May 7, 2014
East Africa – which includes Kenya, Uganda, Tanzania, and Ethiopia – saw a double-digit decline of 31.6 percent in PC shipments in 1Q2014, according to IDC; with shipments for the period falling to 141,831 units due to a number of factors.
James Mutua, Research Analyst at IDC East Africa, explained that during the same period last year, “huge volumes of low-cost mini notebooks were shipped to East Africa” that are now no longer in production. He added that while IDC “expected the remaining vendors to take advantage of this gap by developing products specifically targeted at this market, this has so far not materialised”, and so this, “combined with the impact of VAT, inventory issues, shifts in vendor strategies, and channel realignment initiatives” have “negatively impact[ed] the buoyancy” of the region’s PC shipments during the quarter.
In Ethiopia and Uganda, PC shipments were affected by some vendors opting to change strategies due to poor sales executions; with Uganda also experiencing a lack of stock as some partners complained that their orders were being delayed in Dubai whilst en-route to Uganda, either through the country’s main Entebbe International Airport or the Kenyan sea port of Mombasa.
Meanwhile in Tanzania, IDC stated that vendors in the market “need to urgently realign their focus on consumer segment products in order to take advantage of the gap left by Samsung”, but that “this did not happen in time” for the first quarter of the year, with most vendors only shipping enough stock to fulfil their normal run-rate business. However, IDC added that it is “optimistic about future PC growth in Ethiopia, Tanzania and Uganda as the respective business environments are continually improving and expanding, while consumer spending is also on the rise”.
Following the introduction of VAT in Kenya, IDC has found that “certain unscrupulous market players are utilising dubious means to pay less VAT or evade paying it altogether”, negatively impacting PC shipments into the country and increasing corruption at the country’s ports, resulting in a rise in grey market shipments.
Mutua commented: “The huge decline seen in Kenya is alarming. The government’s intention to increase tax collection is unlikely to be fully realised as substantial shipments are now coming into the country that may not have taxes levied against them. The government needs to act urgently to ensure a level playing field for all market players, either by scrapping VAT altogether or by tightening the loopholes that are increasingly being exploited.”
However, in more positive news, IDC stated that the Kenya ICT Authority is now fully operational with a board of directors in place, meaning that government IT-related projects should start to gain momentum in the second half of the year “potentially giving a much-needed boost to the country’s overall IT market”.
Categories : Products and Technology