is to ensure that we do whatever we can to connect as many Nigerians as possible to the internet. They are not going to be able to afford $500 laptops. If we can give them an affordable smartphone with a very good quality screen, software, and user experience, we believe this is the window to the world for many Nigerians. We cannot ignore the low-end, but our entry strategy would be to focus on smartphones,” said Patel.

Patel said that Mi-Fone would target to be a true pan-African phone brand. In particular, he said the company has designed devices specifically targeted at the bottom of the pyramid. “The Mi-Fone model has already struck a chord with low income earners in more than 12 African countries,” he added further. “In the last five years, we are known for our innovation. We now supply to 14 countries in Africa.

You have Nokia, Samsung, Huawei, Techno – a very successful Chinese brand, but there is no pan-African brand. We are in a position where we will give you a Chinese price but not a Chinese phone,” he said. “We started the business with selling handsets but of course the business has evolved. So, it is now about selling services on the handset. What is relevant to Nigerians does not mean it is relevant to Rwandese. So, we have customised our offering for each market to give the users the relevant tools on the handset screen,” he concluded.

With statistics from the International Telecommunications Union (ITU) showing that smartphone penetration is just 15% in Nigeria, which has the highest internet using population in Africa of 48.3 million, there are significant growth prospects, with for example, smartphone penetration of 23% in Kenya and 43% in South Africa.

Given that Mi-Fone purports to deliver on quality at a bargain, then we certainly believe its strategy will be successful. We also welcome the added competition as this will lower prices of data enabled devices and increase penetration further and help Africa in accelerating growth.

Imara is an investment banking and asset management group renowned for its knowledge of African markets.