Authored by Josphine Kiruku — Communications and Learning Co-ordinator, Youth Impact Labs
Improved digital infrastructure has boosted the rise of digital gig platforms in East Africa. E-commerce, ride-hailing and delivery platforms are quickly gaining popularity, especially among the youth. Reason being, they offer flexibility and cut on costs that would have otherwise been incurred in setting up a physical business premise, among other costs. Blue-collar job-matching platforms have also taken up their position in the digital space with companies such as Lynk in Kenya, FixChap in Tanzania and Taskmoby in Ethiopia spearheading this platform in their respective countries. The rise of such platforms has provided work opportunities more so in the informal sector which in Kenya for example, takes up 83.6% of the labor force according to the KNBS Economic Survey 2019.
As digital gig work platforms continue to scale, there is a need to evaluate the regulatory environment in this sector to ensure that gig workers are protected and recognized as key contributors to the growth of a country’s economy. The implementation of these regulations will also serve as a framework to improve the quality of work for young people on these platforms. This report highlights that the poor quality of many jobs held by young people manifests itself in precarious working conditions and a lack of legal & social protection which leaves many young workers vulnerable and susceptible to poverty especially when an economic crisis like the current COVID-19 pandemic hits. In an article written by Mercy Corps’ Youth Impact Labs that looked at the effect of social safety nets or lack thereof in the gig sector, the question we are asking is, “Gig workers take care of us, who can they count on to take care of them?”
- Welfare and social protection of gig workers
In June 2020 Mercy Corps’ Youth Impact Labs launched a report that analyzed the operation of digital platforms in different regulatory environments. The report which focused on Ethiopia, Tanzania and Kenya notes that across the three countries, there is no legislation currently in place that mandates platforms to provide digital gig workers with welfare or social security protections, leaving the workers at risk. What this means is that workers run the risk of facing challenges such as underpayment or in some cases no payment for services rendered and lack of safeguarding against disability or health-related conditions.
Taxation in the digital economy is an ongoing conversation not only in East Africa but also on a global scale. In East Africa where the governments have a more reactive approach, taxation of the digital gig economy is increasingly becoming a point of discussion with countries like Kenya applying tax legislation on digital gig platforms but with no clear implementation guidelines.
It has been argued that preferential tax regimes for the digital economy in developed countries are meant to spur innovation and attract investment in the newest technologies and this lighter tax burden resulting from the incentives has created a gap between the taxation of digital businesses relative to other sectors.
3. Investment restrictions
Looking at the investment restrictions in the digital gig economy, this report notes that there is a key difference across Kenya, Ethiopia and Tanzania in the protection against foreign investment. In Ethiopia, for example, there are laws restricting foreign companies from operating in sectors such as communication and logistics. These laws have in turn impacted both direct foreign investment into companies and have limited the number of global or regional digital gig platforms entering Ethiopia. Kenya, on the other hand, has the most conducive entry of foreign platforms which has contributed to the pace of growth of its digital gig economy.
The Fourth Industrial Revolution has created a favorable environment for digital gig platforms to scale. Therefore, it is paramount that governments clearly define legislations, guidelines and implementation procedures for various policies while incorporating the needs of the platforms, gig workers and consumers. With clearly set policies and regulations, decency of work and the creation of sustainable jobs will be guaranteed.
Read the full comparative report on regulatory recommendations highlighted to ensure that the digital gig workers are safeguarded.