Bleak Year ahead for Nigerian Handset Market.

According to Wall Street Journal, the global economic downturn and weakening demand, handset makers and vendors affiliated with cell phone components are probably headed toward a large shakeup in 2009.

Mobile penetration in Nigeria is close to 48 percent of total population of 140 million people and this has fuelled the strong market standings of major Handset suppliers and resellers in Nigeria in the last few years. Mobile handsets of different models and from diverse makers can be bought at most mobile outlets across the cities in Nigeria at competitive prices.
The immediate effects of global recession for this market will not be visible for the grey market merchants whose source of products are from Dubai and China because they still have unorthodox method of sourcing foreign exchange which has declined in value significantly since December. Since they also pass on grey phones as originals, their margins will still be manageable and higher.
The challenge lies at the doors of the original handset importers or representatives which cannot engage in unwholesome practices and must pay every form of duties to get their stock into the market.
Network expansion is a chief driver of Handset acquisition. The questions are, How many new towns and villages will the Nigerian operators add to their foot prints in year 2009 in face of dwindling resources and High credit cost, equipment financing, cost of funds and Low ARPU projections from new town / villages add-on.

The declining value of the Naira against every major world currency automatically translates into higher prices in an economy with fast declining disposable income per head.
Mobile operators might benefit in a recession since subscribers will have to weigh cost of doing businesses, traveling against making of calls. Making of calls will always be a cheaper alternative in Nigeria with fast decaying transportation channels.
Due to increased competition, some dominant GSM handset makers will be enticed to look at the cdma market which is operator tied market in Nigeria. Players like Huawei and ZTE will focus on bringing to the table, cheaper handset models that will significantly reduce entry cost for end users.
Nokia should focus on selling its High portfolio phones which it has in abundant ranges, based on benefits and rather than functionalities. They should be at the fore front of educating the end users what values these phones can deliver to enhance productivity.
In the third quarter of 2008, about 309 million mobile phones were sold world-wide, a 6% increase from a year earlier, but a significant decline from the 16% year-to-year growth seen in the third quarter of 2007. Replacement sales were hit especially hard, while first-time users remained active. Nokia kept the lead with 118 million handsets or a 38.2% share, Samsung sales were around 53 million or a 17.1% market share whereas Sony Ericsson came third with 24.8 million handsets sale and a market share of 8.1%.How many of those came our way in Nigeria is not clear since there is no public information in that regards but Nokia still remains a market leader, followed by Samsung.
The quick way forward to rebound the markets in Nigeria will be significant up take in Mobile Banking and if before end of year, Nigerian Banks and Investors are able to launch mass market and application based mobile payment systems, this will open a new strong channel with strong compelling factors.For the market to strive in 2009, Phone makers will need to do more than placing Billboards on the streets.The time to engage the ecosystems is Now.

Emmanuel Okoegwale
Mobile Marketing Specialist