The director of Global Gaming Africa and Clarion’s ICE Africa ambassador gives his predictions on which markets and verticals are set for growth across Africa in the near future
iGaming Business: How did your new role as ICE Africa ambassador come about and what does it entail?
John Kamara: Our company, Global Gaming Africa, works as a partner to Clarion in different markets. This is an ancillary ambassadorial role helping to give ICE Africa a face; we wanted to add more visibility to the event. It’s about promoting the message of ICE Africa and acting as an ambassador in terms of when the company is not present, answering questions relating to government, relating to different types of regulators, and also being able to use my influence in the local market to gather support for the event.
Your firm helps companies looking to come into Africa. Which countries/territories do you think offer the most investment potential right now, and why? I think Mozambique is one. Nigeria traditionally has been a big one, and there has been a shift in Nigeria to a stage where companies can just purely be online and still make decent revenue unlike before when you always had to do retail.
I think Tanzania is still a growing market. Uganda is an interesting market – I think it needs more investment but there is an undertone of good opportunity for growth there. The French-speaking countries such as Senegal are quite good markets right now for investment as they slowly try to break down the monopolies of the existing traditional gaming companies there.
The traditional markets of Kenya and Ghana, they are good markets but they are growing at a flatter rate than these other new markets. Botswana is trying to licence itself now so within the next year there is also potentially a new growth market there. “Chinese businesses in some countries in Africa are bringing local hand-made slot machine products into local communities and many people are playing these things”
We only hear about sub-Saharan countries when it comes to igaming in Africa. Are there investment opportunities in the rest of the continent worth pursuing or do the associated risks rule these out?
In the North African countries there is a stigma about gaming, which makes it difficult for a lot of gaming companies to want to go there. I think Tunisia is one of the countries that is really trying to think about how it can legalise and make more opportunities for gaming companies. In the other countries there is a lot more risk around just being there.
Which types of companies (operators, suppliers, payments, affiliates) should potential investors be looking at when it comes to establishing a sustainable entry and foothold in the region?
I think the first thing to look at is sports betting because the growth of sports is huge. So they could look at finding small sports betting companies in the new markets that still have space for growth and doing M&A with those. I think there are also opportunities with some payment providers that are looking to diversify because they see gaming as a big opportunity.
The affiliate market in Africa is still very young but I think there are opportunities to come to market with various media providers. Apart from South Africa, there are very few suppliers in the African market. Online casino is an area that companies should start looking at because I expect it to follow the same trend as online sports betting.
Companies that only do casino I think are going to be the new trend in the market, which is going to be the new growth area. If I was an investor I would definitely look at that because there are not a lot of companies that really do that in the market. You would not find M&A there but you would find a market that would slowly adopt what you are doing and you could grow very fast.
Sport had a natural in as it is very popular in Africa. But there aren’t as many land-based casinos in Africa as there are in other regions. Is that going to be a stumbling block?
Casinos in Africa have traditionally been built for the affluent, which is why a lot of local people would never walk into a casino, whereas sports just lends itself to every possible person. But we are seeing trends where Chinese businesses in some countries in Africa are bringing local hand-made slot machine products into local communities and many people are playing these things.
They are demystifying the idea that you have to be a certain type of person to play casino. Four or five years ago nobody really thought African countries would be able to become what they have today in terms of sports betting markets. When sports betting first started you only had one or two and if you’d introduced live betting four years ago you’d have just been looking at disaster. You had to bring players through a basic education process.
It’s the same with casino. So you need to start with a basic online slot – you don’t have to hit them with all your products, you just need a very simple product that brings a game at the base level, the same way sports has done. After that people will naturally want more.
What about lotteries, is there scope for expansion of this vertical?
Once most countries really get behind their lottery proposition there is a huge opportunity. It is still a massively untapped market in a number of countries. With traditional lotteries in Europe, you go to a shop and you buy a lottery ticket – that is second nature that is the way the infrastructure has been set up. It is not this way in Africa because the infrastructure that has been set up is different.
One of the reasons why lotteries haven’t been very successful yet is because people don’t trust them, whereas with sports they know that when Man Utd play Arsenal the operator can’t control what is going to happen. Basically, they have got visibility. People don’t really buy into rollovers. You’ve seen companies that have comeinto the market with big jackpots and people don’t believe in that. They think, ‘When somebody wins I amsure it is your brother.’ More needs to be done in terms of building trust.
Is there anything investors should be wary of when presented with potential opportunities in African countries?
The first thing they need to do is look at the market and look at the real value of the opportunity they’ve been presented with because even a lot of South African companies still don’t understand how to evaluate the real value of something.
You need clear due diligence and what I mean by that is not just getting KPMG to look at it, but getting people who understand the local market, who understand what the value of a player on a platform is and things like that. What you do find in the sports betting market is that a lot of these African companies, the biggest problem they have is product and investment.
They don’t control their products so it is hard for them to be nimble and flexible and in a new market like this, one of the key things that drives growth is flexibility. You find the companies that are really successful in this market are the ones that have a lot of funding and either control their product or have their software provider as a co-owner in their business.
This article originally appeared as part of the Africa Focus in iGaming Business September/October 112. The focus ties up with ICE Africa, which takes place between 24 October 2018 and 25 October 2018 in Johannesburg, South Africa