TOUGH GOING

Players in gig economy cut expenses by 50% as Covid-19 bites

The majority are concerned about the ability to earn an income, find work, and cover day-to-day work expenses.

In Summary
  • Four out of five enablers now earn less than $240 per month compared to 16 per cent before the Covid-19 lock-down.
  • Even so, some gig workers are impacted more than others
Flourish managing partner Arjuna Costa
Image: COURTESY

Over half of gig workers in Kenya and South Africa have already reduced their household expenses and borrowed to cope with the economic effects of Covid-19.

Gig workers are independent contractors, online platform workers, contract firm workers, on-call workers and temporary workers.

A study by Flourish, global venture capital with portfolio investments throughout Africa, shows 76 per cent of last-mile digital enablers, including ride-hailing and online deliverers, experienced a large decrease in income since March.

The report tracks the experiences of gig workers, those who use digital platforms such as e-hailing or delivery apps, to learn more about how they are faring during the pandemic.

Dubbed the digital hustle: Gig financial lives under pressure, the study sampled at least 600 gig workers in the two countries. The report also summarizes how they are coping with economic dislocation.

Kenya’s gig economy has been growing steadily over the years, with the entrance of many local and international players offering ride-hailing and online delivery services.

However, the pandemic affected operations in the sector making most players effect a raft of measures to remain afloat in business.

 According to Flourish managing partner Arjuna Costa, digital platforms have made it possible for workers around the world to participate in the gig economy, providing a degree of formality and stability to their work.

"By tracking gig worker experiences in South Africa, and elsewhere, we hope to open conversations about how fintech companies can build lasting solutions for this vulnerable population of citizens," Costa said.

He added that the impact of Covid-19 on South Africa’s gig economy is a reflection of the situation in many countries on the continent.

"However, we expect the gig economy to grow across Africa and we believe gig workers will become a larger part of the African workforce. It’s important that financial institutions understand how to work with and support this growing sector," he said.

The report found that four out of five enablers now earn less than $240 per month compared to 16 per cent before the Covid-19 lockdown.

A whopping 91 per cent are very concerned about Covid-19, specifically how it will affect their ability to earn an income (46 per cent) and the risk to their family’s health (26 per cent).

Even so, some are impacted more than others.  For instance, e-hailing drivers were twice as likely as delivery workers to report a significant decline in quality of life, with 83 per cent suffering a large decrease in income.

In the next six months, nearly all respondents plan to restart or continue the work they were doing before the lockdown.

The majority are concerned about the ability to earn an income, find work, and cover day-to-day work expenses.

Despite recent hardships, Flourish expects continued growth in online platforms and financial tools to support gig workers.