Discussing Ethiopia’s Burgeoning Gig Economy with the co-founder of GoodayOn

The concept of gig work has been around for centuries but has seen a resurgence in recent years due to economic changes, technological advancements, changing nature of jobs and the desire for greater work flexibility.

The internet has enabled the growth of global digital gig work platforms, such as Upwork and Freelancer, which have revolutionized the nature of gig work across the globe.

The benefits of the gig economy cannot be underestimated in African countries where the population is increasing and unemployment is a major concern. The gig economy contributes to job creation and youth employment, especially in the case of digital work. It also has the potential to provide income and employment opportunities for those with limited access to formal employment. For instance, Lynk, a gig work platform in Kenya launched in 2015, has enabled over 1,300 workers to access close to 23,000 jobs in four years.

The gig economy in Ethiopia is relatively nascent, with limited infrastructure and regulatory frameworks to support its growth. However, the potential for the gig economy to provide income and employment opportunities for Ethiopians is significant and also improving over the year with the growth of internet penetration and adoption of new models of work.

In recent years, the use of digital platforms to access work has grown in Ethiopia, with ride-hailing services like RIDE and Feres and goods delivery services like Deliver Addis, Zmall emerging as popular options. These platforms provide flexible work opportunities for drivers and delivery workers, who can work according to their schedules and receive payment on a per-trip basis.

Digital gig platforms mediating the delivery of services between gig workers and customers are a recent phenomenon in Ethiopia and their performance had been sluggish. Being dominated by ride-hailing and delivery services, gig platforms are increasingly being utilized and becoming a source of employment for many. In addition, they can be a way to create market linkages and generate income for specially trained groups. For instance, 150 women migrant returnees and potential migrants trained in childcare services by the international labor organization (ILO) and partners in 2022 were enrolled on GoodayOn, one of the digital gig platforms in Ethiopia.  

GoodayOn is among the main players in Ethiopia’s gig work scene, along with platforms such as TaskMoby, Gebeya Ethiopia, and Freelance Ethiopia.

In 2020, GoodayOn was launched as a platform with the intention of connecting customers with a greater variety of service providers, including those offering domestic work, tutoring, maintenance services, and other specialized services. In this article, Alem Abreha, Co-founder and CEO of GoodayOn discusses GoodayOn’s history, the gig work platform landscape in Ethiopia, and gig economy in general.

Who founded GoodayOn? How did it come about?

I am Alem Abreha, co-founder of GoodayOn alongside Tigist Afework. My expertise lies in technology, having worked in the tech industry in the US for almost 15 years. On the other hand, Tigist boasts a diverse work experience spanning 25 years in finance, management, and operations, working for the government, NGOs, banks, and foreign development programs.

My frequent travels between Addis and the US since late 2017 provided me with first-hand experience of the challenges of finding reliable help for domestic work and home repairs in Addis during my short stays. This inspired me to explore the feasibility of a platform or marketplace that could address this problem. After some research among family and friends, I realized the magnitude of the challenge and began my search for a co-founder to bring this idea to fruition. However, despite my best efforts, I was unable to find someone who matched my level of energy and commitment. Many of my acquaintances were impressed with the idea but were skeptical of its feasibility.

During this time, I frequently shared my ideas and plans with Tigist. Despite her decision to retire from her professional career, I was surprised to find her deeply inspired by the potential impact GoodayOn could have in creating employment opportunities in the informal sector that often lacked technology enablement and modernization. While she initially joined to support and help launch GoodayOn, it wasn’t long before she became a full-time co-founder. Her decades of experience in operation, finance, and management complement my technical background, making her an invaluable asset to the team.

When you launched your platform, you stated your intention to expand outside of Addis? How is that going?

In September 2020, GoodayOn was launched in the midst of the COVID pandemic. Originally, we planned to take a measured approach to our operations, recognizing the need for extensive discovery and learning in an uncharted sector with no pre-existing marketplace to study. However, our traffic rapidly surged after launch, forcing us to hastily incorporate our company and expand our team to handle the growing user base and provide operational support.

As a result, we revisited our objectives and recalibrated our direction towards scaling up our operations to serve the 12 largest cities in Ethiopia within a three-year timeframe. While progress has been made, two and a half years later, we remain solely based in Addis Ababa, recognizing the considerable time and effort required to establish a physical presence in other locations.

