Used electronics prices spike as importers juggle multiple costs

Fairly used household electronic products are increasingly going out of the reach of Nigerians, as a weaker exchange rate and other factors that have contributed to the rising cost of imports trigger price spikes.

Many who depend on imported used electrical and electronic equipment (UEEE) typically turn to markets like Westminster in Lagos for cheap products.

Westminster is a popular market for household and kitchen accessories, and electronic gadgets, whether used or old.

More retail shops have dominated the ever-bustling market in recent times. Prices of goods have also increased due to a combination of factors from the exchange rate depreciation to the COVID-19 pandemic, which forced countries to close borders.

Multiple sources confirm that importers are finding it difficult to import and access to the market is also a major challenge.

About 60,000 tons of UEEE were imported to Nigeria per year via the Lagos’ ports in 2015 and 2016, often mixed with household electronics.

The major sources of imports are China (23%), United States (21%), Spain (11%), the United Kingdom (9%), the UAE and Morocco (4%), Malaysia, Germany, Belgium, and Hong Kong (around 3% each), according to a report.

Apart from the cheap prices and aiming to save cost, some Nigerians prefer to buy second-hand electronics because they are believed to have a longer lifespan compared to new ones.

TV sets have tripled

In 2013, a small fairly used TV set cost N5,000, and N10,000 for the big size while a radio set was sold for N1,200, N3,000, N4,000, depending on its size.

But a recent market survey by BusinessDay shows that prices of second-hand TV sets have more than tripled.

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Moses, one of the traders interviewed by BusinessDay, has been trading at Westminster for over a decade. His 19 inches TV set cost N28,000, even though it is only powered on after several trials. It was about 50 percent less some two years ago.

For a 32-inch TV set, which comes in different types, a consumer could buy for between N38,000 and N45,000 at his shop, but this depends on the model and the features it comes with.

Reminding our correspondent that the prices of goods have gone up, he insists that no TV set can be sold for as low as N10,000—not even a non-tested one.

‘Non-tested’ at Westminster means a product you are not sure will work primarily because it has not been tested. It is also called blind market.

“Clearance is becoming a problem to importers,” he begins explaining the reason for the price hikes. “When goods get to the ports, customs charge so much that they are frustrated.”

The Apapa Port complex is located 9.3 kilometres away from the market and it would take only 22 minutes to get to it, but importers are charged about N1.3 million to get the goods to Westminster.

They also pay heavily for offloading, and these also add to the cost the consumer is left to bear.

Moses blames Nigeria’s system of government, describing it as very bad as it worsens their woes, saying the amount of money they use in clearing their goods is usually more than the entire goods in a container.

So, making profits has now become a question of how each product is sold.

Microwave

New microwaves are sold for between N25,000 and N30,000. The asking price for a fairly used one is N15,000.

“I’ve tested it and it’s working,” he said, as he made to bring the product.

Dealers like him source the product for N10,000 from importers who import from France and the UK, meaning that only a profit of N5,000 would be made if sold at N15,000.

Microwaves used to be sold for N7,000 or N8,000 tops. Things have now grown expensive and Paul blames it on the exchange rate and the pandemic too. He further argues that most electronic products are not even available to buy.

“Even electric iron that used to be N2,000 is now N4,400. We can’t sell for N5, 000,” he concludes, insisting that the least price for microwave is N10,000 to enable him break-even at least.

Microwaves come in different types—one that is used for warming only, and one that is for warming, grilling, and baking. This is more expensive.

Like it is with at most markets, prices vary from one shop to another. While Paul’s could not go lower than N10,000, the least price of some traders for microwave was between N12,000 and N11,000. Others stop at N8,000.

Bad roads, traffic gridlock were also named as reasons partly responsible for increased prices. One Bose, who spoke with BusinessDay, explains that vehicles do not bring in goods anymore due to traffic, as they now depend on cart pushers to take goods into the market.
“It is very expensive,” Bose laments.

Electric kettles on the rise

The prices of electric kettles are no less expensive.

A trader told BusinessDay that before now you could buy an electric kettle for N2,000, but now, the cheapest is N4,000 and some will not be clean. That’s a 100 percent increase.

According to him, there are some for N8,000, N10,000, and N6,000. “If they give for N3,000, it will be the plastic one with lots of dents on it. Everything is high,” he noted.

Near empty shops and low sales

Nigeria’s consumer electronics market has grown, thanks to a steady rise in population.

Nigeria’s huge population and low purchasing power have also triggered growth in the used electronics market.

