• Friday, April 19, 2024
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BusinessDay

Examining Nigeria’s digital future

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  Mobile handsets have become one of the fastest selling items in Nigeria. Data obtained by BusinessDay Research from GfK Retail and Technology Nigeria, a subsidiary of GfK-Verien, one of the world’s market research companies, shows that 21.5 million phones were sold in Nigeria in 2012. This means that about 59,000 new handsets, on the average, are sold in Nigeria daily.

This data does not take into consideration the other thousands of phones sold in traffic, sent from relatives abroad or passed down from one relative to another. It does not also take into consideration the active secondhand phone market in Nigeria.

The high number of mobile handset sales is a reflection of the increasing mobile penetration in the country.

Figures from the Nigerian Communications Commission (NCC) show that there has been a continuous increase in the number of connected lines in Nigeria. There were 138 million connected GSM lines in Nigeria as at January 2013, although only 111 million lines were active. Nigeria’s teledensity is put at 80.85 percent as at December 2012 with the telecom sector now contributing 5.67 percent of Nigeria’s economic activity as at 2011.

An 80.85-percent telecom penetration level is a far cry from 2001 when Nigeria could boast of just 400,000 active phone lines with a penetration rate of less than 1 percent. It may also look like the market is getting saturated. Data from other parts of the world, however, shows that our current teledensity level could still grow.

For example, teledensity levels in Europe are currently estimated at about 142 percent of the population, and it is about 124 percent of the population in Northern America. This is possible because many network subscribers carry more than one phone or carry a dual SIM phone.

The Gfk data on handsets sales in Nigeria, for example, shows that an average of 58 percent of all phone sales in Nigeria is a dual SIM phone. Triple SIM phones are also gradually making their presence felt in the Nigerian market. Several factors will drive the trend where the number of connected SIMs will soon outnumber the Nigerian population.

The factors that will drive SIM penetration will mainly revolve around dropping cost of making calls, the advent of cheaper handsets, increased network coverage of telecom companies, especially in Nigeria’s rural areas, and increased quality of calls as well as income levels as the Nigerian economy starts benefitting from current reforms, particularly in the power sector.

Rising SIM penetration could have significant implications on how business is done in Nigeria. It could throw up new competitors that would give the traditional businesses a good run for their money. The eight-month rise of Jumia.com in the Nigerian retail space is one good example of how this could happen and happen very fast. Wakanow.com is another business giving the traditional business model a run for their money.

For a country like Nigeria with significant infrastructural deficits, phones, especially when internet enabled, become more than a communication tool. Mobile money, which is taking up fast across the country, is just one of the things that can happen with increasing SIM penetration in Nigeria. E-education, e-health, e-farming, e-information, e-governance are all different models that could develop as more Nigerians get on the mobile network.

What is possible with mobile phones will even be more significant as smartphone penetration improves. Majority of Nigerians access the internet on their mobile phones and this is usually easier on a smartphone. BusinessDay Research data shows that current smartphone penetration may just be about 16 percent of existing phone users. However, the expectation is that smartphone penetration will grow very fast as newer models and the older smartphones are sold in the secondhand market. Besides, even the regular feature phones are getting smarter.

Basically, as broadband penetration into the Nigerian hinterland improves, as phones get smarter and more affordable, and as incomes improve, businesses should be ready for significant changes in the traditional way things are done. It is time Nigerian businesses started thinking about business in the digital age.

Youtube, twitter, facebook, Linkedin are languages and platforms business executives should be getting a hand on very fast. Nigeria’s digital age may be closer than anticipated. For more information on how Nigeria’s emerging digital age is shaping up, watch out for BusinessDay Research report titled “Our digital future-broadband, innovative payment solutions and business innovation.” Meanwhile, watch out this Thursday for BusinessDay Research report on “Nigeria’s top 25 best-performing CEOs”.

NOTE: If you want analysis or data on any company or any particular sector of the Nigerian economy or industry or have any other queries that BusinessDay Research Unit can help you with, kindly send a mail to [email protected]/en or call 08185193932. We can also help you with your confidential market surveys and competition analysis at a cost.

 

Anthony Osae-Brown

Editor, BusinessDay Research Unit

[email protected]/en 

 

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