Thursday, June 25, 2020

Phone vendors lose 30% of capital to lockdown


• Seek government’s intervention
• Refurbished smartphone sale rises

Phone and other allied products vendors have lost about 30 per cent of their invested capital to the
economic lockdown. This was revealed on Monday by the President, Phone and Allied Product Dealers Association of Nigeria (PAPDAN), Ifeanyi Akubue, during a chat with The Guardian.
Akubue said this was due to the Government’s lockdown of the economy, with the closure of Lagos, Ogun, and Abuja for about three months to contain the spread of the dreaded coronavirus pandemic.
He said though there has been partial lifting of the ban, sales remain dull. “We can say the market is picking up gradually. Prices of goods however remain and may remain high. Products are coming in partially as well because most stranded operators have had to resort to cargo operations to bring in some of their goods.”
Akubue disclosed that some of the operators in the market, who got stranded in China some months back due to the ban on international travels, have leveraged Federal Government’s evacuation plan, and returned to Nigeria.
He said: “We are not foreseeing any drop in prices of phones and other accessories for now, this is because dollar is still priced very high in Nigeria. Before the lockdown, it was N350 to $1, but as we speak, $1 is above N450. This has not helped the market; it has rather made things more difficult for us and the market.
“Some of our members, who had cash prior to the lockdown from sales made, cannot do anything substantive with the cash at hand after FG eased the lockdown because dollar has gone up beyond reach. By so doing the naira at hand lost value.
“Imagine from N360 to N450 per dollar, that is N90 increase. Some of us budgeted about N360 to buy $10,000, that is about N3.6 million, after the three months economic closure, dollar has gone up to N450, it means you have to make provision for extra N900,000, which wasn’t budgeted for before. So business people lost so much.
“I can say that we have lost about 30 per cent of our capital to this lockdown and rising foreign exchange.”To avoid the collapse of operations and the market as a whole, Akubue called on the Federal Government to help the Computer Village and operators therein.
Though he said members are rallying around one another with a move to approach some banks for low-interest loans, “we call on the Central Bank of Nigeria (CBN) to help extend palliatives and subventions to players in the market.”
Report claimed that Computer Village generates N 1.5 billion daily, from the over 3,000 ICT Small and Medium Enterprises in this market, most of which sell computers, phones, phone accessories, computer accessories, and other household electronics.
Further statistics revealed that this Lagos-based market generates as much as $2 billion in a year. Data have shown that more than 20 million phones are sold at the village in a month, and the National Bureau of Statistics (NBS) has said the market contributed about two per cent to the national gross domestic product (GDP) in 2014.
Lending credence to Akubue’s claims, the Public Relations Officer, Computer and Allied Products Dealers Association of Nigeria (CAPDAN), Olaifa Ademola, said the market is still dull saleswise, “but in terms of people that thronged the market lately, it is alarming. Some are just there to do sight-seeing. Others are around to quickly beat the deadline of 9am to 3pm set by the Lagos State Government.”
Ademola said most goods are coming in through cargo operators, “but largely marketers are still selling old stocks to realise to plug in some losses incurred during the almost three months lockdown. I can say there has been about 25 per cent increase in prices of goods in the market. What we see in the market is that people are not buying new phones, they rather repair the old ones.” According to him, the rise in price of dollar is also another major challenge marketers are facing.
“The rise in dollar, affected us directly because all we sell are imported. They are not made in Nigeria. We buy them in dollars. Once the exchange rates rise for as little as 50k, it will definitely affect the prices of goods. It is what you buy that you sell. It is a world market, if you buy iPhone in dollar abroad, convert to Nigerian money, you will get the value here. If dollar comes down, prices of goods will come down,” he stated.
While appealing to the Federal Government to be sincere in its policies, Ademola reminded that the Computer Village is the biggest hub in West Africa, with many literates and talents plying their trades here.
“Government should beam development searchlight on this market. So many people are software engineers, surveillance experts, technicians and so on. We need programmes specifically targeted towards entrepreneurship for the market. If this can be achieved, it will create multiplier effects on the economy as a whole. For people in the ICT sector like ours, there should be govt subvention; I mean soft loans at reduced interest rates. That will assist us greatly,” he stated.
Latest research from Counterpoint’s Refurbished Smartphone Tracker, has indicated that despite the one per cent decline in the global market for refurbished smartphones, Africa remained one of the regions that still experienced growth.
This, Counterpoint believes, is a result of the nascent stage of the continent’s economy, where the market remains under-penetrated with many users looking for affordable devices to come online.
“Despite a decline in the overall global market, there were several growth markets like Africa, India and Latin America,” the Counterpoint tracker disclosed.
Commenting on these emerging regions, Research Analyst at Counterpoint Research, Varun Mishra, noted the transition from feature phones to Smartphone and the aspiration of premium devices at an affordable price point continue to fuel growth in these markets. There is also the ongoing transition of the refurb segment from the unorganised sector to organized, in some African countries, which is opening opportunities.
He, however, believes that there still needs to be more consumer awareness, standardization in processes, and quality assurance to build consumer trust to fully tap the market potential in these regions. However, going forward, because of COVID-19, the growth of the segment will be impacted in 2020.
The Counterpoint’s Refurbished Smartphone Tracker, had revealed that the global market for refurbished Smartphonse declined one per cent YoY in 2019 reaching just over 137 million units. The latter half, especially the fourth quarter the market grew, as Apple upgrades remained strong. However, a one per cent increase during the second half of the year was not able to offset the decline in the first half.
This is the first time in the last four years that the refurbished market has declined for the full year. The trend is mainly linked with the downturn in new Smartphone sales in key regions like the US, China and Europe. The sell-through in these regions combined declined six per cent YoY during 2019. The upgrades in the premium segment also remained slow, as users continue to hold on to their devices and replacement cycles lengthen.
QUOTE:
“Imaging from N360 to N450 per dollar, that is N90 increase. Some of us budgeted about N360 to buy $10,000, that is about N3.6 million, after the three months economic closure, dollar has gone up to N450, it means you have to make provision for extra N900,000, which wasn’t budgeted for before. So business people lost so much. “I can say that we have lost about 30 per cent of our capital to this lockdown and rising foreign exchange.”

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