Digital marketing: Understanding the gig economy

by Musa Hashim Kasibante
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The internet has created multiple new opportunities that never existed before. Gone are the days when people had to be in an office setting in order to work effectively.

This was further accelerated by the recent global COVID-19 pandemic that compelled companies to allow their workforce to work remotely from their homes.

This new digital trend has led to the growth of multiple online platforms such as zoom a video conferencing app and Google meet which have simplified distant communication among business associates and co-workers.

Ronald Kisitu, an IT graduate from Makerere University, spent many years trying to find employment in corporate spaces but consistently found no open opportunities.

After an extended period of job hunting, Kisitu spoke to a former class mate of his who was working from home using only his smartphone.

He soon learnt that all he really needed was a reliable internet connection and an internet connected device like a laptop, smartphone or tablet to get started.

With the advent of the internet, distance is no longer a cause for concern. 

“The only challenge that digital work presents, is relevant skills, which I think can also be acquired with continuous learning,” says Ronald Kisitu who is now earning on average Ugx 1.6 million per month while working from home.

Makerere University‘s deputy vice-chancellor, Dr Umar Kakumba who is in charge of academic affairs, notes that companies prefer to hire and work with versatile people who have a variety of skill-sets and are able to multitask.

He also adds that most employers want to see a record of continual learning achievement and a digital portfolio that demonstrates their competence, creativity and forward-thinking.

MasterCard recently conducted research on this tech topic of the gig economy focusing on East Africa, with Uganda, Kenya, Tanzania at the centre and their findings indicate that between 2017 and 2019, within a span of just 24 months 60% of the workers joined the gig economy. 

Kenya’s online gig economy, according to MasterCard employs 36,573 people and takes in USD 109 million.

However, it’s not all Rosey as 55% of the respondents said that, “not knowing when the next gig is contributes to instability.”

While 60% of the people living in the gig economy said, “fluctuation in income is a cause for frustration.”

In this world of constantly accelerating change, there is no better way to develop a 21st-century career than to harness the power of self-directed online learning. 

“When you learn independently and apply what you learn by building your creative projects, you thrive in this world of accelerating change,” says Dr Umar Kakumba of Makerere University.

The Mastercard white paper that was released recently titled The Gig Economy in East Africa: A Gateway to the Financial Mainstream reveals how gig work is driving economic growth by facilitating economic opportunities, improving livelihoods and acting as a buffer against unemployment, across the East African region

The concept of gig economy is broad in nature and this coverage includes; Uber drivers, Airbnb landlords, Upwork freelancers, online market sellers, on-call workers, contingent or part-time workers and skilled professionals who can be hired to perform a specific task a case in point is Rocket Health that specializes in telemedicine.

It must be noted that the majority or most common types of gig work in East Africa are artisanal and general service providers, such as domestic workers, Carpenters, welders and electricians.

But gigs, which are based on short-term temporary and flexible independent contractors, to reach its full potential, the digital divide must be bridged through connected devices that power this digital economy and add value, such as access to the market as well as finances or capital.

Uganda’s digital economy 

In Kampala, especially and in most parts of the country, gig work has become the norm and with the growth of digital technologies and connected devices, there is a real opportunity to help gig workers quickly connect to consumers to meet their demands for services and overcome economic struggles, such as inconsistent work, financial planning challenges and late payments.

The availability of the Internet, coupled with smartphone access are some of the key drivers of Uganda’s gig economy.

Another enabler of this gig concept is further aided by platforms or third-party intermediaries who have simplified connection of workers and customers such as WhatsApp, Facebook and Twitter plus LinkedIn.

“If each key player in the gig economy ecosystem comes together from the platform, to the mobile industry and the payments provider, we can ensure that the end-to-end journey of the gig worker is both smooth and profitable. We can also realise the true potential of inclusion and sustainable growth across the continent,” says Jorn Lambert, Mastercard’s chief digital officer.

Challenges within the gigs ecosystem

Although the digital economy has proven to be an enabler for inclusion and prosperity, gig platforms have proven to be a single touch-point for many services and opportunities which are utilised by gig workers.

The MasterCard report, shows that access to gig work opportunities is often not enough to keep a gig worker afloat.

Gig workers in Kenya said that the top three perks that they desire include; Loans, instant payments and benefits, such as insurance. 

In Kenya, about 45% of respondents said they are willing to pay between $1 (about sh3,600) and $5 (about sh18,000) a month for such benefits and services.

