Rwandan Jobs in the Digital Era: Scenarios for the Future of IT-enabled Work

Executive Summary

As more job seekers enter the Rwandan labour market each year, the jobs they find are increasingly shaped by digital technologies. This report explores employment opportunities in emerging digital activities for young Rwandans. To sharpen the report’s focus, we followed three guiding questions: To make the report economically useful, we asked which sectors are promising for large-scale and future-oriented job-creation amidst the age of technological change; to make the report empirically tangible, we asked in which sectors these technological changes have already had a measurable impact on workers; and to align the report with the direction of Rwanda’s goals, we asked what is aspired to in Rwanda’s Vision 2050 (MINECOFIN, 2020) – i.e., what future Rwandans want. Core aspects of Vision 2050 and its supporting documents are: growing the economy by 12% per annum until 2035 and using Information & Communication Technology (ICT) to spur urban innovation and productivity; bringing women more equitably into the workforce to better utilize both halves of the population; and turning its people into the country‘s biggest economic asset by making Rwanda a services-led economy, fully integrated into the global knowledge economy. On this basis, the report arrived at two services sectors, and came to be divided into two studies, one on domestic IT-enabled services, the other on export-oriented IT-enabled services.

Study 1 examines urban mobility, where the emergence of ride-hailing and delivery platforms are changing the ways cab drivers and motorcycle taxi riders work in Rwanda’s capital, Kigali.

Study 2 examines global cloud services, where the emergence of digital labour platforms and Global Business Services (GBS) companies are opening new ways for Rwandan office workers to service global clients.

While the urban mobility sector remains male-dominated and is wrought with informality and worker insecurity, the GBS sector promises formal employment, gender equity, and an avenue for export-led growth via linkages to the global knowledge economy.

Study I: Ride-Hailing and Delivery Platforms as Public Utilities – Transforming Employment in Rwanda’s Urban Mobility Sector

Study 1 introduces two forms of place-based, IT-enabled services in the local urban context – ride-hailing taxi platforms and food delivery platforms. Globally, the literature on urban mobility platforms discusses positively how platforms like Uber facilitate more trade in services by reducing transaction costs, and discusses negatively how such platforms can crowd out local businesses and create new information asymmetries between themselves and local regulators and competitors.In the context of Rwanda’s political economy, mobility platforms play a more constrained role. Rwandan authorities have long been skeptical of the informal and unruly moto taxi sector. And the Government of Rwanda (GoR) is currently experimenting with a public-private partnership model in which ride-hailing platforms are organized like public utilities. In its partnership with the selected platforms, the GoR has access to the data generated by these platforms, determines fare prices, sets the platform tariffs, and makes the use of these platforms mandatory for all cab drivers and motorcycle taxi riders. The main mobility platform is Yego Innovision Ltd. – Yego Moto for motorcycle taxis, and Yego Cab for taxicabs (a second taxicab platform is VW Move). Yego also started Yego Delivery and plans to expand this model into a future of Rwandan multi-service platforms, bringing passenger transport together with a host of other services – from delivery, to banking, to insurance, to home cleaning services. This study examines the ongoing transition to this mandatory, public- private partnership model and investigates how far along the path the Rwandan mobility sector is towards this positive scenario.

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The study’s primary research methods are interviews and focus group discussions (FDGs) with platform cab drivers, platform motorcycle taxi riders, and platform motorcycle delivery riders. Preliminary findings were validated in two full- day workshops with relevant stakeholders, including platform executives and GoR regulators.

The study finds that on their path towards the mandated public utility platforms, both taxicab drivers and moto taxi riders struggle with the transition. In Rwanda’s tightly governed security regime, crime rates are so low that passengers and drivers are less concerned than elsewhere when engaging with strangers. Thus, even though the government-set platform tariffs are very low – between 8-13% of fare prices (compared to the 20-30% taken by private ride-hailing platforms elsewhere in the world) – Kigalians are quick to switch to illegal off-platform rides if the government-set fare prices slightly deviate from the going black-market rate for a given distance. If the platform fare prices are high (as was the case for taxicab fares at the time of our FDGs), passengers have a sufficient reason to ask for off-platform rides. If the platform fare prices are low (as was the case for moto taxi fares), cab drivers and moto riders have a sufficient reason to offer off-platform rides. Either way, the off-platform black market for passenger transport thrives. This puts platform drivers/riders in the unenviable position of either losing their fares to illegal competitors or breaking the rules themselves by transporting passengers off platform, thus risking hefty fines by the traffic police who are mandated to enforce the use of the public utility platforms.

