Birhan Abera’s electronics shop is one of a few mobile phone distributors located inside Addis Abeba Mall. Her shop has been an agent for a local mobile assembler called Tecno Mobile for the past three years.
The mall, located in the heart of Merkato, the largest open market in Africa, is a hotspot for commercial activities. Small shops are becoming a rare sight in Merkato since the area began modernizing a few years ago. Areas and buildings dedicated to just one type of product are becoming more common. The Addis Abeba Mall building is home to a number of mobile shops. Most of them work as agents for an assembler and serve as an outlet to the open market.
“The market is thriving,” Birhan said.
Birhan sells locally assembled phones of different sizes and with different features, ranging in price from 1,000 Br to 8,000 Br.
The demand for locally assembled mobile phones is gaining momentum as products become more diverse in terms of price, technology, and quality. Tecno Telecom Ltd is one of 10 local assemblers actively involved in the market. Five years ago, in addition to their production of feature phones, the company started to assemble smartphones.
Tecno, a Hong Kong-based mobile manufacturer established in 2006, launched its operations in Ethiopia in September 2011 with a capital investment of more than one million dollars. The company is now working to expand its production capacity and has already leased land to build its phase three factory at the Ethio ICT Park in the Yerer area, Bole District.
Local mobile manufacturers are starting to become more active in various bids across the country, worth up to billions of Birr. Just recently, Tecno participated in a bid to supply 180,000 tablets that will be used for the upcoming national census, which is estimated to cost over one billion Birr.
Brehanu Bekelle, a 25-year-old salesperson, thinks the share of local assemblers in the mobile industry has grown significantly over the past two years. Brehanu works in one of the mobile phone shops inside Tebaber Building, along Kenenissa Avenue.
“People tend to use locally assembled phones with the emergence of new models,” said Brehanu.
In the shops Fortune visited, locally assembled phones are cheaper than the imported models, where the price differences between imported and local models is between 500 Br and 1,000 Br.
One advantage that local manufacturers offer to distributors like Brehanu is getting phones on credit. One such assembler, Cell Tell Trading & Manufacturing Plc, is the assembler of G-TiDE Mobiles.
Cell Tell claims to have about a two percent share of the industry’s market. The company was first established in collaboration with Shenzhen G-TiDE Technology Ltd.
“We have fully transferred the technology and knowledge to our company,” said Seife Michael, general manager of Cell Tell. “The industry’s total transition to smartphones is inevitable.” The company has four line productions, each with the capacity to produce 2,000 phones a day. Cell Tell has agents across Ethiopia that sell mobile phones in every regional state.
“We still focus on the production of feature phones targeting small cities and rural areas,” he added.
In this instance, Hidase Mobile and TV manufacturing Plc became operational two years ago with the aim of increasing accessibility in areas where there is no electricity. Hidasie focuses on the production of phones that fit into the lifestyle of rural Ethiopia.
“We focus on phones with high battery capacities,” said a marketing employee at Hidase.
However, the sector is not without its controversies. Assemblers have become involved in court battles over counterfeited phones. In 2015, a Chinese assembler, Xia Zhihua, which produces GEOTEL mobiles, was sued for stealing the designs of two of Tecno’s models. This resulted in a ban on Xia Zhihua’s products by the Trade Competition & Practices Tribunal.
Now, local mobile assemblers are hoping for a boost in the near future as the country prepares to launch the first Equipment Identity Registration System (EIRS). The increasing shift from imported phones to locally assembled phones influenced the Ministry of Communications & Information Technology to propose a bill that bans unregistered phones from operating in the nation.
“It was the local assemblers that pushed for the amendment of the legal framework,” said Fitea Bekele, communication director of the Metals Industry Development Institute which is responsible for supporting and overseeing the mobile manufacturing sector. The Institute provides services in facilitating access to working areas and forex for manufacturers to import parts and raw materials. Last year alone three new assemblers joined the market.
The system will identify and deactivate phones that have not been legally registered in order to crack down on illegal phone imports. It is estimated that the system will force over four million mobile phones out of service, said ethio telecom CEO’s, Adnsualem Admassie last year. ethio telecom will replace out of service phones with feature phones.
“I’m sure when the bill is approved more investors will be motivated to join the market,” said Fitea. “The bill is almost complete and is being translated into Amharic.”
Following the approval of the bill, ethio telecom is expected to release a tender for a bid inviting assemblers to supply replacement phones for those that will be out of service.
A report compiled by the assemblers association indicates that almost 65pc of the mobile market in Ethiopia is supplied by contraband phones smuggled in from neighbouring countries. The remaining 31pc of the market is commanded by ten assemblers working in the mobile industry.
The announcement of the new EIR bill last year has created a stir in the market, according to industry insiders.
Over the past six months, the Ethiopian Revenues & Customs Authority (ERCA) seized 83 million Br worth of contraband imported electronics, one-fifth of the total contraband seized by the Authority.
“The adverse effects of contraband are high in times of hard currency shortages,” says a mobile industry insider. Smartphone ownership in Ethiopia stands at four percent, according to Pew Research, half the rate of Tanzania’s.
Mobile services began in 1999 with a capacity of 36,000 lines in Addis Abeba. Now over 47 million subscribers are registered for mobile services and there are 14.7 million data and internet users in Ethiopia.
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