Africa Trade Policy Brief- How Strategic is the Nigeria Gig Economy to Trade and the Economy?

Africa Trade Policy Brief- How Strategic is the Nigeria Gig Economy to Trade and the Economy?

1.0       Introduction

The gig economy, characterized by short-term independent working arrangements, is growing rapidly in Nigeria. The growth of the gig economy offers opportunities for employment, investment, trade, and economic growth. However, it also presents challenges for the country’s trade ecosystem, competition, and protection of gig workers from exploitation. One of the main concerns is the lack of adequate regulatory frameworks in developing countries like Nigeria. To tackle this issue, Africa International Trade and Commerce Research (AITCR) has partnered with GIZ to facilitate dialogue, knowledge exchange, and capacity building for the gig economy, trade, and investment. This collaboration brings together experts, policymakers, and private sector representatives to develop informed responses for policy and regulatory frameworks within the gig economy sector.

2.0       The Issue

The labour market worldwide has experienced a significant transformation in recent years due to advancement in technology and socioeconomic factors. The growth of digital labour platforms (DLPs) has increased the demand for gig workers, and investment in the DLP market. One country where this change is evident is Nigeria, where the gig economy has created new opportunities for employment, entrepreneurship, and economic growth. However, the gig economy has sparked discussions on its strategic value to commerce and the broader economy. Moreover, there is increased attention to the growth of home-grown platforms, and how the gig economy can be regulated without hindering innovation and investment, while protecting the gig workers. To understand the strategic implications of the Nigerian gig economy, including its effects on trade dynamics, employment patterns, and economic development, stakeholders are engaged in a dialogue. By studying the characteristics of this emerging sector, we can gain valuable insights into its potential impact on Nigeria’s economic growth.

3.0       The Discussion:

3.1       The regulatory framework and the functioning of the gig economy

The first speaker, Vellah Kedogo Kigwiru, brought a wealth of expertise as a Competition Law Consultant with GIZ. With a focus on the regulatory framework and the functioning of the gig economy, she shed light on the intricate interplay between legal regulations, market dynamics, and the livelihoods of gig workers. Through her presentation, the following valuable insights were highlighted:

1. Significant Shift in Labour Dynamics: The increasing demand for gig workers in developing countries like Nigeria reflects a notable change in labour dynamics driven by rising underemployment and unemployment rates. This shift highlights the growing reliance on flexible employment arrangements facilitated by the gig economy.
2. Emergence of Homegrown Platforms: The entry of international platforms into the Nigerian market has not only provided job opportunities but has also spurred the emergence of homegrown platforms. These local platforms now compete alongside their international counterparts, contributing to the diversification of the gig economy landscape in Nigeria.

• Persistent Challenges and Regulatory Considerations: Despite the opportunities presented by the gig economy, challenges such as a lack of regulatory framework, poor working conditions, and limited social protection for gig workers persist. Addressing these challenges is crucial to ensuring fair working conditions and keeping pace with technological advancements. Key regulatory issues include determining the employment status of gig workers, combating exploitation, and preventing anti-competitive conduct, which require careful consideration in Nigeria’s regulatory approach.

3.2       The impact of the gig economy on Nigeria’s trade and economic growth

The second speaker, Mr. Sand Mba Kalu, brought his wealth of experience as the Executive Director of Africa International Trade & Commerce Research. With a focus on “The impact of the gig economy on Nigeria’s trade and economic growth,” Mr. Kalu’s insights illuminated the multifaceted influence of the gig economy on Nigeria’s economic trajectory as follows:

1. Unlocking Economic Potential: Sand has observed that there is a thriving gig economy in Abuja, where people work for multiple clients across different sectors like e-commerce, delivery services, real estate, translation services, design, and content development. This gig economy generates significant revenue, and its growth has surpassed pre-COVID-19 levels. It is crucial for the Nigerian government to prioritize and regulate this sector to tap into its economic potential.
2. Transforming Employment Trends and Opportunities: Sand’s excerpt delves into how the gig economy is transforming Nigeria’s employment landscape and creating new opportunities for young Nigerians, providing them with flexibility and access to global markets. Despite facing challenges related to regulations and platforms, this new trend has encouraged self-employment and contract work, indicating a growing preference for virtual employment over traditional full-time jobs.

• Inadequate Legal Protection: Nigeria’s current labour laws do not adequately cover freelancers in the gig economy, leaving them vulnerable to exploitation and without necessary protections.

1. Need for Advocacy and Reform: Advocacy efforts are urgently needed to reform laws and protect the safety and rights of gig workers both in Nigeria and globally.
2. Business Benefits and Economic Growth: Despite legal shortcomings, the gig economy offers significant benefits to businesses in Nigeria, including cost reduction, flexible solutions, and rapid scalability. This contributes to overall economic growth by enabling businesses to adapt to changing demands more effectively.

