There is no doubt that 2020 has been a defining year. The effects of the Covid-19 pandemic will shape our lives for decades to come – both on a physical, economic and behavioural level.
Prior to the pandemic, the single biggest change to society, both socially and economically, was coming through the advance of technology, as digitalisation provided us with greater flexibility, freedom and choice. Covid-19 has forced major changes in the way we live and has accelerated our reliance upon digital technologies.
In Africa, as on other continents, these changes have been felt for some time. One of the great opportunities of the new digital landscape is the gig economy. The gig economy has given millions of people the freedom to work and live more efficiently and effectively, in sectors as diverse as accounting and consultancy, software testing and mobility. It has also opened up powerful new income-generating opportunities for the continent, with individuals now easily able to offer local services within cities, as well as export services to companies abroad seeking specific inputs. But regulation has not caught up and is holding back the full economic potential of the gig economy and limiting protections available for gig workers.
In our post-pandemic world, the gig economy will only become more vital. Given Africa’s unique status as the continent with the youngest population but the highest youth unemployment rate, gig work is becoming increasingly important as a pathway to socio-economic development and income creation.
According to the 2016 Jobs for Youth in Africa Report by the African Development Bank (AfDB), nearly 420 million youths in Africa are unemployed, while the International Labour Organisation (ILO) estimates that the number of youths facing unemployment in the continent is expected to reach 830 million by 2050.
Research conducted by the World Economic Forum (WEF) shows that Africa will contribute more people to the workforce each year than the rest of the world combined by the year 2035. The continent is expected to be home to 1.25 billion people of working age by 2050. In order to absorb these new entrants to the workforce, Africa needs to create more than 18 million new jobs each year.
Given the urgent need to provide jobs and livelihoods, it is time to examine the conventional wisdom that informal markets must transition into formal markets and that the availability of salaried jobs will come anywhere close to solving this problem. It is against this background that the gig economy is fast gaining traction, with on-demand delivery start-ups and ride-hailing apps leading the way.
If we take Kenya as an example, the Centre for Global Development (CGD) highlights how gig work is gradually changing how people access jobs, shifting the source of work away from informal labour and towards digital platforms.
As with most disruptive technologies, online platform work is leading the way. Currently, the Kenyan online gig economy is valued at $109 million, and it employs a total of 36,573 gig workers. In the next three years, it is predicted to grow at an annual rate of 33 per cent, with the total size of the gig economy reaching $345 million and consisting of 93,875 gig workers by 2023.
Despite the gig economy being the working model of the future, it continues to face challenges both for individuals and companies using this model.
Current labour laws are still not conducive and African governments need to develop labour legislation that supports workers in the informal sector as a way of sustaining the future of work in Africa.
In its report, Africa’s Gig Economy and the Role of Digital Finance, CGAP, a global development organization, cites access to capital as another challenge. Gig workers in Kenya cite savings, loans and medical insurance as top financial services they would like to access via gig platforms. While platforms across Africa increasingly offer credit and insurance, savings appears to be under-supplied.
Gig-based companies can offer better terms and embrace current and new responsibilities to their collaborators. Whereas gig workers may not enjoy all the benefits associated with full-time employees, it is possible to offer perks such as training and better income that would motivate the workers and encourage more to take up the gigs. Gig companies largely want to offer additional perks but are held back by current labour laws.
The challenges notwithstanding, the gig economy remains “the future of work in Africa”. As CGD says: “It’s time we recognized the truth about the future of work in Africa: it isn’t in the growth of full-time formal sector jobs. The future of work will be people working multiple gigs with “somewhat formal” entities. This is already true, and it will be for the foreseeable future.”
When we consider the future of work in Africa the question shouldn’t be whether jobs will be formal or informal, but how digital platforms and policymakers might come together to provide protection and benefits that more closely resemble those enjoyed by employees working under contract.
To ensure that African countries to benefit from the gig economy, policymakers need to regulate in a way that makes the gig economy both more sustainable and inclusive, making it less complicated to belong to either side of the labour spectrum. Perhaps then it could also serve as a panacea to the unemployment challenges faced by the continent.