Nigeria’s embargo on Chinese phones ‘hit top players’

Nigeria’s embargo on Chinese mobile phone brands has affected major players in a market segment dominated by growing popularity of devices like Tecno, a smartphone market research reveals.

International Data Corporation’s (IDC) Quarterly Mobile Phone Tracker shows Africa’s smartphone market saw a 7.1% decline in shipments quarter on quarter (QoQ) in Q1 2019 to total 21.5 million units, partly due to the embargo placed on Chinese mobile phone brands by the Nigerian government.

“Nigeria saw smartphone shipments of 2.3 million units in Q1 2019, down 11.9% YoY. The country's poor performance can be attributed to a three-week embargo on shipments of Chinese mobile phone brands into the country, which negatively affected major market players”, according to the IDC report.

“Nigeria saw smartphone shipments of 2.3 million units in Q1 2019, down 11.9% YoY. The country's poor performance can be attributed to a three-week embargo on shipments of Chinese mobile phone brands into the country, which negatively affected major market players.”

IDC

President Muhammadu Buhari

Arnold Ponela, a research analyst at IDC also notes that economic activity in Nigeria “is usually slow in the first quarter and in Q1 2019 it was further exacerbated by widespread insecurity and the one-week postponement of the general election.”

Meanwhile, Africa's smartphone market saw a 7.1% decline in shipments quarter on quarter (QoQ) in Q1 2019 to total 21.5 million units with the continent's two biggest markets – Nigeria and South Africa – underperforming due to seasonal effects, posting QoQ declines of 14.7% and 23.4%, respectively, according to IDC.

The picture is no different in South Africa where overall mobile phone market contracted 4.0% YoY in Q1 2019 to total 4.7 million units. "The decline can be attributed to seasonal factors, with Q1 traditionally being the slowest quarter of the year," Ponela says. "There was also an issue with overstocking in the channel because of the buoyant volumes seen during Q4, traditionally the strongest, when demand is stirred by Black Friday and the Christmas season."

The IDC exec says that "while Africa's smartphone market experienced a QoQ decline, shipments actually increased 5.6% when viewed year on year (YoY)."

Mobile phones on display at Ikeja Computer Village in Lagos

According to Ponela, "The YoY increase indicates that the market is showing some signs of improvement, while the QoQ decline can be attributed to the traditionally weaker performance of Q1 versus the seasonal buoyancy of Q4, in addition to disappointing results in some large markets."

The IDC reports says that Africa's smartphone market continues to be spurred by the growing popularity of low-end to mid-range devices from players like Transsion, owners of the Tecno and Itel brands, which top these segments and remain the continent's leaders in terms of overall smartphone shipments, together accounting 33.1% of the market's volume in Q1 2019.

Samsung followed in second place with 24.5% unit share. Huawei ranked third with a unit share of 11.8%. "With most of the continent's markets experiencing numerous economic challenges, it is clear that cheaper phones offering better value will increasingly dominate the market," Ponela says.

In the feature phone space, shipments were down 5.8% QoQ and 0.3% YoY in Q1 2019, with shipments totaling 31.6 million units. Feature phones still constitute a significant 59.9% share of the total mobile phone market due to their relative affordability and durability, and they continue to play an important role in connecting even more Africans to the Internet. Transsion brands Tecno and Itel continue to dominate the feature phone landscape with a combined unit share of 59.7%, followed in third place by HMD with 9.2% share.

IDC expects Africa's overall mobile phone market to total 50.9 million units in Q2 2019, reflecting a YoY decline of 5.3% caused by sharp downturns in most countries. The technology market research company’s study shows that 4G LTE networks are continuing to spread their reach in Africa, with shipments of 4G LTE devices increasing 15.1% YoY in Q1 2019 to constitute 67.1% of the smartphone market. Drop in prices for entry-level 4G phones and discounted tariff and data plans on the operator side are driving this growth in this space.

“However, despite the rapid penetration of 4G handsets, 2G and 3G mobile devices remain resilient as an economical option for price sensitive consumers”, IDC says.