Author: Yahaya Maikori

It is universally accepted, writes Yahaya Maikori, gaming lawyer at Lagos-based Law Allianz, that for any business to thrive in a foreign environment it will need the support of the locals. The problem for most operators, he says, is how to find a partner.

In spite of recent developments in America, the African gaming market still generates a lot of interest amongst European operators looking to expand beyond their shores. But in the mist of that palpable excitement is always the nagging question: “How do I go about finding my way around this populous continent?”
The reality is that most foreign operators have never had any kind of contact with Africa or Africans. Besides Africa is a continent of 52 countries, which is a large number of countries to choose from. The diversity of its inhabitants, race, religions, cultures, business ethics, communication and jurisprudence give subtle nuances to how even international best practices are implemented in the respective markets. Getting these right will determine the success or other- wise of such companies in their chosen markets.
During the early days of sports betting in Nigeria most of the South African companies that ventured into the market failed to make these adjustments and this led to their failure or early demise. Typically in South Africa, the sports betting model revolves around large stand alone retail halls. An attempt to replicate that exact model in Nigeria met with limited success; those who eventually became market leaders succeeded because they noted the peculiarities of the local market .So instead of setting up these large shops they built mid-sized shops and implemented a franchise /affiliate retail model which saw the affiliates set up smaller mini contact shops at their own cost – reducing the principal’s capital expenses and allowing the operator to focus its resources on providing software and support, advertisement and payouts. This model led to their quick expansion to all the nooks and crannies of the country.
It is universally accepted in the business world that for any business to thrive in a foreign environment it will need the support or the assistance of locals. The problem with most operators then is how to find a partner in their chosen market given the multitude of issues they must sieve through to arrive at a credible and reliable partner – and the multitude of variables and considerations it has to synthesize to arrive at a winning formula.
As a first step I always advise clients to secure the services of an industry professional to conduct thorough market research, which should take into cognizance peculiarities of the local market as ear- lier highlighted. Such a report if properly conducted will throw up several of the local issues the operator will have to contend with in the course of entering the intended market. The operator needs to juxtapose results of the research with its strength, weaknesses and objectives to reach some form of understanding of what kind of partnership is needed to drive its business.
By way of an example if the market research shows that the market is a grey market; an opera- tor which has decided to enter a given market may need to consider adding to its shopping list “a knowledgeable and respected industry practitioner” or alternatively “an influential person with strong government contacts” provided it also procures the services of a gaming lawyer or industry expert to handhold it as it navigates the unclear regulatory landscape.
In another scenario a client decided to partner with the owner of a media outfit in order to tap into the partner’s strong media entertainment industry contacts. In arriving at this decision, the operator noted that it was a very strong global brand, had adequate funding and could mobilize its global contacts to intervene in any local political issues. but prioritized that it needed to leverage on the entertainment industry to fur- ther localize and entrench its brand.
In a third situation, a foreign company which had strong online presence in Europe needed to tap into the retail market in order to access 93% percent of the local bet- ting market. It simply acquired a majority stake in a burgeoning local operation there by acquiring both a substantial size of the retail market as well as the team’s expertise and skills of the local market, then it went on to reconstitute the board to reflect its diversity and add other competences.
From the above examples it is important to note that no two operators are the same. Operators’ needs do not only differ from that of others but may need to be adapted or deployed to different markets which will bring about different results. Securing a local partner is never a science; at best it is a delicate art, which has its share of risks but taking these considerations can surely minimize the margin of error.
By way of caution no matter how pleasant and sophisticated a potential partner may appear to be, the operator needs to conduct thorough due diligence on the company, its directors and management to understand their business philosophy, ethical standards, accountability and their temperament from col- leagues, business associates, employees and suppliers.
Finally the roles, tasks, remuneration, targets of the prospective partner must be negotiated to the letter and documented; it will also help if further training in terms of international best practices, service delivery and dispute resolution is provided – this will bring about more clarity and reduce areas of potential conflict.

In the second part of his deep dive into key regulatory reforms being made in a number of African jurisdictions, Law Allianz founder Yahaya Maikori examines developments in a number of smaller markets.

Swaziland
Located right in the middle of South Africa, landlocked Swaziland has a population of barely 1.45 million people. The country’s industry is regulated by both the Casino Act of 1963 and the Lotteries Act of 1963.

There is just one sport betting licence available, which is renewed annually and covers the entire country for both online and retail betting. However, the betting industry in southern Africa is very retail-heavy, meaning that more investment will be required to expand the sector in Swaziland.