The imports of UEEE can generate considerable profits, especially if they can be sold primarily for re-use. The overall profits depend on the quality and the brand of the goods and the exchange rate prior to the crash of the naira and the pandemic.

The negative impact now experienced by importers, which has increased prices exponentially, is not only affecting consumers who also have been struggling from weak disposable income and are yet to enjoy Nigeria’s reported bounce-back from recession. Traders are feeling the pinch too.

Joy’s container shop reeks of rust metals clearly from damaged old products. Unsold electronics litter in every corner and left to rust away, indicating that she lacks customers or has difficulties selling off her wares.

But most significantly, the shop is scanty. “There is no market that’s why my container is like this,” she says.

She explains clearing charges run into millions and it is pushing some importers out of business, as clearing has become really difficult.

“They call big money for clearing— N10 million, N15 million, N20 million. Many importers don’t go again. Another thing is there is a lockdown abroad. So, it has affected many things, including importation,” she explains.

Although there were no customers at her shop, and none stopped by, except for a man who came to tease her, Joy says most of her clients place orders, and she delivers to them.

But for Bose, the situation had been critical for days, despite a filled shop. She and her mother have had to deal with poor patronage as customers leave due to steep prices.

Our reporter watched as three buyers left angrily when she told them that the price for a wireless clipper was N5,000. The buyers said they would return after they surveyed other shops for prices but they did not after three hours.

Pleading then became the last resort to getting buyers just to make a sale for the day.

“Please, patronise me, I’ve not sold anything since morning,” she pleads. “Market is bad. When we call prices for customers, they go elsewhere and say they are not buying again.”

But importers themselves are helpless.

Importers are choked by congested ports, which make it difficult for containers to be discharged at the Terminal. Delays in getting cargo are frustrating shippers as it now attracts heavy demurrages and storage charges.

The port access roads are more than a scourge. These have morphed into being a common problem that is above solutions.

Jonathan Nicol, president of the Shippers Association of Lagos State, said the cost of electronics certainly would increase after adding the cost of clearing while decrying the cost of transportation in the same breath.

“Transportation cost from the Apapa Main Port is abnormal. From N800,000 to N1,000,000 to Ikeja and Alaba markets. It is outrageous. Apart from that, there is no guarantee that your goods are safe as government agencies visit the markets to extort money from importers,” he said.

The government has tried to introduce some solutions to some of the challenges, particularly those related to transportation and access to ports.

The Lagos State government recently digitised call-up for more controlled and orderly access into the Apapa ports, but also to reduce traffic congestion along the axis.

But, said to be on trial, the new call-up system is holding down the cargo of shippers because trucks are not going inside the ports. Though this creates another problem for shippers, they are being advised to support the system.

Nonetheless, Nicol revealed that they would eventually call for ease of demurrages, and demand for waivers as time goes on to avoid always being at the receiving end. But would this move ease the pressure on consumers?

“At least it will be a temporary relief,” he said. “Goods cleared at high cost will be sold at the rate it attracted during clearing. Reduction of cost of doing business will come naturally if the trading platform is regulated.”

On the flip side, economists forecast a continued rise in the inflation numbers, despite the news of Nigeria’s recent bounce back from recession. This is because prices for major drivers of inflation like petrol and electricity tariffs have gone up.

The head of Portfolio Management at Comercio Partnera Asset Management, Victor Aluyi, said the imminent increase in pump prices typically has a knock-on effect on the entire economy.

This implies more hardship for Nigerians and a worsened disposable income. Ultimately, there will likely not be any respite for the wallets of Nigerians any time soon.

Aluyi blames the problem of exchange rate on the weakness of the economy and Nigeria’s strong reliance on oil for foreign exchange earnings.

The solution, according to him, is not an easy one, (because) it would lead to near term economic hardship, the political price of which no one might be willing to pay.

“We just need to sort out a lot of things with our economy to significantly reduce our dependence on imported foods and services. We need to build the infrastructure that allows local production thrive,” he suggested.

Nevertheless, some good news can be spotted on the COVID-19 front. With the beginning of COVID-19 vaccination around the world, the hope is that the global economy will open up.

Tunji Andrews, economist and co-founder, Awabah Nigeria, said the vaccine would boost the economy in different ways, but the core issue with the supply chain was that it would take some time to build up that supply from source and then into Nigeria.

“There will always be a positive to the vaccine and I agree that it will ease the market over a period of time, but not to the extent that you will see a huge turnaround. Prices will drop in 12 to 18 months as the supply chain gets better,” he said.