3.3       Fair labour practices and employee status’ effects on Nigeria’s gig economy

The third distinguished speaker, Mr. Ejims Enwukwe, is a highly respected lecturer at the Rivers State University of Science and Technology. With his expertise in labour practices and employment law, he spoke on “Fair labour practices and employee status’ effects on Nigeria’s gig economy”, and highlighted the following:

1. Importance of Properly Classifying Gig Workers: Ejims Enwukwe stressed the significance of accurately categorizing gig workers to guarantee they are entitled to appropriate rights and benefits. This classification is crucial for ensuring fair labour practices within Nigeria’s gig economy.
2. Distinction Between Traditional Employees and Independent Contractors: Enwukwe discussed the differentiation between traditional employees and independent contractors, highlighting factors such as the degree of control exercised by employers over workers. This distinction is essential for determining the legal status and rights of gig workers.

• Examining Control Features and Flexibility in Gig Work: Using Uber as a case study, Enwukwe explored how control features within gig platforms may suggest employee status. However, he also acknowledged the importance of considering other factors like flexibility and autonomy inherent in gig work when assessing employment status.

4.0       Conclusion

The presentations by Vellah Kedogo Kigwiru, Sand Mba Kalu, and Ejims Enwukwe highlighted the diverse aspects of Nigeria’s gig economy and its impact on labor practices, economic growth, and regulations. Kigwiru’s insights emphasized the significant change in labor dynamics due to the gig economy, the emergence of local platforms, and persistent regulatory challenges. Kalu’s analysis focused on the transformational impact of the gig economy on employment trends and opportunities in Nigeria, the inadequacy of existing legal protections, and the need for advocacy and reform. Enwukwe’s examination delved into the importance of properly classifying gig workers, distinguishing between traditional employees and independent contractors, and considering control features and flexibility in gig work.

The presentations emphasized the need for regulatory frameworks to adapt to the evolving nature of work in Nigeria’s gig economy. To unlock the full potential of the gig economy, Nigeria must prioritize fair labour practices, guarantee legal protections for gig workers, and create a supportive environment for business growth. Policymakers, industry stakeholders, and academic experts must collaborate to shape a regulatory framework that fosters innovation, safeguards workers’ rights, and promotes sustainable economic growth in Nigeria.

5.0       Policy Recommendation

Based on the insights provided by the experts regarding the regulatory framework and the functioning of Nigeria’s gig economy, the following policy recommendations can be proposed:

1. Development of Comprehensive Regulatory Framework: The Nigerian government should prioritize the development of a comprehensive regulatory framework tailored to the unique characteristics of the gig economy. This framework should address key regulatory issues such as determining the employment status of gig workers, combating exploitation, and preventing anti-competitive conduct. It should also provide clear guidelines for platform operators and gig workers to ensure fair working conditions and compliance with labour laws.
2. Enhanced Social Protection Measures: To address the inadequate legal protection currently experienced by gig workers, the government should implement enhanced social protection measures. Additionally, mechanisms for resolving disputes and grievances should be established to safeguard the rights of gig workers and ensure they have avenues for seeking recourse in cases of exploitation or unfair treatment.
3. Strengthened Advocacy and Awareness Campaigns: There is a pressing need for advocacy efforts aimed at raising awareness about the rights and protections available to gig workers. This includes educating gig workers about their legal rights, responsibilities, and avenues for seeking redress. Civil society organizations, trade unions, and other stakeholders should collaborate to advocate for policy reforms that promote fair labour practices and protect the rights of gig workers.
4. Promotion of Responsible Business Practices: Businesses operating within the gig economy should be encouraged to adopt responsible business practices that prioritize the well-being and rights of gig workers. This could include implementing fair payment policies, providing adequate training and support, and fostering transparent communication between platform operators and gig workers. Government incentives or certification programs could be introduced to incentivize businesses to adhere to these standards.
5. Investment in Skills Development and Training: To maximize the economic potential of the gig economy and ensure sustainable growth, the government should invest in skills development and training programs tailored to the needs of gig workers. This could include providing access to vocational training, digital literacy programs, and entrepreneurship support services to equip gig workers with the skills and knowledge needed to thrive in the gig economy. By investing in human capital development, Nigeria can build a resilient and inclusive gig economy that benefits both workers and the broader economy.

6.0       About AITCR and GIZ

Africa International Trade and Commerce Research (AITCR) is an international trade consultancy firm that specializes in the African market, focusing on international trade, research, policy, and invest-in-Africa project. AITCR offers policy advisory, policy and trade research, trade facilitation, monitoring and evaluation, impact assessment, training and capacity building.

GIZ is a German federal enterprise in international cooperation for sustainable development. It provides services in the field of international development cooperation and international education work with the goal of improving the living conditions of people in low-and middle-income countries.