Digital revolution, COVID-19 and the Future of Work

The digital revolution is transforming industries and changing the nature of work across all regions of the world, including in Sub-Saharan Africa.

Amidst this ongoing change, there are fears that automation and other digital innovations will lead to large-scale job displacement in manufacturing, retail services, and other industries.

Without employment providing a structure in people’s lives and with technology replacing many human activities, our societies will likely shift towards more individualistic entities with less human interaction.

In developing countries such as Kenya – where a large share of the labor force is in informal employment – there are fears that automation could close the traditional industrial pathway to economic transformation through low-wage factory employment.

Across low, middle, and high-income countries, digital solutions have allowed fortunate workers in some industries to quickly adapt to working from home during the COVID-19 pandemic. What will be the future of work in Kenya?

The reality for Kenya is rather complex but is likely to be more positive going forward. According to the World Bank Development Report 2019, African countries have the potential to take advantage of the digital revolution in varied ways.

To begin with, African countries have a smaller manufacturing base, at less than 10 percent of gross domestic product (GDP), than other regions.

Therefore, automation is not likely to instantly replace as many African jobs as in more industrialized regions of the world; even though ‘robotization’ in other countries could slow down some local job opportunities.

Innovations in digital financial services and logistics are proving to be game changers across the region. Mobile technologies are allowing young entrepreneurs to use various digital platforms to access larger markets.

Of course, the risk of large sections of the poor, the low-skilled, and the uneducated being left behind in a so-called digital divide looms large as more than 60 percent of the labor force is made up of ill-equipped adults and almost 90 percent of total employment is in the informal sector.

To harness the full potential of digital technologies, the Kenyan Government and other crucial stakeholders, including the private sector and development partners, should prioritize investments in several important areas.
These priorities are even more important as the government addresses the humanitarian, economic, and social implications of the COVID-19 pandemic and sets the foundations for the needed recovery afterward.

The first priority is to improve the availability of digital technologies across the country to help increase the productivity of workers and businesses.

It will be important to close the current gap in digital infrastructure by enhancing affordable broadband access with improved regulatory frameworks. Secondly, boosting human capital in our country is crucial to enable broader participation of all segments of the population in the digital economy.

This, ideally, ought to complement increased investments in early childhood education and health care service delivery. Investments in digital infrastructure and solutions, facilities, and personnel for health and education are even more consequential as the country adjusts to COVID-19 and develops resilience to possible future pandemics.

The third priority is to create a business environment that helps increase the productivity and upgrade the skills of informal businesses and workers including by leveraging worker-enhancing digital solutions for low-skilled workers. This is a more effective approach to addressing informality in Kenya than an exclusive focus on formalization policies.

Although much of the business focus during the relief period of the COVID-related health crisis needs to protect existing formal sector jobs and the incomes of informal workers, a better business environment coupled with support of new, more productive investments in technology adoption will be needed to create and sustain the foundations of future growth recovery and prosperity.

Finally, Kenya should strengthen and expand social protection systems to help workers manage risks in the formal and informal economy in the changing world of work. Increasing investments in social protection will entail greater efforts both to mobilize revenue from domestic sources and to improve the efficiency of current social expenditures.

The strategy of expanding social protection systems and strengthening their governance is even more critical in light of the COVID-19 crisis as it will ensure that livelihoods are protected and support the entrepreneurial risk-taking needed to underpin the vibrant recovery moving forward.

The challenge of creating more better and inclusive jobs for Kenyans is not in doubt. In this daunting task for policy makers and businesses, the digital revolution presents vast opportunities as well as risks.

The task will be even more daunting in a post-COVID world though if there is a silver lining, it may be linked to broader and more effective use of digital solutions.

The writer is the Group Head, HR & Administration at CPF Financial Services