Nigeria and South Africa’s economic woes hindering African phone sales growth

The drop largely reflects both countries economic struggles with sluggish growth and widespread unemployment.
Nigeria and South Africa’s economic woes hindering African phone sales growth

The numbers are falling for the first quarter of 2019 in mobile phone shipments to two of Africa’s largest economies – and numbers for the current quarter do not look promising.

Market report by International Data Corporation (IDC) indicate that while smartphone shipments to Nigeria dropped 11.9 per cent to 2.3 million units in the first quarter from a year earlier, the overall phone shipments for South Africa dipped by 4 per cent to 4.7 million units.

The drop largely reflects both countries economic struggles with sluggish growth and widespread unemployment. Nigeria, in particular, was hit in the first quarter by a three-week embargo on shipments of phone brands from China into the country and further worsened by widespread insecurity as well as the one-week delay of the general election.

The Nigerian economy grew marginally by 2 per cent in the three months to March 3st1, far off a target around twice that pace.

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With annualised rate of 3.2 per cent in the first quarter, South Africa’s economy shrank to one of its lowest. This was attributable to the challenges of overstocking after a robust fourth quarter.

Consequent upon this, Research Analyst at IDC, Arnold Ponela suggests that the African market is expected to see a continued dominance of “low-end to mid-range devices” as “cheaper phones offering better value will increasingly dominate the market.”

This offers a bright side for Chinese phone maker, Transsion Holdings which has a manufacturing factory in Ethiopia. After over a decade of establishing its business model by focusing mainly on African markets and producing cheaper smartphones with locally-tailored features (such as multiple SIM slots and camera technology calibrated to darker skin tones), the Shenzhen, China-headquartered company dominates the African mobile phone market and offers a broad spectrum of affordable phone brands.

Over time, those brands have evolved from being less-fancied to becoming ubiquitous among local customers, and eventually surpassing Samsung as the top smartphone seller across the continent in 2017.

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Transsion leveraged its gain on the continent, even as the continent’s biggest markets slow down. It accounted for the largest smartphone shipments to Africa in the first quarter with Tecno and Itel, two of its leading brands, combining for around a third of total market share, IDC’s report shows.

Its dominance also extends to feature phones as Tecno and Itel jointly hold a 59.7 per cent share of Africa’s feature phone shipments. A predicted consumer preference for lower priced smartphones suggests it will continue to dominate.

However, feature phone shipments to Africa were flat year over year at 0.3 per cent in the first quarter, with shipments topping 31.6 million units. The African market is still dominated by feature phones, with about 60 per cent market share.

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IDC forecasts overall mobile phone market sales to decline by 5.3 per cent to about 51 million units in the second quarter due to sharp downswing in macroeconomic and global trade fortunes across the continent.

IDC research manager, Ramazan Yavuz concludes that “another factor is the rise of protectionist measures aimed at controlling smartphone shipments in multiple countries, which causes sudden short-term swings in the market’s performance”.


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