In 1998, Piggs Peak, one of the country’s land-based casinos, was granted a licence to offer
its products online. This roll-out was targeted at South African players, as Swaziland alone is too small to sustain an online market. Given the status of online casino in South Africa, the authorities there didn’t take kindly to this move. They successfully fought it in court, which ultimately stopped the operator from accepting South African players. Players from other countries still remain welcome, however.

In 2005, Swaziland shut down its national lottery, Swazi Lotto. However, in 2013, it awarded a 15-year licence to V Slots Swaziland, a subsidiary of a South African conglomerate, to offer lottery games in the country.

There are also two slot licences available, one of which was recently cancelled, effectively giving the remaining operator a monopoly. This licence holder currently operates around 300 machines across its gaming halls, though research has suggested there is scope for this number to be increased significantly.

Further changes may be forthcoming. In 2018 the Ministry of Tourism issued a request for proposals for consultancies to conduct a review of Swaziland’s gambling laws, though not much has been heard of the process since.

Cameroon
In 2015, the Senate president presented a draft bill seeking to restructure the gambling sector, with a view to imposing new controls on the industry.

This was in response to increased concerns about underage gambling, the industry’s potentially devastating effects on household income, family stability, mental health and loss of revenue by the government.

The public hearing included representations from various committees and bodies. However, the process appears to have ground to a halt, with the bill lost in day-to-day politics. All the while, the vices and illegal activity the government had sought to tackle continue unabated.

In the absence of any tangible action, but in furtherance of its mandate, the Ministry of Territory has resorted to a series of consultations with key stakeholders on how to regulate the industry, with a particular focus on an appropriate model of taxation.
Casinos and gaming halls are littered all over Cameroon, and the unchecked activities of illegal operators and lack of enforcement present a host of socio-economic challenges.

Although there are no popular local Cameroonian brands, illegal online websites are easily accessible.

Sierra Leone
In 1969 a lottery bill was passed into law, which saw the Sierra Leone State Lottery Company (SLSL) licensed and empowered to operate all games of chance on behalf of the state.

The company has existed since 1969 and originally operated as a monopoly. In 2006 a second lottery operator, Mercury International, was granted a licence by the president at the time, Ahmad Tejan Kabbah. This was renewed in 2018 for another three years.

The argument in certain quarters is that the president approved the second operator because of SLSL’s failure to deliver on its mandate. Sierra Leone is only just beginning to recover from its years of civil war and is struggling with a weak economy. This has affected internet connectivity, affordability and penetration, which has, in turn, hampered the growth of online gaming and particularly sports betting which is reliant on good connectivity.

Payments have also been a problem. However, as part of its financial inclusion strategy, the central bank has recently licensed the first mobile money operator in the country, which will most likely nudge the growth of the industry along.

For now, the lottery and pool are the most popular types of gambling and are played predominantly via retail channels. While attempts have been made to also move lottery to mobile platforms, the success – or otherwise – of this initiative remains to be seen.

Ghana
Until 2006, the principal legislation that governed gambling activity in Ghana was the 1960 Lotteries and Betting Act. This was replaced by the 2006 Gaming Act, which saw the establishment of the Gaming Commission of Ghana (GCG), the body that oversees most of the gambling activity in the country. Lottery, meanwhile, remains under the control of the National Lottery Authority.

In Ghana, sports betting is the most popular form of gambling, while the Ghanaian National Lottery contributes valuable funds for good causes in the country through its weekly draws.

The land-based casino world is underserved at the moment, with just four mid-sized casino establishments operating in the whole country, two in the capital Accra, and one each in Tema and Kumasi.

The GCG issues online gambling licences even though we know that there is no specific remote gaming regulation, and there is currently an embargo on new licences.

Early in the year, the GCG announced a rebranding as a way of repositioning its role amid efforts to crack down on illegal gambling and tackle issues such as money laundering. However,
it has been widely opined in some quarters that the rebranding should have come after reviewing the Gaming Act to give the GCG wider powers for enforcement – especially with respect to remote gaming.

The above observations notwithstanding, Ghana is noted for its stable gambling environment – the country has little of the volatility that has hurt the industry in many other African jurisdictions.

As far back as four years ago, the GCG toyed with the idea of implementing a central monitoring system and even went as far as inviting bids, but a change of leadership at the organisation may have stalled the process. The CEO has, however, assured stakeholders that the Act will be reviewed comprehensively in future.

Mauritius
In early 2018, the Gambling Regulatory Authority of Mauritius advertised for consultants to help review its 2007 Gambling Act.

From the terms of reference, it was evident that Mauritius was aiming to position itself as the Malta or Alderney of Africa. The strategy isn’t that far- fetched when you consider that its 1.3 million population does not provide enough of a market on which to build a viable industry.

