✦ Using gaming to tame betting addiction

✦ Using gaming to tame betting addiction
Member brief artwork

Hi Quartz Africa members,

The smartphone revolution and cheap mobile internet have driven an upsurge in the number of mobile gamers in Africa. Users of various gaming platforms like Kucheza, Gamesole, Chopup, and Kuluya do it for fun, but many have sunk into addiction.

According to a 2021 report, there are now 186 million Africans playing online games. Leading countries are South Africa, Ghana, Nigeria, Kenya, and Ethiopia. One reason for the immense popularity of gaming is the high unemployment rate across many countries. For unemployed gamers who lose money on betting, the addiction is doubly ruinous.

In Nairobi, gaming company Usiku Games wants to help. To squeeze some social benefit out of gaming and to bring more Africans into national health insurance programs, Usiku is strategically building health insurance savings into the very structure of gaming. In a pilot scheme, gamers can save their winnings as digital tokens on a blockchain system and then “spend” them on paying for health insurance.

Cheat sheet:

💡 The opportunity: Nearly 97% of Africans were not insured in 2018. The gaming population is mostly made up of young people. 60% of Africa’s population is aged under 25 years. The average age of the continent is 19 years. Through blockchain gaming, Usiku Games wants to get young Africans insured.

🤔 The challenge: Usiku plans to forge a private-public partnership with the government, which will allow national insurance funds to accept tokenized monthly premium payments—a challenge in most African countries.

🌍 The roadmap: Popularizing the concept of “play-to-save” among young people and encouraging them to pay towards their health insurance premiums can ease the stress of paying for future medical treatment.

💰 The stakeholders: Governments should work to reduce internet access costs, which are still relatively high compared to the rest of the world.  Hospitals and national insurance funds can work alongside gaming startups to bring young gamers into these tokenized insurance schemes.

By the digits

186 million:  Number of gamers in sub-Saharan Africa

$590 million: The value, in US dollars, of Africa’s gaming industry in 2022

80%: Proportion of global gamers with crypto accounts who want to use digital currency for gaming purchases

24 million: The number of gamers in South Africa, Africa’s biggest gaming market. The next four countries are Ghana, Nigeria, Kenya and Ethiopia.

302 million: Number of smartphones in Africa in 2018

$6.44: Average price for 1GB of mobile data in Africa

$127 million: Volume of capital that African blockchain startups raised in 2021

60%: Percentage of Africa’s population under the age of 25

The case study

Name: Usiku Games

HQ: Nairobi, Kenya

Founder: Jay Shapiro

Founded in October 2018, Usiku Games’ mission is to bring about positive behavioral change among African youth. Usiku Games is now the biggest gaming platform in Kenya and has expanded to nine other African countries. The company started in Kibera, a slum in Nairobi, and has worked alongside NGOs to address societal challenges, such as drug abuse and crime, through gaming. The games have been designed to appeal to local users: the commands, for instance, are in Swahili and Sheng languages, and the audio tracks are African music. Usiku has a portfolio of 30 games, and thousands of gamers log in everyday to play. All games are free to access, Usiku makes its money through player subscriptions on some of its games.

In January 2022, Jay Shapiro, the founder of Usiku Games, began to think of how to help its users save money through the platform. Usiku didn’t want the model to resemble sports betting, where winners withdraw the money they win. Instead, Usiku developed a way for gamers to use their winnings to pay for health insurance through the National Health Insurance Fund (NHIF), where the minimum premium for unemployed citizens is $5. The company created tokenized Usiku coins, so they might be redeemed for NHIF premiums. Each coin is worth 1 Kenyan shilling ($0.01), and these coins are limitless in supply. By doing this, the startup believes it will help influence behavioral change to help young people ditch sports gambling.

In conversation with

Jay Shapiro, the founder of Usiku Games

Jay Shapiro, the founder of Usiku Games, is a blockchain entrepreneur from Canada. He spent 13 years in Singapore and three years in New York, leading innovation projects. In 2017, Jay came to Kenya because of the country’s tech savvy population and set up Usiku Games.

💡 On starting Usiku Games:

“I researched the Kibera community and learned that many young people are into gaming. You will find them in video game shops or on their smartphones playing games online. You will also see them flooding in various betting platforms, and most of them have become addicted. So I decided to invest in something they love but also help them pay for insurance premiums and move them away from sports betting, where you are never assured of winning.”

💻 On why he chose blockchain gaming:

“Most of them don’t know it is blockchain gaming when they play. I introduced blockchain gaming to make it easier for them to get rewarded for the time they spend playing. The rewards are in the form of digital coins, and I am working with NHIF to make them accepted by the government as a means of premium payment.”

🤝 On making gaming useful to everyone:

“The goal is to take this game to the wider African population. Around 65% of those who play the games everyday are women. We have games tailored for different demographics. We are offering it for free, and we will also introduce it in French to capture the Francophone community in west Africa.”

Gaming/blockchain deals to 👀

In Jan. 2022, South African mobile gaming startup Carry1st raised a $20 million Series A extension round from investors including Andreessen Horowitz, Avenir, and Google to help it scale across Africa.

Startups under the African Startup League will receive $1 million from Humanity Node Protocol (HNP), Web3Africa, and Adanian Labs to build innovative technologies and businesses around blockchain technologies.

Congo Brazaville-based startup Jambo, which is building a Web3 user acquisition platform, has closed a $30 million Series A funding round led by Paradigm, marking the crypto native investing giant’s first investment in Africa.

More from Quartz Africa

🎮 Why Africa will be the world’s fastest growing video game market

💰 Million-dollar blockchain projects have finally come to Africa

🗺️ A handful of pro-gamers is putting Kenya on the global esports map

🇰🇪 How Kenya is pushing for esports dominance

🎵 This Member Brief was prepared while listening to “Cinderella by Alikiba (Tanzania).

Have a highly motivated rest of your week,

—Faustine Ngila, Quartz east Africa correspondent

One 👀 thing

While funding for fintech and gaming startups has been on the rise in the past decade, financing for blockchain-based startups only began last year, and is fast expanding across the continent. A report published recently by Swiss venture capital firm CV VC in partnership with Standard Bank shows that millions of dollars have started trickling into the continent (pdf) in the form of blockchain financing. According to the study, 41 African blockchain startups in eight countries raised $127 million in 2021.