Domesticating Gains of Nigeria’s Booming Smartphone Market

With a huge population, the ongoing transformation in the nation’s telecoms industry, and the enthronement of a financial sector that is driven by technology, it is easy to understand the sustained jostling for the Nigerian market by smartphone makers from all over the world. However, what is difficult to understand is why Nigeria is still outsourcing the production of the device that drives virtually all the day-to-day activities of its citizens, writes Festus Akanbi

It is not a secret that Nigeria with its huge population has remained an investment destination for investors and entrepreneurs from all over the world seeking to get value for their investments. From Europe to Asia, the Middle East, and America, multinationals and other producers of household goods jostle to carve market spaces for their goods and services in Nigeria obviously to take advantage of not only the rising population of youths but the changing tastes and needs of the Nigerian people.

It is therefore not a surprise that smartphone makers appear fixated on the Nigerian market as a cash cow and the reality is ever since the GSM revolution of the early 2000s in the country, the bourgeoning telecoms market has continued to provide jobs and services for millions of people.

Unfortunately, virtually all the smartphones sold in the country are imported, a development that has continued to rob Nigeria of job opportunities for its teeming youth population and other associated benefits that local production of these items would have engendered. Painfully, the only indigenous operator, AfriOne struggles to stay afloat in the country.

Boom for Asian Smartphone Makers

It is this reality that was captured by a new report which asserts that Asian smartphone makers are reaping the rewards of the country’s growing demand for mobile devices.

According to the report titled, The Telecommunications Industry in Nigeria 2022 published by ResearchAndMarkets.com, “About 63 million phone devices are sold in Nigeria each year.” The painful reality, however, is that despite Nigeria’s huge markets, manufacturers from Asia dominate the Nigerian mobile market.

Although there are brands from countries including Finland, France, America, India, Japan, Philippines, Taiwan, South Korea, South Africa, and UAE, however, the bulk of the brands found in the market belongs to the Chinese with experts putting such brands at over 300 models in the last 15 years.

Some of these phone brands include Tecno Mobile, Nokia, Wiko, Samsung, Panasonic, Huawei, Asus, Apple, HP, Google, Gionee, Alcatel, and Oppo, among others. Each of these has significant market shares, as mobile phones remain the main platform for voice and data connectivity with the majority of Nigerians accessing the internet through mobile phones, the report explains. 

There were reports that the number of phones approved for sale in the country by the Nigerian Communications Commission (NCC) increased to 1,985 as of April 2023.

However, apart from these approved brands, industry operators said the inability of the NCC to enforce standards for all telecommunications equipment in Nigeria has opened the gate for the influx of substandard smartphones in the country. Unfortunately, the substandard ones have bigger markets because of their affordability.

Another category of smartphones in the market is the one consisting of stolen phones. The sheer population factor and the falling purchasing power of the people have also been blamed for the surge in the number of stolen phones and the attendant boom in the patronage of such stolen items.

The reports added that 24 new phone models were approved in the latest update from NCC between January and now. As of January, the figure was 1,961 before hitting 1,985 in April.

Another dimension is the job opportunities in the backup end as many youths have taken to phone repairs as an occupation, given the sheer number of phone users in the country. However, industry operators believed Nigeria would have gained substantially if the environment is made in such a way to encourage local entrepreneurs to set up smartphone factories in Nigeria with the capacity to employ a greater number of the youth population.

This is because, with a population of over 200 million people, Nigeria had over 226.84 million subscribers as of February 2023, and going by the changing nature of the Nigerian economy the telecoms sector has a growing capacity to drive the country’s transformation agenda toward a digital economy. It added that the telecoms sector is growing due to a rising urban population and increasing adoption of smartphones, services, and apps.

Checking Influx of Substandard Smartphones

With many Nigerians sliding into poverty, telecoms industry operators said it will be difficult to succeed in the war against the influx of used and fake smartphones in the country as reports say that the shipments of used smartphones, including officially refurbished and used smartphones, reached 282.6 million units in 2022, where its unit growth represented an 11.5 per cent increase over the 253.4 million units shipped in 2021.

Last year, the International Trade Centre (ITC) claimed that Nigeria spent $2.35 billion on telephone importation in three years. ITC, which is an international body that focuses on trade, said the country spent $807.95 million on the importation of phone sets in 2019; $765.57 million in 2020, and $772.25 million in 2021.

Cashless Policy

Telecoms industry watchers told THISDAY that one of the government policies that is expanding the coverage of smartphones, services, and apps is the Central Bank of Nigeria’s cashless policy. The policy recently gained currency with the cash withdrawal policy which compelled Nigerians to embrace online banking transactions. 

The policy, according to Mr. Sunny Iroegbu, a smartphone dealer in the Lagos Computer Village, Ikeja compelled more Nigerians to acquire more internet-enabled phones between January and March this year. 

“To be honest with you, it was a bumper period for smartphone dealers because of the massive rush for phones. People had to download banks apps since cash was not available in banks,” he said.

His position was corroborated by the report by ResearchAndMarkets.com report which finds that in Nigeria, the growth of e-services and cloud computing is fuelling demand for data services. It identifies the expansion of the 4G network and rollout of 5G as key drivers of growth, along with the growing need for mobile base stations and cell towers to support these networks. The report includes profiles of 23 companies, including major players MTN, Globacom, Airtel, and 9mobile, and other notable players such as 21st Century, IHS Towers, and Inq. Digital, ipNX, and MainOne Cable Company.

Analysts are of the view that as network service providers- MTN, Airtel, Globacom (GLO), and 9mobile continue to push their frontiers, their exploits which are being boosted by the expansion of the 4G network and rollout of 5G and the growing need for mobile base stations and cell towers to support these networks will make the nation’s telecoms sector a major driver of the Nigerian economic breakthrough for a long time.

And according to the report, “Expansion of connectivity is driving increased investment. The growth of e-services and cloud computing is fuelling demand for data services. There is a growing interest in fibre following increased bandwidth capacity and mobile financial services are gaining widespread use and acceptance.”

Strong Growth Opportunities

The number of smartphone users in Nigeria is forecast to grow to more than 140 million by 2025. Currently, estimates from different sources put the number of smartphone users in Nigeria at roughly 25 and 40 million although a report said there are around 170 million subscriptions in Nigeria. The exact number of users is hard to pin down – however, the data shows a strong growth outlook for the Nigerian smartphone market with user numbers to at least triple within the next five to six years.

The good news is that smartphone penetration is set to grow to around 60 per cent by 2025, presenting strong growth opportunities for feature phone and smartphone manufacturers alike. This will complement the existing vendors including Samsung although Chinese manufacturers like Tecno, Itel (Hong Kong), and Infinix (Hong Kong) are also holding strong positions in the market.

Nigerian society had its first feel of mobile telephony in 2001. Interestingly, the Global System for Mobile Communications (GSM) is almost in its 21st year in Nigeria. At inception, what mattered was getting a means of virtual communication without having to depend on people who owned land phones to communicate.

There is no doubt that the African mobile communications market has undergone rapid developments in recent years. Exclusive handsets designed for the market, and the increasing popularity of built-in services such as mobile money have led to increased adoption of mobile technology in Africa. While the conditions vary across different countries and regional economic communities, most signs point to mobile technologies facilitating an increasingly connected continent. But the question is when will Nigeria begin to reap from its huge market for smartphones? How long will the country continue to serve as a dumping ground for smartphone products, especially from the Asian country? One hopes the incoming administration will maximise the huge market potential in the country by providing the much-desired enabling environment for industries to thrive.