Chinese slot machines are the latest threat to Africa's poor

Chinese slot machines are the latest threat to Africa's poor

As Africa's gambling sector explodes, the viral proliferation of Chinese-made, Chinese-run slot machines are causing headaches for communities across Africa.

China’s presence in Africa has been well documented, with Beijing funding ambitious mega-projects across the continent. Many African countries have taken a gamble on Chinese money, hoping to benefit without becoming entirely dependent on Chinese business. Similarly, China is also taking a gamble on Africa - literally. Chinese investment in gambling in Africa is one of the more surprising facets of Beijing’s influence in Africa, one that encapsulates the complexities of Africa’s relationship with China.

 
 

Initially, the impact of Chinese investment in gambling and entertainment looks like one would expect, with Macau Legend Development Ltd. building a $275 million casino complex in the tiny island nation of Cape Verde. Billionaire owner David Chow has secured a 75 year land concession and a 25 year gaming concession, as well as a 10 year exclusive national gaming license for online gambling and sports betting.

Such large projects are typical of China’s infrastructure focused investments in Africa, with Chow hoping to turn Cape Verde into 'Africa’s Macau' - indeed Chow cites Cape Verde and Macau’s shared Lusophone heritage and ‘offshore’ location to major markets as key parallels. It is interesting to note that Chow is aiming primarily to capture the interest of Chinese and European gamblers, with African customers a secondary priority: it is unlikely that many locals will be able to enjoy the facilities.

 
 

A 75 year land concession also reminds many of the kind of concessions granted to imperial powers across Asia, the most famous of which being Hong Kong’s 99 year lease to the UK. While certainly not a perfect analogy, these kinds of deals do lead many to criticize what they see as China’s neo-colonial attitude in Africa. Detractors of such investment argue that it does little to benefit host countries, but rather is organized so as to divert any economic benefits offshore.

Africa's gambling boom

The familiar arguments against gambling and its negative effects on poor communities take on additional weight in the context of many African countries. While projects such as Macau Legend’s Cape Verde gambit are at one end of the spectrum, there is an entire industry of small scale gambling operations throughout Africa, primarily controlled by Chinese individuals. Enterprising Chinese expats and SMEs in Africa have capitalized on - and added substantial fuel to - Africa’s gambling explosion.

The two main drivers of gambling in Africa have been sports betting and the proliferation of cheap gambling machines. With regards to the first catalyst, betting on European football has become increasingly popular, both due to the spread of local betting shops, but also as a result of the mass adoption of smartphones. As a result the number of betting apps has exploded, with Ghana alone home to companies like Supabet, Safaribet, Mybet, PremierBet and EuroBet. In Kenya, SportPesa - a name akin to Kenya’s most famous success story, MPesa - boasts over one million users and allows players to pay and redeem money via mobile money transfer.

Recent polling showed one in three respondents across seven regions in Kenya using their smartphones for betting: Kenya has become the Africa’s third largest gambling market after Nigeria and South Africa, with gambling revenue expected to grow by 142 percent by 2020 compared to 2014. The rush of potential winnings combined with football fever in Africa puts many youth and poor communities at serious risk.

A lack of awareness about the dangers of gambling, combined with the popularity of placing small (but frequent) bets has led to gambling becoming a serious drain on marginal incomes. To highlight this point, the same poll found SportPesa to be the second most popular site among respondents, behind only Google and ahead of Facebook.

China's one-armed bandits on the loose

For the majority of Africans without smartphones, the proliferation of Chinese gambling machines has become a real problem. In northern Ghana, fifty percent of the population lives below the poverty line, yet Chinese gambling machines have nevertheless become prolific. With the machines made in China and costing as little as $120, they have spread like wildfire throughout many African nations as means to quick cash for Chinese operators and local gambling den owners.

