As I agonized through the Manchester United -Everton match
last weekend it struck me that the Everton shirt sponsor was sports betting
house SportsPesa.
To distract myself from our dismal performance I looked up
SportsPesa. The betting house is headquartered in Kenya with operations in
Kenya, Tanzania, South Africa, the Isle of Man and the UK. Then I checked what
they paid for the shirt sponsorship with Everton and it came down to £9.6m
(sh46b).
As if that is not enough they have sponsorship deals with English
premier league teams Arsenal, Hull City and Southampton, the Kenya national
soccer team the Harambe stars, as well as league teams Gor Mahia and AFC Leopards
and in Tanzania Simba and Young Africans.
In addition, they sponsor Kenya’s rugby sevens team, boxing,
motorsport, athletics and golf. And they sponsor 100 grassroots teams around
Nairobi for good measure.
I was amazed that a company with the bulk of its operations
in Africa is able to splurge so much money, they must be pulling in big
revenues.
There is a lot of controversy surrounding gambling and in
our parts of the world, sports betting in particular. Beyond the moral
questions, it is a drain on many youth’s earnings, the possibility of hitting
the jackpot, sucking them in, addicting them in many instances and
impoverishing them altogether.
Because the truth is in any betting game the odds are
stacked in favour of the house. Punters may win once or twice but most of the
time, the majority of the time, they will lose. And when you spread this among
dozens, hundreds and even thousands of bettors it looks a sure deal for the
betting houses that they will make money most times.
All that being said, what really got me thinking is that a company
whose business is predominantly in Africa can throw off enough revenues to
sponsor premier league teams.
That’s like saying your poor relative’s nephew offering to
pay the fees of your urban schooling children until they are done with school.
And even then I fear I understate the fact.
In my mind it throws out once and for all the notion that we are poor as a continent or its constituent countries, and firms up my belief that the problem is only that we have not aggregated our resources in meaningful sums to effect local change...
Think about it, the people in the betting houses, at least
here in Uganda, are not predominantly your middle class or upper class people,
but people who park their boda bodas outside the betting houses on match day or
the night watchman coming to try out his luck or the street vendor who has made
some money and hoping to multiply it before he goes home. Real bottom of the
pyramid types.
The difference between SportsPesa and the rest of us is that
they have a structure which can tap into these funds and funnel them into the
business to the benefit of the shareholders and the token sponsorships and
charities they support.
The betting houses here in Uganda are not too shabby either.
In the recent economic slowdown sports betting remained a growth industry,
giving many an exciting option to which they could divert their hard earned
shillings.
SportsPesa was a startling example, but we see it over and
over again. Most recently e-commerce firm Jumia sold shares on the New York
Stock Exchange and raised about $200m in so doing. Most if not all their
business is generated on the continent. Name any other multinational and it’s
the same thing be they in beverages, telecommunications, finance or manufacturing.
They got organized to deliver a product or service and are
laughing all the way to the bank.
True there are structural challenges, bureaucratic
impediments and a deficient finance ecosystem but it is clear that our fate is
not beyond salvage.
But first we have to get our mentality in order. Business success does not come by mistake, if it has, be sure it is not durable.
A few things to think about.
A business is successful because it delivers a good or
service that is in demand in a cost effective way, that is that it sells its
wares for more than the cost of producing and distributing them. Profit is a
bye product of a job well done. So the focus should always be on delivering
good products or service.
Secondly business owners need to decide early on in which
category their business is in, defined by the founder’s mission. A business is
started for four basic reasons – to sustain the lifestyle of the owners, to
pass on to the next generation, to sell it to the market or to satisfy some overarching
philosophy.
In the first two cases there is no incentive to grow beyond
the needs of self and family, which puts a cap on the business growth
potential. In the latter two cases the business owners have a huge incentive to
organize, formalize their business not only so it can expand but so too, it can
fetch a good price at the time of sale.
"The latter two are bigger missions which if the founders are bought into, means they will be able to weather the storms, overcome the speed bumps of setting up any enterprise. In the former two the staying power is not as great. Maybe explains why while Uganda is one of the most entrepreneurial countries in the world the attrition rate by the time of the first birthday for most businesses, is almost total...
On an individual and even national basis we need to
understand and appreciate that there is a wealth of resources available here
that we haven’t even begun to tap into, this is even before we start thinking
of mining our natural endowments out of the ground.
So yes, if we are so keen on ensuring we get a better shake
on the exploitation of our own resources rather than call for the throwing up
of barriers against foreign agents we would be doing ourselves a world of good
if we got organized first.
