Blue-collar task matching platform
Business Model Description
Develop and operate task-matching platforms that create a marketplace for low skilled labour in a range of ‘blue collar’ activities, such as domestic services, gardening, painting, maintenance, and electrical and plumbing work.
Expected Impact
Create new income and work opportunities and scale up employment for temporary workers.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- South Africa: Countrywide
Sector Classification
Infrastructure
Development need
South South Africa faces significant challenges in achieving SDG 9 - Industry, Innovation and Infrastructure, with a score of 45.0. Scores for other goals include 48.7 for SDG 3 - Good Health and Wellbeing, 67.0 for SDG 6 - Clean Water and Sanitation, 79.0 for SDG 7 - Affordable and Clean Energy, and 77.9 for SDG 11 - Sustainable Cities and Communities.(1)
Policy priority
The National Planning Committee identified 9 primary challenges, 4 of which have infrastructure development needs and implications: the public health system cannot meet demand or sustain quality, the economy is unsustainably resource intensive, spatial divides hobble inclusive development, and infrastructure is poorly located, inadequate and undermaintained.(2)
Gender inequalities and marginalization issues
Poor infrastructure can exacerbate the gender gap. In low income countries, women collect over 70% of water and fuelwood. Women spend 200 million hours on water collection every day. Unsafe and low security transport also disadvantage women who are more affected by violence, which affects their wellbeing and workforce participation.(19)
Investment opportunities introduction
President Ramaphosa has an investment drive to mobilise $100 billion for priority sectors, including the energy, water, transport and logistics, and data and ICT sectors.(4) The Sustainable Infrastructure Development Symposium South Africa organised by the Investment and Infrastructure Office within the Presidency seeks to create a $20.5 billion infrastructure fund.(5)
Key bottlenecks introduction
High fixed costs, high levels of debt and low cash reserves may cause a liquidity crisis.(6) Construction was restricted during lockdown and sharp contractions of fixed investment can be expected as firms reconsider or postpone implementation.(7) Projects exposed to foreign currency risk foreign exchange fluctuations and further uncertainty if not previously hedged.(6)
Infrastructure
Development need
South Africa is facing a major unemployment problem, especially among the country's youth.(7),(8),(9) The Quarterly Labour Force Survey for 2020 indicates the number of unemployed persons has increased by 344,000 to 7.1 million. In the first quarter of 2020, 20.4 million young people (aged 15–34 years) were unemployed (63.3% of the total number of unemployed persons).(12)
Policy priority
There is a desperate need for job creation, especially for low skilled jobs. The National Development Plan (NDP) aims to reduce unemployment to 6% by 2030 (14), however unemployment remains one of the country's biggest problems and one of the hardest to fix.
Gender inequalities and marginalization issues
Better integration of female talent into infrastructure planning, management and policy design should be part of the solution for transformative action.(19)
Investment opportunities introduction
South Africa is already embracing digital and other technologies to create positive change in a number of areas.(18)
Engineering and Construction Services
Pipeline Opportunity
Blue-collar task matching platform
Develop and operate task-matching platforms that create a marketplace for low skilled labour in a range of ‘blue collar’ activities, such as domestic services, gardening, painting, maintenance, and electrical and plumbing work.
Business Case
Market Size and Environment
South Africa ranks 14th out of 16 G20 countries on Accenture’s Platform Readiness Index.
The market for digital platforms in South Africa has yet to mature.(8)
Platform businesses across industries have room for growth. These platforms have received private sector finance however there is great potential for further investment in the rapidly growing market of task-matching platforms.(11)
Indicative Return
> 25%
A Cape Town-based venture capital fund that has invested in several South African task-matching platforms targeted a minimum internal rate of return (IRR) of 40%.(16) The fund aims to return 35% or three times investors’ initial investment within the typical 10 years of a fund.
