Why the number of Nigerians buying PCs fell to lowest levels

The International Data Corporation (IDC) has released its latest figures on PC shipment market in Nigeria and it is not cheering. According to the report, official PC shipments to Nigeria dropped 57.1% year on year in 2016 to total 156,511 units.

The drop means the PC market has now fallen to its lowest levels since IDC started tracking it from January to March (Q1) of 2008. The very significant fall has been driven since 2013 by factors like unstable exchange rates, poor economic performance, and the steady rise of refurbished gray market imports.

“Nigeria’s currency – the naira – has been losing considerable value against the US 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 rate are typically 40-50% higher,” said Babatunde Afolayan, senior research analyst at IDC West Africa,

Nigeria does not manufacture PC, hence the dependence on importation which is dollar-based. The constant fluctuations in the exchange rate and the persistent weakening of the naira against the dollar have ensured that prices of commodities that are imported skyrocket thereby having a devastating impact on incomes. Many Nigerians are either forced to forgo non-basic items like PCs or opt for refurbished ones which now proliferate the market.

“Both commercial and consumer 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. And 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,” Afolayan said.

The IDC report may also relate to another one which found that the increased use of mobile devices in the country could be partly responsible for the decline in PC purchase. A recent report from StatCounter showed that Android (mobile-based) has overtaken Windows (largely PC-based) as the world’ most-used operating system for the first time. StatCounter noted that 49.96% Nigerians now use Android based devices compared to 16.03% for Windows.

Importation of refurbished PCs – primarily from the UAE, the UK, and China is also impacting negatively on official channels, with such products according to IDC, compfortably outnumbering official shipments of primary PCs. Not only that, the refurbished market is steadily growing as a result of the lower cost implications for consumers and the benefit of better profit margins for resellers.

It noted further that the government of Nigeria appears to be addressing the issue by continuously trying to improve the country’s economic performance and has implemented various strategies aimed at increasing the purchasing power of end users. The Central Bank of Nigeria is also planning to include IT products for interbank rates when it comes to accessing foreign currencies.

According to Afolayan, the government’s efforts might potentially result in the recovery of the PC market.

“We anticipate a levelling off in 2017 as foreign exchange rate stabilizes and IT decision makers begin to renew spending as most of their products will have passed the end of their life-spans. IDC forecasts that this relatively flat growth in 2017 will be followed by a much stronger year on year increase of 59.9% in 2018,” Afolayan said.