Touted as a revolutionary game-changer in the West, the surge in digital technologies masks a lacerating pattern of uneven development in the African continent.
It was sometime in early 2002, and a young South African tech entrepreneur named Gustav Vermaas was kicking around data from his payment processing company, Ventury, which provided an intermediary service between GS networks, banks and end consumers in Nigeria, Uganda and Tanzania.
Then he observed something unusual in Nigeria, where Ventury had a contract with mobile cellphone operator Celtel to transact top-ups on prepaid cellphones. Instead of averages running at 200 Naira (less than a dollar at the current exchange rate), individuals purchased top-ups worth 3,000 (about $2-3) to 5,000 Naira.
That may have seemed normal in a populous country where informal trading was everyone’s business. But it wasn’t the volume of airtime top-ups that piqued Vermaas’s interest; the value of airtime exchanging hands, based on a relatively few large top-ups, seemed to him an anomaly for another reason: “If there was such a large volume of top-ups, why was this not reflecting in the Ventury transaction data?” he recalled when I met him in 2006.
When Vermaas dug deeper, he found something quite astonishing. “Instead of purchasing a prepaid voucher from an accredited cellphone retail outlet, a small number of people would purchase large airtime top-ups on their phones,” he said. “So, you would go to Celtel and buy airtime worth 10,000 Naira, and then stand somewhere in a remote rural village, where the logistics of getting hard cards were a nightmare, and sell airtime worth, say, 200 Naira on to the next person in exchange for hard currency.”
Very soon, people in rural areas in just about every sub-Saharan African country were purchasing prepaid airtime from formal vendors in cities and selling it on to informal merchants in rural areas, who in turn either rented the use of mobile phones to rural dwellers or sold the airtime on to them at a profit.
In other words, airtime had become a thriving secondary market for informal vendors and rural consumers, along with another transactional means of exchanging goods and services – a “wallet in your phone” (or second currency) based on the stored value of prepaid vouchers.
It was an ingenious innovation, driven purely by pragmatism, until cellphone service providers and banks muscled onto the scene. MTN Nigeria announced its prepaid top-up cards in Nigeria and Britain, allowing Nigerians living in Britain to buy airtime for family members back home as a convenient alternative to remitting small amounts of money through banks. Other large network providers and cellphone companies, including Vodaphone and Safaricom in Kenya, followed suit.
Suddenly, banks, traditionally accustomed to the high-end formal market, woke up to the massive opportunity of a cash-based, largely unbanked African market, where 80% of trade was informal, to deploy mobile banking applications that extended the formal financial services system to the unbanked.
Predictably, banks argued that the benefits of scale helped. A year after I met Vermaas, in 2007, most banks operating in Africa were offering products for mobile banking in low-income markets. This meant they offered bankable services to the poor by leapfrogging a prior development stage of banking: building brick-and-mortar branches, installing ATMs and charging for point-of-service cash transactions.
These days, that’s par for the course, but when I met Vermaas in 2006, the innovation was a game-changer: “It created a whole new digital ecosystem where the possibilities for leapfrogging the economic divide in trade by breaking down infrastructural and geographical barriers were enormous,” he said.
However, another side to the mobile banking story was masked by the dissembling language of “inclusive development” – or what is referred to with gentle understatement as “digital leapfrogging” – that has been doing the rounds in the policy circuit since the 2008 global financial crisis. Barely discernible in those early days of the digital economy, mobile banking prefigured a pattern of uneven development: the appropriation of value by large technology and financial companies in developed countries and its social costs in developing ones.
In the ensuing decade, two moments suggested a tipping point had been reached. The 2008 global financial meltdown and the COVID-19 pandemic in 2020-21 were more than a decade apart, but they seemed to have a kinship. They betrayed a generalised systemic crisis that was becoming incompatible with the exigencies of trade and investment. Transfigured and ravaged by the impact of the 2008 crisis and pandemic, businesses, led by large technology monopolies, seemed to abandon traditional physical regimes of production that had been prevalent since the first industrial revolution in favour of remote, or “gig” work, and, over the past five years, the exponential growth of Artificial Intelligence (AI) based on new machine learning techniques and massive datasets in production.
