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A man rides a motorbike with a delivery box along a road in Ajose Adeogun district in Victoria Island, Lagos, Nigeria June 4, 2018. Picture taken June 4, 2018. REUTERS/Akintunde Akinleye - RC1C91FE5F80
Africa in focus

A gig economy solution to boost employment in Africa

Editor's Note:

Below is a viewpoint from Chapter 3 of the Foresight Africa 2019 report, which explores six overarching themes on the triumphs of the past years as well as strategies to tackle the remaining obstacles for Africa. Read the full chapter on harnessing Africa's youth dividend.

Africa’s rapidly growing employment gap has become an emotionally charged issue for economists and policymakers. The issue is exacerbated by a quickly rising youth population, for whom the lack of formal sector jobs means that most turn to informal sector jobs such as domestic work, casual labor, or smallholder farming. As a technology platform for informal sector workers in Kenya, Lynk has harnessed the growth potential of this trend to create one of the largest gig-work platforms (an online resource to match people’s skills with needed work) on the continent. Innovative efforts like ours are just the tip of the iceberg. In Africa, gig platforms have the potential to provide a source of consistent work, and, with centralized governance and support, a pathway to reduce informality and boost productivity by leapfrogging informal economies.

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As the name suggests, the informal economy is marred by uncertainty, a lack of social protections, and massive inefficiencies around productivity and income growth. In Kenya, for example, where hundreds of thousands of people work in carpentry and joinery, most workers only have access to and training in manual hand tools. Rather than investing to make the sector competitive, the government’s most notable interventions in the past year have been to cripple the sector with a ban on logging and a substantial tax on alternative materials. In spite of their growing importance as an engine of employment, most informal activities are still seen as an adversary by national governments.

The potential for gig platforms to provide a source of consistent work and centralized governance and support is even more exciting in Africa where platforms can leapfrog informal economies.

Meanwhile, in other parts of the world, technology platforms that operate as nontraditional “employers” are rapidly growing. In the United States, where a proliferation of platforms like Uber, Lyft, and Airbnb has led to the rise of the gig economy, a growing population of U.S. workers are choosing flexible gig work instead of formal contracted employment. In China, Alibaba boasts millions of participating small and medium businesses—for many of which Alibaba represents their only sales channel. Beyond simply linking them to consumer demand, the platform also provides loans, access to logistics and warehousing, and even business formalization and tax filing support. The potential for gig platforms to provide a source of consistent work and centralized governance and support is even more exciting in Africa where platforms can leapfrog informal economies.

Lynk is a platform that matches thousands of jobs each month in categories ranging from plumbing and electrical works to yoga lessons and hair care. While the technology is similar to platforms like Uber or TaskRabbit, Lynk takes a more hands-on approach to worker vetting and quality management. Unlike in developed countries, where gig workers often have college degrees or formal sector experience, most informal sector workers in Africa lack this educational foundation and soft skills. Lynk addresses this gap by investing in onboarding and upskilling. So far, the investment is paying off, with most participating workers seeing a two- to three-fold increase in monthly income. Lynk also provides services that are often unavailable like logistics and warehousing support, material wholesaling, and ongoing skill training.

Platforms like Lynk are poised to offer advanced services such as loans or skill accreditation, areas where traditional institutions have struggled to engage.

For many workers on Lynk, the platform is building their first actionable digital identity. By accruing data on jobs completed, income earned, and other efficiency metrics, platforms like Lynk are poised to offer advanced services such as loans or skill accreditation, areas where traditional institutions have struggled to engage. As job platforms grow, they become an increasingly valuable source of data and service delivery for enormous populations of hard-to-reach and historically underutilized workers. As we see in the case of Lynk, indigenous platforms that are customized to the needs of a local ecosystem can serve as both a compelling source of jobs and income, as well as an effective channel for formalization, inclusion, and economic development.

Figure 3.4 Voices of Africa: Priorities for the region

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