Nigeria’s $1 billion mobile applications market is expected

Nigeria’s $1 billion mobile applications market is expected to witness significant growth this year riding on the back of rising smartphone ownership and improvement in broadband internet service, according to industry analysts.

BusinessDay learnt that though smartphones currently account for a mere 5 percent of the mobile phone market (just over 5 million users), their ownership will exponentially grow in the near term as prices of the gadgets are likely to decline, thereby fuelling the speedy adoption of mobile applications.

“The sub-$100 smartphone is steadily becoming a reality globally. Low-end smartphones are increasingly available and these types of mobile phones will likely grow at a CAGR of 15 percent over the coming years,” James Rutherford of Nokia Corporation said.

Smartphone sales in Nigeria more than doubled in 2012. Nigerians spent an average of N92 billion buying 1.82 million smartphones in 2012, according to data obtained from GfK Retail and Technology Nigeria. These figures, according to analysts, reinforce earlier studies which showed that Nigeria leads its counterparts on the continent in smartphone ownership.

Intense competition for a share of the mobile app segment, according to industry analysts, is spreading and user appetite for app downloads appears substantial. Telecommunications operators, vendors and Original Equipment Manufacturers (OEMs) are seeking direct ties to developers and programmers.

With app developers earning 50 percent to 70 percent of retail price via the app-store platforms of Apple, Google, Nokia, Blackberry and Windows, incubating young developers’ innovation could have significant multiplier effect domestically. Global mobile app store revenues are projected to reach $90 billion by 2018, primarily driven by growing mobile subscriber base, strong mobile broadband penetration, and rising sales of smartphones.

Osamede Umweni, managing director, 70th Precinct Limited, said the potential of the app market in Nigeria is massive. According to him, Nigeria has the potential to become the biggest app market in the African continent as there is huge demand for mobile application.

“You can see that it has taken an astronomical growth with over 110 million mobile lines. We are in the top ten biggest mobile market in the world, all this in less than a decade. The growth of the app market is a reflection of our mobile market, they go side by side,” he said in an interview.

He also said improvement in broadband services and the introduction of cheaper smartphones will drive the demand for locally relevant apps.

“Over 100 million Nigerians do not have access to the internet. Many Nigerians are not going to be able to afford $500 laptop. But with an affordable smartphone with a quality screen, software and user experience, we believe that the smartphone will be the window to the world for many Nigerians. It will also drive mobile application development,” Alpesh Patel, chief executive officer, Mi-Fone, a pan-African phone maker, told BusinessDay in an interview.

Most of the resources required to develop apps are freely available online. What is most required is infrastructure in terms of stable power supply and affordable quality internet access. This, according to analysts, would help position Nigeria to produce a generation of innovative start-ups that would grow into successful multi-million naira entities.

For the developer, creative strategies are needed to attract new consumers and different business models will be required to make the regional ecosystems viable in order to effectively monetise the significant app momentum.

This, according to analysts, is essentially because the active user base and growth rates in some of these countries exceed those from the western markets, irrespective of the device type. Overall, by enhancing discovery, improving user experience, dropping price barriers, and increasing developer revenue share, the apps ecosystem can continue to prosper.