The country is seen as a tax haven with over 44 tax treaties signed with other territories. This could make it a no- brainer for global operators looking to leverage the tax advantages to expand into African markets.

Though the consultancy contract was awarded on schedule, it somehow got scuttled during its implementation and the law has remained essentially the same since it was passed in 2007, albeit with minor improvements.

Yahaya Maikori is the senior partner of Law Allianz, a leading African gaming and entertainment law firm. He also co-founded Global Gaming Group, a business that has advised regulators, companies, and startups across key markets in Africa’s growing gaming industry.

Law Allianz founder Yahaya Maikori looks at the established and emerging regulatory frameworks in a number of key African markets.

The increase in popularity of gambling across Africa has given rise to the need for legislative reforms, especially in the online and mobile sub-sector. Of particular concern is the need to curb vices such as gambling addiction and gambling-induced debt. On the one hand, this can be viewed as a direct consequence of socio-economic problems. And on the other, it highlights a need to augment dwindling government income through gaming taxes by harnessing the industry’s potential.

While gambling is not entirely new to Africa, remote gaming and the myriad of new and ever- changing games and platforms present a key challenge to several countries which hitherto regulated at most pools betting, slots and most probably lotto. Until now, gambling was not regarded as an industry; these games were at best treated as ‘mom and pop’ businesses operated on street corners. However, technology and the internet, and the rise of ecommerce, has completely transformed the industry, turning it into a multi-million dollar sector that pervades
our everyday lives, leaving regulators scurrying around trying to establish a workable regulatory framework. In most African jurisdictions, licensing still resides with tax offices without any supporting legal or regulatory framework.

As the industry grows in leap and bounds, the apprehension of most regulators is palpable.

Even with their best efforts, the costs and processes for passing bills and regulations are not only expensive, but also time-consuming, especially when critical stakeholders who are often ignorant of the challenges posed by gambling are involved. Furthermore, the undue politicisation and stigmatisation of the industry in some countries leaves it always at the back burner of key national affairs. Fortunately (or unfortunately) gambling, with the help of media, can no longer be confined. It has become part of our mainstream economic activity and is starting to get the attention it rightly deserves.

While there is still a lot of consultation going on across the continent, this is where some of the key markets stand in terms of legal and regulatory reforms.

Nigeria
The National Lottery Regulatory Commission (NLRC) was established in 2005 by an act of the National Assembly, but the Nigerian constitution empowers the 36 states to individually regulate gaming in each jurisdiction.

In 2016, Vice President Yemi Osinbajo decided to withhold assent to the National Lottery Act (amendment bill) due to the existence of a pending legal challenge to the competence of the National Assembly to legislate on the subject. Notwithstanding this drawback, at the national level many states continue to emulate Lagos State, which has been at the forefront of gaming regulation in Nigeria.

Oyo State passed the Oyo State Gaming Law last year while Anambra State has an amended gaming bill, repealing its 2005 gaming law, before the House of Assembly. Lagos State, meanwhile, has presented a draft bill that repeals the 2004 Lagos State Lottery Act and consolidates it with the 2007 Casino and Gaming Law into the Lagos State Gaming Authority Bill. The highlights of this bill include provisions for remote gaming, advertising, social responsibility measures and the power to appoint inspectors. In the meantime, the National Lottery Regulatory Commission has constituted a committee to work with regulators of the sub nationals to harmonise the seeming conflicts among them.

Botswana

Botswana is one of the smallest countries that can be said to have in place the gold standard of gaming regulation in Africa. Since the passing of the 2012 Gambling Act and 2016 Gambling Regulations, no other legislation has been passed.

As licensing is carried out through expressions of interest and requests for authorisation, the speed of issuing licences for other sectors has slowed down considerably. The auction of the National Lottery licence, which was considered the big one, has been enmeshed in a long, drawn out court case with no end in sight. The parties involved are currently getting set to launch an appeal over the process, two years after bidding closed.

In the meantime, the Gambling Authority has published a notice for public hearing for two casino licences – one is the transfer of a licence to a new operator, the other a fresh application. As popular as sports betting is, the Authority still hasn’t issued sports betting licences, having claimed to intend to do so. If and when that happens the exercise promises to be very competitive, as you will have the largest global brands falling over themselves for one of the four licences.

Tanzania
Tanzania takes pride in being the first East African country to regulate online gaming, with the 2012 Internet Gaming Regulations. Its most recent laws include sports betting regulations, passed in 2016, followed by laws governing gaming equipment standards and establishing a central electronic monitoring system for route operations in 2018.

The gaming board, in collaboration with the Ministry of Finance, has recently developed the gaming regulation electronic monitoring system (GREM) which is in its pilot phase, with a view to having it fully operational next year.

