Kenyans put a hold on buying smartphones as inflation bites
Kenyans have reduced spending on smartphones due to ballooning inflation, which has put constraints on budgets for technology products.
Inflation combined with supply shortages are cited as the main drivers behind Kenya's smartphone market declining for the second consecutive quarter in Q4 2022, with shipments dropping 13.5% year-on-year.
This is according to the latest figure from International Data Corporation’s (IDC) Worldwide Quarterly Mobile Phone Tracker showing that smartphones now account for 72% share of overall mobile phone shipments to the country.
Kenya’s inflation rate was 9.2% in February 2023, according to the Kenya Bureau of Statistics.
It says the rise in inflation was largely due to the increase in prices of commodities, such as food and non-alcoholic beverages, which rose 13.3%. Meanwhile, housing, water, electricity, gas and other fuel costs rose 7.6% and transport costs grew 12.9% between February 2022 and February 2023.
Kenya’s inflation rate reached highs of 9.5% in November 2022 and 9.6% in October 2022, which were cited as record levels, unseen for more than five years.
Resultantly, IDC smartphone distributors held back on their investments and reduced their inventories as prices kept fluctuating in an attempt to avoid losses.
In the period, IDC says Samsung led the way in Kenya's smartphone market with 31.7% unit share. Tecno took second place with 18.8% share, while third-placed Infinix accounted for 9.2% shipments.
“Samsung leveraged its distribution through the M-KOPA asset-financing platform, which provides underbanked customers in Africa with the opportunity to purchase products like smartphones,” says IDC.
George Mbuthia, a senior research analyst at IDC, comments: "While the general market sentiment was negative in Q4 2022 and reflective of the supply chain squeeze that occurred throughout 2022, those vendors that offered their products via asset-financing platforms were the least impacted, demonstrating a growing appetite for mobile financing schemes
"As shown by the rapid uptake of M-PESA, these platforms promise the next big innovative service and fast penetration, appealing to the vast, but untapped segments of the consumer base in Africa. Very soon, the industry will witness these platforms grow, taking the smartphone market along with it."
Looking at 2023 as a whole, IDC expects Kenya's smartphone market to remain relatively flat, with shipments growing by just 1.4%.
"Inflation is expected to hurt the smartphone market this year and the recovery will begin only in the final quarter of 2023 as economic uncertainty diminishes, vendors bring price volatility under control, and supply shortages come to an end," says Ramazan Yavuz, a senior research manager at IDC.
"With all the challenges in the market, the rapid transition to smartphones will continue, enabled by mobile financing schemes such as M-KOPA and Easy-Pay that help consumers to purchase new devices even as prices continue to rise."