Consumer electronics manufacturers in Nigeria are recording slow sales as the impact of the forex scarcity bites harder.
This was revealed in the latest report by Euromonitor International, which projects that the volume of electronics in the formal market could fall for the fifth straight year to 19.8 million in 2023 from 20.3 million in 2022.
According to the report, the high forex and the dwindling value of the naira are also leading to an increase in the price of imported electronics beyond the reach of many Nigerians.
Euromonitor noted that with consumer purchasing power taking a bit hit, consumers are looking to extend the life cycle of their electronics.
It said this is particularly true for televisions.
Consumer electronics are largely imported into Nigeria, Africa’s biggest economy. They include computers, laptops, smartphones, TVs, virtual cameras, air conditioners, dishwashers, refrigerators, washing machines, dryers, and microwave ovens.
While noting that the consumer electronic market in Nigeria is not looking good this year, Euromonitor in the report stated:
- “The picture is expected to be bleak for consumer electronics in 2023, with overall volume sales expected to fall. A new government inherited a sluggish economy, record debt, and shrinking oil output, due to creaking infrastructure.”
It said the government implemented some difficult decisions in order to stabilize the economy, including removing trading restrictions on the official currency market, adding that this has driven the naira to a record low.
- “This significant currency devaluation is expected to negatively impact consumer electronics, as most products are imported. In addition, with inflation continuing to rise, this is putting even further pressure on consumer purchasing power,” the report added.
Demand for computers is expected to rise
The Euromonitor report shows that portable consumer electronics, which contributed the largest share, would fall to 18.1 million from 18.6 million; in-home consumer electronics would reduce to 1.50 million from 1.53 million; in-car entertainment is projected to decline to 26,800 from 26,900; and computers and peripherals would rise to 186,000 from 185,200.
Euromonitor projects that while performance is expected to be negative for consumer electronics this year, the outlook is more positive over the coming years.
- “The new government has implemented some unpopular but essential economic reforms, such as foreign exchange management, and it is hoped that these reforms will restore economic stability over the forecast period and will in turn lead to healthy volume growth in consumer electronics.
- “There will also be healthy volume growth for laptops. Furthermore, increasing internet penetration and 5G connectivity with higher internet speed will also fuel growth, particularly for products such as smartphones and smart TVs. Lastly, continuing population growth should also support increased volume sales,” the report added.
Analysing the Nigerian consumer behaviour in the electronic market, Euromonitor said consumers vastly prefer to purchase consumer electronics in physical stores, as they value being able to touch and test the products before committing to a purchase.
It, however, noted that the awareness of the e-commerce channel is growing with interest stimulated by the impact of the pandemic.