Authored by Alan Ndirangu — Investment Analyst, Youth Impact Labs
In 2018, the global gig economy generated US$ 204 billion in gross volume, with transportation-based services, such as ride-sharing, taking the share of the cake at 58%. This economy was projected to grow by a 17% CAGR, leading to a gross value of approximately ~US$ 455 billion by 2023, due to factors such as evolving societal attitudes around peer to peer sharing and rising digitization rates in emerging markets.
However, 2020 may have led to a significant depletion to the growth of the gig economy sector, due to the Covid-19. The pandemic resulted in societal and regulatory restrictions being enforced in how business operations are conducted. In Africa, the Covid-19 pandemic has exposed the absence of safety nets to cushion gig workers against a crisis. Gig workers in many African countries are already reporting that their savings — on which they can live for four to six weeks to buy basic necessities — are depleting. Their families are drawing closer to malnutrition, starvation, longer-term exclusion from the labor market, and other socioeconomic issues that could far outlast the pandemic. Additionally, governments have struggled to develop a safety net of the same strength for this cohort of the workforce as compared to the social safety protections in place for people in traditional employment models.
“We have seen many formal jobs shrinking across the continent. It’s important for the government, private sectors, and many institutions to catch up and prepare for this future of work as gig work is going to be the new normal.” Sharmi Surianarain, Chief Impact Officer, Harambee Youth Employment Accelerator.
External view on the topic
On a positive note, many gig economy businesses have proven to be valuable network enablers during this time by ferrying food around locked-down areas and responding to exceptional levels of demand. However, the pandemic is also acutely highlighting the precarious nature of the gig economy worker-company relationship.
“The impact of Covid-19 on gig work has been crucial in highlighting the precariousness and potential of the gig economy as well as underscoring the lack of preparedness we have in the system, economies and institutions.” Sharmi Surianarain, Chief Impact Officer, Harambee Youth Employment Accelerator.
Most companies have had to make decisions on how to manage human capital during the COVID-19 pandemic, such as how to deliver on their responsibilities to employees, customers as well as shareholders. In the gig sector, some platforms implemented new measures to ensure that gig workers were able to perform their work, amidst the pandemic. Some of these measures include; setting up a new health insurance policy in response to the outbreak, like in the case of Sendy, and the provision of protective equipment to workers. Additionally, e-commerce platforms like Sky Garden quickly adapted processes to reduce transmission risk, such as no-contact delivery.
Mercy Corps participation in building resilience
Backed up by three-year experience and learnings from supporting various technology-oriented innovation initiatives in the digital economy, Mercy Corps Youth Impact Labs (YIL) hosted a virtual 2-day learning event, dubbed Employment Rewired, to provide insights on how digital gig workers have been affected particularly in the face of COVID-19 among other key thematic areas. The event featured a panel session to discuss ways in which the digital economy has acted as a cushion for gig workers and built their resilience. Key panelists included Ezana Raswork, the CEO of Eziti Information Services, an ICT firm that manages Taskmoby, a service matching platform, Sharmi Surianarain, the Chief Impact Officer, Harambee Youth Employment Accelerator and Michelle Hassan, the Kenya Country Manager, BFA Global — Catalyst Fund.
Mercy Corps, via its Youth Impact Labs (YIL) program, played an instrumental role in supporting its portfolio of innovative gig partners, via a mix of grant support and technical assistance. This support helped the program’s partners adapt their business models or service offerings to remain sustainable and take advantage of emerging opportunities during the pandemic period. In addition, Youth Impact Labs provided unconditional cash transfer support to gig workers who utilized the funds to cater to pending expenses and for some, start small businesses to support their families amid the crisis.
YIL supported one of its partners Taskmoby — a gig platform in Ethiopia — in pivoting to a new disinfection service category primarily aimed at the platform’s B2B and B2G clients. This support enabled a share of the gig workers already utilizing the platform to continue generating revenue. Additionally, for partners like e-logistics platform Getboda and e-commerce site Herdy, YIL was instrumental in the provision of working capital support to assist the firms in purchasing protective equipment for their workers and rider partners. Additionally, YIL supported these platforms in buffering up their inventory needs to meet the increasing demand noted from Herdy’s digital marketing platform.
“One of our key learnings during the pandemic has been the ability of the platform to onboard, train and deploy support to thousands of workers efficiently.” Ezana Raswork, Founder & CEO, Taskmoby.
Covid-19 has further brought to light existing concerns on the quality of digital opportunities, such as job security and lack of legal & social protection for workers. As a result, digital platforms and ecosystem stakeholders have been forced to look into these gaps so as to protect their workers.
“Financial institutions should collaborate with gig platforms to come up with innovative ways of ensuring there is a savings product on their platforms to cushion gig workers in the event of a future economic crisis. We have been thinking of different scenarios regarding the future and we are working to build up resilient products that can support gig workers” Michelle Hassan, Kenya Country Manager, BFA Global — Catalyst Fund.