There’s a class of goods that economists describe as “Giffen goods”. These goods defy the laws of demand and supply – the demand for them rises as their prices go up. Phones seem to be behaving in Nigeria as a Giffen good; demand has at least held up during and after the lockdown, withstanding about 30% rise in price triggered by the fall in the exchange rate. At least for the two big brands, iPhone and Samsung. With the six- week lockdown and businesses losing income and reducing salaries, one would have expected new phones to be the last thing on peoples’ minds. Because you should never sit in an armchair and assume how consumers and the market behave, we decided to go and check how our assumptions about the lockdown, the lower purchasing power of the naira and the demand for phones by speaking to a few dealers.
Frank Alizor, ELCLASSICO PHONES AND GADGET
The phone market is affected by the coronavirus. For example, things don’t work out the way they used to. Before, phones came in within 48 hours. But now it takes a month. I am still importing phones. The number has reduced but people are still buying. Phones are a basic commodity. Demand has reduced a little. But the big brands have not been affected. Apple and Samsung for instance are still really selling out. iPhone 7+ was N110,000 for 128gb but now it costs N135,000. So, that’s about 30% in increase. I really can’t remember how many phones I sold last year. But, I can give you a rough estimate. I must have sold about 5,000 phones. So far this year, I have sold about 1,500. The economy has not been fully opened yet. Things will pick around September.
Contact: No. 22 Awolowo Way, First Floor Beside Digital Square, Tecno Glass House, Ikeja Lagos. +2348063148688, Email: firstname.lastname@example.org
Anonymous, Istore, Ikeja City Mall
We were selling online during the lockdown. We were very surprised that we didn’t get any drop in sales. People kept ordering phones and iPads. This continued during the first phase of lifting the lockdown when we were closing at 3 p.m. People were coming into the store as well as buying online. We have been very surprised. People are still buying now. There has not been any dip in our sales. We are now wondering what’s the point of opening for eight hours like we used to before the coronavirus. Closing the store and opening for five hours have not affected our sales at all.
Olawale Ahmed, Tizzo Network & Comms
The market is not bad. It is just that phones now take longer than usual to arrive in the country. It was normally within 2-3 days when you make an order. But, it now takes a month. I am still importing but prices are now ridiculous due to the exchange rate. I have cut stock by around 30%. I still get the same traffic of customers but a lot of them run away because of the new price. But there are people still buying. I would say that demand is still very high but the issue now is that it is taking forever for the phones to get to Nigeria. People will always buy phones and laptops no matter how bad the economy might be. These gadgets are essential commodities.
I will say prices have increased by 25%-30%. iPhone X was N180,000:00 in January but now it costs N220,000:00. So, that’s about a 30% in increase. I am not really big in the business yet but I was able to sell 700-800 phones last year. I am not really sure of the numbers, but I can give a rough estimate of about 85 phones. You can see the difference from last year. I don’t think prices might get back to normal soon as the economy is still shaky. Only God knows when the exchange rate is going to be stable. So I am just looking forward to next year for a stable price.
Contact: 18, Otigba Street, Suite 31, S-Square/Spectrum plaza, Computer village, Ikeja. Tel: 08100465936
Segun Ajayi, iPower Link Technologies
The market is not stable. Things are not going smooth like before. Phones are now taking longer than usual to get Nigeria. Also, the dollar rate is really affecting the prices of phones. Yes, I am still importing phones. The only difference is that I don’t order so much like I used to. The exchange rate is not allowing me to. I have to spend double money these days.
I don’t think people can do without buying phones. Even during the lockdown, people were still buying phones regularly. We get customers regularly but the demand we are getting is for only big brands like Apple and Samsung. Other brands are not really doing very well in terms of demand. The exchange rate has made prices so ridiculous. An iPhone 11 was N240,000:00 as at March is now sold for N440, 000:00. That’s almost double the price. It’s so crazy. I was able to sell about 4,000 phones. I have sold about 800 phones so far this year. If other brands were really moving, I would have sold more. I don’t see any stability this year. Only if a miracle wants to happen. By next year things should be back to being normal.
Contact: No 21 Ola Ayeni Street, T.B Edung Plaza, Beside Old Slot, Computer Village, Ikeja. Tel: 07013330004
What is happening seems to be that the incomes of the Nigerians who buy high-end phones have not been touched by the economic consequences of the restrictions to curtail the new coronavirus. Robert Giffen, the Scottish economist, discovered the class of goods which would later be named after him in the late 1800s when he found out that poor Irish people were spending more on potatoes as the price rose and forgoing things like meat that they used to spend a bit on. The concept is applied mainly to cheap items consumed by the low-income. But it is reasonable to speculate that better-off Nigerians are spending more on phones as parties, shoes, clothes etc. have been taken off their budgets by the coronavirus.