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Prioritising youth and women: How the digital economy can protect South Africa’s most precarious

The economic impact of COVID-19 disproportionately impacted South Africa’s women and youth. The digital economy offers the chance to protect them from future shocks.

Gugu Resha

Machel-Mandela Fellow

News · Published 19 May 2021

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Women and youth are constantly referred to as South Africa’s saving in terms of potential for economic growth and broadening economic participation. However, they have historically faced higher vulnerabilities in the labour market than older and male counterparts, and now numerous studies of COVID-19’s impact on employment and household income show that women and the youth have been the hardest hit.

The adoption of remote, virtual work and the digitalisation of certain types of work has offered protection for many people’s jobs and consequently, their livelihoods during the pandemic. However, this has not been the case for many young people (aged 18-24), who were more likely to lose their jobs than any other age group, and women, who were more represented in industries that were hardest hit by the pandemic such as hospitality, (informal) food services, and care industries. To ensure more equitable recovery from the devastating impact of COVID-19 on the economy and individual incomes, the opportunities to insulate workers against the effects of the pandemic ought to more accessible. This can be achieved by wider access to digital jobs, platforms, skills and opportunities.

Employment precarity

A recent report by the National Income Dynamics Study (NIDS) – Coronavirus Rapid Mobile Survey (CRAM) revealed that women and young people were most negatively affected by the pandemic in terms of job losses experienced between October 2020 and January 2021. Youth unemployment in South Africa is notoriously high (at 70% pre-pandemic and 74% in 2021) and the additional pressure of COVID-19 job losses exacerbated this situation. Younger people often occupy lower-level positions and have less work experience, making them more prone to losing their jobs when businesses face financial challenges.

The report also noted that in addition to being in sectors that were hardest hit by the crisis, “women [were] perhaps also less likely to have the skills or training to take up new opportunities available”. Although the pandemic has seen widespread adaptations to online, remote work, many people have been unable to take advantage of these opportunities due to a lack of digital access.

Enduring strength of e-commerce

The digital economy is a broad spectrum of activities that can be facilitated or hosted through the internet or mobile phone platforms. They include goods and services that can be exchanged digitally such as music streaming and mobile money payment services, online marketplaces, and e-platforms that connect consumers to businesspeople among others. Collectively, these activities form a part of e-commerce.

Unsurprisingly, in the midst of slowing economic activity, COVID-19 facilitated the acceleration of e-commerce and digital transformation across the world as many businesses went online during the lockdowns. However, these gains have not been shared widely, with a large concentration of digital economic activity in two countries – the United States and China – and more broadly among higher income countries, while middle- and low-income countries lag behind. Furthermore, companies which saw the biggest growth globally during the COVID-19 lockdowns were mostly big tech companies like Google, Amazon and Facebook – who at the end of 2020, added a combined market capitalisation of over $163bn, reportedly more than the entire value of McDonald’s.

"There is huge potential for growth within e-commerce if countries are willing to lay the foundation for their own transitions to the digital economy"

This raises several noteworthy issues. Firstly, there is huge potential for growth within e-commerce if countries are willing to lay the foundation for their own transitions to the digital economy. Digital companies and services can withstand shocks and vulnerabilities that many physical goods and service providers cannot because of their digital nature. With the ease of digital payment methods, efficient delivery means, lower costs of conducting sales transactions, reduced supply chain costs and access to larger consumer demand beyond their immediate geographic location, they are better insulated from some ‘traditional’ business challenges. The business processing outsourcing (BPO) industry – which enables companies to outsource non-core functions such as customer support, billing, telemarketing to certain countries – has shown significant growth and resilience in South Africa during COVID-19 and is also a testament to the increased resilience of digital based businesses.