During this time, we have gained invaluable knowledge and insights about the informal sector, which has proven to be a highly volatile and fluid environment, requiring constant engagement with our workforce pool. We have discovered that many of our gig workers do not own smartphones (80%), making it challenging to track their availability and location. As such, we have had to develop operational tools and processes to ensure accurate tracking of our gig workers, resulting in iterative changes to our platform to improve customer experience and scalability.

While we prioritize building a strong customer base in Addis Ababa, we have also observed organic traction in secondary cities, which will inform our expansion plans. Our focus remains on maturing our operational capability before expanding our services to other locations, as we recognize the value of Addis Ababa as the largest urban market in East Africa, larger than most of the other secondary cities in Ethiopia combined.

We are confident that in the next year or two, we will have a physical presence in three to five secondary cities.

How are you currently generating revenue?  

 For the majority of the last two years, our gig marketplace services were provided for free as we focused on building our platform and expanding our user base. In early 2022, we began testing paid services, initially targeting business and corporate customers. As the year progressed, we gradually expanded our paid services to include selected individual gigs and eventually launched paid services across all channels as of January 12, 2023.

In hindsight, I acknowledge that it may not have been the best decision to offer free services for such an extended period. We should have started generating revenue earlier. In addition to the missed financial opportunity, providing free services may have inadvertently conveyed the message that we were a charity organization rather than a business. It has taken considerable effort this quarter to correct this perception following the launch of our paid service, GoodayOn Premium.

It would be remiss if I did not mention the financial support we received from the LIWAY program. We successfully completed a one-year project with the program and received co-investment (matching) grant funding.

 What business license category covers such matching platform business? 

The current trade/business registration/licensing laws/regulations do not have a clear designation for a matching platform, but I have heard there are some recent developments around new sectors introduced to accommodate digital platforms by the Trade Ministry.

We are currently operating with a digital marketing business license and abide by woreda trade office guidelines since there is no clear classification for our business. It’s a grey area where regulations are mostly lacking, and it sometimes causes friction with the lower-level government offices whenever we apply for permits that we need for our routine operations.

How does the absence of a clear regulation affect your business? Are there any ongoing policy discussions in to address this issue?

It is evident that the absence of licensing and operational guidelines places us in uncharted territory. This presents both a challenge and an opportunity. It is an exciting prospect because it affords us the freedom to establish a precedent for the operation of our sector, and allows us greater flexibility to innovate in the face of obstacles and challenges. However, it also requires us to bear the burden of significant operational and marketing costs as we navigate this relatively new sector. Our efforts must extend beyond the mere creation of a marketplace, as we must educate our target demographic on both the supply and demand sides in order to disrupt the traditional “delala“(broker) dominated informal sector. The absence of licensing and operational guidelines also indicates a lack of recognition and endorsement by the government.

What are the existing challenges in your operation? 

I would say that while challenges are present in many aspects of our operations, it is important to identify the most critical ones. One of the most painful challenges we face is the lack of basic infrastructure, particularly the unreliable internet connection, which has a significant impact on our daily operations. Our call center phone lines are also very unreliable that we lose a significant portion of our inbound traffic.

Another challenge we face is the low adoption rate of digital payment systems in Ethiopia. Although we have integrated our mobile app with a payment gateway that provides access to various payment systems, we have found that less than 1% of our revenue comes from these systems. Instead, more than 99% of our revenue comes from payments made through bank account transfers.

We have also observed that customers prefer to call our call center and make payments through bank account transfers rather than using the mobile app to connect with gig workers and make payments through the app. However, we are encouraged by the growing popularity of bank account to bank account transfer as a form of payment since the launch of GoodayOn premium.

Is there any regulation/partnership/support you receive from the government? If not, what kind of support and regulatory framework would you say you need to succeed?  

In 2020 and 2021, GoodayOn actively participated in the creation of a partnership between the government (specifically, the Jobs Creation Commission at the time) and private sector actors to develop a baseline framework and policy inputs for our sector. We were part of a task force called FROG (Freelance Outsourcing and Gigs) and contributed valuable inputs and recommendations to shape policy and regulation. However, we have yet to see any tangible outcomes from our efforts, and there has been no valuable engagement in the last year.