A draft online casino bill has also been filed, though must be published in the official gazette before it can progress. The Gaming Board is clearly serious about passing these regulations, as it has taken great pains to study regulatory frameworks of advanced jurisdictions such as the Isle of Man and Malta. It is also exciting to see that its monitoring platform was developed locally, helping the growth of the local software industry.

Kenya
The menace of unbridled advertising by betting companies reached an unbearable level earlier this year until the Betting Control and Licensing Board took action. It issued a directive stopping operators from advertising on social media platforms, banning celebrity endorsements and outlawing advertising between 6am and 10pm.

Furthermore, it ruled that all advertisements must contain a warning message about the consequences of gambling – including its addictive nature. This warning message must constitute a third of the space dedicated to the advertisement, and be in the same font as the rest of the copy.

This initiative is laudable, considering the gambling industry is the country’s biggest spender on advertising, which in turn accounts for Kenya’s notoriety for the highest prevalence of underage gambling in Africa.

These drastic reforms will set the tone for other east African countries; however it remains to be seen how this directive will be implemented effectively.

The Board also refused to renew the licences of several operators because of back taxes running into hundreds of millions of dollars. The tax rigmarole didn’t start today – it’s been running for years. Out of 20 operators, only three have renewed their licence based on alleged ‘wrongful calculation of withholding tax on winnings’.

Kenya has always been the darling of most European operators and that perhaps forms the underlying current behind the new regulations, which silently target foreign companies for getting rich off the vulnerabilities of the locals. The 2019 draft gaming bill, which seeks to replace the Betting, Lotteries and Gaming Act of 1966 provides that 30% equity in each licensee must belong to locals.

Again, it remains to be seen what the framework set out in this bill will look like after consultation with industry stakeholders.

Yahaya Maikori is the senior partner of Law Allianz, a leading African gaming and entertainment law firm. He also co- founded Global Gaming Group, a business that has advised regulators, companies, and startups across key markets in Africa’s growing gaming industry.

Blockchain technology “aligns perfectly” with Nigeria’s informal financial culture, writes Yahaya Maikori, partner at Lagos-based Law Allianz. The government should be wary of interfering – and let the private sector lead the way.

Blockchain technology has brought its disruptive nature into our financial system ushering in a new type of currency known as digital or virtual currency. This has steadily caught on in Nigeria with various publications seeming to point at Nigeria as the largest market in Africa; the reasons are not far-fetched, the informality and ease of use of this currency aligns perfectly with our financial culture.

Globally speaking the legality or otherwise of this phenomenon depends on the country; it ranges from regulated, unregulated, restricted to outrightly banned. Some countries classify virtual currency (VC) as money and legal, some classify it as an asset and legal, while in some it’s neither illegal nor legal, and have no legal frameworks in place.

Back home the Central Bank of Nigeria has proactively set up an industry committee to articulate a road map for blockchain (BC) & cryptocurrency (VC) regulation though it has also cautioned the populace to be wary, the Nigeria Deposit Insurance Company (NDIC) however categorically stated that bitcoin is not legal tender.

One of the key findings of the causes of our own financial crisis was over exposure to margin loans, inaccurate and opaque financial disclosure, and abuse of the Expanded Window Discount etc. Imagine what a difference it would have made if the Central Bank of Nigeria had access then to a “golden record” of the realtime ledgers of all regulated financial institutions, rather than trying to assemble piecemeal data of each market participant.

Under Sanusi’s market reforms he tried to put in place a proper reporting protocol. But this initiative still does not provide a complete picture of banking transactions at any point in time, this is because CBN has not harmonized reporting protocols and data fields across all platforms. It is also because of the practical impossibility of collecting sufficient quality data for both cleared and uncleared transactions to recreate a real-time ledger of the highly complex trading portfolios of all market participants.

I believe that, if CBN and other regulators in 2008 had the ability to look at real-time distributed ledger (DTL), and, perhaps, been able to utilize modern cognitive computing capabilities, they may have been able to recognize anomalies in market-wide trade activity and diverging counter-party exposures indicating heightened risk of bank failure. It would certainly have allowed for far prompter, better informed, and more calibrated regulatory intervention instead of the disorganized response that unfortunately ensued.

As the CBN looks at this new development, they need robust consultations with key stakeholders and related institutions. Some of the key issues for determination however include the application of the extant tax regime especially VAT and how to plug the holes that enable tax evasion; how to protect people from scams (ponzi schemes) and children/vulnerable people from sale of drugs, enforcement against unethical and illegal activities, plug holes that encourage the hiding of assets, proceeds of corruption, money laundering and the financing of terrorism – for which Nigeria is already notorious.

