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Kenya: Connected Services Can Boost Gig Economy, Says Report

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Connected workspaces can help Kenya’s gig economy overcome some of its biggest drawbacks, ultimately driving financial inclusion and leading to improved economic possibilities, a new report suggests.

The study report released on Tuesday by global payments company Mastercard indicates that fluctuation in income from week to week is a cause for frustration for 60 per cent 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 per cent) of gig workers joining the gig economy between 2017 and 2019.

Access to capital

However, the research underscores that for 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 exist 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 trillion,” the paper states.

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

Over 35 per cent of respondents said that finding gig work was easier on a digital platform, and about 30 percent said platforms made faster payments possible, and helped 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 connected 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.

Powerful motivator

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.”

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.

Ms Felistas Musyoki, a finance advisor says that those not already benefiting from the gig economy lack the necessary resources, confidence or exposure.

“It is an idea whose time has come and the potential is still huge. For the unemployed connected platforms can help them tap into their creativity. Through legislation and the right policies, Kenya can establish structures to encourage and attract more youth,” she notes.