Despite the lack of partnership or support from the government, we remain undeterred in our mission. We do not expect the government to proactively take action, but rather we continue to seek out opportunities and showcase the value and impact we are creating. We are confident that sooner or later, the government will recognize our contributions and provide a more conducive environment for our sector to thrive.

Seeing where Ethiopia’s economy is heading, what opportunities do you see in running a gig work matching platform?

In my opinion, we have barely scratched the surface of the potential of the gig economy in the informal sector. The informal sector is estimated to be approximately one-third of the national GDP in size, yet it has been largely overlooked for a significant period of time, and its true economic value is not well understood, with only fragmented studies and proxies providing estimates. Therefore, I can confidently say that the gig economy in Ethiopia is a significant untapped resource lying dormant in the shadows. Platforms like ours are poised to shed light on this hidden gem, and when this sleeping giant awakens, the informal sector will be disrupted, unlocking a vast economic potential that will have far-reaching impacts across numerous sectors, such as domestic help, construction, health, hospitality, agriculture, and technology, among others.

It’s clear that the country is not able to keep up with the need for employment/ income generation. Do you think working on developing the gig economy can be a solution?

The gig economy is not a silver bullet to fix all of the unemployment issues in the country, but it’s one of the avenues to unlock employment opportunities that are otherwise lost. In addition to unemployment, in Ethiopia, there is a big issue of under-employment (low salary). The gig economy can be a great tool to create frequent, task-based employment opportunities to help address both problems. The gig economy will create values in countries like Ethiopia at a much higher degree when compared to developed countries, this is because there is already a strong and huge informal sector in developing countries. The practice of hiring gig workers for day-to-day activities and help around home is already ingrained in the culture, the gig economy is here just to bring the informal sector to light and unlock its true economic value. 

Do you see resistance from customers in hiring people they have never met?  

Yes, especially at the beginning, this was a major headache for us. The irony is that people don’t ask this question when they hire someone from the street corners where gig workers usually hang out looking for opportunities. One of the great things we did early on to tackle this issue is our focus on our know-your-customer (KYC) procedure and the business decision we made to allow only verified gig workers in our marketplace. Our users, whether employers or gig workers are authenticated on the platform using their phone numbers. In addition to this, we demand our users to use their actual name and profile picture on the platform, this is a business decision that will drive away some users who are not willing to provide their true identity when they join our platform.

In addition to this, we have implemented a new onboarding process in 2023 where gig workers are required to come in person for an onboarding orientation session, KYC data collection and document verification. Gig workers are allowed to join the GoodayOn marketplace only after they complete this orientation session and provide the required documents in person. This new strict onboarding policy, at the cost of reducing the growth rate of our workforce pool, has enabled us to improve the quality and trustworthiness of our gig workers.

GoodayOn is also in talks with financial institutions to implement a financial guarantee for gig workers. You can think of this as insurance (financial guarantee) when you hire gig workers, this is an effort to replace personal guarantor requirements in the traditional form of the informal sector.

Through a combination of KYC data collection, document and ID verification and financial guarantee to back gig workers, we strongly believe we are going to improve trust issues and over time we believe the concern of trusting GoodayOn and hiring gig workers from GoodayOn will steadily fade away.

How important is providing training to gig workers in ensuring quality services is delivered to customers?

Skill training can be a great input to improve the skills of gig workers and as a result, ensure the quality of service delivered; there is no question about it. But the issue is the quality of training. By their nature, most blue-collar gigs require technical skills that are required for great workmanship. We have come to learn there are very few TVET institutions in Addis Ababa where practical training with real world simulation is given.  

Another important component of training we see is, soft skills training. We have common issues such as gig workers not showing up on time for appointments, asking for exaggerated payment or sending their friends after accepting a job call. Based on aggregated feedback we collected from employers, we have created ongoing soft skills training that is embedded to our gig worker engagement workflows, where we provide feedback-oriented tips and trainings to iteratively help our gig workers improve on their delivery skills. We have found this to be more cost-effective and impactful in improving the quality of gig workers, rather than providing hours long trainings inside halls that are not practical and often forgotten right away.

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