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Through the Magnifying Glass: Nigeria, the “Giant of Africa”

Date

22/01/2021

Written by

Airnow

The Nigerian mobile market is the most exciting mobile market in Africa. Often referred to as the“ Giant of Africa”, due to its large population and thriving economy, at its epicentre is Lagos, Nigeria’s capital city and one of the largest technological hubs in Africa. It’s economy is the largest in Africa and the 24th largest in the world. It is thought to be worth almost $450 billion and $1 trillion in terms of nominal GDP and purchasing power parity, respectively.

The “Giant of Africa” nickname is only made more impressive when you consider the fact that Africa is the world’s second fastest growing region in the world, currently growing at an annual rate of 3.9%.

As of 2019, Nigeria is home to an estimated 206 million inhabitants, making it the most populous country in Africa and the seventh most populous country in the world. According to the United Nations, the population will more than double in size to 400 million by 2050. As we have mentioned in previous ‘In focus’ articles on the likes of India, the rapid economic and population growth seen in developing nations poses an increasing threat to those Western nations which have so far dominated the app market.

State of the app market.

According to a report from allcorrect.com, as of 2017, more than 74% of Nigerians use smartphones, and more than 47% are active mobile internet users, a number three times higher than the African average. This statistic is showing no signs of slowing and has certainly been helped by the ever-decreasing prices of android devices that are allowing more and more people to gain access to smartphones.

Consequently, Nigeria has one of the fastest growing telecommunication markets in the world, which has led to some major emerging market operators such as MTN, 9mobile, Airtel and Globacom to base their largest and most profitable centres in the country.

The rise of emerging markets?

According to the latest report from PwC, Nigeria, which currently holds a CAGR (Compound Annual Growth Rate) of 12.1%, will become the world’s fastest-growing E&M (entertainment and media) market within the next five years. This is in stark contrast to the developed nation and matured app market of Japan, which is predicted to be the slowest-growing market with just 1.7% CAGR.

The report continues, noting that while consumers in mature markets such as North America, Europe and wealthier Asia-Pacific markets spend a large amount — more than US$500 per capita annually — on entertainment and media, growth rates remain relatively slow in these areas. In contrast, less developed economies feature much lower per capita spending and faster growth, albeit from a very low base – less than US$50 a year in many cases.

The report from PwC is yet another indication that emerging markets are coming closer and closer to reaching parity with developed nations. This is vital information for app marketers who, in anticipation of the growth in emerging markets, can start to focus their marketing efforts to capitalize on trends before they become a reality.

The most mobilized country in the world?

The rapid growth of Nigeria’s E&M market is synchronous with the growth seen in its mobile market. Like most developing countries, Nigeria is a mobile first country, meaning that the main device that a person uses to access the internet is their mobile. This has a dramatic impact on the amount of time people in these countries spend on their mobile devices; 76% of all traffic in Nigeria comes through mobile, making it one of the most mobilised countries in the world.

According to Statista, there are around 170 million mobile subscriptions in Nigeria. While the exact numbers are difficult to ascertain, the data shows strong growth, with mobile user numbers set to at least triple within the next five to six years.

This represents strong growth opportunities for feature phone and smartphone manufacturers alike. Currently, Samsung is the leading smartphone vendor in Nigeria. However, Chinese manufacturers like Tecno, Itel (Hong Kong) and Xiaomi also hold strong positions in the market.

Unaffected by the COVID-19 pandemic?

The impressive growth doesn’t look like it's going to stop any time soon, despite the reverberations of a global pandemic trying its best to stop it. According to figures from the International Data Corporation (IDC), smartphone shipments into Nigeria increased by 13.7% quarter on quarter (QoQ) in Q3 2020 to almost 3 million units. George Mbuthia, a research analyst at IDC, noted that “in light of the economic hardships caused by the COVID-19 pandemic, vendors continued to ship more affordable devices priced below $200 as they sought to address demand for cheaper models and penetrate consumer segments with lower purchasing power.” Such moves have prompted a quick comeback and IDC expects Nigeria’s overall mobile phone market to grow 3.1% QoQ in Q4 2020.

