PC shipments in East Africa declines by 31.6 pct
06 May 2014, 15:57
Nairobi - PC shipments to East Africa suffered a huge year-on-year decline of 31.6 percent in the first quarter, a report released in Nairobi on Monday revealed.
The report by International Data Corporation (IDC) that covers Kenya, Uganda, Tanzania, and Ethiopia, notes that the record quarterly decline saw shipments total 141,831 units for the period under review.
A research analyst at IDC East Africa, James Mutua, said the huge volumes of low-cost mini notebooks were shipped to East Africa during the corresponding period of 2013, and these devices are no longer in production.
"We expected the remaining vendors to take advantage of this gap by developing products specifically targeted at this market, but this has so far not materialized," said Mutua.
"The disappearance of mini notebooks from the market combined with the impact of VAT, inventory issues, shifts in vendor strategies, and channel realignment initiatives to negatively impact the buoyancy of East Africa's PC shipments in Q1 2014."
The report said the introduction of VAT in Kenya has had a significant negative impact on PC shipments into the country as certain unscrupulous market players are utilizing dubious means to pay less VAT or evade paying it altogether.
This, Mutua said, has resulted in increased corruption at Kenya's ports and a subsequent rise in gray market shipments.
"The huge decline seen in Kenya is alarming. The government's intention to increase tax collection is unlikely to be fully realized as substantial shipments are now coming into the country that may not have taxes levied against them," Mutua said.
He noted that 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.
According to Mutua, the positive news is that the Kenya ICT Authority is now fully operational with a board of directors in place.
"This means that government IT-related projects should start to gain momentum in the second half 2014, potentially giving a much- needed boost to the country's overall ICT market," Mutua said.
PC shipments to Ethiopia and Uganda were affected by some vendors opting to change their strategies due to poor sales executions.
Uganda also experienced a lack of stock, as some partners complained that their orders were being delayed in Dubai while on transit to Uganda, either through the country's main Entebbe International Airport or sometimes via the Kenyan sea port of Mombasa.
In Tanzania, the market's vendors need to urgently realign their focus on consumer segment products in order to take advantage of the gap left by Samsung.
This did not happen in time for the first quarter, with most vendors simply shipping in enough stock to fulfill their normal run-rate business.
However, IDC 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.