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How the gig economy is solving Kenya’s unemployment challenge

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With the persistent challenge of Kenya’s unemployment, and more importantly youth phenomenon that comprises 84 percent of those that are unemployed, the gig economy has come in to provide a solution, and is currently estimated to be worth $19.7 billion with 5.13 million workers. 

According to a report published by Mercy Corps, titled: “Towards a Digital Workforce: Understanding the Building Blocks of Kenya’s Economy,” the number of unemployed youth in Kenya, consisting of 20 percent, is more than the continental average of 19.2 percent. 

The gig economy, the report explains, is one that is more temporal, say three months, but is based on independence, performance of the work done is followed by the payment and is comparatively contrasted against formal employment.

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By comparison, the gig economy differs from formal employment, the latter which is more permanent-based, salaried and considered of a high quality. 

Labourers in such an economy can be divided into two, that is both offline and online, but can be found in a variety of sectors including those that perform tasks in areas like medicine, delivery sector, technology, transport  and household business services.

“This section of the population is found in the informal sector, which has 83.6 percent of the people who are working and are employing 14.9 million workers,” reads the report, adding: “Online workers are less, coming in at 36, 573 and are worth $ 109 million, as compared to offline workers who are more, at  5.1 million and are worth $ 19.7 billion as of 2019.” 

The online gig workers are bound to grow by 33 percent in the next four years, and are likely to be worth $345 million, observes the report. Comparatively, the offline gig workers are expected to be worth $28.95 billion during the same period, with their number reaching 5.7 million workers.

Online gig work is likely to be driven by the prevalence of technology, with American technology ride-hailing companies and platforms like Uber and Lynk, which have offices in Kenya, boosting the trend.

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For instance, the high uptake of the internet in Kenya, standing at over 100 percent, according to data from the Communications Authority (CA) has served to boost the technological trend.

Another factor, the “ Towards a Digital Workforce” report adds, is that it is the high interest the online gig economy attracts among investors, who are keen to fund technology platforms, that drives the trend.

“East, South and North Africa are the parts of Africa that are attracting technology funding this year. Kenya, for instance, took the lion’s share worth $ 348 million, with startups such as Tala and Cellulant taking up the lead funding,” reads a 2019 report by Partech Ventures.  

Another factor is that corporates such as Safaricom and commercial banks, such as Equity Bank, have contributed to the implosion of online platforms in the country by facilitating the movement of money globally, with companies such as PayPal and Transfer To, further states the report.

Lucrative as this sector sounds, the gig economy has its own set of challenges, the report states. One, the online gig economy is one that is more taken up by men as opposed to  women. Women comprise only three percent of the economy.

The report, citing statistics from the Kenya National Bureau of Statistics (KNBS), further states that unemployment is more of an urban phenomenon, with 6.9 percent of those in the urban areas as opposed to 3.7 percent of those in the rural areas likely to be unemployed. 

Then again, 4.6 percent of the females are likely to be employed, as compared to 2.6 of their male counterparts. 

In terms of education, 30.2 percent of those who are trained at primary education level are more likely to be unemployed as compared to 0.1 percent who have graduated from the university. 

As a consequence, the number of people who have enrolled in Technical and Vocational Training Institutions (TVETs) has risen, from 142, 821 in 2014 to 216,063 people in 2018.

 

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