South African e-retail giant Takealot grew up to R3.7-billion in revenues during the 2020 hard lockdown despite being limited to selling essential goods. Other large local e-commerce platforms such as ParcelNinja, AllSale and Pargo also recorded huge sales. Secondly, this demonstrates the broadening of wealth inequalities between large capital owners and non-owners of capital, as well as between higher and lower income countries. This shows, as Research ICT Africa’s Anri van der Spuy warns, that "digital inequalities risk exacerbating longstanding social and economic inequalities", especially in the absence of interventions to ramp up the inclusion of those who were left destitute by COVID-19.

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How the digital economy can improve resilience

Given the persistence of apartheid-driven spatial inequalities, many South Africans’ places of residence are located far from urban centres and places of work, resulting in long commuting times and huge financial costs. In addition, commuters worry about their safety and job security when relying on public transport. Wider access to digital jobs can alleviate the huge commuter burden faced by low- and middle-income households while spatial transformation and economic access in peri-urban and rural communities is sluggish.

If micro, small and medium enterprises (MSMEs) tapped into the potential of digitalisation for their business, they, too, can optimise their resilience during times of financial hardship and where digitalisation can maintain or improve their competitiveness. In South Africa, key industries and sectors can take advantage of these opportunities to provide goods and services more efficiently and reliably through the take-up of digital technologies and tools. These digital tools have the potential to connect many South Africans with job opportunities such as in the popular e-hailing services, e-agriculture tools for small scale farmers, and digital platforms for virtual freelancers from various industries like information technology, graphic design, crafts, tutoring, copywriting and even gardening and domestic work.

Additionally, businesses that operate on or via a digital platform have the unique ability of bypassing certain barriers to entry in the economy by bridging the gaps in access to information, funding opportunities, larger markets and product distribution means among others – making them prime entry points for the currently unemployed or informally employed.

Priorities for equitable access to participate in the digital economy

The kind of competitiveness that digitalisation provides to businesses can also provide resilience to individuals whose livelihoods can be supported by these offerings. However, to create opportunities for meaningful change for those who have been left disproportionately vulnerable by the pandemic, these opportunities must be accessible to the wider population. There needs to be conducive conditions for people to effectively participate in the digital economy from all parts of the country – and this is going to take work and enabling factors, such as the following:

  1. Support for development of digital skills: through the provision of information and communication technology (ICT) and digital literacy learning in schools and skills training centres for out-of-school youth and women – such as the DigiSchool in Kenya.
  2. Access to digital participation and digital inclusion: through ensuring the affordability of mobile data services and broadened public internet fibre coverage.
  3. Balance of regulation to protect informal workers and freelancers: through policy that provides better workers’ social protections by enabling portable benefits, labour rights and protections without introducing significant barriers to entry through over-regulation.
  4. Provision of affordable digital infrastructure for entrepreneurs: through private-public partnerships for meeting digital business needs coordinated by the Department of Women, Youth and Persons with Disabilities to boost innovation-driven entrepreneurship and support
  5. Strengthen e-government services implementation: through the widespread use of e-platforms for delivering public and basic services to increase take-up of digital products, digital competency and demand for services.

South Africa has a ripe opportunity to fully leverage the expansion of the digital economy to facilitate inclusive growth that specifically targets the challenges faced by women and the youth. With a relatively high internet and smartphone penetration rate compared to some of its African counterparts, it can make entrepreneurship less intimidating by removing the information gaps and red tape that hinder many from entering the market. By observing the digital industries that South African young people are mostly interested in, namely, social media content creation, video blogging, game and app design, and digital product design, it is clear that digital access and skills development to lower the entry barriers must be prioritised to allow for broader economic inclusion in high-interest careers.

Additionally, by noting the specific challenges faced in the sectors where women are overrepresented and introducing in them digital strategies to mitigate exposure to risks and vulnerability, we could effectively manage the economic precarity of women in future. This can prove to be especially beneficial for advancing the reliability and sustainability of otherwise precarious livelihoods of those working in the informal sector, and those living in peri-urban and rural areas.

This article was originally published by on Africa Portal. (Photo: CreateHER Stock)

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