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Rising inflation and a shortage of currency reduce the demand for smartphones

Rising inflation and shortage of foreign currency led to a 32.1 per cent decline in Nigeria’s smartphone market in the fourth quarter of 2022, a new market analysis by International Data Corporation has disclosed.

According to the market intelligence firm, Africa’s smartphone market declined for the sixth consecutive quarter in Q4 2022, with shipments falling by 17.8 per cent year-on-year to 17.6 million units.

It stated that the dip in the smartphone market was not isolated as the continent’s feature phone market also fell in Q4 2022, with shipments down 16.2 per cent to total of 22.7 million units.

The firm said, “Nigeria’s smartphone market declined 32.1 per cent y-o-y in Q4 2022 due to sustained high inflation and a shortage of U.S. dollars in the country.

South Africa was the least affected market in the region, declining just 1.8 per cent y-o-y, thanks to an increased focus on the country from Chinese vendors, an improved performance from local brands, and promotional activities that took place during the festive season.”

The firm’s market insight revealed that Egypt recorded the largest drop, 56.2 per cent y-0-y, in smartphone shipment on the continent because of the introduction of new import regulations, which led to device shortages and higher prices.

A senior research analyst at IDC, Arnold Ponela, said, “The mobile phone industry is now challenged by constrained demand even though the supply constraints that had previously been weighing on the market have started to ease off.

“Inflation and economic uncertainty have seriously dampened consumer spending, causing vendors to cut back drastically on shipments as their largest markets continue to struggle. The situation is not unique to Africa, with smartphone shipments declining across all major global markets in 2022.”

According to the firm, rising inflation and growing macroeconomic issues are restricting consumer spending, causing phone vendors to be increasingly cautious with their shipments.

It revealed that phones like Tecno, Itel, and Infinix continue to dominate the smartphone market in the region.

The IDC added that smartphone demand is expected to improve in 2023.

In 2022, Nigeria’s inflation rate rose from 15.60 per cent in January to 21.34 per cent in December.

Improving smartphone access is crucial in Nigeria as only about 44 per cent of Nigerians had access to smartphones in 2022, according to a report by Alliance for Affordable Internet.

According to experts, smartphones offer a relatively cheap gateway into the digital world.

Speaking recently at the launch of MTN’s device financing event, the Chief Marketing Officer of MTN Nigeria, Adia Sowho, said, “Smartphones have become the computer for many Nigerians today.

“Unfortunately, the high costs of these devices have made them out of reach for many. Factors such as forex fluctuation, chipset shortages, and inflation are continuously driving up the cost of phones.”

Since Nigeria does not produce any smartphones, it relies heavily on imports to meet the technology demand of a teeming youth population.

Recently, the Nigerian Communications Commission disclosed that about 63 million technology devices are sold yearly in the country.

In 2021, the country spent $772.25m importing phones, according to data from the International Trade Centre.


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