Leveraging digital labour platforms to provide jobs for graduates in Nigeria

Nigeria faces a huge challenge of unemployment, with 27% of the population out of work. Their graduates are one of the hardest-hit groups: In 2019, 36.3% of graduates lacked formal employment in Nigeria, which is higher than the overall unemployment rate in South Africa (31%). This situation is so dire that the Nigerian Senate recently discussed declaring the unemployment of graduates a national emergency. Policymakers and regulators should prioritise regulating, creating and promoting work for these graduates. One of the promising new options they can look to is the work opportunities on digital labour platforms.

There has been remarkable growth in digital labour platforms in Nigeria: It has the second-highest number of digital labour platforms on the continent, after South Africa. The growth in new labour platforms offers diverse work opportunities to individuals as well as other benefits like flexible working hours, relatively low barriers to entry and access to a stable source of income.

The stable income and the potential to earn considerably higher monthly wages than they would earn for other entry-level work are driving graduates to look for work on digital labour platforms. For example, e-hailing drivers in Lagos earn, on average, USD410 a month, which is approximately five times the national minimum wage in Nigeria (USD78).

Figure 1: Average monthly earning per platform worker (US dollars – Lagos, Nigeria) | Source: insight2impact (2020)

Figure 1 shows that both freelance workers and e-hailing drivers in Lagos earn more than the minimum wage per month.

To encourage graduates to seek work on platforms, policymakers and regulators need to ensure that the challenges of high costs of work, risk of exploitation and lack of protections be dealt with.

There are high costs associated with working on most of these platforms, which can act as a barrier for prospective workers. E-hailing drivers in Nigeria, for instance, pay on average a 20% commission to the platform. This cost is on top of the already expensive cost of fuel, vehicle maintenance, and the cell phone data used to find passengers. Furthermore, even though platforms offer workers higher remuneration than the minimum wage, it often comes at a risk of exploitation. Nigerian labour regulation currently does not recognise platform workers as formal employees. This means that the platforms do not offer workers the necessary basic benefits and protections such as defined working hours, medical insurance and pension schemes, which leaves them susceptible to exploitation. To address the exploitation of workers, relevant stakeholders need to regulate digital labour platform work.  For instance, classifying platform workers as formal employees would give them rights, benefits and protections that they currently are not afforded.

Once actively regulating to protect workers, stakeholders should also promote labour platforms as a viable employment opportunity to create gainful jobs for unemployed graduates. One way this has already been done is by hosting workshops on the benefits of work on digital labour platforms. Promoting digital jobs is in line with Nigeria’s Economic Recovery and Growth Plan 2017-2020 (ERGP), which identifies the need for a digital-led strategy to make the Nigerian economy more competitive in the 21^st-century global economy.

Our early insights on e-hailing and other labour platform work in Nigeria show that digital labour platforms in Nigeria have the potential to create productive employment to address the challenge of unemployment among graduates. However, if stakeholders and regulators don’t promote the use of digital platforms and ensure decent work conditions, Nigeria’s graduates will keep struggling to find gainful employment. It is therefore crucial that policymakers formulate relevant and context-specific policies to promote and protect workers on platforms.

For more insights on how policymakers could craft these relevant policies, read our report on policy options for regulating platform work.