My column this week is the third part of my recent paper for the NTU-SBF Centre for African Studies at Nanyang Business School, Singapore, where I am a research fellow. References are in the original article.
E-Commerce to boost growth in retail, transport, & hospitality industries
Online marketplaces are digital platforms that match suppliers of goods and services with customers. They are generally classified into four types: business-to-consumer (B2C), business-to-business (B2B), consumer-to-consumer (C2C), and consumer-to-business (C2B).
Jumia, an Africa-focused online retail marketplace is an example of a B2C and B2B platform. Uber, an online ride-hailing, ride-sharing and food delivery marketplace, and Airbnb, an online hospitality brokerage marketplace, are C2C platforms. Thundafund, a South African online crowdfunding marketplace for entrepreneurs is an example of a C2B platform. These few examples of online marketplaces and others are disrupting the retail, transportation and banking industries on the continent.
And they are doing so for the better. Not only are they rendering legacy services in these sectors more efficiently, there are also tapping hitherto sub-optimal opportunities in profitable ways and creating new jobs in the process. Some are peculiarly African. In Angola, there is a service for the online purchase and delivery of goats, for instance.
Table 5: New e-Commerce jobs by 2025
Sectors Jobs (millions)
Consumer goods 1.7
Mobility 0.5
Travel & hospitality 0.3
Other categories 0.4
Source: BCG1
Commerce on these digital platforms, generally termed “electronic commerce” or “e-commerce”, could create as much as 3 million jobs by 2025. That is one new job opportunity for every 15 unemployed African youth. Only 100,000 Africans would be directly employed by these online marketplaces, though. So, the real effect would be in the increased economic activities and efficiencies they instigate in other sectors.
These are the creation of new products, reduction or elimination of supply chain bottlenecks, and the expansion of customer bases. As shown in Table 5, 1.7 million (60 percent) of these new jobs would be in the consumer goods sector, 500,000 in mobility services, and 300,000 in the travel & hospitality industry. As some jobs would also be lost in the process, these are clearly net estimates.
The African opportunity is underpinned by the still early lifecycle stages of its economic sectors. In retail, for instance, there are 15 formal stores for every 1 million Africans. (Compare with 930 per million Americans, 568 per million Europeans and 136 per 1 million Latin Americans.) Online retail marketplaces could easily increase the coverage at less cost and without the need for as much brick-and-mortar. Additionally, because almost 40 percent of sub-Saharan African economy is informal, there is an ample portion of the labour force that is not unionised or organised. So they are more amenable to new employment norms.
Of course, this varies by country and industry. For example, established taxi services are unionised and well-organised in most African countries. So naturally, there has been resistance to digital taxi services, resulting in bans or partial bans, in at least seven African countries. The forms of this resistance in the various African countries are noteworthy. It is mild and increasingly collaborative in Nigeria. In South Africa, however, the resistance is strong and sometimes violent. In other words, the expected jobs boost from e-Commerce would likely vary from country to country. Thus, culture and attitudes in each country are huge factors.
Prospects of gig economy are huge but mixed
Online gig work is short-term paid labour via online or digital employment platforms. The resultant ecosystem is referred to variously as the “on-demand economy”, “gig economy”, “sharing economy”, or “platform economy”. Online gig work is enabling Africans participate in the global economy, with the resultant effects of increased incomes and poverty alleviation.
Still, there are reservations. Wages are relatively lower, working hours are longer, and labour protections are weak or non-existent. Because of the enormity of the unemployment problem in most African countries, these are not likely to be much of a concern for their eager labour force. The gig economy would be crucial to creating the more than 18 million new jobs Africa needs per year for its expected 1.3 billion working population by 2050.
Digital labour takes various forms. One example is online freelance contracting work like web development, book editing, and reporting. Crowdsourcing is another example, whereby firms get external personnel to do certain jobs for them via the internet. Freelance contracting and crowdsourcing differ in the number of contractors involved. A firm could hire just one freelance contractor. But it would only be deemed to be crowdsourcing if the contractors are more than one. Both are outsourcing in any case. Crowdsourcing can be classified into the following forms: “intelligence, crowd content creation, crowd voting, funding and microwork.” Major crowdsourcing platforms are Amazon Mechanical Turk, CrowdFlower and Microworkers. Crowdsourcing tasks include online customer service, data processing, content review and tagging.
Table 6: 10 highest paying gig economy jobs of 2018
Job Rate per hour
Artificial intelligence/
Deep learning $115.1
Blockchain architecture $87.1
Robotics $77.5
Ethical hacking $66.3
Cryptocurrency $65.3
Amazon web services
Lambda coding $51.0
Virtual reality $50.0
React.JS developers $40.8
Final Cut pro editors $37.1
Instagram marketing $31.2
Source: Investec
There are 10-12 million new African workers every year. Only about 30-40 percent would get a job. That 77 percent of African workers in non-agricultural employment work in the informal sector lends itself to the burgeoning African digital on-demand or gig economy. And even though gig economy jobs are still considered vulnerable employment, being as they lack labour protections, they are relatively better organised and formalised. In any case, there are increasing calls for a fit-for-purpose “social contract” to address some of the current shortcomings of digital employment.
As more jobs become on-demand, a lot is also increasingly technology-based in tandem. Consequently, job profiles are constantly changing. Unsurprisingly, many new vacancies go unfilled for lack of skills. While the disruption is global, it is happening in African countries as well. The extent to which African jobs rely on internet technologies is rising but varies from country to country. For instance, 18 percent of formal jobs in Kenya have high ICT intensity, while only 7 percent do in Ghana.
While much of the current ICT intensive jobs in Africa are low-skilled, research shows greater benefits are to be garnered from advanced ones in digital design and engineering. African countries have to start positioning their labour forces for these opportunities. In this regard, curricula would have to be revamped. And greater emphasis would need to be placed on science, technology, engineering and mathematics (STEM) education.
Rafiq Raji
