Fake products hamper sale of genuine gadgets

Tuesday April 11 2017

Standard One students in Mwamunga primary school, Taita Taveta County, being shown how to use a tablet. Tablets were boosted 230.5 per cent to 149,906 units by the government’s  free laptop programme for primary schools. FILE PHOTO | NMG

Standard One students in Mwamunga primary school, Taita Taveta County, being shown how to use a tablet. Tablets were boosted 230.5 per cent to 149,906 units by the government’s  free laptop programme for primary schools. FILE PHOTO | NMG  

By MUTHOKI MUMO
More by this Author

For the tech firms facing near-saturated markets in the West, Africa offers hope as the next frontier.

There are still millions on the continent waiting to buy their first smartphone or computer. However, recent numbers show that Africa may not be the Promised Land for smartphone and computer manufacturers.

The International Data Corporation (IDC), a research firm, paints a depressing picture of the trends in technology sales on the continent.

IDC shows that shipments of PCs to Kenya fell 16.6 per cent on a year-on-year basis in the fourth quarter of 2016. The whole of East African market, including Ethiopia, Tanzania and Uganda, recorded a 8.6 per cent decline in PC shipments to 113, 303 units.

This tale extends beyond PCs and East Africa. Nigeria was hit hard with shipments of PCs falling 57.1 per cent year on years.

Smartphone sales recorded a growth rate of 3.4 per cent on the continent which, although it is a positive, is a far-cry from the double digit growth rates experienced earlier in the decade.

“Africa’s smartphone revolution is showing signs of a slowdown,” writes IDC.

IDC says a combination of factors are to blame; a tough economic climate is lowering technology as a priority for Africans while also opening the door for cheaper, counterfeit products.

Customers are opting to use their older devices for one more year or going for cheaper ones. Therefore, while smartphone shipments fell, feature phone shipments rose 16.1 per cent to 119.97 million units.

These numbers are bad news for technology firms that have increasingly targeted Africa as the next source of growth, even going as far as to develop products specifically for the continent.

On the one hand in Kenya, the monetary policy and the interest rate caps have reduced the amount of credit available to the private sector, hurting businesses that might have wanted to increase investments in technology.

Lending grew 4.3 per cent in the year to December 2016, down from 20.6 per cent growth a year earlier, the slowest rate in more than 10 years.

On the other hand, businesses are also reluctant to spend money as they adopt a wait-and-see attitude that is typical of an election year. Commercial PC shipments to East Africa fell 9.1 per cent in the year to December 2016. IDC says the situation is exacerbated by “grey imports” from the United Arab Emirates (UAE) which are not officially recorded and do not usually pay  tax, “making them a cheaper alternative that local channel partners simply cannot compete with”.

Losing battle

Local authorities have been fighting what sometimes feels like a losing battle against counterfeit electronic devices in the market. The anti-counterfeit agency in February confiscated fake electronics worth Sh7 million. 

At the same time, the Communication Authority (CA) is fighting to install a system to telecommunication networks which, it argues, will partly be used to track counterfeit devices. 

School laptop plan

One of the few bright spots is to be found in the public sector.  While PC sales remained depressed, tablets were boosted 230.5 per cent to 149,906 units by the government’s  free laptop programme for primary schools.

The government in January said that it had imported and locally assembled over 900,000 devices  for the programme.

The downward trend in PC and smartphones sales is especially visible in the Nigerian market where the Naira has been falling consistently and dramatically against the US dollar for the last few years.

PC life cycles.

“Both commercial and consumer end users have been prolonging their PC life cycles beyond what is generally considered normal,” said Babatunde Afolayan, a technology researcher in West Africa.