Zambia's only mobile phone assembling plant, M-mobile Telecommunications (M-Tech), may close if the Zambian government does not move quickly to protect the company against undue competition from China.
The increasing number of imported and highly subsidised mobile phones from China into the Zambian market is having a negative impact on the company's growth.
M-Tech chairman Mohammed Seedat said business has not been favourable because of the stiff competition from phones, which are heavily subsidised and sold cheaply, being dumped in the Zambian market from China. As a result, the company has failed to fully penetrate the local and regional markets, as planned.
The $10 million mobile assembling plant was set up in 2009 to provide affordable mobile phones in Zambia and the southern African region.
Seedat said there is a need for the Zambian government to formulate policies that will protect the local industry from Chinese competition.
The company's initial plan was to assemble 1 000 handsets per day. However, since 2009, it has only been able to produce 12 000 single- and dual-SIM phones, due to low sales.
The M-Tech handsets have, among other features, FM radios, phonebooks, colour screens, alarms and calendars. They are currently being sold for between $40 and $45.
“Our plans to export mobile phones to countries within the southern African region have been put on hold because, like Zambia, these countries have not been spared from the influx of heavily subsidised mobile phones,” said Seedat.
In 2009, the Zambian government increased customs duty on foreign manufactured phones to 15%, from 5%, in a bid to encourage local production of phones.
M-Tech was also exempted from paying tax; a move aimed at making the locally manufactured phones cheaper than imported ones.
But despite the increase in customs duty, Chinese-manufactured phones are still cheaper, selling for as little as $20. Mobile phone operators including MTN and Bharti Airtel are selling Chinese-made customised handsets for as little as $12, with free airtime.
The Zambia Information and Communication Technology Authority (ZICTA), the country's telecoms sector regulator, has reacted by partnering with the Competition and Consumer Protection Commission (CCPC), a local consumer watchdog, to tighten rules on competition in the telecoms sector in a bid to save the company from closing due to stiff competition.
ZICTA DG Margaret Mudenda said the Authority would not allow traders to continue flooding the Zambian market with cheap, imported phones, which she said are actually counterfeit.
Mudenda said ZICTA would continue to tighten regulations by ensuring that ICT gadgets such as phones and computers brought into the country are not health hazards.
Zambia, she said, should not be used as a dumping ground for cheap ICT equipment, which is mostly brought into the country by local traders.
“The growth of the telecoms sector has indeed contributed to the economic growth of the country, but the growth has also led to competition, which may at times lead to conduct that requires regulating,” said CCPC executive director Chilufya Sampa.
The partnership will result in the formation of a joint working committee that would be acting on the referral of complaints in relation to ICT products and services, and will also investigate matters relating to competition enforcement.
Furthermore, the partnership will ensure that the ICT products sold in the Zambian market conform to the standards that would be set.
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