Africa gaming industry excites investors despite Covid-19

John Bamidele

THE AFRICA GAMING INDUSTRY is usually referred to as an emerging market because it is a late starter alongside the Latin America market. Less than a decade ago, gaming was relegated to the back burner by African governments despite contributing hugely to the economies of countries in the continent.

The stigma associated with gambling was another reason for the neglect and its attendant negative social effects pervade the continent with some African countries banning gaming. Many countries in Africa did not see gaming as a form of entertainment; therefore they were blind to the huge revenue potential inherent in allowing and regulating it. Upon the realization that whether you regulate gaming or not people will always bet, different African countries began to allow betting. They also realized that offshore betting companies are making a kill, therefore the need to have a strong regulatory agency to protect the industry.

South Africa has the most developed gaming industry in Africa closely followed by Nigeria and Kenya with the trio worth $40 billion according to a report released by Pwc. The Gaming industry in Africa has continued to attract foreign interests in the past five years. Although there is no reliable statistics readily available to reveal the effects of the pandemic on the industry, the growth and gains witnessed in the past five years cannot be totally wished away.

Mobile gaming has reached 35 countries in Africa, according to KPMG, and it generates $18 billion dollars every year which accounts for more than half of the gaming revenue in Africa. In Nigeria, 60 million Nigerians between the ages of 18 and 40 participate daily, according to Pwc, and spend an average of $15 (6600 naira) per day totaling 730 billion naira in a year. Kenya has the highest number of gambling youth in Sub-Sahara Africa and sports betting has become the most popular form of gambling according to GeoPoll’s series of gambling studies.

As demand grows, Pwc predicts sport betting industry in Kenya will reach $50 million turnover by the end of 2020. One of the reasons for the growth of betting in Africa especially Sport betting is its ever increasing youth population. Today, Sub-Sahara Africa has about 300 million youth population, therefore with a population who like to bet and who are going to bet whether it’s allowed or not and regulators brave enough to deal with it, the industry will witness the kind of growth presently been experienced.

Football is the number one sport in Africa and Africans follow major leagues in Europe especially teams with African players. Major football leagues in Europe such as the English Premier League (EPL), Spanish Laliga, Italian Serie A, French League 1 and the BundesLiga (German League) are passionately followed by Africans irrespective of age, sex and social status. European clubs such as Manchester United, Liverpool, Chelsea, Arsenal, Barcelona, Real Madrid, Inter Milan, AC Milan, Juventus and recently, Manchester City, enjoy large followings from Africans.

Today, sport betting is the fastest growing in the gaming industry. Increase in internet penetration in Africa and an increase in the use of smartphones is another reason adduced for the growth. Over 300 million Africans use smartphones and internet penetration in the region has improved tremendously leading to an increase in igaming in Africa. In 2005, internet connection in Africa was just 2.1percent, but by 2018, it had increased to 24 percent.

Although, bricks and mortar still dominate Africa’s gaming sector, the continent is beginning to experience a paradigm shift from retail gambling to igaming.

Development witnessed in the fintech industry in Africa is another major factor fuelling the growth especially in the igaming sector. With around 66 percent of the adult population in Africa unbanked, the emerging industry has a huge opportunity to drive financial inclusion outside of traditional banking systems and this has contributed positively to Africa’s igaming sector.

In Kenya, M-Pesa mobile money service has been a runaway success because it has not only deepened financial inclusion in Kenya but in the whole of East Africa. The fledging mobile money market in Nigeria got a boost when two of the biggest GSM companies in Nigeria, MTN and Airtel were licensed by the Central Bank of Nigeria to operate mobile money service in Nigeria. As a continent, Africa has an advantage when it comes to digitalization, a young population, rising middle class, proactive network operators and constantly increasing internet penetration, with these factors, growth in the gaming sector will continue to rise.