Cheaper smartphones set pace for mobile growth, Jumia White Paper shows

[dropcap]S[/dropcap]martphones are becoming more affordable.  And that seems to the force behind increasing mobile services penetration over the past year, a new survey by Jumia Kenya, the leading online retailer, says.

The cost reduction in smartphones is being attributed to the entry into Kenya of new handsets manufacturers targeting the budget segment of the population. Kenya recently surpassed the 40 million mobile subscriptions in 2017 and stands at 41 million (+3%), with mobile penetration at 90.4% of the adult population.

“High mobile penetration in Kenya has been driven by the arrival of aggressive entrants, such as Hong Kong based Transsion Holdings,” says Jumia in its Kenya Mobile White Paper 2018, Smartphones: The gateway to a better life.

The report was released on Friday to coincide with the retailer’s Mobile Week, a promotional sale on its website with huge offers and discounts on mobile phones.

Jumia notes that Transsion offers quality devices at affordable prices through its brands Tecno, Itel and Infinix. While Tecno and Infinix dominate the smartphone segment, Tecno and Itel have taken control of the feature phones market. Samsung has a 17% market share by volume driven by its economically priced J-series.

The smartphone industry continues to see new entrants into the market such as Oppo, Vivo and Xiaomi, which is expected to officially expand into Kenya early this year. “We expect this will drive moderate reductions in mobile device prices in the coming years though not as significant as we seen in recent years,” says Mr Sam Chappatte, Managing Director Jumia Kenya.

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As such, smartphones have become the primary gateway to the internet for 270 million people in sub-Saharan Africa today. In Kenya, the smartphone industry plays an important role in the social and economic development of Kenya, including boosting financial inclusion.

At the beginning of 2017, there were 420 million unique mobile subscribers in Sub-Saharan Africa. It is forecasted by 2020 that the region will have more than 500 million unique mobile subscribers.

In 2016, mobile technologies and services generated $110 billion of economic value in sub-Saharan Africa, equivalent to 7.7% of GDP.

“This trend, along with the uptake of internet services, is driving demand for digital content and results in an increase in mobile data traffic. It is expected that smartphone internet traffic is forecast to grow 12x across Africa over the next 5 years,” says Mr Chappatte. 

With growing demand, Jumia Kenya sold more than 250,000 smartphones in 2017, a 25% increase compared to 2016, which helped it increase its gaining market share. Despite major reduction in prices over the last few years, prices have stabilised on Jumia at $90. Smartphones accounted for 97% of all phones sold, with feature phones accounting to 3%.

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