HR and Legal Lunch and Learn Session

SIGMA ROADSHOW 7 JULY 2021 – INTERVIEW QUESTIONS AND ANSWERS – TRANSCRIPT

SIGMA ROADSHOW 7 JULY 2021 – INTERVIEW QUESTIONS AND ANSWERS – TRANSCRIPT

INTERVIEW WITH AMNE SUEDI – CEO SHIKANA GROUP

  1. How stable is the regulatory environment in East Africa?
    1. It has really not been stable at all and it was inevitable to make changes since some of these legislations for example in Kenya and Uganda were just not in line with the current realities of the industries.
    2. Operators found themselves doing online gaming activities for example with no clear regulatory framework – this was also not an ideal situation 
    3. So regulatory change also occurred because it was time for the change
    4. Tanzania has been ahead of the game in the region as it already had regulations for online and digital gaming activities from 2012 and even catered for online casino games ahead of other countries
    5. However, we have seen the three countries go through threats of “banning” of gaming activities (threats still affect the market), revocation of licenses, banning of advertisement, banning of foreign operators – these are clear indications of instability and would somehow justify one to conclude that the environment has not been stable the last years
    6. When you look at the actors though, you realize that the result of instability is due to both sides – regulators in the given jurisdiction that have not managed to be more temperamental in their decisions and jumped to just an outright prohibition however when you look on the other side of the operators, there are example of clear abuses of the market that have resulted in politicians stepping in and saying right this is enough, we are banning all this all together. 

  1. What is your advice for operators who want to come to Africa?
    1. To do the right thing! 
    2. The issue I see are the number of operators that just want to cut corners and just wing it! You cannot do this anymore. Regulators have woken up. They realize how big the industry is and the potential for growth and more and more regulators are investing in education and capacity building, but also tools and technology that allow for monitoring operators’ operations so that they actually know the tricks in the business, etc. 
    3. So in the light of this, operators really need to invest in good advisers who can ensure that they are compliant and follow the rules and regulations. We are seeing more and more disputes at the Fair competition commission for example in Tanzania where customers are complaining and seeking protection of rights for consumers. We are seeing more litigation cases against operators as well so people are waking up to the realization that operators need to be held accountable including the customers. 
    4. Operators need to be ahead of the game. To be honest, most of these regulatory changes that occur could be avoided in my opinion but most of the time operators do not take a hands on approach in working with the government to ensure the right regulations are put in place. Operators need to look at what they want and what they can give in exchange. It is a two way straight. You cannot ask a regulator to cut you slack on taxes for example and sell them the pipe dream that if taxes are lower, it will give an incentive for more players to play! You need to offer alternative solutions because these taxes collected are revenue and earnings for the government. So operators need to have a more quid pro quo mindset and approach.
    5. Instead of being spectators and victims, stronger associations should be formed whose mandate is to only do that – watch out for the interests of the industry and promote and improve the environment. 

  1. Where do you see the regulatory environment go in the next 5 years?
    1. WE have seen recently in Tanzania an increase of GGR to 30 percent for the tax on sports betting, 5 percent of which will go to sports development. I think we are going to see more ties and linkages between sports development and gaming and we will see more and regulators wanting to make those linkages that sports betting and sports development. Some operators have been doing it already through sponsorships of football teams for example, however the terms and conditions are subject to negotiation and we can imagine that the investment in sponsorship is NOT equivalent to the 5 percent of GGR
    2. Local content and local participation is going to become big. Not only in terms of having local participation in the shareholding of a company that comes into the market and let us face it, most companies in the east African region are all foreign companies in the space. I think we will see legalization of a minimum shareholding requirement of indigenous people in the company however, we have seen the experience of these kind of policies in other sectors where the indigenous is just literally a rubber stamp and there is no real positive impact on that relationship, no real development for the industry by having more local participation
    3. So I think regulators will eventually wake up to the realization that for the gaming industry, an important component is software development which ALL of it right now in the east African region is being developed outside the continent where companies are contracting outside companies to provide for this. This is understandable given that there is no real industry in this area in the region however regulators will wake up and realize they need to develop this and that it is time. Just like they realized the linkage between sports development and sport betting, they will realize that to really benefit from the industry, they need to develop a future generation of software developers and engineers and they will probably have to use the actors who are already in the market to assist in making this happen at a faster rate and more cost efficient rate. So I think we will see a host of policies that will go in that direction.

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