We are once again delighted to have been invited by iGaming Business to write the introductory feature of the February edition of Africa Focus 2018.
You can view the full feature via iGaming Business here, or keep reading for our contribution below.
Coming to Africa
Susan O’Leary, CEO of Alderney eGambl ing, says there are significant opportunities in African countries for remote gambling businesses, but operators and suppliers still need to be savvy in how they approach things
Africa is one of the fastest-growing gambling markets in the world. Compared to other pre-regulated regions such as Asia and Latin America, the African countries are the most open to encouraging inward investment in this sector and the regulation both of retail and online gambling. The majority of the 54 countries that make up the continent are ready and raring to go; they are moving towards online regulation and licensing with determination and commitment, with new frameworks set to come into force imminently, watch this space.
Some countries already have regulatory frameworks in place but many of the African countries’ legislative frameworks focus on retail gambling. Alderney has been working with various regulators, governments and local experts in respect of the online framework to encourage foreign businesses to set up bases and target these markets. These first-movers are helping us better understand the wider African market, and the opportunities and challenges faced by those looking to get in on the action. It is already clear there are tremendous upsides, but plenty of hurdles to jump over, too.
The state of play:
The first thing for any iGaming business looking to make a move in Africa to consider is to educate themselves on the current state of play. Which countries are already regulated and which are on the cusp? What licences are available? What conditions do they come with? What products can be offered to players, etc? These are all questions that need answering – remember, each market is different.
It is also important for operators and suppliers to understand the dynamics of the region they are looking to enter. Africa is vastly different to established European markets; from demographics to smartphone penetration via the games players engage with and the methods they use to pay. Perhaps the starkest difference is one of population, and in particular the average age.
On average across the continent, 60% of a country’s population is under the age of 27. This young demographic has embraced mobile technology – penetration is around 43% across Africa, but in Kenya is upwards of 90% – with many using smartphone and tablet devices to manage their day to day lives, as well as to wager online. Indeed, the continent has skipped the desktop stage almost entirely.
The spread of mobile devices has been underpinned by telecoms companies providing low cost products and services to users. As a result, a mobile-driven economy has emerged; companies such as Konga, Jumia, Iroko, hellofoods and flowers.za have all used mobile ecommerce platforms to target this younger demographic, which in turn has driven revenues.
At the heart of this smartphone economy is mobile payments; in Africa, a huge percentage of the population banks and transacts via mobile devices, without holding a bank account. MPESA is one of the leading mobile money transfer providers, and accounts for more than 50% of all transactions in Kenya. Visa and MasterCard are also becoming more widely available.
Online operators already live in the region have had to adapt their payment wallets to meet these needs; brands such as SportPesa, Betway, Betin, Mlotto and bet365 are among those offering mobile, USSD and online payments to their customers. Bitcoin and other cryptocurrencies are also becoming increasingly popular in African markets, particularly when it comes to online gambling.
Things to consider:
While mobile banking may be the platform of choice for consumers, for operators and suppliers entering the region, they must also look at what financial structures are in place for their own business needs. They should familiarise themselves with the main financial institutions; are they international, national or local? In addition, what AML protocols are in place, and do they offer sufficient protection?
We also recommend operators and suppliers assess the stability of the country’s currency, as well as the process of repatriating funds. Businesses want to be able to withdraw profits from accounts held in that region to others located elsewhere, but different countries have different rules, processes and procedures. It’s important to understand these and how they impact you.
It is also worth researching player preferences in the market you are looking to enter. Sports betting reigns supreme in most African countries, but pool betting jackpots and virtual sports are also popular. Punters in some countries like to wager on their mobile devices, while others like to go to land-based bookmakers to place their bets. Operators and suppliers need to consider whether their proposition is a good fit.
As with any new and emerging market, the key to success is balancing the risk/reward factor. Some markets will offer huge rewards, but entry carries significant risk. Operators and suppliers should only take on risks they are comfortable with, and must always keep in mind how entering one jurisdiction can impact their licensing status in another.
The best approach:
The landscape in Africa – as with any pre-regulated region – is forever changing, which is why we believe operators and suppliers looking to make a move in the continent should work with, and obtain a licence from, established regulators prior to entry. This means they can assess the situation safe in the knowledge they are operating to internationally-recognised gold standards, and are doing the right thing.
Regulators can also help prepare businesses ahead of launch. The Alderney Gambling Control Commission, for example, has spent the past two years working with industry experts and regulators in Africa, forging relationships and partnerships with key representatives from the government, regulatory bodies as well as local operators and suppliers. We understand the market and work closely with local experts.
This means we know which markets are likely to launch regulatory frameworks first – at present, which are closest to the line – the timeline for their implementation, and any specific requirements operators and suppliers will have to meet – this could be partnering with a local retail operator or otherwise, engaging with local experts or having certain responsible gambling measures in place, for example.
Africa is on the brink of the mass adoption of regulated online gambling. Once the first two or three countries cross the line, we expect a second wave to come crashing down. For iGaming operators and suppliers, the opportunities are immense – a young, mobile-savvy demographic with an interest in gaming and gambling, both land-based and online.
Operators and suppliers looking to target Africa can move forward with plans by ensuring they are licenced by an established regulator that understands the quirks and nuances of each market across the continent. These same regulators can also guide them through a smooth and seamless launch, ensuring they are primed and ready for long-term success.