Other critical issues for consideration are how to create unique identification, which protects people from the loss of private keys as well as creating digitals rights for IP protection.

Investment in blockchain faces the danger that when regulation does come, it will come from a dozen different directions with different restrictions stifling crucial technological development before it reaches fruition; while CBN has issued a statement on virtual currencies I believe that it is the duty of National Information Technology Development Agency (NITDA) to set a broad and predictable framework for the underlying technology that will form a basis for other agencies build their peculiar and unique regulations and guidelines around.

Fortunately, there is a good model for the healthy development of BC – the “ do no harm” approach to the early Internet. Two decades ago, as the Internet was entering a phase of rapid growth and expansion, the US government established these foundational principles: the Internet was to progress through human social interaction; voluntary contractual relations and free markets; and governments and regulators were not to harm the Internet’s continuing evolution.

“Do no harm” was unquestionably the right approach to the development of the Internet. Similarly, “do no harm” is the right approach for BC. In this technology-driven economy innovators and investors should not have to seek government’s permission, only its forbearance, to develop BC.

Once again, the private sector must lead. Regulators must avoid impeding innovation and investment. Instead, they must provide a predictable, consistent and straightforward legal environment. Protracted regulatory uncertainty or an uncoordinated regulatory approach must be avoided, as should rigid application of existing rules designed for a bygone technological era.

Though this industry is in its infancy and still subject to a lot of debate about the pros and cons, one thing is certain – “it is unstoppable” and can certainly become a tool in the hands of the Federal Government of Nigeria for the promotion of its regional trade objectives like ECOWAS and NEPAD as well as help drive Nigeria’s cashless economy policy.

A simple matter of one delayed application has left the bidding process for Botswana’s National Lottery postponed for over a year. Although frustrating for those involved, the case reveals “both the ugly and beautiful sides of the rule of law and due process,” writes Yahaya Maikori, partner at Law Allianz – that have been building confidence and transparency in this promising market.

On Thursday the 26 October 2017, being the deadline for the submission of bids for the Botswana National Lottery, Infinutum Lottery Company submitted its application in accordance with the set deadline. However it felt the need to submit additional documents after the deadline to further support its application.

The Botswana Gambling Authority (BGA) in trying to keep with the integrity of Request For Application (RFA) however refused to accept the applicant’s subsequent submission as it considered it to be out of time. The applicant, feeling aggrieved that such a refusal will jeopardise its chances of winning the bid for the ten year license, referred the matter to court.

The plaintiff’s argument before the court is that BGA was wrong to refuse accepting its subsequent submission having made its first submission before the expiration of the deadline. The court in granting the plaintiff’s application for an injunction against BGA explained, “The applicant has satisfied the requirements for granting of the interim relief. I exercise my discretion to grant the relief for interim interdict” and directed that BGA “…should not continue any proceedings in regards to accepting, evaluating, processing or taking any steps ancillary to, nor in pursuance of the national lottery license applications until the arbitration process was concluded and finally determined and any appeal thereof.”

It has been over a year, the matter is yet to be resolved leaving the other four applicants in continued suspense. This scenario reveals both the ugly and beautiful sides of the rule of law and due process, which to the credit of the Authority established barely two years ago, has gone on to create not only a data driven and transparent licensing regime but also caters to the uniqueness of its market by ensuring that all licenses are issued via RFAs only. This peculiar provision eliminates indiscriminate and random licensing especially for its very small market of barely 2,000,000 people. Furthermore this process of licensing has a way of dis- tilling serious operators from the fly-by-night opportunist.

For example, five applicants responded to the RFA for the National lottery license – a very impressive response surpassing even that of South Africa. The applicants line up consists of prominent persons/organizations in the gambling world.

Notwithstanding the problem encountered with the lottery license, BGA has gone ahead to issue RFPs for six additional casino licenses to add to the existing ten. If past experience is anything to go by, you can be assured that this won’t be any less competitive. Surprisingly annual revenues in the casino industry range between $70,000,000 – $100,000,000 which far exceeds that of many other jurisdictions including Nigeria’s, which not only had the largest economy but also holds the title of the most populous country in the continent.

Undaunted by the delays in completing the lottery licensing, the CEO, Thuli Johnson, in a recent interview revealed that RFAs will be advertised for sports betting, bingo, and he enthused on the opportunities the new round of licensing will create in sports, entertainment, culture and hospitality. Aside from the above, RFAs will be advertised for different services and a range of consultancies opening a vista of opportunities for the industry.

For those wondering on what else this small country has to offer, Botswana is an hour’s flight from South Africa, has one of the world’s largest diamond reserves, landlocked and has a national park, it is the highest exporter of beef and one of the richest countries in Africa. Its citizens generally enjoy a very high standard of living.

