Africa's booming electronics market

In a potentially game-changing move, Chinese-owned Lenovo, the world's second-largest maker of personal computers, announced it will introduce its first smartphones in Africa, with a release planned for Nigeria before the end of the year. Nigeria, Africa's most populous nation with more than 160 million people and 113 million wireless subscribers, makes an appealing market as Lenovo can sell directly to customers. This is in contrast to South Africa, where mobile phone makers need to work with local telecom operators in order to sell their handsets, making it a less attractive market.

The number of smartphone users in Nigeria is expected to grow to more than 35 million by 2017, driven by declining smartphone prices and the expansion of more competitively-priced data networks. While Nigeria will be the first country Lenovo officially enters, they are already studying other African markets, including Kenya, in order to determine its readiness for the Lenovo phone. Africa's handset ownership is expected to grow to 85 percent of the population in 2015, from about 73 percent currently.

Lenovo is also set to expand its Kenyan operations by launching operations in Mombasa and Kisumu, in addition to its existing distributors in Nairobi. The company recently revealed it will introduce a new range of Android running tablets in the Kenyan market in March through a partnership with Safaricom, as well as tablets running the Windows 8 operating system. Newly appointed Kenyan President Uhuru Kenyatta made an ambitious proclamation to offer free laptops for every first-year student in the country; Lenovo is reportedly in the running to give Kenyan children the ability to connect with the rest of the world.

However, China's perceived dominance of Africa's consumer electronics industry is set to be challenged by the entry of some of the world's biggest brands onto the continent. The relatively high risk of doing business in Africa previously meant that traditional market leaders opted to partner with distributors throughout the continent, leaving the market wide open to the more risk-averse Chinese manufacturers. While China's first mover advantage has resulted in exports of technology-based goods to Africa reaching more than $8 billion in 2012, the entry of more players means Africa's 1 billion plus consumers stand to benefit the most from greater competition, further fueling Africa's consumption boom.

The ChinAfrica Econometer is produced by The Beijing Axis, a China-focused international advisory firm operating in four principal areas: Commodities, Capital, Procurement, and Strategy.

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Daniel Galvez, danielgalvez@thebeijingaxis.com

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