Mastercard Releases White Paper On How Gigs Are Driving Economies
Mastercard has released a white paper revealing how gig work across East Africa is helping to drive economic growth by facilitating economic opportunities, improving livelihoods, and acting as a buffer against unemployment.
However, for the gig economy – which is based on short-term, temporary, and flexible independent contractors – 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 value adds like access to capital and access to the market.
Mastercard’s white paper titled The Gig Economy in East Africa: A Gateway to the Financial Mainstream explores how digital inclusion is a prime enabler of the gig economy.
Connected devices, which are already proven to be vehicles of inclusion and development in Africa, can help gig workers overcome some of the biggest challenges they face, ultimately driving financial inclusion and leading to improved economic possibilities.
The paper, based on research from in-depth face-to-face interviews with gig workers in Kenya, shows that the gig economy is nascent, buoyant, and continues to grow, with almost two-thirds (60%) of gig workers joining the gig economy between 2017 and 2019.
However, like much of the informal sector, uncertainty is a fact of life, with the biggest challenges being around continuity of income. More than half (55%) said that not knowing when the next gig contributes to instability. And close to 60% of respondents said that fluctuation in income from week to week is a cause for frustration.
Currently, the online gig economy (the portion of gig work that is attained through digital platforms) is a tiny portion of the overall gig economy.
Research-based estimates in 2019 put the total size of the online gig economy in Kenya at USD 109 million, employing 36,573, while the offline gig economy comprises 5.1 million workers, and accounts for USD 19.6 billion.
Despite this, online gig economy work is preferred; Mastercard’s report found that almost 60% would prefer online gigs to offline. This is because online gig work enables end-to-end management of projects.
A third (over 35%) said that finding gig work was easier on a platform, and about 30% said platforms made faster payments possible and helped them connect to other workers.
“Gig work is present everywhere in East Africa, but now, with the growth of digital technologies and connected devices, there is 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 realize the true potential of inclusive, sustainable growth across the continent,” said Jorn Lambert, Chief Digital Officer, Mastercard.
Some of the most common types of gig work in East Africa are artisanal and general services, which include welders, electricians, carpenters, and domestic work.
“Independence” is the powerful motivator behind this movement. 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.
The Gig Disconnect
With the digital economy as an enabler of greater prosperity and inclusion, gig platforms have proven to be a single touchpoint for many services and opportunities utilized by gig workers. But access to gig work opportunities is often not enough to keep a gig worker afloat.
Loans, instant payments, and benefits such as insurance, are the top three perks desired by gig workers in Kenya, and 45% of respondents said they are willing to pay between $1 and $5 a month for such benefits and services.
Over 80% of