As this shift coincided with the COVID-19 Pandemic and less passenger travel, a few moto riders also shifted away from working in passenger transport towards working for food delivery platforms, seen as a safe harbour in times of the pandemic. We accompanied some of these riders to understand their motivations, journeys, and personal results of switching from taxi to delivery app riding. The study finds that these delivery riders had made the switch in the hopes of more stable employment relations. Whilst moto taxi riders tend to earn more per ride by transporting passengers, they also have higher insurance costs and operate as independent entrepreneurs in a riskier day-to-day struggle for rides. Working for delivery platforms, by contrast, entails fewer expenses and more security as delivery riders receive steady orders and monthly pay checks from the platform company. Delivery riders, however, utter a different grievance: many claim to have made the switch to food delivery in the hopes of entering into formal employment with the platform. Monthly payments do arrive, and riders are subjected to regular working hours and reprimanded to work exclusively for one delivery platform, but none of our respondents had thus far received employment contracts. And none felt secure in their work arrangement, as they notice the platform bringing in waves of new riders and threatened to release veteran riders who demanded employment contracts, more flexibility, or other promised benefits.

Based on these findings, we develop simple scenarios for Rwanda’s future of ride hailing and delivery platforms: in a failed take-off scenario, the government-steered pricing would not be responsive enough to changes in supply and demand, and the public-private partnership model of using platforms as public utilities would succumb to the informal competition. In the scenario of a narrow and unfair take-off, the mandatory platforms would win out over the illegal competition, but the cab drivers and moto riders would not benefit financially or be able to diversify their services. The data collected by the platform could also be used to surveil all taxi services in the city for illegitimate purposes, be this for economic or political motives. A full take-off scenario would entail giving workers fair and stable wages, social security benefits, and chances to generate more business in related services. A well-functioning multi-service platform could also bring more opportunities for women in the mobility, delivery, and mobile services sector. This could make the Rwandan experiment of a public- private partnership a model for reigning in mobility platforms across the world.

Policy recommendations for ride-hailing and delivery app services: As the mandatory use of the platforms rolls out, this study does not recommend harsher punishment of illegal and off platform service providers. This new model of a government-mandated public-private partnership in ride hailing can only be successful if it offers a better alternative to

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both cab drivers /moto riders and their passengers. Flexibility in setting fare prices is crucial. If this proves too difficult for the regulators and the platform to deliver, cab drivers and moto riders will need to find alternative ways to earn a living. Positive incentives for early adopters and loyal platform drivers/riders could come as lowered taxes, insurance fees, or permit costs. Other amenities could be pursued that do not lead to foregone revenue (e.g., easing the recurring payment methods for platform workers through inbuilt savings schemes). In terms of worker rights, short of full employment contracts, the GoR regulator should clarify and articulate to platform providers which rights and duties come with arms- length quasi-employment contracts for platform drivers and riders. The worker organization of riders and protection of rider representatives seem to be in flux and could be better institutionalized. For data collection, transparency is important on how and when data is collected, stored, and used by the platform and/or the regulator for which purposes. The GoR should make this information publicly available, since this is not only an issue for cab drivers and moto riders, but also for their potential passenger. Concretely to enhance the chances of women workers in the mobility platform sector, international development partners could target their support to companies that are already invested in enhancing the plight of women (e.g., Kasha Inc).

Study II: Cloud-Based Digital Services – Online Labour Platforms & Exporting Global Business Services from Rwanda to the World

Study 2 examines two forms of cloud-based IT-enabled services: online platform work, also known as online freelancing; and classical, brick-and-mortar Global Business Services (GBS), also known as business process outsourcing (BPO). The types of services they provide differ slightly: online platform work consists mainly of non-customer facing back-office tasks, such as data entry, labelling, or transcription; while GBS work consists more in customer facing front-office work, such as answering customer queries. But online platforms specialized in front-office work have recently emerged, and classical GBS firms have always offered all forms of back-office work as well. The main difference between online platform work and GBS firm work thus lies in how workers provide these services – as individual freelancers on the platforms, and as stable employees in GBS firms.

In a short first section, we discuss online platform work in the African context, showing that, throughout the 2010s, global online labour platforms have grown rapidly in size (e.g., Upwork, Fiverr), and in number (by one count, more than 350 global online labour platforms exist; Kässi et al., 2021). But the numbers of African freelancers who earn steady incomes online are still small. Online platform workers tend to cluster in countries like India, Bangladesh, Pakistan, or the Philippines, which often already have sizable digital services sectors. Online work clusters thus tend to emerge in countries with large labour pools, spilling out of the GBS sector, as former GBS workers provide the platform tasks they previously performed as employees (Lehdonvirta et al., 2021). In Rwanda, where no online work cluster exists, and where the GBS sector is just in its infancy, we recommend that the Government of Rwanda (GoR) concentrate less on facilitating online platform work and more on the GBS sector, using Rwanda’s business-friendly regulations and conducive infrastructure to attract GBS firms.

The bulk of Study 2 thus asks whether GBS can become an elevator sector for Rwanda, bringing more youths into decent, formal, export-oriented work, lifting these workers up the career ladder towards more complex tasks, and with them, lifting Rwanda’s entire society up towards the aimed high-income status. Whether a GBS cluster will consist merely of temporary click-farms (with low salaries and no avenues for skills upgrading) or will become a permanent growth sector for catchup development will depend on different factors. A critical academic literature on the Indian and Filipino GBS (aka BPO) sectors has long lamented that this sector has in part consisted of ‘digital sweatshops’ with poor working

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conditions, monotonous tasks, and few options for worker career development. Other observers found that the sector provides decent jobs that help workers advance the skills needed in the job market.

