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Mara Phones says Covid and lack of uptake in South Africa caused its demise

Business Insider SA
Mara store
Mara phones store front Maponya Mall.
  • Mara phones, which has gone under in South Africa, says it was a victim of the Covid-19 pandemic
  • South African consumers also didn't adopt the brand fast enough, it says.
  • Its failure comes after hefty government investments in the company, including a tax break of over R100 million.
  • For more stories go to www.BusinessInsider.co.za.

Mara Phones, which built South Africa's first smartphone manufacturing facility, but has now put it on auction, blamed its demise in the country on the Covid-19 pandemic and slow uptake of its phones.

The factory, situated at the Dube Trade Port outside of Durban, was launched in 2019 amid widespread excitement and was punted as a good step in making South Africa a leader in the tech industry.

But, after just two years of operating the facility, it has shut down and is on auction in a sale mandated by its funders: the Industrial Development Corporation (IDC) and Standard Bank.

"Our ambitious plans to launch two subsequent facilities in Africa to manufacture 'Made in Africa' devices was untenable in South Africa due to the pandemic and lockdowns that followed only four months after opening," Mara Phones said on Wednesday, responding to Business Insider's questions.

A year after launching in South Africa, the company opened its first retail store under a franchise licence agreement. At the time, the store owner, Chante Janties told Business Insider that the company planned to roll out 50 stores in the country.

See also: TAKE A LOOK | Locally made Mara smartphones get a first 'experience' store in Soweto

The company said a slow adoption of Mara phones in the country also hurt the business.

"The Mara Phones South Africa facility will be auctioned, and we will work with the financial institutions to support this transition. Unfortunately, the lack of uptake in the South African domestic market coupled with shortfall in tender materialisation and lockdowns has prompted this course of action," Mara Phones said.

"As in other countries, the pandemic really affected South Africa and our business as a result too," it said.

The South African factory opened a week after Mara Phones was set up in Rwanda. Unlike in South Africa, the Rwandan facility remains operational and has been consistently in production, the company said.

The company's failure in the country comes following hefty investments from the government. It was granted a R100 million tax break and additional capital approvals of R350 million granted by the South African government under a now-disbanded Section 12I tax incentive scheme.  

Under the scheme, businesses could get back up to 55% of the amount they invested in buildings and equipment in the form of a tax deduction.

See also | Mara Phones went bust in South Africa despite a R100 million tax break, and govt preference

The company also received a contract that positioned Mara as the government's preferred brand when it bought cellphones until 2026.

Beside support from the government, Mara CEO Ashish Thakkar had pledged R1.5 billion to build South Africa's first high-tech smartphone plant at the Dube Trade Port outside Durban and associated retail infrastructure. At the launch, the company said it had spent roughly half of that planned capital to set up the factory.

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