The State of the African Smartphone Market

The State of the African Smartphone Market

The African smartphone market saw encouraging growth in the Q3 against all odds. Report from International Data Corporation (IDC) noted that the growth has happened despite the market pressures emanating from China-U.S trade tension that has impacted smartphone markets globally.

Shipment increased by 4.0% on quarter on quarter in Q3 2019 to total 22.6 million units. The IDC’s Mobile Phone Tracker shows that Africa’s overall mobile phone market reached 55.8 million units in Q3 2019, with feature phones accounting for 59.4% of this versus smartphones at 40.6%.

“Africa’s smartphones and feature phones witnessed decline in shipments in Q1 2019. Market giants, Nigeria and South Africa posted quarter on quarter decreases of 14.7% and 23.4% respectively. In Nigeria, smartphone shipments were 2.3 million units in Q1 of 2019 which is a 11.9% drop year on year. This decline was attributed to a 3 weeks embargo on shipments of Chinese phone brands into the country, slow economic activity, prevalent cases of insecurity and the postponement of the general election. In this same period, South Africa recorded 4% year on year totaling 4.7 million units. This was attributed to Q1 being traditionally the slowest quarter in the year, and there was issue of overstocking due to volumes traditionally seen during Q4.”

The 2019 Q3 record growth was spurred by the activities of three major African markets – Nigeria, Egypt and South Africa. These factors have been noted as reasons for growth: 1. Huge influx of affordable models that saturated the markets, 2. Relative stability of the Nigerian naira (NGN) and the appreciation of Egyptian pound (EGP), all contributed to increase in consumer demand.

In the fierce competition among smartphone companies, Transsion brands (Tecno, Infinix, and Itel) are leading the feature phone space with a combined unit share of 64.0%. Nokia comes second with 10% share. In the smartphone space, Transsion (36.2%) Samsung (23.9%) and Huawei (11.4%) led the way in unit terms.

But Samsung is leading in value terms with 33.2% share, followed by Transsion (22.4%) and Huawei, (15.6%). Samsung’s year on year record in the Q3 is remarkably high at 61.4% in the low-end price band ($100-$200). Its recent position has provided a level playground, forcing Chinese companies to offer more affordable devices.

However, local African brands became protagonists of this new development. Their focus to fill the gap left by international brands in the entry-level declined by 33.6% year on year, due to the influx of smartphones of foreign origin.

But the growth of African smartphone market has seen support by another factor – price band. The $100-$200 category saw its share of shipment increase from 31.4% in Q3 2018 to 39.8% in Q33 2019. The launch of new Samsung and Transsion models spurred the growth, thanks to new features like big screen and 4G technologies. The ultra-low-end band(below $100) has been declining in recent quarters and losing share to the low-end price band because of upgrade in the smartphones that include larger screens and 4G capabilities.

The rise in the $100-$200 category is an indication that Africa is embracing the new innovations not minding the differences in the cost. Ramazan Yavuz, a research manager at IDC noted:

“2019 will prove to have been a pivotal year for the African smartphone market. 4G devices are now dominating the market like never before, accounting for 73.0% of shipments. Screen sizes are also getting larger, with devices equipped with 6-inch screens and above now accounting for 41.7% of shipments, up from just 9.0% a year ago.”

IDC says it expects Africa’s overall mobile phone market (both smart and feature phones) to total 218.2 million units for 2019 as a whole. Smartphone shipments will total 91.0 million units for the year, up 3.2% in 2018, and the introduction of more affordable devices will help drive progress in this space over the coming years. Feature phone shipments are expected to remain flat at 127.2 million units for 2019, up just 0.1% year on year, as the transition to smartphones wins popularity.

However, the concern of civil and political  instability poses a challenge to the sustenance of this growth. In Egypt, the tendency of currency fluctuation and political protests is a threat that cannot be ignored. In South Africa, xenophobic attacks have recently disrupted market activities, minimizing the market potentials, and there is no guarantee it is not happening again. In Nigeria, it’s more about insecurity and economic policies, such as the border closure that has stymied integration in the West African region.

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