Nigeria records drop in digital technology, smartphone sales

… as South Africa takes lead as highest grossing market for digital devices

Nigeria, which used to be the highest grossing market for technology devices, has seen a drastic decline in purchase of digital devices and smartphones within the last one year because of the falling naira and economic downturn, experts say.

Technology experts in South Africa say factors such as oil price crash, which has cut Nigeria’s government revenue by more than 50 percent, while forcing the central bank to initiate several measures to curb import and spending cut of fixed income earners in the face of more than 16 percent inflation rate have affected sales of technology products. And industry watchers say there has been a significant reduction in the number of new entrants in Nigeria’s technology market.

Speaking at the Samsung Africa Forum 2017, held in Cape Town, South Africa, Sunil Gupta, regional product manager, Digital Appliances, Africa, said “Nigeria used to be the biggest economy in Africa and it is very close to our hearts at Samsung because we are leaders in the digital devices market in Nigeria, but obviously, sales has reduced drastically because of the currency fall.

‘’Devices, which used to be low priced now cost much more because the value of dollar which is the global price rate to Naira is now more than triple.

“Currently, South Africa has taken over and is now the biggest recipient to our latest innovations because of Nigeria’s economic lull.”

Industry experts say this is disappointing as Nigeria, which became home to technology giants such as Huawei, Samsung, LG, Apple, Nokia, Lenovo, among others, as a result of the growing tech community, teaming youth population, size and wealth, has seen some of these device manufacturers leave the country as a result of not being able to break even on sales.

In 2015, before the country was declared to be in a recession, reports by GFK retail and technology Nigeria listed Nigeria as the third highest technology device growth market globally, with a 13 percent growth between 2014 and 2015. According to the report, sales of technology devices rose from $5.1 billion in 2014 to $5.7 billion in 2015.

The decline in prices of gadgets at the time opened access to cheap smartphones for all including ICT illiterates and fuelled the speedy adaptation of mobile applications and increased broadband penetration.

However, with prices of digital devices increasing, consumers in Nigeria have shifted more towards purchasing more practical digital home appliances rather than luxury devices.

“Between the beginning of 2016 up till now, consumer trends have shifted and more people who are technology driven, have not necessarily stopped buying digital devices, but we have noticed that they are now more interested in buying necessary home devices like smart televisions, innovative air conditioners, smart refrigerators and others. These are devices that could be used for as long as ten years without needing a replacement but not so much sale of Smartphone devices which was growing exponentially between 2013 to 2015,” Olasubomi Sodipo, CEO, CF Mobile, said.

According to Shodipo, “This is because a cheap smartphone which could cost about N8,000 to N10,000 in the market before has now crippled in price because of the falling naira.”

Gupta told BusinessDay that Samsung had a very good market share in the washing machine and air conditioners market where they have up to 33 percent market share in Nigeria, as customers continue to show trust in the brand, however, sales have reduced significantly in the past one year due to the currency devaluation and recession in the country.

Analysts say the continuous fall of the Naira could seriously affect mobile subscriptions on smartphones in Nigeria, which before 2015, was presumed to rise by 21 percent annually from 2016 to 2022, unless Nigeria began to manufacture and sell its own smartphone and digital devices.

Chijioke Anthony, chairman, Sidmach Technologies told BusinessDay that; “Most Nigerians have smart phones and smart devices but none is made in Nigeria, how many are even made in Africa? So the challenge before us is to find a way, over the next few years while we are still active, to bring these things down here, not just to assemble because we can see the effect of assembling.

Those who assembled IT systems like servers, desktops, and laptops are huffing and puffing because the market is not there.

“Someone needs to be in control. We must go beyond that with the active cooperation of government, and let them know that it is time to deliberately develop the indigenous IT market, so that we can help our current economic situation,” he said.

The smart phone and technology companies are attracted by Nigeria’s demography of mainly young people, as well as technology gaps in the country and huge market size, however, analysts say the unfavourable economic situation might drive them away from the Nigerian market to focus on other emerging African markets, hence the reason why it is important for local technology to develop rapidly.