Nigeria's Mobile App Market Growth & Gaming Surge

The Impact of the Pandemic on the Global and African App Markets

The influence of the recent pandemic on the worldwide application market has been readily apparent. During the first quarter and initial six months of the current year, consumer expenditure within mobile applications reached unprecedented levels, totaling $32 billion and $64.9 billion, respectively.

Challenges in Quantifying African Consumer Spending

Pinpointing precise figures for consumer spending in Africa presents difficulties, as the continent often receives limited attention in comprehensive global app market analyses. However, alternative metrics offer valuable insights. A recent report from AppsFlyer, developed in partnership with Google, provides crucial data regarding the performance of the African app market since the pandemic's onset last year.

Scope of the AppsFlyer Report

The study focused on mobile application activity within three of Africa’s most significant app markets – Kenya, Nigeria, and South Africa – spanning the period from Q1 2020 to Q1 2021.

Significant Growth in App Installs

Between the first halves of 2020 and 2021, the African mobile app sector, which is largely dominated by the Android operating system, experienced a 41% increase in total installations. This analysis was based on data from 6,000 applications and 2 billion installs across the three examined countries.

Nigeria demonstrated the most substantial growth, recording a 43% rise in app installs. South Africa’s market grew by 37%, while Kenya saw a 29% increase during the same period.

This data highlights a considerable expansion in mobile app usage across key African markets during the pandemic.

Lockdown Impact on App Installs

Rwanda was the first nation in Africa to institute a lockdown, initiating these measures on March 22, 2020. Following this, several other countries implemented similar restrictions, including Kenya (March 25), South Africa (March 27), and Nigeria (March 30).

With a greater proportion of the population remaining at home beginning in the second quarter of 2020, a 20% rise in app installs was observed across these three nations.

South African users demonstrated the most rapid adoption of mobile applications as lockdowns took effect, experiencing a 17% increase in installs compared to the prior quarter.

Conversely, Nigeria and Kenya saw more modest gains of 2% and 9%, respectively. This difference is attributed to the differing degrees of restrictions imposed in each country, with South Africa facing the most stringent and consistently applied measures.

The report indicates significant growth in the performance of gaming apps between the first and second quarters of 2020. This segment registered a 50% increase, while non-gaming app installs rose by only 8%.

This trend mirrored a global phenomenon, where gaming app downloads reached a record high of 14 billion globally during Q2 2020.

Growth in In-App Purchases and Year-Over-Year Revenue

AppsFlyer’s analysis revealed a prominent trend: the surge in revenue generated through in-app purchases. A remarkable 136% growth was observed in in-app purchasing revenue from Q2 to Q3 2020. This represented 33% of the total revenue for 2020, demonstrating substantial consumer spending within applications.

This spending encompassed a wide range of activities, including retail transactions and enhancements within mobile games.

Specifically, South African consumers exhibited a 213% increase in in-app purchasing revenue. Consumers in Nigeria and Kenya also showed significant growth, with increases of 141% and 74% respectively.

Significant Rise in In-App Advertising Revenue

Alongside in-app purchases, revenue from in-app advertising experienced substantial growth on an almost year-on-year basis. Increased smartphone usage across Africa fueled this expansion.

The report indicates a 167% increase in in-app advertising revenue between Q2 2020 and Q1 2021.

Performance of Gaming and Non-Gaming Applications

Both gaming and non-gaming applications demonstrated growth when comparing the first two quarters of the analyzed period. Gaming apps saw a 44% increase, while non-gaming apps experienced a 40% rise in revenue from Q2 2020 to Q1 2021.

These figures highlight the expanding mobile app ecosystem and its increasing contribution to revenue streams across the African continent.

Fintech and Super Apps in Africa

Over the past five years, fintech companies have been the primary focus of venture capital investments in African startups. This strong interest is easily understood given the sector’s potential. Fintechs deliver substantial benefits to Africa’s predominantly mobile-first population, encompassing those who are unbanked, underbanked, and fully banked.

This inherent value is the reason why nearly all of the continent’s billion-dollar companies are rooted in the fintech space. A report by Disrupt Africa indicates a significant growth rate of 89.4% for African fintechs between 2017 and 2021.

Currently, the continent is home to over 570 fintech startups. A large proportion of these companies operate through mobile platforms, mirroring the daily usage of fintech applications by African consumers.

Year-on-year growth in finance app installations was observed in both South Africa and Nigeria, with increases of 116% and 60%, respectively, according to data from AppsFlyer.

The Rise of Super Apps

Alongside fintech apps, AppsFlyer’s research indicates a growing trend towards super apps. These comprehensive “all-in-one” applications provide users with a diverse array of services, including banking, messaging, e-commerce, and ride-hailing.

The increasing popularity of super apps, in part due to limitations in device capabilities across the continent, is closely linked to the same factors driving the expansion of fintech apps: widespread systemic underbanking.

“Super apps mitigate some of the obstacles faced by these users, while also offering a degree of customer understanding and a user experience that traditional banking institutions struggle to match,” the report states.

Daniel Junowicz, RVP EMEA & Strategic Projects for AppsFlyer, noted the trends outlined in the report, stating, “…The mobile app ecosystem in Africa is flourishing despite the challenges of the previous year. App installations are increasing, and consumers are spending more money than ever before, demonstrating the critical role mobile technology plays in revenue generation for businesses.”

Fintech continues to attract significant investment in Africa.
Super apps are gaining traction, offering a wide range of services.
Systemic underbanking is a key driver for both fintech and super app adoption.