Over 80% of the respondents in the Mastercard research said instant payments when a job is completed is the most desired feature of a gig platform.

With growing reliance on the mobile money infrastructure, about two-thirds (62%) of respondents said they prefer to receive payment through mobile money because it is readily available, reliable, easy to manage, secure and convenient.

Internet access still a barrier

Although people have embraced it on a good scale, Internet access still faces some hurdles that users have to overcome to in order to realise the massive opportunity that the East Africa region stands to benefit from. 

 In comparison, Africa at large has much slower speed of internet data in contract toto other continents around the globe.

The dark side of traditional platforms is that they do not adequately serve the needs of the gig worker who is at risk from personal accident and injury, loss in revenue from any absence from work, incomplete delivery or payments and economic volatility.

But on the bright side, increasingly connected devices are bridging divides between urban and rural, rich and poor and connecting gig workers to peers, information, opportunities and services. 

Gig workers suggest that it is very critical to establish a digital identity for them across platforms.

Despite the availability of various gig platforms which are currently being utilised, it it is still difficult for a single platform to provide the value and benefits that worker require, such as easy collection of payments via digital channels and access to credit, training and insurance, particularly as they tend to move from one platform to another.

“A collaborative approach is called for to not just create jobs, but also a gig worker identity that provide benefits, ensuring decent working conditions and improved livelihoods,” said Ngozi Megwa, the senior vice-president digital partnerships of Mastercard MEA.

Taxes, still a thorn in the flesh

Paul Kibuuka who is the founding chairperson and executive director of the Taxation and Development Research Bureau (TDRB), says that many gig economy workers still find major challenges in fulfilling their tax obligations and reporting their actual income.

According to Kibuuka, the failure to fulfill these obligations, creates a tax gap between the amount that gig economy workers owe and the amount the Uganda Revenue Authority receives, which subsequently impacts negatively on the economic development of the country.

He notes that for purposes of tax, most workers within the gig economy are treated as sole proprietors, which isolates them from the way salaried employees are treated by tax authorities.

“Withholding and reporting obligations and deduction rules may discourage budding gig economy workers, who may be ignorant about or inexperienced in tax compliance,” he added.

According to Uganda’s employment and income tax laws, gig economy workers are treated as independent contractors when they carry out freelance tasks.

 However, the taxation challenges that these gig workers face differ from independent contractors.

The Income Tax Act Cap 340, and the Employment Act 2006 plus common law doctrines govern whether a worker is an ‘employee’ or ‘independent contractor’.

The categorisation of gig economy workers as independent contractors still presents a challenge in that is it proper or whether they should be treated as employees to make them qualify for employee benefits and other protections under the Employment Act.

According to Kibuuka these workers are subject to the same tax provisions under the Income Tax Act as independent contractors.

Gig workers are not liable to withholding from their income, unlike employees.

Fueling the gig ecosystem

The alluring appeal of self-employment coupled with the freedom to work at an individual pace are some of the catalysts that are fuelling the growth of gig work. 

The gig economy, is an inclusive space where people of different social and economic backgrounds can fit in and earn a living. 

Mastercard’s white paper on the gig economy also explores how digital inclusion is a prime enabler of the gig economy.

The availability easy access to connected devices, have already proven to be avenues of inclusion and development in Africa, these can help gig workers overcome some of the biggest challenges they face to date, which ultimately drives financial inclusion and leads to improved economic possibilities.

Based on research from in-depth face-to-face interviews with gig workers in the east African region, the paper shows that the gig economy is still nascent or in it’s infancy stage. 

Nevertheless, it continues to grow, with almost two-thirds (60%) of gig workers joining the economy between 2017 and 2019.

But, like most of the informal sector, uncertainty is the major concern, with the biggest challenges being income instability.

The downside to this is that the online gig economy the portion of gig work that is attained through digital platforms is a tiny fraction of the overall gig economy. 

In one single country – Kenya alone in 2019, research-based estimates, prior to the COVID-19 pandemic, put the size of the online gig economy at $109m (about sh386.5b), employing 36,573, while the offline gig economy comprises 5.1 million workers and accounts for $19.6b (about sh69.5 trillion).

Regardless of this fact, the Mastercard report discovered that almost 60% would prefer online gigs to offline work.

The logic behind this is that online gigs enable end-to-end management of projects. Another 35% which is a third of the respondents said finding gig work was easier on a platform while the minority, 30% said platforms made faster payments possible and helped them connect to other workers.

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