Africa’s gig economy

Africa’s gig economy

29 October 2019


The gig economy also referred to as the “sharing economy” or “freelance economy” is a labour market characterised by freelance, flexible, on-demand work rather than the more traditional nine-to-five working model. Instead of being paid a regular salary, workers are paid for each ‘gig’ they do, such as a car journey, food delivery or a cleaning job. It is often characterised by digital platforms facilitating services between freelancers and customers.

According to Mastercard, the global gig economy generated $204 billion in 2018, with transportation-based services comprising 58% of this value. The size of gig economy transactions is projected to grow by 17% CAGR to reach $455 billion by 2023.

Some of the major sectors of the gig economy include:

  • Asset sharing services – facilitating short-term peer-to-peer (P2P) rentals of one owner’s (or “freelancer”) property to another individual.
  • Transport-based services – which use a freelance driver to complete the requested transport service.
  • Professional services – connecting freelancers directly with businesses to complete projects.
  • Handmade goods, household & miscellaneous services – enabling freelancers to sell homemade crafts or offer on-demand services for household-related tasks.

Key drivers for the growth of the gig economy include factors such as evolving societal attitudes around P2P sharing and increased digitalisation in developing countries. And this is where Africa’s biggest opportunity lies, as more people on the continent are connecting to the internet, mostly via mobile, they’ll be able to provide and / or use gig economy services.

African entrepreneurs have also seen significant levels of VC funding invested into the launch of gig economy startups. Examples include Nigeria’s Kobo360, a freight logistics startup, which has raised over $30 million and is backed by Goldman Sachs. Another success on the continent is the South African cleaning services platform SweepSouth, which has raised over $6 million and is backed by global investor Naspers.

In sub-Saharan Africa, 18 million jobs need to be created annually to absorb new entries into the labour market. Flexible work offered for low-skilled workers via gig economy platforms can unlock significant economic benefits such as raising labour-force participation on the continent.

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