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need to be improved. But these are skills that can be significantly boosted with three to six month intensive training programs. Our research found that a number of international partner organisations and training institutions exist in Kigali, who are all willing to fund demand-driven skills development for the GBS sector over the longer term.

Our policy recommendations for cloud-based services are thus focused on sparking a GBS cluster in Kigali and are aimed at three groups of readers: (i) incoming GBS firms; (ii) the Kigali ecosystem of existing GBS firms and their training and partner organisations; and (iii) the Government of Rwanda. For incoming firms, our recommendations are to plan longer term (since workers will need a little time to become competitive with their peers in established clusters), and to clearlydefine ‘impact’ (since many international development partners are willing to support GBS firms who see a clear role for themselves in the development of the local labour market). For non-governmental ecosystem players, such as partner organisations and the GBS firms already in Kigali, one policy recommendation is to showcase the Kigali ecosystem to potential new GBS-sector investors. Furthermore, demand-driven training needs to be coordinated with the incoming GBS firms, needs to be aligned with the plans of the responsible government body, the Rwanda Development Board (RDB), and needs to be harmonized with similar initiatives by other partner organisations. A noteworthy case study is the collaboration between the Digital Skills Accelerator Africa (DSAA; a club of IT-enabled services firms), German Development Cooperation, the MasterCard Foundation, Harambee Youth Employment Accelerator, and Education First, who are in the process of building a GBS industry association, and who are all coordinating their upskilling initiatives with the GBS firms.

Our most detailed policy recommendations are for the Government of Rwanda, mainly on economic incentives for incoming GBS firms, and on coordinating a skills pipeline with the local ecosystem of development partners and training institutions. This consists of: (i) addressing the entry-level skills gap; (ii) considering foreign worker permits; (iii) finding ways to become more cost competitive; (iv) helping GBS firms win global contracts for their Kigali centres; and (v) over time, nudging the GBS cluster towards delivering ever more complex services from Rwanda.

       (i)  Coordinate language skills training: After a glance at various global indices, potential GBS firms will not be worried about the stability and reliability of Rwanda’s political system and regulatory framework. The main concern of these potential investors will be whether a small and low-income country like Rwanda can supply enough workers who are sufficiently skilled to serve global markets. The GoR has addressed this challenge for high-end IT services by bringing some of the world’s best technical institutions to Rwanda. But on a broader scale, the main task, with sufficiently low entry barriers to employ broader masses, is that of a call centre agent, serving customers in English-speaking (or, to a lesser extent, in French-speaking) global markets. For this, spoken English levels of B2 or better are required. Initial testing by Harambee (2020) indicated that only around 10% of Rwandan university-graduate job seekers possessed these skills in 2019, but that this could be scaled up via three to six month demand-driven training courses if the learners could be incentivized with real job prospects instead of mere certificates. The GoR should coordinate such trainings.

    (ii)  Liberalize targeted work visas: In the meantime, the GoR should link its efforts to facilitate a GBS cluster with its ICT Hub Strategy (MINICT, 2020) of bringing talented workers and students from across the African region to Rwanda. Concretely, this would entail a massive liberalization of work visas for GBS sector managers and for GBS workers with particular talents – e.g., niche language skills.

   (iii) Subsidizeinnovativelywherepossible:Rwandacompeteswithothercountriesthatcanofferbetterfinancialincentives as direct subsidies, but the GoR can work around this by offering forgone revenue to newly investing GBS firms (e.g., periods of zero income tax for employees). It can also offer employment subsidies that are supported by international partner organisations (e.g., German Development Cooperation, MasterCard Foundation) in the form of training stipends to the GBS firm’s upskilling entities (elev8 for Tek Experts, Careerbox for CCI). Further, we make concrete

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suggestions on how the GoR could help incoming GBS firms by lowering their office rental costs (e.g., first as an intermediary lease negotiator, and later as a co-developer of open-space offices) and reduce internet connectivity costs (e.g., by buying bulk packages from providers and reselling parts to GBS firms, and by negotiating off-peak rates for GBS sector night shifts). A straight-forward quasi-subsidy would be to clarify Rwanda’s Export Processing Zone (EPZ) status for GBS firms. This would significantly reduce set up costs, and it would lower the value-added and corporate income taxes for services exporting firms. 

    (iv)  Advertise globally: More generally, the GoR is in a unique position to signal strong GoR support to the ecosystem and to advertise for GBS contracts at global summits. As GBS firms’ clients often drive the decision for new locations, the GoR can play a significant role in enticing large buyers of global business services to consider Kigali as a delivery location.

    (v)  Nudge towards higher value: Lastly, when the GBS cluster takes off in Rwanda, the GoR will need to support the sector along the pathway of ever higher-value services, nudging the sector towards knowledge transfer from the lead companies in the global value chain in order to anchor innovation capabilities in Rwanda. This can be done by engaging in regular exchanges with support organisations in countries like Egypt or South Africa, where GBS clusters are established and where the ecosystems are further along the pathway of generating lasting knowledge transfers.