New normal and rise of Africa’s gig economic platforms
31 March 2021 |
3:47 am
Today, there are thousands of educated Nigerians, including some with regular day jobs, working as on-demand drivers on platforms like Uber and Bolt.
Today, there are thousands of educated Nigerians, including some with regular day jobs, working as on-demand drivers on platforms like Uber and Bolt. Some people have even quipped that driving for these platforms pays better than their day jobs.
Ride-hailing platforms such as Uber and Bolt are the poster child of the gig economy—a catch-all term used to describe online marketplaces that have emerged over the last decade for short-term and freelance work.
These marketplaces typically focus on niche services such as transportation, food delivery, content writing, music production, graphics design or programming. These fully digital marketplaces try to create a market by matching people who need a service/product (the buyer) with service providers/independent workers (the seller) who can provide these services on request; meanwhile, the platform handles everything from payments to ratings for the buyer and seller.
A report by Staffing Industry Analysts (SIA) estimates that the global gig was worth $4.5 trillion in 2018, with the U.S unsurprisingly being the largest market with 53 million gig workers and total gig spending of $1.3 trillion.
Across Africa, the gig economy platforms take different forms. For example, there are Kobo360 and Lori Systems, two companies that have each raised at least $37 million to connect people with third-party truck drivers on-demand. Lori Systems estimates that the African haulage market is worth $180 billion yearly.
There’s also SweepSouth, which has raised $6 million from investors, and Eden Life, which provide on-demand home cleaning services, among many other things, in South Africa and Nigeria, respectively. But there are also other platforms for professional services like accounting, graphics design, programming, content writing, among others. One notable name is Andela, the Mark Zuckerberg-funded company valued at $700 million in 2019.
Although it has tweaked its model significantly, Andela connects experienced African developer talent to international companies with salary opportunities above the local market rates. There are other platforms connecting skilled workers to international clients, including Toptal, UpWork, Paydesk and Fiverr, an $8.6 billion company listed on the New York Stock Exchange (NYSE) in 2019.
Buoyed by these platforms, the number of gig workers in Africa has increased over the last few years. For unemployed skilled workers, freelancing is a crucial way to earn a living on the internet. Freelancing has become a vital side hustle with clients springing forth from developed countries and willing to pay in FX for professional services.
However, with the outbreak of the pandemic in early 2020 and COVID-19 control measures, the global economy tumbled. The lockdowns, particularly full lockdowns, grounded mobility and forced many people to isolate themselves at home. Business temporarily shut down physical operations, and employees started working from home. But not every job can be done from home, and that’s definitely the case for many gig workers offering ride-hailing services.
Speaking on this development, the Chief Executive Officer of Trium Venture Capital, Adedeji Olowe, said ride-hailing suffered as ride orders plummeted globally, affecting the earning power of many gig workers.
Olowe said for instance, in the second quarter of 2020, Uber’s gross booking volume declined by 35 per cent compared to the previous year. Other platforms such as Kobo360 and Lori Systems worried about the impact of government lockdowns, with Kobo360 warning that 3,000 of its truck drivers in Nigeria stopped working until they got clarity on the mobility restrictions.
According to him, in African countries such as Nigeria, Egypt, South Africa and Kenya, Uber and Bolt swiftly introduced logistics services—which were classified as essential services by the government—to keep these companies and their drivers in the business. But he said this was not enough, because gig workers are not employees, they are not eligible for steady salary payments, paid leave, insurance and health benefits. To him, the experience was scary for many, with several news reports early in the pandemic proclaiming the gig economy was dead.
Olowe said they were wrong because the gig economy is more alive than ever. He said while Uber and Bolt suffered declines in the first half of 2020, ride orders soared again in the second half, and Uber could return to pre-pandemic growth levels by the first half of 2021.
According to him, logistics services such as Eden Life, OyaNow, Gokada and Jumia Food had recorded impressive growth since March 2020 as the food delivery industry reorganised amid the lockdown and gained traction in the months that followed.
Outside food delivery, Olowe said the number of independent riders working as logistics providers for other businesses, including Jumia, the Pan-African retailer, is reportedly growing.
Accordingly, he said at one point in mid-2020, the Nigerian government threatened to enforce stricter logistics regulations because the number of operators had increased within a short period.
“A crucial part of the resilience of the gig economy, particularly platforms and providers of physical services, is they are highly essential. When Kobo360 warned of disruptions to its truck activities, it predicted that supermarkets and major stores could run out of food items, medical supplies and other critical items within seven days. That warning was instructive, and within a few days, the government clarified the exemption for essential service workers to include truck drivers moving in and out of a state. Food delivery and other logistics operators have also benefited from their essential status, which has kept them in business,” he stated.
He also said gig economy companies doubled down on providing health care and sanitary support to workers on their platforms. Over the last year, Kobo360, Uber, Bolt, Jumia, Gokada, among others, each supplied their riders with nose masks, hand sanitisers and other support to help them complete their orders within different cities.
On her part, Spokesperson, Trium Limited, Oluwatoyin Ashipa,while physical gig economy services are the most visible kind of freelance work, professional services are growing despite the pandemic.
Ashipa said the world is flat, and technology, especially communication services, have shrunk the world even further by enabling buyers halfway across the globe to find and hire skilled workers to provide a service—ranging from accounting, data analysis, video production, content writing, programming and content marketing.
Call them a mix of creatives and techies, Ashipa said these jobs are increasingly populated by skilled young Africans who are bypassing geography limitations to earn from abroad while residing in their home countries.
Last year, she said gig economy platforms like UpWork and Fiverr saw their numbers reach new highs as demand for professional services soared.
For instance, she hinted that Fiverr, which has 3.4 million active buyers, saw its revenue grow 77 per cent year-on-year to top $189.5 million in 2020.
According to her, homegrown African companies such as TalentQL, Andela, Semicolon, Gebeya and Decagon are equally connecting Africa’s top developer talent to global companies.
She said for venture capital investors, the gig economy represents a growing and profitable opportunity because of the large number of young Africans and the relatively low living costs (compared to rich countries).
According to her, If properly trained, Africa’s young folks could turn the continent into a crucial hub that supplies the world with talent for a wide variety of tasks such as article writing and programming.
For venture builders and investors, she said the goal now is to identify startups and local platforms that are enabling this on the continent and support them. Because like it or not, Africa is the future. Its young population of digital natives represents an essential chance to leapfrog many of the continent’s challenges using creatively and using technology.
“As you think on these words, bear in mind that as an investor – individual or institutional — the importance of putting your money in a place that guarantees you healthy returns on your investments while also partnering with you to achieve your goals cannot be overemphasised. While as a start-up, it is critical to make the right connections with a venture builder that not only provides the needed finance to grow your business but also guarantees a commitment to your success within the African business terrain and beyond,” she stated.
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