Making blockchain games useful for Africa’s youth — Quartz Africa Member Brief — Quartz

Hello Quartz Africa members,

The smartphone revolution and cheap mobile internet have driven an increase in the number of mobile gamers in Africa. Users of various gaming platforms such as Kuchaza, 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 huge popularity of games is the high unemployment rate in many countries. For unemployed gamblers who lose money betting, the addiction is doubly devastating.

In Nairobi, gaming company Usiku Games wants to help. To squeeze some social benefits 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 the game itself. In a pilot scheme, players can store their winnings as digital tokens on a blockchain system and then “spend” them to pay for health insurance.

Cheat Sheet:

💡 The possibility: Almost 97% of Africans were uninsured in 2018. The gaming population is mostly young people. 60% of Africa’s population is under 25 years of age. The average age on the continent is 19 years. Through blockchain games, Usiku Games wants to get young Africans insured.

🤔 The challenge: Usiku plans to enter into 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 road map: Popularizing the concept of “gaming to save” among young people and encouraging them to pay towards their health insurance premiums can ease the stress of paying for future medical care.

💰 The stakeholders: Authorities should work to reduce the cost of internet access, which is still relatively high compared to the rest of the world. Hospitals and social security funds can work together with gaming startups to bring young players into these tokenized insurance schemes.

By the numbers

186 million: Number of players in sub-Saharan Africa

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

80%: Share of global players with crypto accounts who want to use digital currency for game purchases

24 million: Number of players in South Africa, Africa’s largest 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 of 1GB of mobile data in Africa

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

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

The case study

Name: Usiku Games

Headquarters: Nairobi, Kenya

Founder: Jay Shapiro

Usiku Games was founded in October 2018 and aims to bring about positive behavioral change among African youth. Usiku Games is now the largest gaming platform in Kenya and has expanded to nine other African countries. The company started in Kibera, a slum in Nairobi, and has worked with NGOs to address societal challenges, such as drug addiction and crime, through games. The games are designed to appeal to local users: the commands are in Swahili and Sheng, for example, and the soundtracks are African music. Usiku has a portfolio of 30 games and thousands of players log in every day to play. All games are free to access, Usiku earns its money through player subscriptions to some of its games.

In January 2022, Jay Shapiro, the founder of Usiku Games, started thinking about how to help users save money through the platform. Usiku did not want the model to resemble sports betting, where winners withdraw the money they win. Instead, Usiku devised a way for players 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 can be redeemed for NHIF prizes. Each coin is worth 1 Kenyan shilling ($0.01) and these coins have unlimited access. By doing this, the startup believes it will help influence behavioral change to help young people quit sports gambling.

In conversation with

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.

💡 When you start Usiku Games:

“I surveyed the Kibera community and learned that many young people are interested in games. You can find them in video game stores or on their smartphones playing games online. You will also see them flooding into various gaming platforms and most of them have become addictive. 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’re never sure of winning.”

💻 On why he chose blockchain games:

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

🤝 On making games useful for everyone:

“The goal is to take this game to the wider African population. About 65% of those who play every day are women. We have games tailored to different demographics. We offer it for free and we will also introduce it in French to capture it francophone society in West Africa.”

Gaming/blockchain offer for 👀

In January 2022, South African mobile gaming startup Carry1st raised a $20 million Series A expansion 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 Brazzaville-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 cryptonative investment 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 are 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 very motivated rest of the week,

—Faustine Ngila, Quartz East Africa Correspondent

One 👀 thing

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