As the economist and former finance minister of Greece, Yanis Varoufakis, observed in his book Techno Feudalism: What Killed Capitalism, “The financial bailouts by the US government of financial institutions were invested in tech monopolies that took off around 2015-16 and significantly accelerated during the 2020-21 pandemic.”
It all seemed like the received verities of the 2008 carnage were suddenly being swept away, only to be replaced by another dystopia. The new rules of the game during the pandemic – social distancing, remote work, controlled gatherings – disappeared in the shadows of an emergent class of precarious gig workers on the margins of the international digital division of labour between developed countries and developing economies on the African continent.
To understand this evolving social and economic dynamic, one must see why official talk of exponential growth and digital leapfrogging is so dissembling. It is to see past the policy abstractions of what World Economic Forum (WEF) head Klaus Schwab called the Fourth Industrial Revolution, to what the digital regime really means.
One of the most abiding myths that resurfaced during the COVID-19 pandemic has been the potential of digital production to grow at rates that benefit the poor. Yet the impact on developed and developing economies has been entangled, with cruel disappointment for the latter born of the growth of the former. The irony is those informal sector-driven innovations in Africa, like digital currency, driven by the basic instinct of informal communities to survive, became appropriated and monetised by large tech companies and banks in the West.
The impact of digital technology is hard to discern with accuracy, not least because it is still too small relative to the scale of the labour market to have had first-order impacts on employment patterns outside digital production itself. Nevertheless, there is evidence of Artificial Intelligence (AI) adoption by corporate establishments with a task structure suitable for AI use that suggests a developing pattern. Perhaps the most incredulous stretch of all the data was a series of calculations by the authors of a study titled ‘AI and Jobs: Evidence from vacancy rates’, in 2020. In a classical industrial economy, jobs, by definition, are simply the measure of tasks in an occupational structure.
To understand the impact of AI, the study used traditional occupational structures in 2010, before the digital surge, as a baseline measure of AI exposure and machine learning during 2014-18 to the occupational structure in select industries in the United States. Among the key findings was the strong association of AI exposure with both a significant decline in some of the traditional skills and the emergence of new skills, but with this difference: rather than broad occupational categories, AI has been decomposing traditional occupations and radically altering the task structure of jobs, displacing some human-performed jobs while simultaneously replacing new tasks accompanied by new skill demands.
This finding does not, of course, tell us how digitally-based tasks are distributed across the division of labour between developed and developing countries. Evidence from relatively developed economies in Africa like Ghana, Nigeria, and South Africa points to the COVID-19 pandemic as a moment when companies, in their attempts to adapt to the vicissitudes of the pandemic, began replacing traditional jobs with digital technology and slashing wages.
By focusing on micro-tasking data, the authors of a recent study on the digital production regime in Africa, ‘Digital Labour in Africa: A Status Report’, found that the acclaimed benefits of top-flight digital work in the US were in stark contrast with menial, unpaid labour in Africa.
The resulting imbalances were startling. Since the pandemic, a large labour precariat, or cheap gig labour engaged in menial tasks, has grown on the back of old structural barriers. Although microtasks tend to vary in complexity, the results of the study were robust across sectors: “Given Africa’s very high economic inequality in the labour market, with the relative shortage of high skills versus the oversupply of un- or semi-skilled labour, individual digital labour issues right across the spectrum are much more pronounced than in the developed world.”
Apart from skills, some of the root causes relate to a lack of reliable and affordable bandwidth in most, if not all, of Africa; limited access to the internet; limited infrastructure; low ICT literacies and education levels in science and technology; a lack of indigenous tech companies, and weak digital platform-based policy regimes. However, the study’s authors acknowledge as a limitation that very few “hard facts” are known from available data. Despite the difficulties of collecting and harmonising statistics in a diverse, under-resourced continent where national statistics offices are porous and often subject to political pressure, it should be possible to improve current statistics by focusing on qualitative data.
