Across sub-Saharan Africa, the World Bank estimates that more than 80% of workers find their livelihoods in the informal sector. In Kenya, it’s estimated that the informal sector accounts for 82% of the working population, while in Tanzania, it is thought to be even higher.
This article was contributed to TechCabal by Priya Sippy. Priya is a freelance journalist and communications specialist covering news from East Africa. Formerly based in Dar es Salaam for a number of years, she is currently based in London. Her work has featured in Quartz, Rest of World, The Continent, New African Magazine and TRT.
Digital platforms are disrupting East Africa’s traditional gig industries
Rehema Zongo, 36, stirs a large pot of rice outside her small shop on Tunisia Road in Kinondoni, Dar es Salaam. Inside her kitchen, two other women chop spinach to make mchicha, a popular side dish in Tanzania, while steam rises from saucepans containing boiling beans, which will be used later to make maharage.
It’s 11.00 a.m. in Dar es Salaam and the sun beats down on the bustling streets. Rehema is ready for a busy afternoon, preparing dishes for the lunch-hour rush.
A few months earlier, Rehema would have waited for customers to arrive and take their orders. Today, she packages the food and hands it to three boda boda drivers, who will deliver it to nearby offices. During the height of the pandemic, Rehema joined one of Tanzania’s fastest-growing food delivery apps, Food Sasa, which delivers local street food to Dar es Salaam’s workers.
Women like Rehema—fondly known as “Mama Ntilie”, a name for female food vendors in Tanzania—were onced threatened by the rise of e-commerce as food delivery apps typically partnered with high-end established restaurants. But now the Mama Ntilies of East Africa are becoming part of the new digital informal economy, and cashing in on it too. Before joining Food Sasa, Rehema was selling around 26 plates a day. She now sells 55 on average, doubling her salary.
Across East Africa, digital platforms like Food Sasa are reimagining the region’s informal economy, offering traditional gig industries a bridge to formal employment. East Africa has seen a proliferation of digital platforms popping up, which are able to employ large numbers of informal actors in their supply chain or service delivery.
Research shows that East Africa is leading the continent on digital platforms, recording 58% year-on-year growth in 2019. This growth has been steered by developments in Kenya. In total, Kenya has both the highest number of platforms (118) in East Africa and the highest growth (71%) in the region.
The expansion of such digital platforms accelerated during the COVID-19 pandemic as East Africa navigated lockdowns, curfews and restrictions.
Africa’s thriving informal sectors
Across sub-Saharan Africa, the World Bank estimates that more than 80% of workers find their livelihoods in the informal sector. In Kenya, it’s estimated that the informal sector accounts for 82% of the working population, while in Tanzania, it is thought to be even higher.
The challenges of the informal sector are well documented. With no contracts, the gig economy is marred by uncertainty, a lack of legal protections and low pay. No formal registration also means a smaller tax base for the government.
Now, digital platforms appear to be providing a solution of some sorts. They have the potential to provide consistent work, a steady income, fairer working conditions and a pathway to reduce informality.
Food Sasa is one such platform bridging the formal and informal sector. Seeing a gap in the market to deliver local food to Dar es Salaam’s clientele, the majority of the vendors on the app are the Mama Ntilies. “If you look on our platform, more than 60% of food vendors are like Rehema,” says Albany James, the founder of Food Sasa. “Through the app, these local cooks are now contracted employees. The technology supports them to track their sales and records. This makes it easier for them to get a loan and grow their enterprise.”
“It was not easy for street food vendors to get customers from big offices or upper class areas, but thanks to Food Sasa, I now have customers from areas like Masaki, Oyster Bay and Mikocheni,” says Kemi, a local cook who joined the platform six months ago. “The number of orders I have increased since I have been working with them. Working with Food Sasa has been a blessing and it is good for other street sellers.”
Food Sasa’s contracted delivery drivers can also reap the benefits of platform work. The company purchases motorbikes for the drivers, and if they keep it for 18 months, the bike is theirs. This allows them to rent it out to others for additional income.
Ride-hailing services are transforming East Africa’s informal economy
Across the transport industry, ride-hailing apps like Uber and Taxify, which connect self-employed drivers to customers, have rapidly gained ground. Local startups are also cashing in. In Uganda, SafeBoda is the most popular ride-hailing service in the country and has 22,000 registered drivers on the platform.
Such apps can offer skills accreditation and loan services, boosting productivity in gig work. Fundi App, which started in 2019 in Tanzania, connects households and businesses with handymen (commonly known as fundis) and artisans. The app certifies fundis through a training programme with the Vocational Education and Training Authority (VETA). “Our fundis are working in much better conditions,” says Kilimomweshi. “Formerly very few would have protective gear, but we provide that [now]. They have health insurance and they are also getting a regular salary.”
Lynk, a similar app based in Kenya, has seen sharp growth. As of February 2019, Lynk had enabled over 1,300 informal workers to access over 22,961 jobs, and the platform has transferred more than $2.5 million to workers in payments.
Domestic work is another industry impacted by digital platforms. In 2019, Balbina Gulam set up Huduma Smart, a web-based platform which connects trained house helps to clientele in Tanzania.
“Domestic work is not seen as a professional sector, and this often puts young housemaids in vulnerable positions,” explains Gulam. “We saw a big problem with unpaid salaries. There were also cases of physical and emotional abuse. But through this platform, contracts are signed and they have their rights protected.”
The impact of mobile adoption and penetration in East Africa
The growth in digital platforms correlates with the increase in access to mobile phones and the internet across East Africa. A report by the World Bank shows that sub-Saharan Africa will have 167 million new mobile subscribers by 2025, and half of these will originate from five key markets: Nigeria, Ethiopia, DRC, Tanzania and Kenya. GSMA reports that smartphone connections are expected to increase 2.7 times in East African countries by 2025, led by Rwanda and Tanzania.
The boom in mobile money has similarly fueled the growth of East Africa’s digital platforms.
“Traditionally, informal businesses have remained unbanked. But through mobile money, gig workers can now be banked formally. Customers can trust transactions, they are able to send and receive money, and do remote delivery,” says Jumane Mtambilike, CEO of Sahara Ventures. “People can access mobile loans and access capital in a way they couldn’t before.”
Although digital platforms are showing promise, the impact is so far modest, with the online gig economy accounting for a small portion of the overall gig economy. For example, in Kenya the total size of the online gig economy is $109 million, employing over 36,000 gig workers while the offline gig economy comprises 5.1 million workers accounting for $19.6 billion.
“There are some obvious challenges,” continues Mtambilike, “the biggest one being infrastructure and access to smartphones and internet, particularly in sub-urban and rural areas. There is also a skills gap in digital literacy. These challenges limit such digital platforms to grow to an exponential level.”
The cost and ease of doing business can also impact the growth of such platforms. “The Tanzanian government must build an enabling environment where such mobile apps and digital platforms can survive,” says Jones Mrusha, founder of Innovation Hub255. “Currently, tech startups are facing high tax and registration costs. ”
Some also warn that the nature of informality that exists with digital platforms can lead to exploitation of gig workers. A recent study by Rest of World showed that 40% of gig workers globally on platforms make less than minimum wage while precarious working conditions leave 60% of them wanting to quit within a year.
