COVID-19: How the pandemic has impacted Africa’s gig economy

The COVID-19 pandemic has had a significant impact on the gig economy worldwide, with gig workers experiencing a large decline in income. According to a report by Flourish Ventures, 66% of gig workers globally reported a substantial decrease in earnings, with ridesharing drivers being the most affected. In 2020, the outbreak of the coronavirus led to increased unemployment rates, particularly hitting informal workers in lower and middle-income segments such as street hawkers, shopkeepers, mechanics, and carpenters. Amidst this challenging scenario, digital gig platforms like Uber and Bolt have played a crucial role in connecting these informal workers to digital ecosystems, helping them stabilize and increase their incomes. However, despite this progress, these workers remain financially vulnerable due to their daily income streams, making them highly susceptible to economic shocks like the one caused by the pandemic. To address this issue and empower gig workers to be more financially resilient, Flourish Ventures embarked on a mission to track the financial lives of gig workers during the pandemic. Their goal is to engage regulators, digital platforms, fintech companies, and investors in a dialogue to provide tools and support to enhance the financial well-being of gig workers for the future. Ameya Upadhyay, Venture Partner at Flourish Ventures, highlighted the key findings of the report, emphasizing the dramatic impact of the pandemic on gig workers' incomes. Prior to the pandemic, 85% of surveyed workers earned more than 4,000 units a month, but post-pandemic, 80% reported earning less than that amount, indicating a significant decline in financial stability. The data revealed that most gig workers lacked savings to cover household expenses for even a month in case of income loss, leading to cutbacks in household spending. The report focused on two key sectors employing a significant number of gig workers - ride-sharing and logistics. It found that the incomes of ride-hailing and delivery drivers were severely affected, with a significant portion experiencing income reductions. The recommendations stemming from the research pointed towards the need for gig platforms to prioritize the financial resilience of gig workers. These included building trust with customers, diversifying revenue sources, developing financial tools, and engaging proactively with regulators. Digitization emerged as a crucial enabler for the gig economy, providing visibility and access to financial services for previously marginalized informal workers. However, realizing the full benefits of digitization will require collaborative efforts from regulators, fintech companies, and gig platforms. Looking ahead to 2021, Flourish Ventures believes that the trend of digital growth in the gig economy will continue, driven by the increased shift towards online platforms and services.