Investment Timeframe
Medium Term (5–10 years)
Investors look to exit after 4 to 7 years.(9)
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Capital - CapEx Intensive
Market - Highly Regulated
Impact Case
Sustainable Development Need
A large portion of South Africa's workforce seek and earn income in blue collar activities such as domestic services, gardening, painting, maintenance, and electrical and plumbing work. Much of this work has relatively low barriers to entry, and is informal and part time. As a result, it can be uncertain, and several constraints contribute to inefficient matching of available supply to demand.(8)
There are high costs of work and worker searching, a reliance on referrals, and often both customers and providers are unable to verify the credibility of work-seekers and employers.(8)
Gender & Marginalisation
Poor infrastructure affects women's wellbeing and workforce participation.(19)
Expected Development Outcome
Blue collar task-matching platforms have the potential to: create employment opportunities for low skilled labour (8),(9); reduce information asymmetries in low skill labour markets; and accelerate paths to employment and remove barriers to entry.
Upskill supply-side participants; improve conditions for overall economic and job growth in the country
Gender & Marginalisation
Contribute to the integration of female talent by creating new employment opportunities
Primary SDGs addressed
8.5.2 Unemployment rate, by sex, age and persons with disabilities
Unemployment rate by sex - males: 25.5% (2017), females: 29.4% (2017). Youth (15–34 years) unemployment rate: 38.7% (2017). Youth unemployment rate (female to male ratio): 1.16 in 2019. Total unemployment rate (female to male ratio): 1.15 in 2019.(20)
N/A
9.b.1 Proportion of medium and high-tech industry value added in total value added
24.43% (2015) (22)
Secondary SDGs addressed
Directly impacted stakeholders
People
Outcome Risks
Exploitation of workers who use platforms to provide services. Low pay and poor working conditions.
Impact Risks
Stakeholder participation risk if successful platforms gain market power which could be used to exclude up-and-coming competitors or work to the disadvantage of either suppliers or customers (8)
Impact Classification
What
The outcome is likely to be positive and important, by removing the barriers to entry for low skilled workers to find opportunities
Who
Underserved low skilled blue collar workers
Risk
Medium risk
Impact Thesis
Create new income and work opportunities and scale up employment for temporary workers.
Enabling Environment
Policy Environment
The mission of the Department of Communication focuses on developing an information society in South Africa , formulating a policy environment of growth for all its citizens in a global digital economy.(18)
Financial Environment
Financial incentives: Significant private investment through venture capital firms.(15)
Fiscal incentives: There is not much government funding for platforms for South Africa's digital economy.
Regulatory Environment
Labour and competition law: Labour rights are limited for workers classified as ‘employees’. Digital platforms classify their workers as 'independent contractors'.(17)
Marketplace Participants
Private Sector
Kandua, Domestly, SweepSouth, Clockwork, 234work, Freelancer.com, Fiverr, getTOD, Handymandirect, Guru Hubstaff Talent, Kandua, Kuhustle, Nomad Now, NoSweat Work, PeoplePerHour, PrimU, Snupit, TaskApp, Truelancer.com, twago, Workana and Weworx, Investec, Vinny Lingham
Government
Centre for IT and National Development
Non-Profit
Wesgro, Silicon Cape
Target Locations
South Africa: Countrywide
References
- (1) Sachs, J., Schmidt-Traub, G., Kroll, C., Lafortune, G., Fuller, G., Woelm, F. (2020). The Sustainable Development Goals and COVID-19. Sustainable Development Report 2020. Cambridge: Cambridge University Press. https://dashboards.sdgindex.org/#/ZAF
