Why growth of Nigeria’s gaming industry defies economic downturn – CEO Kobobid
Victor Muoghalu is the founder and CEO of Kobobid, an indigenous online penny auction platform that allows people to bid on items and purchase them at low prices. In this Interview with IFEOMA OKEKE-KORIEOCHA, he spoke on how the gaming industry has continued to grow and defy the economic downturn. Excerpts:
You said the gaming industry has grown exponentially and has defied the economic downturn and current realities. Why is this so?
This is one of the key reasons I relocated to Nigeria. I said to myself that if I am going to quit my sweet job, I need to know that what I am jumping into is worth it. I needed to know if it’s a business that is here to stay. When I was doing my research, I did my research first on the American economy and what I found was that most of the people that play in the betting and gaming market are Africans. I did more digging and research to it and find that it narrows down to religious factor. The more religious you are, the more you are into betting. While you belong to the one percent that say betting is against my religion, others are saying ‘This is where God has told me I’m going to make it.’ It is poor countries that you get a lot of gamblers because these people believe in luck and this is where their luck would shine. I have heard people say ‘I would pray on this ticket and it would win.’ This is psyche of gamblers. When you look at Nigeria, you discover that Nigerians are extremely religious. At this point, the economic downturn keeps biting. Unemployment keeps getting worse. Inflation is up which means people can’t afford what to eat or buy. So, most people are looking for the next miracle. When you flip the situation and people become better and more employed, the next thing is they look the amount of disposable income they have to play with. At that point, it becomes a habit. Remember when you start smoking, you don’t start overnight. So gaming is here to stay and it’s not going anywhere. And it is simply because of the social, religious and economic conditions in Nigeria and Africa as a whole.
Despite the controversies around this industry, the industry keeps booming. Who are the players in this industry and how was the experience setting this up in Nigeria?
The business needs a lot of understanding. It is not for everyone and you still have to be smart to a certain extent to do this. For the scratch cards, anyone can play it. The lessons we have learnt in entrepreneurship in Nigeria is if you are going to innovate, you start first with what they already know, and then you add to it. You don’t innovate first because if you do this, you will pay the expensive cost of educating everyone to come up to speed. The first thing you do is you give them what they know, then you give them the additional features of what they are not exposed to. This way, the learning process becomes easier for people. So, we took that time to educate people and here we are today. At the end of the day, I would not know what I know today if we didn’t do this. In business, you can only figure out what works, what did not work, why it did not work and what does it work for. There is no right or wrong, it is just that you maybe could have done things in another way. This is because the products are still viable, you just keep educating people.
You said this is not for everyone. Why did you say this?
When I say it is not for everyone, I am specific about the penny auction because the penny auction requires you to be smart, some thinking, skills and logic. And we have to think about it in terms of intelligence. It is just like me trying to teach someone using a touch light phone how to use an I-phone. The i-phone is easy but it is easy because you are already used to something like that. But if all you are using is just a touch light phone, that is a complete different experience where may not even want to start because you think you may never get it. However, we created different games to capture everybody. If you come on Kobobid, there is something for you. If Penny auction is too complex for you, there is raffle draw, there is football fantasy for the football lovers and there is scratch card option. There is something for everyone.
You said this industry requires smartness. Is there a level of education to engage in the games?
It requires common sense. An illiterate can also play as long as they have common sense. It is just like playing Candy Crush but the strategy is just different. So as long as you understand strategy, you can play it.
Are you registered with Lagos State licencing agencies?
Lagos State did not accept our licence because we belong to Auctioneers. They sent us a letter saying we don’t fall under Lottery because we fall under Mobile Other Games. So we are licence with the Auctioneers Commission of Nigeria and we are registered under the National Lottery Regulatory Commission. So, we are registered under these two national bodies.
You will be two years in February. So from your experience, do you think this line of business contributes to the Nigerian economy?
The gaming industry contributes to the economy. For instance for every payment that comes in, government is paid some sum in terms of Value-Added Tax (VAT), and taxes. We get these complaints from customers a lot. They don’t understand why they are paying VAT. They tell us they won N500,000 and they feel this is the sum they are supposed to collect. But someone has to be pay tax on their behalf. For every prize that goes out, there is VAT that goes straight to the government. And we take that out directly. For the goods that we put up, there are VATs on them that go straight to the government. We have to get our licence fees which go to the government. At the end of quarter, government still gets three percent of our gross revenue.
We are starting an agency model where anyone can become an agent for Kobobid and we are doing this to give back to the community. For our agency model, there is no agency fee, no sign-on fee, and no registration fee and there is no retainer fee. It is free. Agencies make their commission instantly from Kobobid with zero naira and they don’t need to know anyone to do this. They can sign up online and start.
Considering some of the challenges you have encountered, do you think the business would get better and where do you see the brand in the next five years?
In every business, we have to look at it in terms of growth and where we are. We are at a state where we need recognition and brand identity and that is what we are growing now. People need to understand who we are, recognise that name and let people see who we truly are. We are not scratching the surface at all. We want to transform what we have and in the next two years, I see us breaking into the market and being one of those household names. When you talk about BetKing and the rest, you would remember Kobobid but you are going to remember us for something completely different because we won’t be competing with them but we would be in that space where we are providing you something more unique and something completely different. This is because of the way we are structured, you will realise it is easy to win on Kobobid without breaking the bank. We want to become like Indomie and Maggi which are brands but people refer to them as specific food items. This is what we want Kobobid to become. We want it to become that household name.
So in the next five years, we want to look at it in terms of a conglomerate. My Chief Operating Officer is in New York; my head of Logistics is in Ghana. And these are all people who are industry captains in terms of where they are and in terms of what they do, because of the complexity of the system. I started this in 2017 and I came back to Nigeria hiring a local team to build it and that didn’t work. In three years I couldn’t get a local team to build this for me. So, I had to go back to United States. He is a Nigerian but works in the US with big tech companies. He is very good at what he does in terms of tech. He manages the entire tech. We have local tech teams in Nigeria that support the system daily but he is the brain child behind the tech aspect. We are trying to expand by using what we have. So, in the next five years, I think we should be in all the African countries. What do I need to be in South Africa? I say South Africa because it’s on my list. They gave us DSTV and we would give them Kobobid. It takes us nothing to do that. If we want to operate in other countries today, we don’t need anything, we just need a licence. We are set up in a way that we are self-sufficient. We can expand anywhere at any time.