From research to launch: How to enter Africa’s gaming markets
The gaming market in Africa is growing and attracting notable interest from potential foreign investors who are eager to tap into its potential. However, setting up operations requires a thorough understanding of the regulatory environment, market dynamics, and logistical limitations. A recent iGaming AFRIKA webinar shed light on significant factors and conditions relevant for those interested in entering Africa’s top markets.
Factors to consider before starting a business in the African market
Participation in Africa’s gaming industry begins with identifying markets that have existing legalised gaming regimes. One must understand that not all markets allow such activities; thus, it is necessary to focus on jurisdictions that have clear legal regulations. After identifying those markets, there will also be a need to review their economic indicators, such as Gross Domestic Product and population size. Large populations and higher GDPs often mean more attractive opportunities, but they do come with specific regulatory matters.
Determining the minimum required capital presents another key step of the process. Every jurisdiction has its own limits regarding the level of investment necessary for a company to initiate operations. In addition, specific markets have prohibitions on the types of licenses or certifications that are permitted for firms. “Observing investing requirements in different markets is very important since you can find some jurisdictions that only allow local investors to set up companies and do not allow any foreign investments. Or in turn they may allow foreign investors as long as there is a local investor involved,” details Job Weku, FAZI Business Development Manager. As such, it also becomes necessary to conduct detailed research on investment policies tailored to each specific market.
How to source accurate information before setting up a business
Before entering an agreement with any jurisdiction, it is necessary to have access to trusted and up-to-date information. Interacting with market professionals who are already represented on the market has tremendous value, as those who have first-hand experience with local regulations and market conduct are the best sources of information. As iGaming expert Martin Sack suggests, “Attending events held within Africa is a great way to learn more about the demographic. Seeking advice from both legal practitioners and consultants within these markets is also important.”
Local gaming conferences and events significantly improve knowledge of existing trends and local market potential. Additionally, seeking consultation with legal experts and advisors with expertise in African gaming can help decipher complex regulatory regimes and ensure compliance from the outset.
Effective research techniques
Study of the regulatory environment is of critical value. The markets vary significantly in terms of the level of regulation, with some having strong regulations and others having moderate regulations. Identifying the regulatory position of every jurisdiction helps tailor business strategy accordingly. Additionally, understanding the payment instruments available in the market is crucial.
The efficacy and dependability of payment channels have an immediate impact on customers’ satisfaction, as well as on the overall effectiveness of conducting business. “Available methods of payment within said markets. How funds are transferred inbound and outbound from the nation matters quite a bit,” responds Martin.
Key conditions for development of operational activities
Financial protection plans are part of the building blocks of establishing a sustainable gaming firm. The use of bank guarantees stands central in protecting both the firm and its stakeholders. “Bank guarantees are important for securing a business and also safeguarding players.
Some regulators will stipulate high bank guarantees to ward off investors who are not serious,” explains iGaming expert Brian Ondieki. Bank guarantees are insurance-like policies explicitly designed to mitigate potential financial risks and demonstrate regulatory accountability.
It also concerns the choice of payment methods. Given that most players have active interests in quick withdrawals, the function of an effective payment aggregator becomes central. This service ensures easy transaction processing and builds user confidence. It is a testament that a lot of markets in Africa have been using convenient digital payment methods for quite some time.
Current regulatory trends in Africa
This new regulatory trend has made the investment environment more attractive. For instance, in Kenya, there have been remarkable reforms that have seen the withholding tax on winning payouts lowered from 20% to 5%. The excise duty has also been reduced from 15% to 5%, making the investment environment more attractive. As Job noted, “Such enhancements are persuading not only potential operators, but also those who exited the market before, to reassess the investment opportunity again.”
Ghana has made significant strides with the removal of the 10% betting tax this year, hence allowing new investment opportunities. Likewise, Nigeria has made its environment transparent and well-regulated with a competitive structure free of monopolies. “Nigeria is open and highly competitive and regulated,” observes Samuel Rowland. Angola, Mozambique, and Ghana also show good performance and have high investment potential.
Together with relevant knowledge and long-term strategic planning, Africa offers an attractive frontier for gaming operators. The continent has a massive consumer base and significant revenue potential, which relies on thorough knowledge of and compliance with relevant regulatory demands made on the respective firms. Conducting diligent research, adhering rigorously to local regulations related to investment, and keeping up with the changing regulatory environment are key undertakings for launching successful operations in Africa’s markets.