- (2) National Science and Technology Forum (2019). The National Development Plan. http://www.nstf.org.za/wp-content/uploads/2019/04/All-The-NDP-1.pdf
- (3) Le Roux, A., Arnold, K., Makhanya, S. and Mans, G. (2019). South Africa’s urban future: Growth projections for 2050. Green Book. https://pta-gis-2-web1.csir.co.za/portal2/apps/GBCascade/index.html?appid=3c4901e8681244d1a7989e8ed2ace1f9
- (4) Industrial Development Corporation (2019). The Case For Investing in South Africa. https://sainvestmentconference.co.za/wp-content/uploads/2019/11/The-case-for-investing-in-South-Africa-2019-Executive-summary-31-October-2019.pdf
- (5) Sustainable Infrastructure Development Symposium (2020). Sustainable Infrastructure Development Symposium South Africa. https://sidssa.org.za/
- (6) Deloitte (2020). The Impact of COVID-19 on infrastructure projects and assets. https://www2.deloitte.com/content/dam/Deloitte/ng/Documents/finance/ng-the-Impact-of-COVID-19-on-Infrastructure-project-and-assets_27052020.pdf
- (7) Arndt, C., Davies, R., Gabriel, S., Harris, L., Makrelov, K., Modise, B., Robinson, S., Simbanegavi, W., van Seventer, D. and Anderson, L. (2020). Impact of Covid-19 on the South African economy. https://sa-tied.wider.unu.edu/sites/default/files/pdf/SA-TIED-WP-111.pdf
- (8) South Africa in the Digital Age (2020). Pathways to Digital Work. https://www.genesis-analytics.com/sada
- (9) BizCommunity (2020). South Africa in the Digital Age reveals key findings. https://www.bizcommunity.com/Article/196/852/199813.html
- (10) Business Day (2020). Initiative for digital economy strategy plots way for job creation. https://www.businesslive.co.za/bd/opinion/2020-01-19-initiative-for-digital-economy-strategy-plots-way-for-job-creation/
- (11) Interview with S'onqoba Vuba from Perpetu8 on 30/06/2020.
- (12) Lourie, G. (2017). 'Behind the Spick & Span in South Africa there are 3 On-Demand Cleaning Startups', Tech Financial.
- (13) South Africa Investment Conference (2019). The Case for Investing in South Africa. https://www.idc.co.za/wp-content/uploads/2019/11/The-case-for-investing-in-South-Africa-2019-Full-publication-31-October-2019.pdf
- (14) Wesgro (2017). Shared economy in Africa. https://www.wesgro.co.za/uploads/files/47.-shared-economy.pdf
- (15) Youth Bridge Trust (2020). Building Africa's future. https://www.youthbridgetrust.org/?gclid=CjwKCAjwr7X4BRA4EiwAUXjbt1mmDPpzwQ8T0HOPMdauCYRQyCmXhFDbez-LeLRK3sj6XUukeFv3OxoCS24QAvD_BwE
- (16) Ventureburn (2018). Startups need at least 10x in 5 years to be good investment – VC, angel investors. https://ventureburn.com/2018/05/vc-angel-investments/
- (17) Fairwork South Africa (2020). Fairwork South Africa Ratings 2020: Labour Standards in the Gig Economy. https://fair.work/wp-content/uploads/sites/97/2020/04/Fairwork-South-Africa-2020-report.pdf
- (18) Cogburn, D.L. and Nyaki Adeya, C. (2001). Prospects for the Digital Economy in South Africa Technology, Policy, People, and Strategies. http://www.rrojasdatabank.info/unudp01/dp2001-77_1.pdf
- (19) Organization for Economic Cooperation and Development (2019). Gender Equality and Sustainable Infrastructure. http://www.oecd.org/governance/gender-equality-and-sustainable-infrastructure-paris-march-2019.htm
- (20) United Nations Development Programme (2020). Human Development Report. https://www.ng.undp.org/content/nigeria/en/home/library/human_development/the-2020-human-development-report.html
- (21) Accenture. South Africa: Winning with Digital Platforms. https://www.accenture.com/_acnmedia/PDF-80/Accenture-Winning-Digital-Platforms.pdf
- (22) Statistics South Africa (2019). Sustainable Development Goals: Country Report 2019 - South Africa. http://www.statssa.gov.za/MDG/SDGs_Country_Report_2019_South_Africa.pdf