The Emerging Gig Economy in Nigeria: Opportunities for Small Businesses
Introduction
The Gig Economy also referred to as the platform economy is a type of work arrangement where professionals are hired as an independent contractor as against the traditional full-time employments. Gigs as a formal employment option is still relatively new in Nigeria. In Nigeria, they are seen as “side hustles” or “runs” which individuals engage in to supplement the income from their main jobs.
The Information and Communications Technology (ICT) sector seems to be the early mover in the emergence of gigs in the country. It is not unusual to see ICT professionals working independently for multiple companies at the same time. The relationship can be seen moving from employer — employee to contractor/consultant — client. Ride-hailing companies like Uber, Bolt have also provided an avenue for more Nigerians to be a part of the gig economy. It is a known fact that some car owners especially in Lagos and Abuja double as drivers in their spare time or even after close of business.
A study done by McKinsey in 2016 showed that between 20% and 30% of the working-age population in the United States and the European Union were engaged in one form of independent work or the other. “Free agents”, who deliberately engage in independent work and earn their primary income from it were said to have constituted 30% of the survey population. 40% of the surveyed population were classified as “casual earners”, who engage in independent work as a supplement to their primary source of income. It is not unlikely that this is the category where most gig workers in Nigeria currently fall into.
A report by Staffing Industry Analysts (SIA), estimated that the global gig was worth $4.5 trillion in 2018, with the US unsurprisingly being the largest market with 53 million gig workers and total gig spending of $1.3 trillion.
Given the value of gig economy across Africa, Nigeria inclusive, the gig economy platforms take different forms, for example, there are platforms who connect professionals to third party and get jobs done and common platforms are Up-work, Fiverr, and Paydesk.
Africa platforms like Kobo360 (Nigeria) and Lori Systems (Kenya), two companies that have each raised at least $37 million to connect people with third-party truck drivers base on-demand. Lori Systems estimates that the African haulage market is worth $180 billion annually.
Mark Zuckerberg funded Andela platform for professional services like accounting, graphics design, programming, content writing, among others and it is valued at $700 million in 2019. Andela connects experienced African developer talent to international companies with salary opportunities above the local market rates.
There is also SweepSouth, which has raised $6 million from investors, and Eden Life, which provide on-demand home cleaning services, among many other things, in South Africa and Nigeria, respectively.
As the Nigerian economy and IT evolves, gigs will no doubt become an increasingly popular option for outsourcing talents. Some of the opportunities gig provide for small businesses include
- Cost Savings: The compensation of gig workers is negotiated based on the man-hours required from them. Since most gig workers work for more than one client, gig worker schedule becomes the major consideration in any form of engagement. The fees payable to a gig worker who will work for a limited time should typically be less than the wages of a full-time employee possessing the same level of skills and experience. Factoring in pensions and other statutory benefits provided for full-time employees, the cost savings on gig workers becomes more significant.
- Better access to talents: Gig arrangements will also allow small businesses owners to compete better in the marketplace for talents, as they will be able to utilize the skill set of some professionals, they may not have been able to attract if they were to hire them full-time. The gig arrangement allows them to pay for only the allotted hours of these professional’s time at rates they can more easily afford.
- More efficient delivery: The competition for their time ideally makes gig workers more efficient in their delivery. With multiple client commitments, a gig worker understands the phrase “time is money” and would therefore be better motivated to deliver within agreed timelines. This is clearly an advantage for business owners as there is a better opportunity to earn value for money.
- Mutually agreed terms of disengagement: The terms of disengagement of gig workers are most often limited to the termination clauses in their contracts. Where fairly negotiated, such termination clauses would provide adequate protection for both the gig worker and the client, with shorter notice periods and liabilities.
What At Stake
· Job Insecurity: The concept of job security is based on a steady income, a sense of permanence, and retirement benefits. Gig workers are usually hit when a company faces challenges like acquisition, bankruptcy, or financial scandals unlike full-time employee who have job security. Understandably, all sectors of the economy were affected by the pandemic and most organizations had to relieve people of their job, but it appears that contract employees were mostly affected because, barring those offering exceptional value, they were not the priority when companies drew up their adaptation plans.
· Uncertain Incentives: Gig workers have lower levels of protection when it comes to termination of their employment. This is having in mind that not all temporary jobs have clearly defined termination date. Usually, no reasons are given by the client to justify the end of the employment relationship other than the end date of the contract being reached and the client unwillingness to renew. Also, because of the ease with which workers in the gig economy can be replaced, most companies do not bother giving them benefits once they are let go.
· Legal Protection: There are very few countries with defined regulatory provisions protecting the interests of gig workers. As a result, these casual jobs are taken up without any contractual agreements.
And the absence of regulations makes it easy for employers to treat employees unfairly, without the latter having litigation options to redress the wrongs done to them.
· Access to Fund/Credit: Another challenge that gig workers face is the lack of salary slips which can prevent gig workers from accessing certain financial services such as loans when they are in dear need.
Conclusion
Despite its challenges, a pronounced gig economy plays a crucial role in people’s entry into the labour market, it helps the young population gain relevant work experience. Whether you are an Nigerian freelance writer remotely running a publication for a company Oklahoma, an Uber driver, a software engineer, or a web designer building a website for a corporate agency, you’re a part of the gig economy. Taking up gigs is an opportunity for professionals to upskill without being held back by their stable job.
In essence, the gig economy provides a kind of testing ground which helps young people try out different roles, compare work ethics across sectors, develop other skills, as well as build a network with other professionals. Meanwhile, an employer can objectively judge whether an employee is a best fit for the company after a series of short-term services before deciding to offer permanent employment.
Ultimately, If Nigeria will benefit from the gig economy, we need to adopt an inclusive regulatory model for every form of employment. Eventually, it would be less complicated belonging to either side of the labour phase. Perhaps, it will also serve as a panacea to the unemployment challenges faced in the Nigeria and Africa at large.
Citations
· MSME Hub: GIG Economy
· Techpoint Africa: Africa Gig Economy
· Financial Nigeria: Emerging Gig Economy
