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March 15, 2023

Inflation, FX shrink Nigeria’s smartphones market by 32.1%

By Upfrontdigital News 0 267 Views

 

MACRO economic challenges including inflation and forex challenge, especially dollar shortage have impacted the smartphone market in Nigeria.

    The International Data Corporation (IDC) informed that Nigeria’s smartphone market declined 32.1 per cent year-on-year in Q4 2022 due to sustained high inflation and a shortage of U.S. dollars in the country.

    Largely, IDC disclosed that smartphone markets in Nigeria and other parts of Africa declined for the sixth consecutive quarter in Q4 2022, with shipments down 17.8 per cent YoY to 17.6 million units.

   Latest insights from IDC, with the firm’s Worldwide Quarterly Mobile Phone Tracker, showed that Africa’s feature phone market also declined in Q4 2022, with shipments down 16.2 per cent to total 22.7 million units.

   Senior Research Analyst at IDC, Arnold Ponela, said the mobile phone industry is now challenged by constrained demand even though the supply constraints that had previously been weighing on the market have started to ease off.

    “Inflation and economic uncertainty have seriously dampened consumer spending, causing vendors to cut back drastically on shipments as their largest markets continue to struggle. The situation is not unique to Africa, with smartphone shipments declining across all major global markets in 2022,” Ponela stated.

    The corporation disclosed that the biggest decline was seen in Egypt, where smartphone shipments were down 56.2 per cent YoY in Q4 2022, with the introduction of new import regulations leading to device shortages and higher prices. IDC said this situation has been further exacerbated by the Egyptian pound’s devaluation against the U.S. dollar, the challenging economic environment, and the fact that the government has approved very few letters of credit (LCs), which are required for import payments on non-essential goods such as mobile phones.  

     According to it, South Africa was the least affected market in the region, declining just 1.8 per cent YoY, owing to an increased focus on the country from Chinese vendors, an improved performance from local brands, and promotional activities that took place during the festive season.

    “Nigeria’s smartphone market declined 32.1 per cent YoY in Q4 2022 due to sustained high inflation and a shortage of U.S. dollars in the country. South Africa was the least affected market in the region, declining just 1.8 per cent YoY, thanks to an increased focus on the country from Chinese vendors, an improved performance from local brands, and promotional activities that took place during the festive season,” IDC noted.

    The body stressed that rising inflation and growing macroeconomic issues continue to restrict consumer spending, causing vendors to be increasingly cautious with their shipments.

  According to it, Transsion brands (Tecno, Itel, and Infinix) led the region’s overall smartphone market in Q4 2022 with 43.4 per cent unit share, spurred by its strong portfolio of entry-level devices. Samsung took second place with 28.7 per cent share thanks to the strong performance of its A04 model. Xiaomi ranked third with 7.0 per cent share. Transsion brands (Tecno and Itel) also dominated the feature phone landscape, garnering a combined unit share of 78.8 per cent. Nokia ranked third in this space with 5.9 per cent share.

   In terms of price bands, the share of smartphones priced below $100 remained flat (from 42.0 per cent in Q3 2022 to 41.7 per cent in Q4 2022), while the share of devices priced $100–$200 increased from 41.6 per cent to 43.8 per cent over the same period, spurred by the performance of Samsung’s A series. The midrange segment ($200<$400) contracted slightly, from a share of 11.6 per cent to 10.5 per cent.

   Research Manager at IDC, Ramazan Yavuz, said IDC expects the market’s demand constraints to improve in the mid-term and for smartphone shipments to rebound in 2023 with YoY growth of 3.0 per cent.

   This is modest growth for Africa but given the level of uncertainty in the global and regional economy, there is room for cautiousness in the region’s smartphone markets,” Yavuz said, adding “”Inflationary pressures are set to persist and the repercussions of a global economic downturn are likely to impact consumer spending and vendor appetite. In the worst case scenario, any possible recovery will be pushed back to the very end of 2023.”

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