From streaming content to intra-African trade, blockchain technology is set to transform Africa, says gaming and eCommerce lawyer, Yahaya Maikori.

Africa’s “infrastructure deficit” creates a kind of paradox, says Yahaya Maikori, gaming and ecommerce lawyer, and founder of Nigeria-based Law Allianz.

“It means Africans are more eager to adopt technologies than anywhere else.”

It’s easy to turn a blind eye to something as abstract as bitcoin and blockchain, when your debit card is accepted virtually everywhere. Indeed, in a world saturated with financial and legal institutions, new and disruptive technologies present themselves as threatening to an established system on which many livelihoods depend.

For the vast majority of Africans however, this simply isn’t the case. With limited access to banking, and systemic mistrust of formal institutions where they do exist, blockchain has far less to disrupt, and is rapidly being seen as an immediate solution to many areas of economic life.

Unbridled by skepticism and institutional resistance, governments, private enterprise and consumers from all over the continent are diving in.

“For the first time we can see Africa trying to adopt any kind of technological solution that helps to empower the unempowered,” says Maikori.

“And blockchain cuts across almost every part of human life. We just have to make it easy to use, and easy to access – especially for those in the low income bracket, because that is where it will really help.”

Africa is still “a very underbanked economy”, he reminds. Unlike in Europe, where conventional banking is affordable, accessible, trustworthy and virtually instantaneous – while cryptocurrencies are associated with crime, trafficking money laundering and hacking – in Africa almost the inverse is true.

In Nigeria for example, of around 70 million account owners, barely a third of them have debit cards. But for those that do, the fear of being scammed often overwhelms the convenience of using them.

“Everyone knows someone who’s lost their money, so they don’t like using their card details. That fear is pushing people to adopt other payment systems.”

The restrictions this puts one economic development is hard to overstate. And only recently have innovative, albeit rudimentary solutions been adopted to try and bridge the gap.

In East Africa, MPesa, a payments initiative from the Vodafone group, allows people to use basic phones as a virtual wallet. In any one of 300,000 outlets across ten countries, people can deposit hard cash into a mobile account – and use their phones to pay for things.

In other countries consumers can simply trade the airtime they use to make calls, for goods and services in store or online, using SMS or USSD protocols. It’s not a niche system either; in some cases airtime sales are the equivalent to another country’s GDP.

“The mobile phone has been the saviour to that demand, for that kind of commerce,” he adds. “But these are local solutions that are basically helping to circumvent the hurdles of infrastructure.”

From the consumer’s perspective, using bitcoin is only a small step on from using mobile payments like MPesa – but a giant leap forward in terms of engaging in a more global economy.

Adoption of bitcoin is already happening at pace. With bitcoin rising by a factor of 20 throughout 2017, many have begun using the returns from ownership as passive income – “as if it will never go down,” Maikori regrets.

Governments are of course wary, and advise people to be cautious.

But when it comes to the wider applications of blockchain, they generally take a more curious approach: letting the private sector experiment with the possibilities before they step in with regulations.

“With technology, practically everything is liberalised,” he says.

“Entreprises that use it are allowed to move forward at the speed at which the market accepts it. Until eventually governments will wake up and say: ‘we can’t ban it, we just have to work with it, and minimise the damage.’ But for now they just want to see where it’s applicable.”

Kenya and South Africa are “open-minded,” he says, while Nigeria, the largest purchaser of cryptocurrencies, has already set up a committee to work on the full application of blockchain there.

One area where blockchain is already being applied in Nigeria, is entertainment and intellectual property. A PwC report recently stated that in the next three years, Nigeria’s entertainment industry will become the fastest growing in the world – “because of the sheer population, and because the entrainment is the most consumed content across Africa.”

Internet penetration is rising rapidly across the board, and with it consumers are moving away from terrestrial TV and streaming more content online. But the sector has struggled to monetise it: many people don’t have a way to pay for it, and many international sites such as Spotify don’t accept Nigerian cards.

Blockchain solves the problem. Firstly, in enabling producers to register their content on the intellectual property exchange, and secondly in enabling the viewer to pay them.

But perhaps the most profound application of blockchain is in international trade. “African countries don’t trade among themselves,” Maikori laments.

“Again because of the financial burdens, the logistics involved, the amount of paperwork to make transfers through the central bank.

“So Africans do more trade outside Africa than within. Yet it’s potentially the biggest market in the world.”

As blockchain structures transactions and facilitates the payments, it enables the credible trade of goods – agriculture, raw materials and so on – as well as services, between individuals firms and governments, without relying on inefficient or untrustworthy institutions.

