Over the past decade, a billion-dollar job market – microwork – has emerged around technologies that divide activities into piecemeal tasks to be performed by many people on the Internet, primarily using computers. mobile devices.
According to research conducted in Kenya by Mercy Corps Ventures (MCV), the impact investing arm of global development agency Mercy Corps.
Microwork has the potential to create jobs for workers of all skill levels and boost employment for Africa’s burgeoning youth population, with 10-12 million young people entering the labor market in Africa each year, according to the African Development Bank.
However, the MCV study notes that the costs incurred in collecting payments, along with other barriers, have limited the adoption of microwork in Africa, where a turnaround could be achieved using crypto-payment options. Paying with cryptocurrency reduces transaction fees by 93%, regardless of payment size, according to the pilot project that was conducted in Nairobi, Kenya, to test whether digital stablecoins and mobile wallets could mitigate friction and reduce the costs of cross-border payments.
Other study partners were Celo, a mobile-first DeFi platform; Kotani Pay, a technology stack that enables blockchain protocols; Appen, a publicly traded data company, and NairoBits, a Kenyan non-profit organization that uses ICT to empower disadvantaged youth.
“We trained 200 young Kenyans to access digital microwork from global platforms using a mobile app and an integrated Valora digital wallet, which is powered by Celo. Our pilot tested how a stablecoin could reduce the costs and challenges of sending and receiving cross-border micropayments over a three-month period,” said Scott Onder, Senior Managing Director, Mercy Corps Ventures.
The result of the study, according to Will Le, partner of Celo, confirmed that “by reducing financial frictions, we have introduced a new model to exploit talents across borders, which was not possible before. with traditional financial infrastructure. Cryptocurrency, and especially stablecoins, could significantly reduce the cost of remittances and promote cross-border trade.
In the trial, participants were paid seconds after completing the task, using Celo dollars (cUSD), a native Celo stablecoin that tracks the value of the US dollar, with a fee of approximately 0.01 $. Payments were temporarily stored in Celo’s digital wallet, Valora, and could be cashed out at any time on Kenya’s mobile money platform, M-Pesa, with conversion enabled by Kotani Pay’s output technologies.
In 2021, remittances, including payments for online jobs, accounted for more than 3.5% of Kenya’s GDP, worth $3.7 billion. With global weighted average remittance costs of 4.71%, Kenyans who receive remittances potentially lose close to $100 million annually.
“Given that the average cost of sending remittances worth $200 is significantly higher than the global average (8.72% in sub-Saharan Africa compared to 6.30% globally), the savings are potentially even greater . If all of these transactions only cost the 2.02% activated during the pilot, the total potential impact on the Kenyan economy could be over $200 million, or 0.22% more than Kenya’s overall GDP MCV said in a statement.
Overall, Kenya’s online job market is on a steady growth trajectory due to an increase in internet penetration – nearly 90% of the country’s urban population is aware of the job market. mobile Internet. According to the study, at least 1.2 million Kenyans are currently working online, earning an average of $182 per month, in a country where 36% of its 2.6 million employees (about 1 million people) earn between $176 and $274 per month.
Commonly used options for international online jobs include PayPal, Skrill and Payoneer, some of which have policies withholding payments without explanation and higher fees for lower payments.
“High transaction costs, especially for lower payouts, mean that micro-workers often lose a significant portion of their income (with an overall weighted average cost of 4.71% but in some cases up to 30% of gross revenues), said MCV, adding that these barriers can be overcome by using cryptocurrency.