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The Shaky African Gig Economy & How Digital Interventions Can Reduce Unemployment In The Backcountries


January 28, 2020

It is a known fact that the gig economy can be a key element in powering Africa’s growth. The rise of digital platforms in the continent offers an array of new avenues to connect informal work and formal employment. By closing this gap, gig workers would finally become a substantial unit of the region’s economy. 

The State Of Things

Africa already has over 300 active digital platforms, which employs nearly 5 million people. A good example of such a platform is JUMIA, which operates in 14 countries in the continent. With the rise of such platforms came the debate of the demise of traditional employment contracts. 

By 2035, Africa will contribute more people to the workforce each year than the rest of the world combined. By 2050, the continent will be home to 1.25 billion people of working age. Overall, McKinsey estimates that 63 percent of the total labor force in Africa engages in some form of self-employment.

While the continent’s gig economy gathers steam and puts forth a debate for the formal employment sector, much attention is not given to ruralities. Africa’s Youth Unemployment Rate is said to have exceeded 30 percent in 2019. According to the International Labor Organization, young people will continue to be 3.5 times more likely than adults to be unemployed. 

These figures beg a series of questions, but African rural areas appears to be kept out of the tag. A publication by Brookings from 2019 showed how joblessness in less developed areas is destabilizing the Near East and North African (NENA) region – a region that has struggled for over 30 years with the highest rates of youth unemployment in the world.

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Is Gig Work In Rural Areas A Thing?

Courtesy: The Conversation

Yes. In rural Kenya, for instance, gig work is not a new concept, characterizing most of agriculture for as long as can be remembered. In these parts – and many others – gig work is defined as an independent work paid on a task-by-task basis. 80 percent of the East African country’s workforce is informal, the majority of whom reside in the rural areas.  

“‘Vibarua’ jobs such as land tilling, harvesting, mama fuas, etc., all account for gig work and are quite common in rural areas. Similarly, small-time hustling which is synonymous with urban and rural Kenyan youth also counts as gig work, and mostly happens in an offline, ad hoc and often unsystematic environment,” says Gituku Ngene, Post Investment and Learning Advisor at Youth Impact Labs.

Youth Impact Labs – which identifies and tests creative, technology-enabled solutions to tackle global youth unemployment – accelerates job creation so every young person has the opportunity for dignified, purposeful work. The growth of online gig work in Kenya has allowed people to traditionally access jobs through ad hoc non-digital arrangements. The platform on which they work include Lynk, Uber, Fundis, and SafeBoda among others. 

However, the uptake of such online platforms is more prevalent in urban areas and is gathering much slower traction in rural areas, says Ngene. This is not peculiar to Kenya, but also the same case with other African countries. With available data, youth employment rates are higher in urbanities. 

Barriers To The Gig Economy

Source: Freepik

Morocco’s youth job security rates are four times higher in urban areas than in the rurals. According to the International Fund for Agricultural Development’s 2019 Rural Development Report, this phenomenon is in the context of the rural transformation process. The report says it has rural work has become constrained over the past years. 

The reasons are plentiful, but they can be narrowed down. In an electronic dialogue with WeeTracker, Ngene, who is a key part of Google.org-funded Mercy Corps spin-off program, Youth Impact Labs, identifies three main barriers. 

Infrastructure: Inferior infrastructure in rural areas puts young people at a disadvantage compared to their peers in urban areas. Most rural youths rely on weak mobile broadband or cyber cafes to access the internet (which of course can be quite expensive and unreliable at times). In a digital economy that is pegged on effectiveness and efficiency, poor internet connectivity puts these youths in a bad place.

Skills: The gig economy requires a level of tech savviness among workers for them to deliver quality work. This could range from basic mobile and internet usage capabilities, to more sophisticated skills such as software coding. Majority of rural youth still have very elementary digital skills, thanks to low exposure and the absence of modernized training institutions. 

“There is also a deficiency of skills that can be learnt on the job, which would ensure that skilled workers get skills and move up the gig work hierarchy as they work on digital platforms i.e. even for workers who possess some form of skill, the majority of them do not get to learn as much in the course of their work,” Ngene adds. 

Access to finance: Low incomes and poor access to financial services means that rural youth cannot make investments in resources required to participate effectively in the gig economy. For instance, in the case of online professional work, such youth may lack adequate funds to invest in devices such as laptops, which are fundamental in conducting online work.

In the case of blue collar workers, youth in these areas may require the necessary funding to purchase required tools to service their clients.

Possible Digital Interventions

It is a network of interrelated efforts, but at the base of it all is access to finance. Gig workers need more money to make investments that will help them become more competitive in the market.

In Ngene’s opinion, this could include financing to invest in tools and equipment e.g. for blue collar workers such as carpenters, it could be small loans that allow them to buy power tools. 

“Some examples include 2jiajiri by KCB and Lynk that is partnering with Bosch under the FIBR programme. That is in the case of online professional work, it could be to purchase devices such as laptops.

Additionally, as gig workers move up the ladder, it will be critical to look into financial services that increase their resilience and adaptability to financial shocks. This could include insurance, savings among others”. 

Pathways to skills: There is a critical need to equip gig workers with the right skills to set them up for the future of work. For aspiring gig workers, this entails getting equipped with the right digital skills to make them competitive.

Tertiary institutions, gig platforms and innovators could identify new models of growing skills within this population e.g. through digital learning modules, gamified learning, etc. 

For existing gig workers, there is a need to provide up-skilling pathways to enable them to improve their skills and hence play more actively across different spectra of the gig economy.

Additionally, as Kenya’s informal labor force transitions into more professional platforms, investment in soft skills such as communication, time keeping, and interpersonal skills will be critical.

According to a 2019 report by Mercy Corps, Youth Impact Labs, the development of nationwide infrastructure can go a long way in bolstering the gig economy – of any African country.

The study, Towards A Digital Workforce: Understanding The Blocks Of Kenya’s Gig Economy, says: “This will enable more young people, including those in rural areas to access highs-speed internet as they acquire and utilize new skills – thereby alleviating and optimizing shared prosperity in the online gig economy”. 

The Bottom Pot

Professional work has traditionally presented the most compelling opportunity for gig workers. However, Kenya – like most other African countries – continues to face harsh competition from markets such as India, The Philippines and Bangladesh. 

It may take years to turn around this. As we explore global markets, we should also turn to bigger opportunities locally – by building a strong demand pipeline within local corporations and government as they look to digitize their operations and make their operations and workforce more efficient.

According to Youth Impact Labs, the most exciting and compelling space is the opportunity within the blue collar space. Digital platforms are increasingly presenting opportunities to connect supply and demand in order to connect buyers and sellers. 

This presents an opportunity to streamline and professionalize the 83 percent of the workforce that works in the informal sector, Ngene points out.

“This will enable them to transact with each other, access opportunities that were otherwise outside their reach, professionalize and improve the standard of their services as they seek to be more competitive in a more competitive and extensive market”. 

Further, the embedding of ancillary services within these platforms ensures that such workers are protected from financial shocks while at the same time being ble to upskill and broaden their portfolio of services within these platforms.

Secondary cities and rural areas present opportunities for workers to plug into the digital economy by taking advantage of platforms to access digital opportunities outside their reach.

Finally

With digital commerce estimated to benefit at least 80 million young Africans by 2030, opportunities for gig workers will increase. According to the World Economic Forum, digital platforms should also consider how to include portable benefits in what they offer to potential employees. 

African governments also have a huge role to play, as they too can introduce benefits to gig workers. So doing, African talent will not go to waste and its economies will not lose out on tax revenue and the fruits of the digital revolution.

Featured Image: Wired

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