The Emerging Gig Economy in Nigeria - Opportunities for Small Businesses

By Tunde WaleTemowo | 3 min read
15th October 2019
The Emerging Gig Economy in Nigeria - Opportunities for Small Businesses

The "Gig Economy", which is also referred to as the "sharing or platform economy" is an increasingly popular work arrangement in which workers are engaged as independent contractors as against the traditional full-time employments. "Gigs" as formal employment options are still relatively new in Nigeria. In colloquial parlance, they are seen as "side hustles" or "runs", suggesting an alternative, informal endeavour individuals engage in to supplement the income from their main jobs.

The Information and Communications Technology (ICT) sector seems to be the early mover in the emergence of gigs in the country. It is not unusual to see ICT professionals working independently for multiple companies at the same time. The relationship therefore moves from employer - employee, to contractor/ consultant - client. Ride-hailing companies have also provided an avenue for more Nigerians to be a part of the gig economy. Some fleet owners actually double as drivers in their spare time.   

A study done by McKinsey in 2016 showed that between 20% and 30% of the working-age population in the United States and the European Union were engaged in one form of independent work or the other. "Free agents", who deliberately engage in independent work and earn their primary income from it were said to have constituted 30% of the survey population. 40% of the surveyed population were classified as "casual earners", who engage in independent work as a supplement to their primary source of income. It is not unlikely that this is the category where most gig workers in Nigeria currently fall into.

A key feature of gigs, which makes it an attractive option for employers is the fact that they reduce the burden that comes with the provision of benefits such as pensions, paid leave, health insurance etc., which employers would typically have to provide for full-time employees. Although, as gigs get increasingly popular, arguments about the need to extend certain benefits to gig workers are gaining momentum.

As the Nigerian economy evolves, gigs will no doubt become an increasingly popular option for resourcing businesses. Some of the opportunities such arrangements provide for small business owners include:

  • Cost Savings: typically, the compensation of gig workers is negotiated based on the man-hours required from them. Since most gig workers work for more than one employer (client) per time, their schedules therefore become the major consideration in any form of engagement. All things being equal, the fees payable to a gig worker who will work for a limited time should typically be less than the wages of a full-time employee possessing the same level of skills and experience. Factoring in pensions and other statutory benefits provided for full-time employees, the cost savings on gig workers becomes more significant. In addition to the savings on compensation and benefits, remote work arrangements are more aligned with the gig economy, and this should result in further savings on rental charges and energy bills.  In addition to these savings, the responsibility for capacity-building in such relationships rests more on the gig worker, who in this case is the one offering his/her skills to multiple "buyers". Hence, learning & development costs for business owners are reduced.      
  • Better access to talents: gig arrangements will also allow small businesses to compete better in the marketplace for talents, as they will be able to utilize the skill set of some professionals they may typically not have been able to attract if they were to hire them full-time. The gig arrangement therefore allows them to pay for a portion of these professionals' time at rates they can more easily afford.
  • More efficient delivery: the competition for their time ideally makes gig workers more efficient in their delivery. With multiple client commitments, a gig worker truly understands the maxim "time is money" and would therefore be better motivated to deliver within agreed timelines. This is clearly an advantage for business owners as there is a better opportunity to earn value for money. 
  • Mutually agreed terms of disengagement: the terms of disengagement of gig workers are most often limited to the termination clauses in their contracts. Where fairly negotiated, such termination clauses would provide adequate protection for both the gig worker and the client (employer), with shorter notice periods and liabilities.

The evolving nature of work and emergence of new technologies and collaborative tools suggest that the traditional work arrangements we are familiar with, will continue to give way to disruptions like the gig economy. Resistance in this case will be futile, and business owners would do well to re-position and take advantage of the gig revolution. 

Tunde WaleTemowo
Tunde Wale-Temowo heads the Human Resources function of a specialized financial services institution in Nigeria. Prior to his current role, he had worked in the Management Consulting practice of one of the Big 4. He writes from Abuja.
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