PC shipments to Nigeria fall to lowest level in nine years
Shipments of ‘official’ Personal Computer (PC) to Nigeria fell 57.1 per cent year-on-year in 2016 to total 156,511 units, according to the latest figures compiled by International Data Corporation (IDC).
Statistics obtained by The Guardian, indicated that the market has fallen to its lowest levels since IDC started tracking it in first quarter (Q1) 2008. Factors such as unstable exchange rates, poor economic performance, and steady rise in refurbished grey market imports caused a decline that has been ongoing since 2013.
The country’s poor economic performance has impacted negatively on the value of the Naira, with low crude oil prices, and militant and terrorist activities further compounding the issue.
A Senior Research Analyst at IDC West Africa, Babatunde Afolayan, said: “Nigeria’s currency – the Naira, has been losing considerable value against the U.S. dollar for a number of years now. “To make matters worse, the government excluded IT products from accessing foreign currencies at the interbank rate, pushing channel partners to obtain foreign currencies from the unofficial market, where rates are typically 40 to 50 per cent higher.”
Afolayan said such factors have significantly weakened the purchasing power of end users, resulting in low demand for PC products. “Both commercial and consumer end users have been prolonging their PC life cycles beyond what is generally considered normal. And in cases where new purchases are being made, commercial end users are typically opting for cheaper models while consumers are increasingly opting for refurbished products. An additional challenge is that channel partners are no longer stocking units to meet future demand; PCs are now ordered on a need-to-supply basis, and only after orders have been fully paid.”
The import of refurbished PCs – mainly from the United Arab Emirates (UAE), United Kingdom (U.K.), and China, is proving particularly challenging for official channels, with such products comfortably outnumbering shipments of primary PCs.
Afolayan noted that at the same the same time, the volume of grey market imports is steadily increasing, adding “One of the main reasons is the lower price points at which resellers can purchase products from gray market sources, giving them better profit margins than official channels.”
The report however, observed that the government is continuously trying to improve the country’s economic performance and has implemented various strategies aimed at increasing the purchasing power of end users.
Meanwhile, the Central Bank of Nigeria (CBN), is considering the inclusion of IT products for interbank rates when it comes to accessing foreign currencies, “Such efforts are expected to drive a recovery of sorts in Nigeria’s PC market,” said Afolayan.
“We anticipate a leveling off in 2017 as foreign exchange rates stabilise and IT decision makers begin to renew spending as most of their products will have passed the end of their lifespans. IDC forecasts that this relatively flat growth in 2017 will be followed by a much stronger year-on-year increase of 59.9 per cent in 2018,” he added.
Commenting on the report, an operator, Jude Ogbonnaya, noted that because of the challenges the country is facing currently, most people are not importing PCs. He told The Guardian, “My brother, the situation we find ourselves has crippled the market. We don’t have access to foreign exchange that alone has hindered most of us in the business. The last time I made a major import was some months before the 2015 elections. I thing government should do something fast,” he said.