Investing in Africa’s Gig Economy may be the continent’s solution to change

The gig economy is essential for the people of Africa because of its ability to provide a source of income to the inexperienced and unemployed majority. Africa has a growing youth population that will need to be absorbed into the productive sector. In Kenya, 83% of employment is informal; in Zimbabwe, it is 93%, and such high proportions are common in Africa’ s…

A survey conducted in 34 African countries between 2016 and 2018 shows that people are chiefly concerned about the future of work, be it job availability, quality, or growth. The gig economy is essential for the people of Africa because of its ability to provide a source of income to the inexperienced and unemployed majority. Formal jobs are only available to a few, while most people work in the informal sector as subsistence farmers, vendors, small-scale traders and numerous other roles.

Africa has a growing youth population that will need to be absorbed into the productive sector. An estimated 122 million new entrants are expected to join the labour market in the next two years, and it is impossible for an equal number of formal jobs to be created for these people.

The gig economy has the potential to provide consistent work and, with improved governance and support, an avenue to lessen informality and increase productivity by advancing informal economies.

There is need to acknowledge that the informal economy, which includes all commercial activity outside the regulated economic and tax system, is an integral part of the African financial fabric. In Kenya, 83% of employment is informal; in Zimbabwe, it is 93%, and such high proportions are common in Africa’s developing economies. The informal sector contributes between 25 and 65 per cent of Africa’s GDP.

The future of work has changed, and today’s employers will not meet the needs of tomorrow’s labour force with the same approach. A growing number of youth are going into the hustle or gig economy. McKinsey estimates that 63 per cent of the total labour force in Africa engages in some form of self-employment.

Gig platforms are pioneering new ways of introducing efficiency and higher productivity into traditional informal markets. Investing in this trend is critical to solving Africa’s pressing job creation need. Technology is also key in helping African freelance workers on the path to formalisation.

Companies across African markets are coming up with business models that link the formal and informal sectors. Kenya–based company Safaricom’s subsidiary M-PESA is a great example. A formal company utilises such innovative business models to mobilise large numbers of informal actors in their supply chains or service delivery.

Safaricom employs 5,400 people formally but has another 130,000 mobile-money outlets, which typically employ one or two people. Another e-commerce leader, Jumia, employs 3,000 people across Africa but has another 100,000 commission-based affiliates who help customers make orders.

The immense challenge for African governments is not only to generate jobs but to create good quality jobs. The rise of the gig economy on the continent has allowed many to join new labour markets, but they are faced with many risks.

Most gig platforms do not usually have workers’ best interests in mind and have generally avoided regulatory scrutiny in Africa and globally. This leaves gig workers exposed to subjective firing, non-payment of wages, unfair payment and unfavourable working conditions.

Workers are mainly attracted by the freedom and flexibility offered by gigs, but these do not necessarily translate into improved working conditions or livelihoods for many. It disguises the long, lonely and irregular working hours quite common among gig workers. The fear of losing jobs keeps workers trapped in continuous cycles of exploitation, especially those who are new to gig work. This may even lead to health issues emanating from factors related to working conditions.

There is an immediate need to regulate gig work platforms by developing and enforcing a set of labour standards for platforms to comply with. This requires more significant multi-stakeholder association levels, including government, labour unions, civil society and businesses, to ensure workers’ rights and remunerations are not mistreated. The Covid-19 pandemic has helped expose the need to protect gig employees as they do not have the privilege of paid leave or terminal benefits like their formally employed counterparts.

Workers should also look into innovative ways of forming unions so that they can have a collective representation to ensure bargaining power. This can be effectively achieved through social media networks.

Gig economies have the potential to create higher efficiency and increase economic productivity. For that to happen, there is a need to increase investment in start-ups that are providing gig work. One great example of a company that has shown efficiency in the gig economy is Jumia, which has taken the African continent by storm. It has the largest e-commerce platform and is now present in 16 countries delivering over 8 million packages a year.

Jumia employs 10,000 commission-based sales agents across Nigeria who are typically young people with an understanding of technology, such as recent graduates or young mothers, eager to make extra income. Jumia provides them with customer service training and the modalities of how to shop on their site. Equipped with their newfound knowledge, they now begin work in their communities. Jumia has even found a way to make e-commerce work for customers who are not online.

Jumia’s gig contractors can make between $100-300 per month, while a Nigerian teacher earns around US$140 per month for a full-time job. This shows how efficient Jumia’s gig has been in improving living standards for the Nigerian youth who may not have otherwise found formal employment elsewhere. It even offers an opportunity for promotion to full-time employment.

If Africa’s existing gig platforms and new start-ups could emulate the business models of companies such as Safaricom and Jumia, then African economies can benefit immensely from the gig economy. They would also need to implement or formulate comprehensive regulatory models for the gig economy. With increased efficiency, the gig economy could become the solution to Africa’s unemployment woes, as more participants join the bandwagon.

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