Lower prices for data?

Statcounter shows that Nigeria devours the most mobile data in the world, which has no doubt been influenced by the jaw-dropping 128 million mobile internet subscriptions. With statistics like these, it comes as no surprise to us that The Guardian reported that Nigeria has the world’s fastest growing mobile internet usage, only behind China and India.

While the cost of data is high for local consumers, competition between local mobile network providers has ensured that the actual buying power of Nigerians has increased over time. This has also led to a strange phenomenon: Nigeria is the world leader in multi-sim devices. Competition between network providers has driven down the price of pay-as-you-go sims dramatically, leading it to become the norm for Nigerians to have multiple sim cards on their phones as they seek to get the best deals from each network.

User behaviour

But what are Nigerians doing to eat up all that data on their mobiles? Well, according to Statcounter data, the vast majority of users spend their data on social media, while half of this amount look for information and check their emails, and less than a third as many watch online videos.

However, this isn’t the full story. In line with global trends, mobile video is growing hugely. According to AppsAfrica, mobile video will drive 70% of all data traffic in Nigeria by 2021. This is no doubt a result of the explosion of video content on social media sites such as Facebook, which saw a rise of 258% between 2016 and 2017.

This megatrend correlates with what we are seeing in Nigeria, where a reported 69% of Nigerians watch video on mobile daily, resulting in an average 6.7 hours of video watched per month. Twinepine also reports that 45% of video views in Nigeria come from people aged 25-34, and that 55% of them are male.

Mobile gaming

Now that more people in Nigeria are able to access mobile phones more than ever before, the market for apps has scope to grow very quickly indeed. And the signs are already there; a NewZoo report showed that in 2018 Nigeria generated $180 million in revenue from gaming activities, receiving global recognition for its presence in the gaming industry. And, according to allcorrectgames, the average revenue per customer (ARPU) in Nigeria stands at $9.94. This, combined with the fact that the cost per install (CPI) holds at a steady $0.11, makes the market very promising for mobile game and app developers.

Android-based operating systems far outweigh Apple’s. However, as the Play Store is largely saturated with Western applications, it is difficult for local developers to breakthrough. As you can see in the image above, none of the apps in the top 10 are Nigerian based.

Local Theming

It is understandable why the majority of the top apps on Nigeria’s app store leaderboard are not from Nigerian publishers when they have to compete with the likes of Facebook. However, there has been pushback in this respect from Lagos’ upcoming mobile gaming market, with local video gaming developers attempting to create games with a “distinctly local flavour." For example, the local developer Maliyo Games builds games such as Okada Ride - “a game based on the ubiquitous delivery motorcycles that zip about the streets of Lagos”. Or Mosquito Smasher, a game focused on killing Malaria-spreading mosquitoes. According to Hugo Obi, co-creator of Maliyo Games, the company aims to “use games[s] as an engine to share African experiences between ourselves and the rest of the world through African narratives, sounds and characters.”

However, according to Nigerian developers, the biggest market for local games is overseas. The business model of video game developer Gamsole targets foreign customers, with their games drawing inspiration from Western releases such as Candy Crush and Angry Birds. According to founder Abiola Olaniran, “we didn't see it making sense for us to design for Nigerians alone...we couldn't have gotten ...9 million downloads in Nigeria.” More than 60% of video games released by Kuluya are being downloaded outside of Nigeria.

Rounding off

Nigeria is currently the biggest emerging market in Africa. Important factors that contribute to a rise in app usage are rising dramatically: most notably mobile penetration and mobile data usage. This is making the country a very interesting space for app marketers who are starting to see the Nigerian app market as completely untapped potential. . While there has been a push from local Nigerian app developers to integrate local culture within their apps, these have thus far been met with limited success.