COVID-19 deepens economic uncertainty as consumption pattern changes
While the total mobile phone shipments to Africa declined by 6.0 per cent year on year (YoY) in Q3 2020, shipments to Nigeria grew due to a shift from vendors to entry-level and mid-range devices.
The International Data Corporation (IDC) made this known in its Quarterly Global Mobile Phone Tracker. It said the decline in Africa’s shipments stemmed mainly from feature phones, with the delivery of the devices declining by 11.2 per cent YoY in Q3 2020 to a total of 29.4 million units.
IDC, global technology research and consulting firm, explained that by contrast, smartphone shipments were up by a healthy 14.1 per cent YoY, with 22.9 million smartphones shipped to the region during the quarter.
The growth of the smartphone market, it stated, was caused by the release of pent-up demand after countries eased their COVID-19 lockdown restrictions and by a shift in vendor strategies to offer more entry-level flagship models.
IDC said the rising unemployment rates and economic uncertainty caused by the COVID-19 pandemic continued to shift consumer buying patterns toward affordable and feature-rich products.
It stressed that Africa’s largest smartphone markets recorded mixed performances as Egypt and Nigeria posted YoY growth in Q3 2020 while South Africa suffered a decline.
According to the data firm, smartphone shipments to Nigeria grew due to a shift from vendors to entry-level and mid-range devices. Also, it said the Egyptian smartphone market grew as vendors offered devices with more competitive prices, larger screens and improved features.
It stressed that despite, experiencing a 13.4 per cent YoY decline in shipments, South Africa continued to lead the way in Africa’s smartphone market, with shipments to the country totaling 3.3 million units.
A research analyst at IDC, Arnold Ponela, explained that while South Africa’s smartphone market experienced a YoY decline, shipments actually increased by17.8 per cent quarter-on-quarter (QoQ) as lockdown restrictions were lifted and the channels replenished their inventories for Q4 promotions.
Ponela said South Africa is struggling with economic hardships whereas smartphones have become an essential consumer item, making it a resilient market in a downturn.
IDC revealed that Transsion brands (Tecno, Itel and Infinix) continued to dominate Africa’s smartphone space in Q3 2020, with 42.2 per cent unit share. Samsung and Huawei followed, with respective market shares of 19.9 per cent and 8.7 per cent.
It stressed that the Transsion brands (Tecno and Itel) also dominated the feature phone landscape with a combined share of 76.6 per cent. Nokia came third with 8 per cent share of feature phone shipments.
In terms of price bands, devices priced below $200 accounted for 89.3 per cent of smartphone shipments to Africa in Q3 2020. The share of smartphones priced below $100 declined slightly from 53.8 per cent in Q2 2020 to 53.0 per cent in Q3 2020 while the share of devices priced $100-$200 increased from 34.7 per cent to 36.3 per cent over the same period.
Giving more insight, Senior Research Manager at IDC, Ramazan Yavuz, said demand for entry-level smartphones was driven by e-learning requirements since smartphones are the only devices offering Internet access for most households in Africa.
“The mid-range segment ($200-$500) declined YoY as consumers held back on upgrading to more expensive smartphones due to economic uncertainties,” he stated.
Looking ahead, IDC expects the recovery in shipments seen in Q3 to continue through Q4 2020 during the festive months, with overall shipments expected to grow 4.6 per cent QoQ.
According to the research firm, the prospects for 2021 will depend on improvements in the overall economy, which will be largely dictated by the availability of a COVID-19 vaccine.
Checks showed that to cushion the effects of bad economy on their finances, more Nigerians are embracing smartphone financing schemes. The scheme allows intending users without adequate funding at hand to get a device of their choice after making an initial deposit, with the remaining balance spread over a period of time.
Electronic commerce platforms, gadgets platforms, and banks have introduced the scheme, which is gradually gaining attention. The scheme is not limited to Nigeria, as it has gained more traction, even better, in countries including South Africa, Kenya, Egypt, and some sub-Saharan Africa (SSA).
Already, through this scheme, the Global System for Mobile telecommunications Association (GSMA), predicted that smartphone connections in the region will hit 700 million by 2025. GSMA expects Nigeria to have 154 million, South Africa 73 million, and Kenya 47 million connections.
Currently, estimates from different sources put the number of smartphone users in Nigeria at between 25 and 40 million. The exact number of users is hard to pin down.
However, available data show a strong growth outlook for the local smartphone market with user numbers to at least triple within the next five to six years.