Device registries: Making the grey market more black and white

Details: James Barton; Category: Devices & Platforms; 30 July 2025; 13158 views

Globally, smartphone sales have been declining for the past few years, with emerging markets one of the few growth drivers. However, the cost of smartphones is a major barrier to adoption in these regions, and this has resulted in thriving grey markets for devices that are resold outside of official channels.

While this is not necessarily illegal, it can be detrimental to all sides – manufacturers lose out on revenue, governments are unable to collect import taxes, and consumers have no guarantees that their devices are official, functional or repairable.

While many accept this as the price for lower-cost devices, governments are scrutinising the issue, with Egypt bringing in legislation earlier this year to better control imports. Manish Pravinkumar, an analyst at Canalys, notes that governments in emerging markets are adopting device registries – national databases that track device IMEIs (international mobile equipment identity) - to combat the influx of illegally imported or grey market smartphones.

Device registries ensure that only registered and verified devices can access mobile networks, which helps address curb tax evasion, protect consumers from counterfeit products, and support local distributors and manufacturers. Pravinkumar explains that he began observing this trend in markets including Egypt, Turkey and Kenya, and that it is becoming increasingly prevalent in West Africa and other sub-Saharan countries. Registries offer revenue protection for both vendors and governments as well as consumer safety and market structure support, which strengthens the formal retail ecosystem.

Weight, not volume

In the short term, this does impact lower income consumers who often rely on the cheaper grey market devices - they lose access to these when enforcement gets strict. “In Kenya, a lot of imports used to happen through Eldoret International Airport”, says Pravinkumar. “All the shipments would come in from Dubai. A year and a half back when the government started getting strict, they closed down those imports. The mobile phones would be imported by weight - forget about the number of units, you would have one or two kilograms of phones coming in. And the prices would be damn cheap!”

In response to these crackdowns, several markets – such as Kenya and Nigeria - have seen shifts towards refurbished or older certified devices. Pravinkumar notes that this is affecting upgrade cycles, which could lead to digital exclusion – particularly as many African governments are now pushing digitalisation, so consumers will require access to more advanced devices to avoid widening the digital gap.

“Registries can improve regulation and revenue collection, but also risk dampening overall device sales in price sensitive segments unless governments balance enforcement with affordability programmes, subsidies, or local assembly initiatives”, says Pravinkumar, noting that he has observed successful examples of such programmes in Egypt and Kenya.

Domestic assembly

This argument is supported by Feraz Ahmed, the CEO of Hayo, whose National Mobile Registry (NMR) platform helps governments address this issue. While Ahmed acknowledges that cracking down on the grey market will affect device affordability in the immediate term, it will also significantly boost state revenues as well as drive a new market for local manufacturing.

“In the markets where we deploy in Africa, there's a huge incentive now for companies to come in and start manufacturing, creating new jobs and new streams of revenue for the people within the country.”

While it is unlikely that device manufacturers would set up a facility in every market where they’re present, the role doesn’t always fall to these companies – Ahmed notes that in Kenya, Safaricom have stepped into the manufacturing space to create low-cost devices, creating jobs and helping the domestic economy, rather than relying on international vendors like Samsung and Apple.

“It's a new space for them. They launched this year, and identified that there's a huge gap. In countries in Africa, the taxes in VAT customs make up around 40 - 50% of the value of the of the MSRP of the device. If you're importing a $1,000 phone, you're paying $600 on top just in dues and taxes. This creates a big incentive for mobile operators to venture into manufacturing.”

Pravinkumar agrees that vendors will be drawn to local manufacturing, but posits that utimately operators are interested in ARPU rather than quality hardware, and ultra low-cost devices won’t be desirable. Ideally, Africa needs smartphones at a price point of around US$50, but this is not possible currently. Transsion has seen success with a more feasible $75-80 price point, but there is a challenge in shifting consumer mindsets – if they’re currently using a feature phone that costs between $12 and $18, there’s a significant barrier to upgrade to a smartphone that costs $80 or more. Pravinkumar notes that China’s Xiaomi have managed to take second place in Nigeria, where Transsion has a very strong hold, by selling at or below cost to ensure they grab market share. They know this isn’t possible in China due to saturation – however, both Africa and Latin America show a growth trajectory.

If every country starts implementing a registry to protect the market, they need to ensure that they have the whole ecosystem in place, argues Pravinkumar. India has expertise and engineering skills but lacks components – they still depend on China for this, and while this won’t change immediately, India is already taking steps towards reducing this reliance. Of course, not every country will be able to manufacture locally, and Pravinkumar notes that this will likely lead to regional import agreements, particularly once local manufacturing becomes more prevalent in certain markets. There are already numerous examples across Africa, grouping together trading blocs in North Africa or Francophone West Africa. Countries such as Morocco and Tunisia can charge as much as 50% on imports, so inter-regional trading agreements will help to bring down these taxes, facilitating freer movement of devices. Pravinkumar notes that achieving widespread implementation of these agreements will be a Herculean task, but if for example Egypt is successful in establishing local manufacturing facilities, it would likely become a regional hub.

ID parade

Ahmed says that in addition to a boost in local manufacturing, the longer-term impact of device registries will be a drop-off in the use of counterfeit devices, saying: “As soon as we go live, our system is able to detect each and every device which is active within an entire ecosystem.”

“We can also identify each new device that's coming to the market - if the government says that they’re going to provide amnesty to all the devices that are currently active within the country, that's fine. It's really going to be driven by the telecom regulator within the country to decide on what different aspects they want and what parameters they want to set for this new stream of revenue.”

Importers are required to formally register devices before they can function, so if a device bypasses this process and connects to a network, Hayo’s system instantly detects it, sends a notification to the user, and gives them a window to regularise the device. If they fail to comply, the system flags the device for blocking, and then the mobile operator is requested to deny network access. This immediate feedback loop starts disrupting the grey market right from the beginning by making it impossible for unregistered devices to operate undetected.

In addition to fighting counterfeit devices, this also helps combat mobile theft. Currently if you report a device stolen, little is possible, but with the NMR in place, you can supply your phone number and the police can track and remotely block the IMEI. This essentially makes the handset unusable, thereby removing the key incentive for device theft. This also addresses the issue of SIM swap fraud, which Ahmed notes is rife in numerous markets, including Kenya. Once they’re in the system, banks can check if a SIM has been swapped within a 48- or 72-hour period. “It's something that gives some control over the national ecosystem to the regulator, which is necessary in today's day and age with the advancement in technology and cell phones being such a pivotal part of your access and your identity.”

Counting the cost

The incentive for governments to adopt device registries is clear – increased tax revenues from the start, with longer term opportunities for local manufacturing and inter-regional trading agreements. Consumer attitudes may be the key barrier – in emerging markets where incomes are lower, many will mourn the low-cost resold devices available via grey markets, so device registries may prove unpopular at first. However, some benefits will be felt immediately on the consumer side, such as reduced theft and fraud, while others – such as job opportunities and boosted domestic revenue – will emerge over the long term.