Nigeria’s smartphone uptake set to improve in 2018

Analysts at Counterpoint Research expect the smartphone market in Nigeria to grow in double digits in CY 2018, driven by the entry of new players and changing OEM strategies.

According to analysis firm’s Market Monitor research focused on the Nigerian handset market, the feature phone market grew 15% annually, offsetting the smartphone decline in 2017, due to a recent economic recession.

The research is comprised of shipment estimates based on vendors’ investor relations results, vendor sales, supply chain checks and secondary research.

Research analyst Anshika Jain said the overall Nigerian handset market declined 8% Y-o-Y in 2016, as the economy (highly dependent on oil exports) witnessed a major downfall in GDP due to plummeting oil prices which triggered a recession, affecting buying power.

This adversely affected the purchasing power of the people. “The overall handset market experienced modest growth of 6% p.a. in CY 2017 as the market is slowly moving out of recession. The situation is likely to improve in 2018,” said Jain.

According to Counterpoint Research, the over smartphone market in 2017 contributed to 52% of the total handset volume, declined by 1% YoY.

Samsung led the overall smartphone market with 34% share in terms of shipments volume, it added

“Samsung still retains the top position with more than one-third share in the total smartphone market. While in the feature phone segment, the market is dominated by a single OEM with 76% share. This highlights the dominance of Chinese players in the feature phone market,” The research stated.

According to Jain, the top two OEMs – Samsung and Transsion Holdings (which owns Tecno, Itel, and Infinix) captured two-thirds of the total smartphone market. “Apart from these two, other leading smartphone players include Huawei, Lenovo, Fero, Alcatel, Gionee, and Apple. These brands capture a smaller share of the overall Nigerian smartphone market.”

Tarun Pathak, Associate Director at Counterpoint Research said almost one-third of mobile subscribers currently use smartphones in Nigeria. “Operators like Airtel and MTN will also look forward to partner with OEMs and Microfinance companies to drive smartphone penetration across the country.”

According to the GSMA’s Mobile Economy 2018 report, mobile subscriber penetration in Sub-Saharan Africa will reach 52% in 2025 compared to 44% in 2017 and 48% in 2020. “In terms of mobile penetration of population, Sub-Saharan Africa will have the largest increase between 2017 and 2025 (8 percentage points).”

Some of the challenges faced by the overall African smartphone market, according to Jain, include affordability and costs, low internet penetration, and a weaker economic climate.

She says Africa is one of the largest continents with more than a billion people, but remains highly underpenetrated in terms of mobile connectivity.

“Less than half of the population still doesn’t own a mobile phone and thus offers a great opportunity for every player in the mobile value chain. Due to this offline is the major channel for mobile device sales.

“Due to lack of infrastructure, it is a challenging task to leapfrog into semi-urban and rural markets. Additionally, the economic slowdown has adversely affected the purchasing power because of which people upgraded to low-cost feature phones rather than smartphones.”

“However, as per our estimates, smartphone adoption is likely to grow in Nigeria and other African countries in coming years as smartphone Average Selling Price is declining and more brands are entering into the mobile ecosystem.”