Again, it’s hard to be overly romantic about what this means. Interdependent trade is not only the surest mechanism for peace (of which the EU is only the most clear example), but economists estimate the gains of intra-African trade would sit between $6trn and $12trn in the long run.

“The implications for African trade will be massive. For now it’s all private sector driven. But there are all sorts of conversations happening about how blockchain can be used to boost commerce and trade.”

Anyone keen to invest in blockchain should consider themselves “very welcome” in Africa, Maikori concludes, and “should not be apprehensive about regulatory changes”.

“Eventually, once the technology moves industries forward, you’re then going to see governments start deciding how they’re going to regulate it – but only to minimise the damage.”

“Right now the awareness is amazing, and adoption is happening incredibly fast. In the next three years you’re going to see a massive amount of transactions taking place. It only depends on how blockchain is made available.

If it’s affordable and accessible it won’t be hard. We are already so inclined to the technology and the currencies.”

On the 25TH of August of 2106 we woke up to splashing headlines by several local papers announcing Sun International’s (SI) pullout from Nigeria. Some noted that it was the 4th South African company to pullout from the Nigerian market citing the hostile economic environment as the reason. As expected I was inundated with inquires from several quarters especially from those eying the Nigeria gaming market  – they were eager to know whether the announcement signaled a negative outlook on the industry’s prospects. The report was bound to raise concerns internationally given Sun internationals revered position in both the gaming and hospitality sector. Truthfully the pullout had nothing to do with the gaming industry, SI runs one casino in the whole of Nigeria; it is pertinent to mention that casinos occupy the lowest rung in Nigeria’s budding gaming industry.

While the reasons for the pullout were widely reported, SI gave several reasons necessitating the pullout, …. “The Federal Palace Hotel continues to operate in a difficult environment with the Nigerian economy facing a number of crises including the low oil price, Boko Haram and a weakening naira and it has still not recovered from the significant impact that the Ebola epidemic had on the business’.

While Nigeria’s infrastructural challenges are not new, some of the reasons proffered may sound reasonable on the face of it but on close inspection are far from compelling; sensationalising the pullout as part of a South African exodus without any form of juxtaposition with relevant data portends unjustifiable harm to Nigeria which desperately requires foreign direct investments to shore up its reserves as well as jumpstart its economy , my conclusion is that some of our journalist in a bid to reinforce the current disenchantment with government’s perceived failure in managing the economy inadvertently acted as economic saboteurs .

So lets take the issues one by one.

While it is official that Nigeria is in recession, several South African companies are thriving depending on the industry and several more are investing in our economy inspite of the perceived hostile economy. As at today there are well over 100 South Africa companies operating in Nigeria and only a handful are commercial failures. The list of well-known failures includes Telkom, Woolworths and Tiger Brands. But they aren’t representative of the wider experiences of South African companies.

It is in the nature of doing business that some companies succeed and others fail. There are many reasons why some have not done as well in Nigeria. These include not conducting proper due diligence before entering the market, selecting the wrong acquisition target, inappropriate market strategies, choosing the wrong partner and mismanaging stakeholder relations or outright competition. For example Woolworths was competing in the same space with Chinese imported textiles and it wouldn’t have taken a genius to know that they were bound to fail miserably.

Ebola for one lasted only 90 days, in one of Nigeria’s daring showcase of effective governance ,ebola was eradicated with a casualty figure of only 7 people. So that alone couldn’t have been a big factor in the poor room occupancy rate for the hotel group,even 2 years after Nigeria was declared free of the disease . For one Federal Palace Hotel (FHP) had out priced its self from the market; Furthermore intense competition from guesthouses, boutique hotels, bread and breakfasts and the incursion of market disrupters like air bnb left the group vulnerable and unattractive.

Another reason given for the pull out was the menace of Boko Haram (BH). This leaves one wandering how that directly affected FHP given that there was never a BH attack in Lagos or any part of the Southern Nigeria, BH attacks have largely remained in the north eastern region of Nigeria  with some isolated attacks in Kano and Kaduna and this attacks ceased since the new government came into power early last year.

Another reason given elsewhere was the continued retention of the passports of some of SI staff who are under investigation by EFCC; while I am not privy to the facts prompting the investigation it is not news that several foreigners operate locally as if they are above the laws of their host cities (the MTN matter readily comes to mind) – in a recent chat with a senior management staff of SI, he readily confessed that multinationals were prone to abusing the laws of their host countries and SI was not exempted .

So while Nigeria’s tough operating environment includes deficient infrastructure, erratic power supply, foreign exchange shortages, high inflation, currency volatility, corruption, high capital cost, red tape, high rentals, as well as excessive and unpredictable regulations we still have lots of South African companies like MTN, Multi choice still doing good business in Nigeria.

