Down for the Ride 🏍

Welcome to Prox Weekly #7!

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This is Part 2 of The Gig Dream Series. In Part 1 of The Gig Dream, we explored how the gig economy could be an answer to Africa’s mass unemployment problem.

On the outset, it seems like a no brainer - gig work is easy to get started in, and is flexible for workers.

But, when I dug a bit deeper, the realities of gig work in Africa weren’t all easy riding.

In this edition, we will explore how much a gig worker really makes in Africa, and how startups are making gig work accessible and well paid for gig workers.

Gig Realities

Last week I spoke to Kayode Adeyinka about what realities are like for Gig Platforms and Gig workers.

Kayode was Head of Growth, and later Country Manager of Jumia in Ghana.

Jumia is Africa’s biggest e-commerce company - like Amazon, but for Africa.

A bit of context on the size of Jumia below.

Kayode’s biggest challenge launching Jumia in Ghana? Finding enough drivers to deliver products.

Now, that’s a bit surprising.

On a continent with high unemployment but highly ambitious young population, there is a shortage of workers? 🤷‍♂️

Kayode explained that there is demand for gig work, but the starting costs are too high.

The population who want to do gig work live on $2-$4 a day. They want work, but they cant get started.

In the US or Australia - where most people own a car or can rent one - this isn’t an option for most in Africa.

In many cases, they have no access to banks and cant get a loan for a vehicle.

But sometimes drivers can get lucky.

They may have a family member or friend who can buy a vehicle and rent it to them. This is how most get started in gig work.

But even when gig drivers can figure out how to rent a bike, the Gig Realities aren’t all that they shape up to be.

Gig nightmare? 😱

Let’s say you live in Ghana, and want to get into gig work.

You’re lucky, and have a well-off cousin called Travis.

You ask him to buy you a motorcycle so that you can do delivery work on gig platforms, like Glovo and Jumia Food.

He agrees, but you’re expected to rent the bike for as long as you use it.

Let’s do some quick math and break down the costs.

On average, drivers renting bikes in Ghana will earn $150 USD a month.

• 30% of their earnings goes to weekly repayments.

• 30% goes to running costs - like platform fees, fuel, insurance and cleaning.

• The rest (40%) goes to you.

In Ghana, the minimum wage is $45 USD per month.

As a gig worker you are netting just above minimum wage. You’re probably living week to week.

To get enough money to live and save, you have to drive non-stop.

And you have to be frugal with what you earn - no KitKats at the end of the work day.

Now, imagine that one day, you drop your phone while riding and it breaks. There goes your monthly income.

So, even when you have a helpful cousin like Travis lending you a bike, gig work barely provides for your needs.

And it’s hard work to make a meaningful living.

Gig workers don’t just need access to vehicles..

Gig Workers need partners

After working at Jumia, Kayode bumped into one of his drivers, Sam.

Sam needed a loan to buy a bike.

Kayode agreed to buy him a bike, but Sam would pay him back weekly and over time, pay back the cost of the bike.

Week 1 and Week 2 were great. But in Week 3, Kayode didn’t get paid.

It turned out that Sam had damaged his phone, and couldn’t complete rides.

He needed a new phone to get back into riding.

A bit skeptical, Kayode went ahead and bought him a phone.

From there onward, Sam always made his repayments on time. And soon after, he had referred some friends to Kayode, who also needed a bike to start working.

Before he knew it, Kayode had a small business - leasing to own.

Kayode’s main learning: there are a lot of things that can go wrong as a mobility driver.

Like dropping your phone, or having your vehicle t-boned.

This is risky for drivers living week to week, and can put them out of work.

And most gig workers haven’t had roles like this in the past. They need support - not just financially, but with training and guidance.

On this learning, Kayode then launched Gigmile - to be a partner with gig workers at all stages of their gig journey.

Down for the ride 😎

This is the lease-to-own model. And it’s hardly new.

Companies like Asaak, Moove and Watu use the lease to own model in Africa.

We’ve seen this in other emerging markets like Latin America, with startups like Kovi and Mottu using similar models.

What Gigmile does differently is partner with their users before they have a job through to their next career - whether thats within or outside of gig work.

Gigmile runs youth empowerment programs alongside the Ghanian Government for underserved and unemployed young people.

Their users start off unemployed or earning less than minimum wage.

Gigmile helps them track their aspirations and goals. These are usually outside of gig work, and have more to do with starting their own business.

They then help those who are eligible to become gig workers and start earning.

Remember - gig work is transitory. Most drivers don’t want to drive forever.

Gigmile helps them set financial goals, access insurance and help them save to reach these goals.

Gigmile helps their riders get consistent gig work through partnerships with gig platforms, and they help with maintenance, training and fuel advances.

Gigmile isn’t just vehicle leasing - it’s becoming a life-long partner with their users.

Gig Options 💰

Let’s do some more quick math.

Drivers on Gigmile earn between $250-400 per month, and pay off their motorcycles within 12 months.

When drivers own their own bike, thats 70% of income in their pockets.

Suddenly, they have money to save for other goals.

And it gets more exciting.

Now that you own an asset - like a motorcycle - you can lease it to others who want to get into gig work but cant afford a vehicle.

This is a path out of poverty, and into financial independence.

So - Gig Dream or Gig Nightmare?

The gig economy can trap workers and make it hard for them to earn and save effectively.

But in Africa, the influx of gig platforms presents an opportunity.

Getting started in the gig economy is hard and not accessible to people who want to do gig work.

But by owning a vehicle, workers can save more, provide for themselves and reach their financial goals.

Mobility fintech startups like Gigmile, are using Lease-to-own models that help drivers eventually own their vehicles.

These startups are turning the promise of gig work into an opportunity for Africa’s young unemployed population.

And if they are successful, we will see the gig economy become rails for Africa’s young population to get employed and deliver better outcomes for themselves, their families and their futures.

What do you think of the gig economy’s potential in Africa?

Let me know on this LinkedIn post here.

We invested in Gigmile’s Pre-Seed Round, which they are still raising. Reach out if you’re interested in learning more.

What do you think of the Gig Economy’s potential in Africa? Let me know on LinkedIn here, or on Twitter below.

Know someone else who would find this interesting? Please share it over 🙏🏾

And that’s all for this week. Catch you next week for a run down on startup funding in July!

Heya! 👋🏾 I’m Caleb

I’m a writer, investor and founder having fun building in Africa. I’m bullish on Africa becoming the world’s next tech frontier.

Follow for more on Africa’s booming tech scene on LinkedIn + Twitter.

Thanks for reading!