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Reuters/Akintunde Akinleye
Mobile phone buffet.
DEAD WEIGHT

Nigeria and South Africa’s economic struggles are starting to hurt African phone sales

By Yomi Kazeem

Mobile phone shipments to Africa’s two largest economies for the first quarter of 2019 do not make good reading for phone makers and it’s not looking great for the current quarter.

Smartphone shipments to Nigeria dropped 11.9% to 2.3 million units in the first quarter from a year earlier. And overall phone shipments for South Africa dipped by 4% to 4.7 million units,  according to a market report by International Data Corporation (IDC).

The dip largely mirrors both countries economic struggles with sluggish growth and high unemployment. Nigeria in particular was hit in the first quarter by a three-week embargo on shipments of Chinese mobile phone brands into the country and further exacerbated by widespread insecurity as well as the one-week postponement of the general election. The Nigerian economy grew by just 2% in the three months to Mar. 31, far off a target around twice that pace.

South Africa’s economy shrank at annualized rate of about 3.2% in the first quarter. Its industry challenges were attributed to overstocking after a buoyant fourth quarter.

As a result, 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,” notes Arnold Ponela, research analyst at IDC.

For Transsion Holdings, the Chinese phone maker, that represents a silver lining.

After more than a decade of building 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) from its manufacturing factory in Ethiopia, the Shenzhen, China-headquartered company dominates the African mobile phone market and offers a range of lower priced phone brands.

Overtime, 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.

The company consolidated its lead on the continent, even as the continent’s biggest markets slow down. Transsion 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. Transsion’s dominance also extends to feature phones as Tecno and Itel jointly hold a 59.7% share of Africa’s feature phone shipments. A predicted consumer preference for lower priced smartphones suggests Transsion will continue to dominate.

 

Overall, feature phone shipments to Africa were flat year over year at 0.3% in the first quarter, with shipments topping 31.6 million units. The African market is still dominated by feature phones, with 59.9% market share.

IDC forecasts overall mobile phone market sales to decline by 5.3% to 50.9 million units in the second quarter due to sharp downturns in macroeconomic and global trade fortunes across the continent.  ”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,” says Ramazan Yavuz, IDC research manager.

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