Formal Employment does not Guarantee Financial Equality in Africa: Exploring the Gig Economy.
The formal employment sector in Africa has often been touted as a solution to the continent’s economic woes. However, the reality is that formal employment alone is not a guaranteed path to financial equality in Africa. The gig economy, on the other hand, presents an alternative model that could help address the inequality gap. In this article, we explore the gig economy in Ghana and Nigeria and discuss its potential to promote financial equality.
Formal employment in Africa is characterized by low wages, job insecurity, and limited benefits (Owuor, 2020). This is particularly true in Ghana and Nigeria, where formal jobs are scarce, and the majority of the population relies on informal employment. According to the International Labour Organization (ILO), over 85% of employment in Nigeria and Ghana is informal (ILO, 2021). Informal employment often provides little job security and few opportunities for career advancement, making it difficult for workers to build wealth and attain financial stability.
The gig economy, however, presents an opportunity for workers to earn a living while maintaining flexibility and control over their work. The gig economy is a labor market characterized by short-term contracts or freelance work, as opposed to permanent jobs. Examples of gig economy jobs include ride-sharing, food delivery, online freelancing, and other on-demand services. In Africa, the gig economy is rapidly growing, and platforms such as Uber, Bolt, and Jumia are becoming increasingly popular.
One of the benefits of the gig economy is that it allows workers to earn income without the constraints of formal employment. This can be particularly advantageous for marginalized groups, such as women and youth, who often face discrimination in formal employment. In Ghana and Nigeria, the gig economy is enabling more women to enter the workforce, providing them with financial independence and empowerment (African Development Bank, 2018).
Another benefit of the gig economy is that it allows workers to earn more money than they would in formal employment. For example, a study conducted by Jumia, a leading e-commerce platform in Africa, found that their delivery partners in Nigeria earn an average of $10 per hour, which is significantly higher than the minimum wage (Jumia, 2021). Similarly, drivers on ride-sharing platforms such as Uber and Bolt can earn up to $1,000 per month, which is higher than what many formal sector workers earn (Okoye, 2021).
Despite the benefits of the gig economy, there are also challenges that need to be addressed. For example, gig economy workers often lack social protections such as health insurance, paid sick leave, and retirement benefits. This can leave them vulnerable to financial shocks and can make it difficult for them to save for the future. In addition, there is a need for greater regulation of the gig economy to ensure that workers are not exploited and that their rights are protected.
In conclusion, formal employment alone is not a guaranteed path to financial equality in Africa. The gig economy presents an alternative model that could help address the inequality gap. The gig economy provides opportunities for workers to earn income without the constraints of formal employment, and it allows them to work on their terms. However, it is characterized by low pay, poor working conditions, and limited opportunities for career advancement. Fintech companies such as Gigmile Technologies position themselves to support the gig economy in Africa and that approach may be the best solution for achieving financial equality in Africa.
