By Zelalem Tamir
The gig economy has been a global phenomenon in recent years and has shown tremendous growth potential in Ethiopia. It refers to a labor market characterized by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs. The gig economy creates opportunities for individuals to work independently, set their own schedules, and earn a flexible income. In Ethiopia, the gig economy can be a game-changer for the country's economic growth, and the government should support it with policies that encourage the growth of gig workers and startups.
Firstly, the gig economy has the potential to create employment opportunities for millions of Ethiopians, especially the youth. According to the World Bank, Ethiopia has one of the youngest populations globally, with over 60% of its population under the age of 25. Unfortunately, the country's formal job market cannot absorb the increasing number of job seekers. The gig economy presents tremendous opportunities to change this narrative by creating self-employment opportunities for the youth. For instance, the rise of ride-sharing services like Uber and Bolt has created opportunities for drivers to work independently and earn a living. The government should support these startups to create an enabling environment for gig workers, leading to more job opportunities for the youth.
Secondly, the gig economy can contribute to the country's economic growth by increasing productivity and competitiveness. Startups in the gig economy are typically lean and agile, allowing them to operate with minimal overhead costs and without the constraints of traditional business models. This makes them more efficient and productive, leading to increased competitiveness and profitability. In Ethiopia, there has been a significant increase in the number of startups in the gig economy, such as delivery services, freelance platforms, and ride-sharing services. By supporting these startups, the government can create a more competitive and productive business environment that can contribute to the country's economic growth.
Thirdly, the gig economy can lead to more tax revenue for the government. In Ethiopia, the informal sector accounts for a significant percentage of the country's economy, and it is challenging for the government to collect taxes from this sector. However, the gig economy is a more formal sector, and gig workers are typically registered with the platforms they work for, making it easier for the government to collect taxes. By supporting the gig economy, the government can increase its tax revenue, leading to more resources for social services and infrastructure development.
Fourthly, the gig economy can lead to the development of new skills and knowledge. Gig workers often work on short-term projects, which require them to acquire new skills and knowledge to complete the tasks. This leads to the development of a more skilled workforce that can contribute to the country's economic growth. For instance, the rise of e-commerce platforms has created opportunities for Ethiopians to develop new skills in logistics, marketing, and customer service. The government can support the growth of the gig economy by investing in training and development programs that can help gig workers acquire new skills and knowledge.
Finally, the gig economy can lead to the development of a more inclusive economy. Traditionally, the formal job market in Ethiopia has been exclusive, with limited opportunities for women, people with disabilities, and marginalized communities. However, the gig economy presents opportunities for these groups to participate in the labor market. For instance, women can work as freelance writers, graphic designers, or virtual assistants, while people with disabilities can work from home as customer service representatives or social media managers. By supporting the gig economy, the government can create a more inclusive economy that benefits all Ethiopians.
In conclusion, the gig economy presents significant opportunities for Ethiopia's economic growth, and the government should support it with policies that encourage the growth of gig workers and startups. By doing so, the government can create more job opportunities, increase productivity and competitiveness, increase tax revenue, develop new skills and knowledge, and create a more inclusive economy.
It is thus important that the government should prioritize the approval of the startup code to create an enabling environment for gig workers and startups in Ethiopia.
The startup code will make it easier for startups and gig workers to access financing. The code will provide clear guidelines and regulations for investors, making it easier for them to invest in startups. This will increase the availability of funding for startups and gig workers, leading to more growth and job creation.
It is also essential for supporting the development of the digital economy in Ethiopia. The gig economy is heavily reliant on digital platforms, and the startup code will provide a legal and regulatory framework for the operation of these platforms. This will create an enabling environment for the development of the digital economy, which will drive economic growth and job creation.
Zelalem Tamir is an economist. He can be reached at [email protected]
