Africa has been widely touted as the next land of opportunity for the igaming industry, according to Slotegrator, who points to advancements in technology, economic expansion and mobile penetration as three key drivers for growth across the region.
Africa offers a unique set of conditions that is likely to result in a rapid expansion of the online gambling industry in the coming years.
It is home to many emerging economies. While growth was stifled by the current pandemic, Sub-Saharan countries’ gross domestic product shrunk at a significantly lower rate than that of most other states.
Before the onset of Covid-19, the regions’ GDP was forecasted to grow by 3.6% in 2020 which – to put things in perspective – would have amounted to three times the estimated Eurozone growth for the same year. In any case, a rebound is on its way, with a GDP growth for 2021 once again forecasted to be above 3%.
At Slotegrator, we wanted to break down the opportunities within the African market with our upcoming webinar titled “Striking while the iron is hot: how to launch an online gambling business in Africa”, which will be held on 13 April at 14:00 CEST.
The speaker, Sales Manager Nikolaj Plugatar, will cover the topic in depth and answer any questions from the audience. In order to attend, simply follow this link to the registration page.
Ahead of the webinar, we wanted to give a preview of the opportunities that will be addressed – before reminding sportsbooks of the challenges that they may face when entering the African market.
Technology, a growing population and economic expansion – the opportunities
Years of continuous economic expansion have resulted in a now sizable middle class with rising buying power, which acts as a catalyst for foreign investments and further economic advancement.
Africa is also on the way to be the only continent with birth rates higher than replacement level and a positive demographic dividend – the ratio between active population and their dependents. The demographic dividend can act as a further boon to the region as, if local economies prove able to absorb the growing active population by scaling accordingly, the overall productivity is bound to increase sharply.
Advancements in technology are the final piece of the puzzle making the region so attractive. While African countries are still playing catch-up when it comes to internet penetration, things are rapidly changing thanks to new infrastructures resulting in more affordable mobile broadband access.
The number of people using mobile broadband more than doubled between 2014 and 2019, and the coverage is also quickly expanding. Three quarters of Sub-Saharan Africans have access to at least 3G connectivity, while half of them can enjoy 4G speeds. The cost of both internet consumption and mobile devices nearly halved during the last five years, contributing to the overall uptake in internet penetration in the region, particularly in the main urban hubs.
The resulting picture, from the perspective of investors in the iGaming industry interested in the region, is rosy: a growing population with rapidly increasing disposable income and affordable access to high-speed internet.
While these markets aren’t completely untapped, they’re – for the most part – not saturated either. Kenya and South Africa are perhaps the most competitive, but other heavyweights like Nigeria, Ghana, and Tanzania offer exciting possibilities for operators entering the fray with a limited marketing budget.
Furthermore, saturation generally is limited to the sports betting side of the industry, the most widespread form of online gambling in Africa. Due to the legacy of poor broadband penetration and costly data, casino gaming hasn’t yet gained traction in the region.
The segment is likely to steadily grow going forward, thanks to the above-mentioned technological advancements and the operators’ growing awareness of the need to provide lightweight, mobile-friendly games specifically designed to cope with the limitations currently in place.
What to consider
Currently, the most successful gambling brands in the African markets are local, albeit supported by foreign investors. It is crucial to understand that gambling products, much like any other service, need to be localised and adapted to the specificities of each local market. This means not only adapting the style and contents of the marketing collateral, but also the product offered itself, particularly as the competition increases.
We already talked about the need for casino games that respond to the infrastructural limitations of African markets, but sportsbooks are no different.
It’s easy to understand that countries with different sporting heritages are likely to house punters with similarly different betting preferences. For example, bookmakers in South Africa need to prioritise rugby and cricket events, whereas in Nigeria football would take precedence.
Offering competitive odds on the events that most matter to the local audiences is possibly the best way to drive customer acquisition and retention, particularly in markets where savvy betters are willing to seek out the best deals available, as is the case for Nigeria or Kenya.
The challenges
Something to consider before entering the African market is the state of regulatory frameworks in the region.
A handful of countries – particularly in the north of the continent – outright ban gambling, while only a few have comprehensive legislation in place. However, this is expected to change in the near future, with widespread market regulation likely on the horizon throughout much of Africa.
Blanket prohibition is becoming nigh on impossible to enforce due to technological advancements. This issue has been exacerbated over the past year by players switching from physical to online gaming venues as a result of national lockdowns.
Meanwhile, local governments are driven by the need to control the monetary fluxes tied with the industry: due to the peculiarities of the region, regulators are especially wary of the potential issues presented by money laundering and terrorist financing.
Going forward we can expect regulatory regimes based on internationally recognised best practice, yet specifically adapted to each local jurisdiction, thus creating a fragmented market.
The key markets in the region
Governments that have already regulated online gambling, like Tanzania, have reaped significant benefits in the form of revenues – soaring as the market expands – from the taxation of local operators, serving as a model for their peers.
Tanzania is indeed a great model: with a significant mobile penetration and a population of 70 million, it represents a very interesting market for investors. Online gambling was regulated early, nearly a decade ago, and the Gaming Board of Tanzania developed a high-tech, operator-friendly system that relies on an API to report every single bet placed on gaming platforms, removing the need for providing monthly reports to the authorities.
The continent’s largest market and prime destination for sportsbooks, South Africa, is looking into the possibility of introducing regulations for online casino gaming, which is currently illegal. Meanwhile, notable markets like Uganda, the Seychelles, and most importantly Nigeria all have detailed online gambling legislations in the pipeline.
Notwithstanding the disputes between state and federal regulators, Nigeria is widely believed to be the most promising market in the continent for investments when considering its size, growth potential, and current saturation.
The country has by far the largest population in Africa, and is home to 60 million punters, spending about $5 million a day on sports betting alone, which puts it firmly in the top five of countries with the largest gambling on the continent. The others, apart from the already mentioned South Africa, are Uganda, Ghana, and Kenya.
Kenya is a bit of a question mark: while its market has incredible potential, the political opposition to the gambling industry makes it somewhat of a risk for investors. Some local operators like SportPesa and Betin decided to call it quits following a controversial 20% tax on stakes imposed and then removed by the government within less than a year.
Africa – the land of opportunity?
For all of those interested in learning more about the nuances of the most promising African gambling markets, and perhaps investing an iGaming platform in the region, tune into our free webinar on 13 April at 14:00 CEST.
