Egypt’s smartphone market will grow just 1.0% year on year (YoY) in 2022 to total 13.1 million units, with momentum being slowed by the government’s introduction of a new 10% import tariff on mobile phones.
That’s according to the latest analysis from International Data Corporation (IDC), which believes that the new tariff will constrain — but not completely halt — the steady growth that was seen in the market throughout 2020 and 2021 despite the considerable challenges posed by the COVID-19 pandemic and subsequent shortage of mobile phone components.
“The new customs duty that was announced on November 20th will definitely impact the market in the short and medium term,” says Taher Abdel Hameed, a senior research analyst at IDC. “In the short term, smartphone prices will increase 10% YoY in Q4 2021 due to the new tariff and continuing supply shortages. Vendors will resort to increasing the share of more affordable models in their portfolios to combat the price increases and maintain sales growth. In the medium term, this tariff can be considered as a precursor of further action by the government to encourage the local assembly of mobile phones, following a similar pattern to other markets across the region — including Turkey in 2020 and Pakistan in 2019 — after tariffs on mobile phones were increased.”
The latest edition of IDC’s Quarterly Mobile Phone Tracker shows that Samsung led Egypt’s smartphone market in Q3 2021 with 29.7% unit share, followed by Oppo in second place and Xiaomi in third.
In terms of price bands, the $100-$200 category continued to account for the largest share of smartphone shipments in Q3 2021 at 48.6%. The share of mid-range devices priced between $200-$400 increased considerably from 10.8% in Q3 2020 to 29.1% in Q3 2021.
This increase was due to the introduction of new models by Samsung, Oppo, and Xiaomi that were priced higher than their predecessors, as well as by the ongoing shortage of components which caused the prices of other models to increase.
Looking ahead, IDC expects Egypt’s smartphone market to remain on a growth trajectory in terms of unit shipments over the coming years through 2025. The market is still transitioning from feature phones and remains unsaturated, with strong demand stemming from a young and technically savvy consumer base.
Dr Ramazan Yavuz, a senior research manager at IDC, added, “Smartphone markets are always closely monitored by governments across the region, since imports of these devices are significant contributors to current account deficits.Governments are increasingly employing a strategy of first controlling the import flows and then encouraging the local manufacturing of these devices within their respective countries. This was recently seen in Turkey, where tariff increases on mobile phones paved the way for global brands to establish local production in the country. Egypt, already a strong hub for production, is likely to follow the same route.”
This week the IDC announced that Africa’s smartphone market saw shipments decline 2.3% quarter-on-quarter (QoQ) during Q3 2021.
In a statement released to the media, the IDC said while the region displayed signs of recovery in H1 2021, its newly released Quarterly Mobile Phone Tracker shows that component shortages began to negatively impact African markets in Q3 2021, causing a decline in smartphone shipments.
In contrast, Africa’s feature phone market remains buoyant, growing 14.2% QoQ Q3 2021. With smartphone prices remaining relatively high and only expected to increase over the coming following quarters, the affordable prices of feature phones make these devices extremely attractive, the research company affirmed.
Market research showed that Africa’s top three smartphone markets recorded mixed performances in Q3 2021. Egypt saw shipments decline 19.5% QoQ, while Nigeria was down 9.4% over the same period.