On October 19, 2024, Ericsson announced plans to build a $19 million tech hub in Nigeria; a look through Ericsson's history shows what that could look like.
Lars Magnus Ericsson started Ericsson as a repair shop in 1876. In 1878, the Swedish company started repairing phones and subsequently started making phones that rivalled the ones it repaired.
This led to its rapid growth internationally, and it started building major telecom infrastructure. But by the 1920s, it had to adopt an expansion strategy that involved building manufacturing plants in other countries to stay competitive.
According to the company, most of its customers — governments of countries — wanted it to set up local operations that would ensure they received investment, employment, or technical know-how, and perhaps someday produce their own telecommunication components.
The local operations also meant there would not be an imbalance of trade. For instance, it set up a manufacturing plant in Finland in 1948 because the country did not have foreign currency to import telephone equipment.
Other countries, like Mexico, banned the importation of foreign telecom equipment and forced the company to set up shop in the country. Over the years, Ericsson has continued to establish plants all over the world, and Nigeria could be next.
Tech hub means manufacturing plant
Based on similar investments the company has made in other countries, a tech hub could mean a research and development hub, manufacturing plant, or a single site to consolidate all its activities in a country in one place.
For example, in July 2023, when it announced plans to build a smart manufacturing plant in Estonia, it was described as a $170 million tech hub that would consist of test labs, warehouses, production lines, and offices.
According to Peter Ogundele, Managing Director of Ericsson Nigeria, the company has had a presence in Nigeria since 1978. However, there are no records of it having a manufacturing plant or research base in Nigeria.
Give it a try, you can unsubscribe anytime. Privacy Policy.
While Ericsson's tech hub might equal a manufacturing hub or research centre, it is important to also note that the company has been clear about its plans in other countries, like Canada, for instance, where it unequivocally stated that it would set up a smart manufacturing and R&D hub worth $470 million.
These hubs are an expansion strategy for Ericsson, and they help the company appeal to customers who might not have foreign exchange to import its products or customers who want it to make investments.
With 144.9 million mobile subscribers, Nigeria is an appealing investment destination for Ericsson's telecom equipment business. Nigeria's biggest telco by market share — MTN — is already working with Ericsson to modernise its core network.
The West African nation is not the only African country Ericsson has shown interest in. The company has been in business with Ethiopia since 1894 and has a 90% market share of fixed-line network services.
However, it does not have any manufacturing or research hubs in the country. The company had a business relationship with Egypt that started in 1897, and by 1959, Egyptian Telephone Company was manufacturing Ericsson telephone equipment.
However, it seems Nigeria is the first African country where it has made a commitment to invest a specific amount of money. The question now is, what will an Ericsson investment do for Nigeria?
What does an Ericsson investment mean for Nigeria?
A look at Ericsson's past investments could help answer this question. In 2005, the company announced that it would invest $1 billion in China over the next five years.
It went on to create five research centres in the country. The Nanjing Research Center, which closed in 2021, employed 5,500 people.
An Ericsson investment could mean employment and training for Nigeria. But that it happened in China does not guarantee the same thing will take place in Nigeria.
This is despite the fact that the Nigerian government has signed an MoU with the Swedish company, not just to invest, but also to explore the potential of 5G technology in the country.
Interestingly, MoUs in Nigeria are difficult to understand. In 2019, Nigeria signed 36 MoUs, but 24 of them have expired and 12 are active. And 22 of the 30 MoUs signed in 2020 are still active while eight have expired.
Attracting investments is one thing; ensuring they are worthwhile is another. Time will ultimately tell if this is a valuable investment.
