Galaxy eSolutions
Nov 21, 2017 · 4 min read

Nigeria: Africa’s Ripest Market for Second-Hand Smartphones

The Unprecedented Smartphone Boom

Africa is currently one of the fastest-growing mobile phone markets in the world. The past five years saw a 65% yearly growth rate in mobile phone use within the continent, which, for perspective, is double the global annual average. That accounts for some 960 million mobile subscriptions in the continent. At present, the African smartphone market is also growing twice as much as Asia’s, with recent forecasts indicating as much as 300 million users by 2020.

The dramatic growth in smartphone adoption has consequently driven smartphone sales up, with more than 200 million units shipped in 2016 — more than a 10% increase from the previous year’s figures. The reason? Smartphones are proving to be a more cost-effective communications alternative to traditional fixed-line phones. A primary driver to adoption is internet access, traditionally achieved only in Africa via a personal computer.

Environmental and economic barriers such as warfare, natural disasters, and the low income of its populations have made stringing up phone wires nearly impossible across Africa. In contrast, erecting masts for mobile networks have proven to be more economically viable. And as the average selling price (ASP) continues to plummet in response to increased demand, millions more are expected to be smartphone subscribers by the end of the decade.

Nigeria’s Smartphone Market Has the Best Prospects for Growth

In general, Africa’s major economies have experienced a dramatic intensity in smartphone penetration in recent years. In particular, South Africa, Nigeria, Egypt and Kenya have had rapidly expanding smartphone markets in the last five years. But of them all, Nigeria has experienced the most growth regarding penetration rate (averaging at 81%) and increase in mobile subscribers, which reached 150 million this year.

This 150 million figure accounts for around 35% of the country’s current population and roughly 15% of Africa’s total mobile subscriptions as of 2017. Concerning market potential, Nigeria has 62.2 million more internet subscribers and 52.1 million more users than Egypt, as well as 65.3 million and 110.78 internet and mobile users than Kenya, respectively. If current trends continue, shipments of new smartphones to Nigeria are expected to increase as much as 60% in 2020, effectively making Nigeria the largest smartphone market in Africa, and one with the most potential as a growing market for GSM phones.

Barriers to Penetration and Price as the Primary Adoption Factor

Despite the unprecedented growth of the smartphone market in Africa, there are various barriers to smartphone adoption in the continent, such as the lack of electricity and a relative dearth of telecom infrastructures in general. But perhaps the most significant barrier is poverty, which has a direct impact on the purchasing power of Africa’s populations. Nigeria, for one, and despite its booming economy, is still rife with low-income households, mirroring the trend across the entire region.

This explains a few things: 1) the marginal market share of brand-new iPhones in Africa; 2) the popularity of lower-priced brands like Samsung; 3) price becoming even more significant as a factor when purchasing phones. As a recent Quartz article remarked, “Price competitiveness has become a key issue in many African markets… To grow significantly in these markets, vendors have to be able to address the continent’s large low-income population by providing phones that are priced very competitively.”

Forecast: Continued Growth for Online Retail and Immense Market Potential for Used Phones

Online retail has also experienced a boom in Nigeria and other countries in Africa, a response, in part, to the growth of internet subscribers. Jumia, Nigeria’s largest online retailer, reports that the increase in demand has driven their ASPs down, from $216 in 2014 to just $117 this year. The company also notes that its sales grew by 394% over the same period.

Given all these, there appear to be significant market opportunities for used smartphone retailers in Nigeria in particular, and Africa in general, specifically in the following ways:

· As mobile telecom infrastructure grows, the market share of online smartphone retailers is set to increase;

· As price continues to dominate purchase considerations, demand for cheaper but feature-rich GSM alternatives will continue to rise;

· Refurbished iPhone retailers can cater to the current gap in Apple product sales, and could compete with ASPs of established retailers;

· Used phone retailers can also sell refurbished versions of popular brands in the region, like Samsung, which currently ranks first as the most traded phone in Africa;

· Africa’s second-hand market is virtually untapped despite the demand and the infrastructure being present, meaning immense revenue potential for initial traders in the market.

In particular, Nigeria’s current market conditions make it the most viable market for used smartphones in Africa. To learn how you can take advantage of Nigeria and Africa’s significant market potential for used smartphone retail, watch the Galaxy eSolutions video and partner with us today through our GES ICO program.

Galaxy eSolutions

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Hybrid eCommerce ecosystem on blockchain in the multi-billion preowned and refurbished market.

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