To fill the research gap, I interviewed a sample of South African gig workers in the media and advertising industry on the gig platform Upwork in mid-2023. By prioritising humanistic aspects such as to what extent the phenomenon of the gig economy, crowdsourcing and micro-tasking casualises labour, removes safety nets and traditional labour institutions, and allows for exploitation, the other side of the story came into focus.
When I asked a 55-year-old female participant who turned to Upwork for work during the COVID-19 pandemic how the digital work regime had impacted her livelihood, she shrugged. Her previous position as an advertising executive earning a top-flight income in a medium-scale firm was decomposed into menial tasks distributed to remote workers worldwide using AI as an enabler. “Most work orders on the platform reflect a division between semi-skilled labour in South Africa and highly skilled tech workers in the United States,” she said.
Other interviewees reported being alienated from the business process or unaware of the clients they were working for. Unlike their US counterparts, this information asymmetry means that the majority of previously skilled digital workers in South Africa are not only poorly paid but also deprived of further skills development and social mobility.
To put the potential macro impact in perspective, digital offshoring has grown exponentially, doubling to $4.4 billion between 2014 and 2016 and more than tripling by 2020. In theory, platform-mediated digital labour removes transaction costs, and therefore allows for the full value added by the work to be shared or “captured” by buyer and seller, even if “sharing” is not equitable due to power imbalances.
And therein lies the rub: the veneer of “sharing” masks large imbalances between Africa and the West. With almost proprietary regulatory, the digital revolution has been consistently portrayed by African statesmen since the pandemic as a potential pathway to socioeconomic development and unemployment alleviation on the continent. Beneath the veneer, however, are more desolate conclusions about the economic impact on livelihoods: the vast swathe of rural dwellers like the early pioneers of digital currency in Nigeria, where the swathe of informality had placed a heavy burden on their capacity to meet their needs, do not count.
The real storyline is that life since the COVID-19 moment has never been tougher. A new “cybercariat”, a term currently used to describe the new digital division of precarious labour, has arisen in little more than a decade. The semi-skilled and unskilled, especially, have been marooned. Many of those remaining have been put on part-time employment contracts.
These indelible images are not confounded in the post-pandemic era. In fact, much of what passes as “digital production” in Africa is not really digital. This is reflected in the meagre participation of African contractors on gig work platforms such as Upwork compared to emerging and developed economies. Many, if not most, jobs in the African IT and mobile telecoms sector alone, which makes up a not-insignificant share of the continent’s GDP, such as mobile money agents or mobile phone retailers, perform traditional, largely informal non-digital jobs but within a digital economy environment.
Based on these results, what are the prospects for the continent’s emerging cybercariat? If the phenomenon of precarity originated in the West in an attempt to normalise the discourse of remote work and shift its meaning towards a certain ambiguity, denouncing its consequences but also showing many of its possible outcomes, the potential impact on Africa is less ambiguous. Perhaps a confidential internal memo from the CEO of a large multinational gig work platform to staff in June last year is a harbinger of a jobless future: “Upwards of 60% of all work inputs and outputs must be AI-driven.”
Malcolm Ray is a research consultant and author of two scholarly books, titled Free Fall: Why South African Universities are in a Race against Time and The Tyranny of Growth: Why Capitalism has Triumphed in the West and Failed in Africa. Malcolm’s subject speciality is economic history. His writing deals directly with themes of power hierarchies, race and gender discrimination, and class inequality. His current work focuses on the shifting dynamics of urban livelihoods, economic growth and power relations that allow for the development of theorisations of the economy and polity more relevant to post-colonial contexts. Malcolm began his career as an anti-apartheid activist during the 1980s and early 90s. He practised journalism for more than a decade before becoming a financial magazine editor in the early 2000s. He was a Senior Fellow in the Faculty of Humanities at the University of Johannesburg and editor of four premier South African and pan-African business and finance magazines.
