R1-billion South African electronics factory faces liquidation

January 16, 2020 Siyabonga Mtangana

The R1-billion Yekani Manufacturing facility in East London. Image c/o Aki Anastasiou

A major electronics manufacturing facility in East London in the Eastern Cape, which until recently made decoders for MultiChoice Group, faces possible liquidation after it reportedly failed to make repayments on a R200-million loan to Standard Bank.

The Daily Dispatch newspaper reported earlier this week that Yekani Manufacturing, part of the Yekani Group, failed to reopen after the December holiday break. In November, reports said the company would retrench more than 200 employees as it sought to cut costs.

The closure of the facility comes just 18 months after Yekani unveiled the new, R1-billion hi-tech factory in the East London Industrial Development Zone that would do contract electronics manufacturing for a large range of clients.

The high-profile launch was attended by former Eastern Cape premier Phumulo Masualle and trade & industry minister Rob Davies. The minister said at the time that the facility would eventually create a thousand new jobs and was a flagship investment by a black-owned company (watch the video clip below). Government invested R50-million in the plant, Davies said.

According to the Daily Dispatch report, the factory failed to reopen after Standard Bank called in its R200-million loan. Standard Bank spokesman Ross Linstrom said on Thursday that the bank is unable to comment because of client confidentiality.

Quoting an unnamed source, the report said employees had not been paid since last August. It said 500 jobs could be lost if the company is placed into final liquidation.

DStv Explora

Yekani manufactured the DStv Explora satellite decoder for pay-television operator MultiChoice, along with cellphones, tablet computers, and other devices and components.

MultiChoice South Africa CEO Mark Rayner said in a telephone interview with TechCentral on Thursday that although Yekani manufactured its Explora personal video recorder set-top boxes until recently, the company didn’t have a direct relationship with the firm. Rather, the relationship was indirect, through a US-headquartered company called CommScope, which sub-contracted the Explora business to Yekani Manufacturing.

“Yekani has a world-class facility … but it failed to fill the volumes outside our business. There were a few wobbles some time ago and the CommScope guys came to us and said these guys are not living up to their strict standards… We made plans to move the production to CZ Electronics on the East Rand. Our broadcasting technology and sales guys managed that transition over the last six months and there was no blip on the radar in terms of supply to us.”

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Retailers have stock of the Explora and there have been no stock shortages as a result of the switchover, Rayner said. “Luckily, we saw it coming and managed it … and there was no impact on us. However, the disappointing thing is we need South African electronics manufacturing to grow; we need many players. It’s disappointing that somewhere like the Eastern Cape, which needs the work, is battling (as a result).”

TechCentral was unable to reach Yekani Group CEO Siphiwe Cele for comment. A call to the company’s switchboard went unanswered.