The growth in mobile money services has created new opportunities for merchants to sell their products and services. One of these is the fast-growing sports betting sector which has taken a number of African countries by storm.
What’s further spurred the growth is rapid internet penetration. Consumers now have easy access to online sports betting services even in remote areas. Countries like Nigeria, Kenya, Ghana, Uganda, Senegal, the Democratic Republic of Congo, and Tanzania are seeing a huge expansion in sports betting and other forms of gambling.
Betting on major European soccer leagues, as well as local and national teams, has become a multimillion-dollar industry. Much of this betting is done on mobile phones with studies showing that mobile platforms are quickly becoming the preferred means of gambling.
The combined size of the gambling industry in Kenya, Nigeria, and South African is projected to be worth USD$37 billion in 2018. In Kenya alone, a 2017 study found that an estimated 2 million individuals engage in mobile-based sports betting.
The proliferation of betting is one of the unintended consequences of the growth in mobile money services which have taken off on the back of a drive for financial inclusion. Since 2014 mobile phone platforms have been fronted as the key to improving financial inclusion on the continent. But these eventualities were never what were envisaged. Yet financial inclusion remains an action point because the majority of adult Africans are unbanked.
But it’s time that government’s recognise the scale of the problem that’s been created.
Supporters of mobile-based sports betting in Africa will tell you how good it’s been for the continent. They list off a number of gambling benefits including increased employment opportunities, easy money for low-income earners, tax revenue for government, and general economic growth.
What they don’t talk about is the devastating effect betting has on many of those who participate in it, more than half of whom are below the age of 35.
This is particularly problematic in Africa because the continent has the youngest population in the world. Over 420 million Africans are aged between 15 and 35. On top of this unemployment is extremely high. About 35% of Africa’s young people are unemployed. Only one out of six African youths are in gainful wage employment.
These unemployed and underemployed youths are easily stimulated by sports which is a major craze on the continent. And betting appears to offer a way out of poverty.
In this kind of environment, it’s easy to see how the value proposition of mobile-based sports betting is so attractive to young people given that bets as small as USD$1 can deliver a win of USD$500.
In Nigeria, 60 million people aged between 18 and 40 spend up to USD$5 million on sports betting daily. The majority are unemployed or underemployed young people who stake an average of USD$8.40 daily.
Consequences of mobile-based betting
The Kenya study showed that most people who engaged in mobile-based betting did so in spite of the inherent dangers.
One of the dangers is that low-earning young people often borrow money for betting. This places them in a cycle of perpetual debt. Rising debt levels compound an already dire situation – 40% of people in Africa live on less than USD$1.90 a day.
Despite the crushing implications of sports betting through mobile phone platforms, the practice has become an intolerable addiction across the continent. This is worrying given that betting has been recognised as a gambling disorder.
Two decades ago financial inclusion – the notion that individuals and businesses should have access to banks, credit unions and financial institutions – was heralded as the much awaited trigger for Africa’s economic growth.
Cellular phone technology enabled low-income earners, many of whom live in economically fragile and conflict-affected countries, to access financial services. And a young and highly mobile-literate populace, plus the availability of affordable mobile telephones has led to the phenomenal growth of mobile money services in countries with otherwise low bank penetration.
While this has had a positive effect on economies across the African continent, it has also had undesired effects on poor people. These run the risk of being ignored because financial inclusion is still backed by multilateral organisations, governments, central banks, and private-sector actors. It also features in seven of the UN’s 17 Sustainable Development Goals.
Governments need to recognise that, while, for the most part, financial inclusion through mobile money has had a positive impact, there have also been down sides. The exponential growth of mobile telephony has contributed to a higher betting prevalence and the rise of gambling addiction in Africa.
By Victor Odundo Owuor, Senior Research Associate, University of Colorado
This article was originally published on The Conversation.