Remote Working in Africa: Growing Trend in an Overlooked Market

Data Scraper

Data Analyst

Blog Writer

Background

By 2020, the

US remote workforce was more than 59 million

and according to Statista research more than half of the US workforce

will be working remotely by 2028

While we traditionally think of remote working as a phenomenon limited to professionals in North America and Europe, it is actually a worldwide phenomenon. The global remote platforms market, which was valued at USD 3.4 billion in 2019,

is predicted to rise at a CAGR of 15.3 percent

between 2021 and 2026.

According to a recent report,

companies hiring in Africa have risen to 800% YOY

— yet this large talent pool is often overlooked by European and American companies looking to hire professionals to work remotely.

In this article, I examine the current state of remote working in Africa, and opportunities presented by technology and globalization, I’ve also highlighted some of the roadblocks to growth in the African remote working sector and how remote marketplaces can play a part in creating a more equal world by promoting remote working in Africa.

The remote working marketplace in Africa

Many people all around the world are turning to remote work in order to obtain more freedom and a better work-life balance. While this is true in Africa as well as elsewhere, it is only a portion of the tale.

Unemployment rates in several African countries are exceptionally high. South Africa, DR Congo, and Nigeria are the three African countries with the highest rates in the world. There are a growing number of skilled workers encountering high unemployment rates, especially in low-income regions like sub-Saharan Africa. Many young individuals in Africa are eager for jobs and welcome the trend of global firms capitalizing on the shift to virtual workplaces to expand hiring in their countries.

Unemployment % in 10 Key African Markets Q1-2022

Data Source:

Statista.com

Opportunities presented by technology and globalization

Africa has a unique competitive advantage in which our young generation's entrepreneurial spirit sparks inventive solutions that create jobs for the future. This is the reason we are witnessing

Tech Giants

such as

Google

Microsoft,

and

Visa

set up centers for

innovation

in countries like Kenya. Recently,

Safaricom PLC and Amazon Web Services

announced a strategic partnership in East Africa, which will see Telco become a reseller of AWS services. Countries such as Nigeria, South Africa, and Kenya offer companies such as Amazon, Accenture, Microsoft, and IBM a large, skilled English-speaking workforce.

While most countries globally have aging populations,

Africa is by far the youngest continent with a median age of 19.7 as of 2020

. And it's growing quickly: during the next 20 years, it's anticipated to grow by 20%. Many African countries will have to figure out how to include this burgeoning population in their workforces.

“Africa is home to more than a billion people ages 0-34, or 22.7% of the world’s youth population, the second largest after Asia, which stands at 58%.”

― The Mo Ibrahim Foundation, 2020.

Over the past few years, a number of local remote working platforms and companies aiming at remote workers have launched in Africa. Examples include Lagos-based

Andela

Gebeya

African Foresight Group

, and South Africa-based

PengoInsight

. These local companies are leading the way, allowing global businesses with a presence in Africa to connect with local experts.

Barriers to remote Working in Africa

Despite much progress over recent years, there are still some barriers that are preventing the African remote market from reaching its full potential.

1. Limited internet penetration and speeds

Rates of internet penetration vary widely across the continent. Countries with the highest internet penetration rates include Egypt, Algeria, Morocco, Nigeria, Kenya, and Ghana. On the other end of the scale, countries with a low penetration rate below 25% include Tanzania, DRC, and Ethiopia.

Using data extracted from

DataReportal

, here’s a summary at the top 10 African countries with the highest number of internet users, alongside their internet penetration rates as of January 2022.

No. of Internet Users vs Penetration Rate

Data Source:

DataReportal

Note: When it comes to internet users, some countries have more than others. But a country’s online population doesn’t necessarily reflect its overall connectivity.

Despite the fact that these numbers have been gradually increasing, internet subscriptions remain quite expensive in parts of Africa, with monthly broadband internet costs averaging around

USD $80 in Nigeria, $86 in Kenya

. When we compare this to US norms of $66.2 per month and the disparity in average income between the US and other African nations, we can see that for many people, this represents a significant barrier to entry into remote working, which is mostly done online. Furthermore, internet speeds in North Africa and Sub-Saharan Africa are often low,

averaging 5.68Mbps and 6.56Mbps

, respectively, compared to 90.56Mbps in Western Europe

2. Limited payment options

PayPal is one of the most convenient and widely used payment methods for remote workers all around the world. The company's apparent reluctance to completely enter the African market might be a major roadblock for the African remote workforce seeking payment from their clients. PayPal is currently active in

over 40 of Africa's 54 countries

. However, clients can only accept payments in 12 of them through the site. Even in Nigeria, one of the continent's largest economies, clients can only use PayPal to send money-not to receive it. This effectively prevents many African remote workers from collecting compensation from international clients. Of course, there are other payment options, but they aren't always well-known or trusted around the world.

