How to tap potential of fast rising gig economy

Digitally connected workspaces can help Kenya's gig economy overcome some of its biggest drawbacks. FILE PHOTO | NMG

By FAUSTINE NGILA
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Summary

• The report indicates that fluctuation in income from week to week is a cause for frustration for 60 percent of gig workers in the country, and that is attributable to traditional ways of doing business.
• Gig economy is a term used by economists to refer to jobs that are based on short-term, temporary and flexible independent contractual agreements.

Digitally connected workspaces can help Kenya's gig economy overcome some of its biggest drawbacks, ultimately driving financial inclusion and leading to improved economic possibilities.

This is a according to a study released on Tuesday by global payments company MasterCard. The report indicates that fluctuation in income from week to week is a cause for frustration for 60 percent of gig workers in the country, and that is attributable to traditional ways of doing business.

Gig economy is a term used by economists to refer to jobs that are based on short-term, temporary and flexible independent contractual agreements.

The paper, The Gig Economy in East Africa: A Gateway to the Financial Mainstream, shows that the gig economy continues to grow, with almost two-thirds (60 percent) of gig workers joining this segment of the economy between 2017 and 2019.

However, the research underscores that for this part of the economy to reach its potential and unlock prosperity for millions of people, the digital divide must be bridged through connected devices that power the digital economy, and add value such as access to capital and market.

A gap between legacy business models — offline gig economy — and business designs meant for the future of work, exists in Kenya, with the former still holding the bigger share of the market.

"Currently, the online gig economy is a tiny portion of the overall gig economy. In 2019, the total size of the online gig economy in Kenya stood at Sh11.7 billion, employing 36,573 people, while the offline gig economy comprises 5.1 million workers, and accounts for Sh2 btrillion," the paper states.

Despite this, online gig economy work is preferred, and the report found that almost 60 percent of workers would prefer online gigs to offline because the former enables end-to-end management of projects.

More than 35 percent of respondents said that finding gig work is easier on a digital platform, and about 30 percent said platforms make faster payments possible, and help them connect to other workers.

Jorn Lambert, chief digital officer at Mastercard said that while gig work is present everywhere in Kenya, the growth of digital technologies and linked devices presents a real opportunity to help gig workers quickly connect to consumers to meet their demands for services, and overcome significant pain points such as inconsistent work, financial planning challenges and late payments.

"If each key player in the gig economy ecosystem comes together – from the platform, to the mobile industry and the payments provider – we can ensure that the end-to-end journey of the gig worker is both smooth and profitable, and realise the true potential of inclusive, sustainable growth across the continent," he said.

Some of the most common types of gig work in East Africa are in artisanal and general services, which include welders, electricians, carpenters, and domestic work.

The report identified business independence as a powerful motivator behind the movement, and being self-employed with the freedom to work at an individual pace are part of why gig work is growing.

"It is an inclusive space where people of different social and economic backgrounds can fit in and earn a living," the report says.

Ngozi Megwa, Senior Vice President, Digital Partnerships, Mastercard in Middle East and Africa decried the reality that traditional platforms often do not adequately serve the needs of the gig worker, who is at risk from personal accident and injury, loss in revenue from any absence from work, incomplete delivery or payments, and economic volatility.

"However, connected devices are bridging divides between urban and rural, rich and poor, and connecting gig workers to peers, information, opportunities and services. But what's equally as critical is establishing a digital identity for gig workers across platforms," she noted.

While there are various gig platforms currently being utilised, it is difficult for a single platform to provide the value and benefits that workers require, such as easy collection of payments via digital channels, and access to credit, training and insurance, as they tend to move from one platform to another.

"A collaborative approach is called for to not just create jobs, but also a gig-worker identity that provide benefits, ensuring decent working conditions and improved livelihoods," added Ms Megwa.

With the digital economy fast becoming an enabler of greater prosperity and inclusion, gig platforms have proven to be key “unlockers” of many services and opportunities utilised by gig workers.

But access to gig work opportunities is often not enough to keep a giworker afloat. Loans, instant payments, and benefits such as insurance, are the top three perks desired by gig workers in Kenya, and 45 percent of respondents said they are willing to pay between Sh100 and Sh500 a month for such ben­efits and services.

"Over 80 percent of respondents said instant payments when a job is completed is the most desired feature of a gig platform. And in step with the prevalent mobile money system, 62 percent of respondents said they prefer to receive payment through mobile money such as M-Pesa or Airtel Money because it is readily available, reliable, easy to manage, secure, and convenient," the report established.