New normal and rise of Africa’s gig economic platforms

 

By Adeyemi Adepetun

 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.

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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.