3. Limited power supply

Electricity supply is lower and costs are higher in sub-Saharan Africa (SSA) than in any other world region. At present

46% of Africans still lack access to electricity

. For example, while Nigeria is Africa's biggest oil producer the West African nation still struggles to meet its energy needs, a struggle that has persisted for many decades. Income levels and geographic location seem to be key determinants of electricity use, as electricity consumers tend to be urban and comparatively better off.

4. Cultural beliefs against remote working

Many of us are brought up to pursue an education and then attain a traditional corporate job, this has been the belief and mindset of most of our parents/guardians. There is a cultural stereotype that remote jobs are not stable, do not pay enough, and do not provide other benefits which is far from the truth.

Recommendations: How Can Remote Marketplaces help?

1. As remote work becomes more common, pay disparities need to be addressed

Employers justify lower salaries as “location pay” determined by a lower cost of living. But in Africa, most skilled workers live in large cities that can provide the infrastructure they need to work remotely – namely stable electricity and high-speed internet and mobile broadband. That means the actual cost of living for an urban professional in Lagos or Nairobi is getting closer to their contemporaries doing the same job in cities where multinationals are headquartered. And at the very least, the differences do not justify salaries five to ten times below wealthy country rates.

Remote marketplaces can help companies develop policies that globalize their corporate values – fair and equitable treatment and compensation for their workers wherever they happen to live.

2. Change the narrative by raising awareness and foster culture change

The existing cultures in Africa impact the adoption of working remotely. There is a need to raise awareness and foster culture change, learn how to learn, to become more lean and agile in Africa.

3. Leverage on DATA

Need to collect more data from worker contracts to start analyzing trends in global hiring in emerging markets to better understand the diverse demographics.

Create automated dashboards that enable clients to submit documents seamlessly avoiding heavy fines and centralized access to employee records to provide KPI insights on the total number of requests received, source, the status of tickets, refer back cases, aging, TAT & country-wise/region-wise performance. Saving time and resources.

4. Partnering with payment services providers

Examples include

Payoneer

VISA

flutter wave

, etc. which can accelerate faster payment options in Africa enabling clients to pay their global teams with just a click.

5. Promote financial literacy and a saving culture

Earning a substantial income is just one part of the equation, there is a need to partner with reputable financial advisors who can educate the remote workforce in emerging markets on the best investment strategies and promote a savings culture. An example includes Kenya-based

Ndovu Investments

empowering young Africans with their product that gives access to global markets allowing them to save & invest simply & easily.

6. Partnering with mission-driven startups aiming to provide cheaper, cleaner, and more reliable electricity in emerging markets

An example includes

CrossBoundary

which is a mission-driven investment firm that unlocks capital for sustainable growth and strong returns in underserved markets through the installation of power grids and solar panels providing a clear path to growth for developing countries.

7. Targeting Gen Z and millennials

Remote marketplaces can work with their clients to target young African workers who not only want better pay, they want previously less-popular benefits such as mental health care and four-day workweeks, according to three surveys by separate companies. And they want to work for companies that care about personal and global ethics.

Top 5 Concerns among Gen Zs and Millennials

Data Source:

The Deloitte Global 2022 Gen Z and Millennial Survey

While there are still obstacles to overcome, Africa's remote labor industry is booming and has a lot of potential. According to McKinsey, online talent platforms might contribute

USD 2.7 trillion to global GBP by 2025, as well as 72 million full-time equivalent jobs

Africa's market accounts for only a small portion of these forecasts. There is a need to further explore other emerging markets such as Mexico, Brazil, Argentina, Peru, Colombia, and the Dominican Republic. The African market, however, should not be disregarded due to its young and rapidly growing demographics, increased technological adaption, and increased internet access.

Remote marketplaces with remote workers in Africa might need to spend a little extra time determining the best payment and communication options that will work for everyone. But, by opening our minds to African remote workers, Remote marketplaces can help their clients gain access to a broadly untapped talent pool.