Recession hits mobile market due to high prices, supply shortage

Mohamed Alaa El-Din
5 Min Read

The mobile market suffers from a state of stagnation due to a significant increase in prices and a scarcity of supply of devices, due to the halt in imports and the high exchange rate of the dollar.

Walid Ramadan, deputy head of the Mobile and Communications Division at the Chambers of Commerce, said that the prices of mobile phones rose at approximately the same rate as the pound’s price drop against the dollar.

Ramadan told Daily News Egypt that the mobile market is suffering from a complete stagnation due to the doubling of the price of mobile phones, in addition to the lack of supply of mobile devices.

Ramadan explained that the volume of locally manufactured mobile phones does not cover the volume of demand in the local market and does not contribute to lowering prices due to the import of components, whose prices have increased due to the high price of the dollar.

Mobile phone sales in Egypt recorded more than 15 million phones in 2021, according to the research institution GFK, compared to 13.3 million phones in 2020.

The value of Egypt’s imports of mobile phones decreased by 50.7%, to reach $299.1m during the first 4 months of this year, compared to $607m in the comparative period of the previous year.

Ramadan believes that the mobile market in Egypt is experiencing the same scenario as in 2016, when Egypt liberalized the exchange rate of the pound against the dollar in November of the aforementioned year, which caused a significant rise in mobile prices, followed by a state of stagnation for a period of time.

Ramadan said that mobile phone dealers are in a very bad situation, due to the recession that hit the market, in addition to the difficulty in providing goods.

He believes that the state is trying, through the “Egypt Makes Electronics” initiative, to localize the mobile phone industry locally, and has provided industrial incentives to companies, but the consequences of the Russian-Ukrainian war and the supply chain crisis resulting from the Coronavirus pandemic still cast a shadow on the Egyptian market.

Four companies announced their intention to manufacture their products locally in Egypt, starting with the Chinese company Vivo, one of the Chinese BBK Group companies, which launched its factory on an area of 11,000 square meters in the Tenth of Ramadan, with investments of $20m and increasing to about $30m within a year, with a production capacity close to 2 million phones.

In August, Etisal for Advanced Industries (EAI) announced its agreement with HMD, which owns the old brand “Nokia”, to manufacture about one million phones annually in the Egyptian market.

In September, the Chinese company, OPPO, announced its intention to establish a mobile factory in Egypt, with investments of $30m and a production capacity of 4.5 million phones annually. Thus, the company’s factory in Egypt is one of the company’s 10 factories around the world.

Samsung manufactures some of its mobile devices in its factory in Beni Suef for a trial period.

For his part, a source in the mobile market said that the market is suffering because of the inability to provide mobile devices due to the suspension of imports.

The source, who preferred not to be named, explained that the import has been suspended since last March, and even the periods of recovery in the introduction of imported goods did not include an appropriate amount of mobile shipments, which caused a shortage in the products available in the market.

He added that the rise in the price of the dollar, the difficulty of saving it, and the cessation of imports caused the prices of mobile devices to double, noting that most of the devices available in the market did not enter normally through importers.

Share This Article