East Africans to pay more for smartphones
Saturday March 28 2020
A mobile phone user. Last year, Kenya's smartphone market saw shipments increased 20.3 per cent year on year (YoY) in Q4 2019 while Tanzania and Uganda experienced YoY growth of 8.7 and 8.6 per cent respectively. FILE PHOTO | NMG
The East Africa smartphone market is projected to decline by 12 per cent in the first quarter this year and fall a further 3 per cent in the subsequent quarter due to disruption of shipments by coronavirus pandemic across the globe.
The market across the region will remain low for the first six months of the year, with a market recovery expected in the third and fourth quarter of 2020 if the virus is contained and supply chains return to normal.
According to the latest report by global research firm, International Data Corporation (IDC), effects of Covid-19 are anticipated to cause an overall yearly decline of the East Africa smartphone market by 1.6 per cent compared with 2019.
The number of smartphones shipped into Kenya is expected to drop by more than 10 per cent in the first half of 2020 and prices to increase due to supply constraints, reversing the growth seen in the last quarter of 2019 when it grew by a fifth.
Last year, Kenya's smartphone market saw shipments increased 20.3 per cent year on year (YoY) in Q4 2019 while Tanzania and Uganda experienced YoY growth of 8.7 and 8.6 per cent respectively.
These three markets combined saw total smartphone shipments of 10.7 million units, up 13.3 per cent on the 9.4 million units that were shipped in 2018.
The smaller markets of Tanzania and Uganda are likely to see steeper declines as the priority of limited supply is expected to be given to the bigger Kenyan market.
Increased prices
Top distributors and retailers have warned that prices of consumer goods, mobile phones, TVs, and fridges, among others, will rise from March 2020 as the effects of the Covid-19 pandemic disrupt supply chains as those distributors that shipped in goods in bulk before the start of the Chinese New Year in January expect to run out of stock in a few weeks.
"While the decline would be more drastic under the pessimistic scenario, stocks that were imported in the early months of the quarter have helped to stem the decline," says Dr Ramazan Yavuz, a senior research manager at IDC.
He added, "In Q2 2020, the market will continue to decline due to supply chain disruptions in China. The prices of the available smartphones will also rise slightly, driven by the shortage in supply as we expect the virus being contained by Q3 2020, at which point production should fully resume."
The report indicates Chinese brands Tecno, Itel, Infinix, Oppo, Xiaomi and Huawei account for more than 85 per cent of total smartphone shipments to East Africa while other brands such as Samsung and Nokia source their components from China, with the assembly of a certain portion of their devices also taking place in the country.
The slowdown in the market has been attributed by the dominance of the Chinese brands in the East Africa market and the dependence of other brands on China for components and assembly.
The IDC report noted that the virus is expected to affect the launch patterns for new smartphone models considering China closed all its factories following the Covid-19 outbreak thus severely disrupting the supply chain for components used in the production of smartphones.