COVID-19 Exposes Risks and Opportunities in Kenya's Gig Economy

Like young people in many parts of the world, Kenya’s youth are gravitating toward the gig economy in the face of job shortages among traditional employers. Proponents of the gig economy argue that gig platforms can help workers to become more productive, smooth their incomes and obtain better labor and social protections than they might otherwise have access to in the informal economy. CGAP’s research in Kenya confirms that many gig workers value their work as an essential source of income for their families. Yet the ongoing COVID-19 (coronavirus) crisis makes plain the limitations of gig work. Many workers lack savings and have seen their incomes plummet, with platforms unable to offer enough support to get them through the crisis. According to the platforms, however, there may be opportunities to collaborate with donors or governments to get loans or other types of financial assistance to workers.

Gig workers report major disruptions to business, depleted savings

E-hailing driver in Kenya. Photo: Josephine Kibe
Shallet Mutua is an e-hailing driver in Kenya. Her income has plummeted during the coronavirus crisis. “I’m online and there is no request,” she told us. Photo: Josephine Kibe

As part of CGAP’s research on Africa’s nascent gig economy and what it means for financial inclusion, CGAP has been interviewing gig workers and platforms in Nairobi. Over the past few weeks, we reached out to understand the immediate impact of the COVID-19 crisis on their livelihoods, especially after the government imposed a number of restrictions on business and mobility in an effort to curb the disease, such as restricting the number of passengers in vehicles, closing restaurants and bars and imposing a curfew.

This impact has varied tremendously by sector. While platforms that facilitate logistics and movement of goods report a surge in business, those offering artisanal and personal services shared with us that business was down by as much as 90 percent.

The gig workers we spoke to in these sectors reported parallel drop-offs in their gigs.

Shallet Mutua, an e-hailing driver, told us: “I can stay the whole day without a request. Before I could get even 15 trips. Yesterday, I didn’t get any request and even now, I’m online and there is no request.”

In the face of this income shock, workers are resorting to various coping strategies. Few said they had savings, and many who do have savings have already depleted them. These reports echo the findings of a recent BFA survey in which median respondents indicated their household savings would be depleted in four weeks without income, with casual workers reporting some of the shortest financial runways.

To get by, many workers we spoke with reported borrowing from friends and family. Often, workers told us they were combining savings withdrawals with other strategies. Irene Awino, a produce vendor, said: “I am waiting for some chama [savings and loan group] money—I will send my kids to my rural home. My husband and I can survive on black tea.”

Belly Orondo, who sells artisanal goods through informal e-commerce, is also planning to lower food expenses. The week we spoke with her, she had made zero sales. Her Facebook pageviews have decreased from an average of 500 per week to fewer than 30. Her delivery costs have also increased, in some cases to half the price of the product.

“We have to cut down on costs. We have reduced the portion of food so we are assured of a meal,” she said.

Belly Orondo. Photo: Josephine Kibe
Belly Orondo owns an online shop that sells artisanal goods in Kenya. She has seen her sales and social media traffic drop to almost nothing. “We have reduced the portion of food so we are assured of a meal,” she said. Photo: Josepine Kibe

Those who do have work are trying to balance the risk of infection with the need for income. Similarly, the platforms that employ them report trying to balance the safety of their workers and communities with the need to survive as a business.

Gig platforms signal eagerness to route government payments or loans to workers

All the platforms we spoke with in Kenya were attempting to support workers by ensuring they had accurate information, safety training and personal protective equipment. One platform said that this has involved translating official bulletins and directives into simplified language workers can more easily understand. The platforms we spoke with had also adjusted their business processes to facilitate social distancing, such as by accepting photos of delivered goods instead of signatures.

At least one delivery platform is seeing an uptick in business and has started to hire inexperienced drivers in addition to experienced ones, a move that may offer opportunities to idle workers in other sectors. However, the lead time for this training and recruitment is six weeks after new workers are identified, much longer than the financial runway of most gig workers.

But clearly these pockets of strong demand will be insufficient to offset the overall weakening of the economy, and many gig workers will need income support to ride out the crisis. Several platforms expressed a desire to provide such support but lacked the funds given the sharp declines in their businesses. Even before the crisis, few would have had the cash to mimic Go-Jek in Indonesia or SweepSouth in South Africa, which have established income support funds for their partners and workers through related foundations.

What the platforms we spoke to do have are payments infrastructure and data on workers’ typical earnings that could be used to facilitate and calibrate payments to workers were there a means available to funnel assistance. They also noted that it would be straightforward — “trivial,” in one platform leader’s words — to use platform infrastructure to route cash transfers to workers, many of whom fall outside of existing government-to-person (G2P) cash transfer programs.

Alternatively, income support could be structured as a loan from governments or donors to be recovered through future gig earnings. The source of capital could route the funds directly to the platform or through a financial services provider.

“We would be in it body, heart, and soul,” said the leader of another platform, referring to both possible support arrangements.

The aim of CGAP’s gig economy initiative is to understand the role of financial services in helping workers maximize the benefits and minimize the risks of the gig economy. The current crisis has put into even starker relief how convenient, appropriately structured savings, loans and insurance products designed for gig workers could help stabilize livelihoods in the face of an economic shock. Unfortunately, few such solutions exist, and we will be redoubling our efforts to pilot such longer-term mitigants for the next crisis.

In the meantime, gig platforms may still be an innovative partner for those looking to channel immediate relief to hard-hit gig workers.

CGAP is working to collect and synthesize insights on low-income customers coping with COVID-19. How is the crisis impacting the ability of poor people to generate income, access essential services and protect their living standards? Are responses from governments, providers, NGOs, and funders making a difference for people living in poverty? Are these efforts reaching the people most at risk? Please share information and results from research with customers at to include it in our analysis.


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