With minimum bets the equivalent of only five cents, even subsistence farmers can participate, resulting in a substantial siphoning of wealth from rural villages. For instance, the village of Zamashegu is a typical rural Ghanaian community, home to around a thousand people. Chinese gambling machines first started appearing in the region in early 2016, and now Chinese men show up twice a week to empty the machines in Zamashegu, taking around $100 in coins. For community where many subsist on a few dollars a day, this is a serious outflow of money.

 

One armed bandits: Chinese slot machines confiscated by Kenyan police

 

Similar complaints are coming out of Zambia, where journalist Edem Djokotoe notes that “the biggest Chinese investment in Zambia is the casino. Every small town and district I have travelled to in all the provinces have gambling centres run by the Chinese.” The spread of these Chinese run gambling establishments have been helped by the lack of comprehensive gambling laws in various African countries, lax enforcement of existing rules and the corrosive impact of corruption.

Community leaders across the northern Ghana and beyond are lamenting the rise of school absenteeism, the number of youth stealing from their parents and the increase in the number of gambling addicts. This is perpetuated by the fact that many view slot machines as a viable source of income, spending the little they have in the hopes of getting rich.

Various local chiefs who try to ban the machines from their communities are often presented with ‘gifts’ and other bribes by Chinese gambling operators to allow them to continue. Issues with tardy youth and gambling addiction has led to efforts to ban gambling in Uganda, as the number of school dropouts in Kampala has increased due to students squandering their tuition money. Uganda’s second largest city, Gulu has also made efforts to ban gambling.

Chinese gambling machines are creating such a stir across Africa, that the social and moral outcry over them harkens back to the moral panic in 19th century America over the deleterious impact of these ‘one armed bandits’.

Ghanaian MP Afenyo Markin has publicly complained about this trend, stating that “those Chinese who have come here with their rattle joints, I want to tell them we will encourage the police to close these joints down.” Similarly, Esther Armah, a radio host and lecturer at Webster University in Accra, Ghana laments the such economic colonialism. “Part of Ghana’s challenge is creating an economy that serves Ghanaians first and foremost. We don’t have that. We have an economy that first and foremost serves foreigners,” laments Armah.

Only African governments can tackle this problem

Alongside the impact on public order and poor communities, these fly-by-night gambling operations appear from nowhere and do not pay any taxes or fees. Sam Kahia, chairman of the Kenya Counties Amusement & Gaming Society notes that “unscrupulous business people operate gaming premises with Chinese machines whose integrity cannot be verified and most have no importation documentation nor evidence of payment of necessary taxes.”

The influx of Chinese gambling operations threatens to act as a very visible symbol for the perceived inequality in Africa's relationship with Beijing, supporting claims that China is bleeding Africa dry. Critics of this trend also point to the fact that gambling remains illegal in China, questioning why Chinese citizens in Africa can continue to operate such businesses.

Interestingly, a recent crackdown by the Chinese government on overseas investment has specifically targeted gambling, with Beijing issuing its first rules for overseas acquisitions. The “sex and gambling industries” have been specifically targeted by China, in part to prevent risky overseas investments as well as clamp down on sectors which attract black money and shady individuals.

What this means for large projects like Macau Legend’s Cape Verde venture remains to be seen, as does whether these injunctions will stem Chinese-run gambling in Africa. These measures have been implemented in order to decrease risk in Chinese investment portfolios, not to assuage the concerns of African communities, and given the nature of Chinese-run gambling in the continent it is unlikely to have much of an impact.

The cheap and ubiquitous slot machines, and the fact that most (very informal) operations are run by Chinese expats with the help of locals means that any effective response can only come from African governments.

Bandits have been the perennial threat throughout Chinese history, the bane of imperial rulers and impoverished peasants alike. Unfortunately, Chinese one-armed bandits are increasingly becoming the bane of communities across Africa.

Jeremy Luedi is the editor of Asia by Africa. His writing has been featured in Business Insider, The Japan Times, The Diplomat, FACTA Magazine, Yahoo Finance, Asia Times. His insights have also been quoted by TIME, OZY, and the Washington Times, among others.