Financing Services to Boost Smartphone Adoption in Emerging Markets

Global smartphone shipments have reached around 1.5 Bn units in a calendar year, however, it is expected to show negative growth for the first time in 2018. As many developed markets have become saturated, smartphone demand is expected to come from replacement cycles and growth in emerging markets. It has, therefore, become more important for smartphone companies to focus on emerging market growth strategies. All emerging markets have their unique challenges as well as commonalities. One of the common factors is low smartphone penetration, and therefore, a large runway for future growth. In this article, we will look at the key barriers in providing affordable smartphones in emerging markets and how financing options are emerging as a catalyst for increasing smartphone penetration in these countries.

Barriers to Smartphone Affordability:

Some of the key barriers to smartphone affordability are listed below:

  • Localization: Most smartphones are available in the English language by default. Smartphones with language support in Over-the-Top (OTT) services are limited to a few SKUs making it difficult for non-English users to adopt these devices. Without the additional usage and services, smartphones for mere communication (where a feature phone will suffice) remain too costly in many emerging markets.
  • Multi-Layer Channel Margin: Another major barrier in emerging markets includes its multi-level supply chain, especially in semi-urban and rural areas. Due to lack of infrastructure and technology implementation, smartphones go through multiple distributors and retailers before reaching the end consumer. Thus, multiple channel cuts make it comparatively costlier for people living in less connected areas. Xiaomi attempted to solve this problem by selling directly through its online platform partners and one layers distributor in offline channels in China, India, and South Asian Countries. However, offline product availability for the company in rural areas still a major issue.
  • Affordability problem: The disposable income level of these countries acts as a major factor affecting smartphone affordability. Countries such as Mexico, India, Pakistan, Bangladesh, Philippines, and Thailand have a sizable population (>20%) still living below the poverty level. Therefore, buying a smartphone is beyond their means. However, these countries also have a large middle-class population who would consider a smartphone purchase but are reluctant due to the large, one-time cost.

Mobile Financing Solving the Affordability Problem:

There are many key players who are offering unique services to provide financing options for smartphone buyers. These offers include subsidies provided under different government and NGO programs. However, these schemes are temporary in nature. Long-term growth will come from the affordability of smartphones. As a result, many mobile financing start-ups came up with small monthly installment options in many emerging markets like the Philippines, Indonesia, Thailand, India, Nigeria, Kenya etc. Some of the key players in these markets are discussed below:

Key Players in Mobile Financing 

SEA Countries:

  • The Philippines is a country with a weak financial infrastructure where close to four out of five adults do not have a savings bank account and the credit and debit card penetration is also low. Home Credit and Flexi Finance are the two major companies providing finance options to buy a smartphone. These companies’ partner with OEMs, online stores and offline stores. Consumers can simply visit a partner store, select the financing option, provide IDs and get the application processed within 15 minutes. It enables a low entry cost for a smartphone. Leading smartphone OEMs have partnered with such financing firms to provide financing at 0% interest for a limited time interval.
  • As per Counterpoint Consumer Lens, almost three in four respondents are aware of financial companies that provide loans for mobile purchases in the Philippines.
  • Companies such as Home Credit, Kredivo, I Am are providing consumer financing services for buying a mobile phone in Indonesia in both online and offline channels.
  • OEMs also provide special partnership offers with these companies to promote affordability of its latest products. For example, OPPO partnered with Lazada (financing platform Kredivo) for its flagship F9 series in Indonesia. Tokopedia banking partners provide installments on Xiaomi smartphones in the same market. As per Counterpoint Consumer Lens, more than 90% of the respondents were aware of the financial services for buying a mobile phone in Indonesia.
  • Alibaba’s Ant financial service saw success in China and now is interested in expanding into other Southeast Asian markets. The company has started investing in finance and e-commerce startups in many SEA countries.

African Countries:

  • In Kenya, Commercial Bank of Africa (CBA) and Safaricom introduced M-Shwari loans to buy smartphones in 2015 with partnerships with OEMs such as Huawei, Tecno, LG, and Samsung.
  • Equity Bank and Airtel launched Equitel to provide similar services from its OEM partners in Kenya.
  • Barclays Bank of Kenya launched a new mobile loan service in March 2018 called Timiza to replicate the success of already existing providers such as M-Co-op Cash, KCB M-Pesa, Equitel, and M-Shwari.
  • Renmoney partnered with Airtel to provide loans to buy mobile devices in Nigeria. The company has many services including loans for personal and business needs besides loans for buying consumer devices.
  • Another online platform, Zerofinance, provides product on credit in Nigeria with a “Buy now, Pay later” tagline.


  • Like other countries, online platforms such as CashCare, ZestMoney and Snapmint are gaining popularity in the smartphone loan market in India.
  • Financial institutions such as Bajaj Finserv and Home Credit also entered the “loans for buying smartphones” category.
  • Xiaomi is planning to roll out its financial unit as a Non-Banking Financial Company (NBFC) to provide credit to companies and corporates for buying smartphones with zero down payment as a Unique Selling Proposition (USP) to further promote its products.
  • Since India has a good savings account surplus, smartphone buying credit therefore so far is limited to urban areas targeting young customers.


  • The next smartphone growth will be driven by emerging markets. There is an opportunity for mobile ecosystem players to create localized offerings to make it more attractive and affordable for first-time smartphone buyers.
  • Customers adopting financing for buying mobile phones are a mid-single digit percentage in SEA and India. This percentage is higher in African countries. However, the adoption rate is growing rapidly with the increase of new players entering the ecosystem with lucrative offers.
  • The target for OEMs should be to create bundle offers with operators and finance providers to gain long-term access to the digital life of customers. Programs like small credit loans with postpaid operation services and monthly additional OTT packages may work well in African countries.
  • A percentage of buyers will likely forfeit the offer in the middle due to non-availability of a constant income source, therefore it will be important to balance out the interest rate with risk vs rewards.