So what could have prompted this level of sensationalism? My hunch is that SI needed the media stunts in order to cover for its inability to turn profits for its shareholders. It is not a new trick, last year me and a few other Nigerians were aghast when we stumbled on a report by a listed South Africa company who blamed the whole group’s misfortune on it’s $700,000 investment in a loss making company in Nigeria in which were all shareholders in and thus familiar with the facts.

Because of our poor investigative reporting culture, our media houses failed to balance out the fact that SI ‘s pullout is part of its overall strategy for Africa – it has all along been divesting from Africa with a focus on Latin America. In 2015 alone it divested by selling majority stake to in the Gaborone Sun in Botswana, the Kalahari Sands in Namibia, the Lesotho Sun and Maseru Sun as well as the Royal Swazi and Ezulwini Sun in Swaziland to MNG group. Sun International also reduced its 100 percent stake in the Royal Livingstone and Zambezi Sun in Zambia to 50 percent, with MHG holding the balance.

The latest announcement by SI has more to do with its focus on Latin America arising from its general depressed growth from the African continent than Nigeria’s hostile economic environment. Graeme Stephens,the group CEO said

“In South Africa, the economic environment remains a serious concern. We do not anticipate any meaningful growth in gaming revenue until there is a recovery in the economy and renewed consumer confidence,” .

In recent times there has been lots of excitement about the African gaming market for reasons which are not farfetched, given its demographic asset, which presents a growth opportunity for many companies. Of the 53 African countries Nigeria is undoubtedly the largest market by virtue of its population making it the preferred investment destination for most gaming companies, but beyond the excitement about the industry and its prospects, what is the value of Nigeria’s gaming industry? Do we have any supporting data? As always we have looked to companies like PWC and a host of other institutions to guide us. For example PWC’s 2015 – 2019 gaming outlook while projecting that gaming revenues were up by 17%, based its projections on only 3 licensed casinos in Nigeria.

In reality casinos occupy the lowest rung of the Nigerian gaming ladder, PWC’s gaming outlook distorts the impact of the industry and how it permeates our economic life. A cursory look at the assumptions indicates a lack of understanding or appreciation of the industry.

Our industry is grossly misconceived and this misconception manifests itself in frequently asked questions like “do Nigerians’ gamble?” “Is gambling legal in Nigeria” etc.? The National lottery Act defines lottery to”… include games of chance or skill”; though the definition may be unwieldy it definitely expands the frontiers of the industry beyond what it is traditionally known. If the NLRC definition is anything to go by then it means that even the “Ayo Ayo’ played across Africa forms part of the industry and it predates any form of contemporary gaming device, which currently exists in Africa.

The legality of gambling in Nigeria has been questioned severally partly because of controversy surrounding the1977 slot machine prohibition act; the act was not meant to prohibit gambling in general, the law simply sought to regulate indiscriminate littering of slot machines across the length and breath of the country. On whether Nigerians gamble or not, that depends on the class you belong to. The truth is that the generality of our people are casual gamblers but we are certainly active when it comes to mobile-based wagering, raffles draws, promos etc. At the lower end of the spectrum pools betting and lottery has been part and parcel of our lives from colonial times. Though we are a religious set of people our religious sensibilities ironically endear us to the fundamental principles of gambling, the concept of miracles, sowing a seed and reaping large and immediate rewards.

Traditionally gaming has been stigmatized in our climes but casinos and slot institutions have been the biggest victims of our selective moralization of the industry, while raffle draws and similar schemes have become widely accepted without so much thought as to the underlying fact that they are laundered forms of gambling. If the NLRC’s definition is anything to by it means that even the video games played with consoles or preloaded on the phones of our 133million mobile subscribers or those played on desk /laptops, promos, raffle draws by corporate organizations i.e. telcos , banks, fmcgs etc. form a significant portion of the industry ,though they run into billions of Naira every year they have never been considered as part of the industry.

In general we may have our reservations about sports betting we however subconsciously rationalize this type of wagering because it is tied to our passion for sports, in any case sports betting cannot survive on its own, it piggy bags on sports events. Interestingly while we consider Lotteries a form of gambling it has never really been stigmatized maybe because of its historical and religious roots.

Now that we have defined gambling in accordance with Nigeria’s law; as well as established that almost all Nigerians are involved at some level , what is the size of the gaming industry in Nigeria? How does it contribute to our GDP? Was is ever captured during the rebasing of the economy? If it was under which subsectors was it captured? under ICT, entertainment or tourism?.

Yahaya Maikori  is the Senior Partner of Law Allianz

www.lawallianz.com