Kenyan tax laws make local BRCK assembly impossible – Hersman

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Prohibitive duties make it impossible for the local assembly of the BRCK router, according to chief executive officer (CEO) Erik Hersman, who said legacy laws are also stopping the building of other types of hardware in Kenya.

The BRCK is a rugged router designed for harsh environments with limited connectivity and power, able to hop between various sources of connectivity and with a built-in battery for use in the event of a blackout.

Originally conceived by Ushahidi, it was last year spun out as a separate entity and raised a US$1.2 million seed funding round to begin shipping the US$199 BRCK device.

Yet Hersman told the Connected East Africa conference in Diani the BRCK has “exactly a reverse of the normal supply chain”, with the device designed and engineered in Nairobi before being assembled in the United States (US). Due to the fact it is then a complete device, the company can ship back to Nairobi duty free, compared to the high costs of local assembly.

“We had the problem that we couldn’t even do the prototyping here because it is too expensive,” Hersman said.

“Why can’t I do assembly here? We would like to do it here. But the problem is if we do that, that attracts a 25 per cent to 30 per cent duty. So now it is untenable, it doesn’t make sense.”

He called on Kenya’s Treasury to address the situation, which he said was not just holding back BRCK but also the local manufacture and assembly of other hardware.

“This is about the Treasury. It is about looking at old legacy laws, and then deciding to get rid of them, whitelist them, do something,” he said.

“Tablets, phones, PCs, we could do everything. You’ve got guys with different ideas and they’re trying to make things but they can’t do it.”

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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