Is the sharing economy good for the Arab world?

On a recent trip to Lebanon, I hopped into a Careem car from the airport to a meeting in downtown Beirut. In Lebanon, and all over the Arab world, commuting via Careem or Uber provides a much better experience then the local taxis especially for someone who doesn’t want to carry cash or endlessly bargain with a driver about the rates. My driver Ahmad was a 21-year-old young man, a student at a culinary school specializing in making pastries. His day starts at 7am where he works at a local bakery until 2pm and in the afternoon, he drives for Careem. “In Lebanon, life is hard” he said and “I need to have 2 jobs to make ends meet”. Ahmad is a participant in the sharing economy!

Whilst there are proponents and detractors of the so-called sharing economy, we’re yet to experience its impact on the Arab world. From my biased perspective having run Nabbesh.com - an online marketplace for independent contractors - over the past 5 years, the sharing economy is here to stay so we’d better proactively embrace it. In fact, Nabbesh.com is one of the first marketplaces dabbling into the sharing economy in the Middle East & North Africa (MENA) since 2102 and connecting designers, developers, translators and artists with work opportunities.

So what is the sharing economy? Also known as the collaborative economy, the gig economy and for the cynics among us, the rental economy. In its essence, the sharing economy allows people to make money or benefit from underused assets be it physical products or services. Anyone can make a quick buck by allowing someone else to use what they own whether it is an apartment, a bed, a car, a bike, their clothes or even their expertise. This concept is not new, in fact it’s commerce at its most basic form or shall we say micro commerce? Jeremiah Owyang a Silicon Valley veteran and a proponent of the sharing economy has dubbed this movement the “Collaborative Economy" and has developed the "Collaborative Economy Honeycomb" which aims at describing the various players into the sharing economy.

Independent contractors were at the forefront of this movement enabling others in need of their expertise to - rent them by the day - for instance. So what is the hype all about you may ask? Well there are two factors - which propelled the sharing economy into the spotlight and weaved it into every economic and legislative discussion in the past few years – technology and economic downturns.

Technology made millions of us instant traders. Anyone with a smart phone can be selling something over the myriad of marketplaces created to regulate peer-to-peer transactions. Economic downturns across the world made us seek an extra $10 here and $50 dollars there. PWC says that the sharing economy is about “impact”, Airbnb averages 425,000 guests per night, 22% more than guests who stay at the Hilton globally. These global marketplaces are becoming the largest “employers” within an economy and it is not a fad, it is here to stay.

So what about the Arab world?

Let’s look at the Arab world, this concoction of youth with little opportunities is now looking to enter the workforce and guess what? There aren’t enough jobs to accommodate them. Here is what we know… According to the International Labor Organization (ILO) there are 144 million people in MENA’s workforce today, the USA has 161 million and India has 500 million, just to give you some perspective. However these numbers may not reflect what is happening on the ground. Nearly one third of the Arab world’s jobs are within the informal economy, meaning they are not part of “the system” and hence not recognized within the active workforce. In addition to that our region has the world’s lowest labor force participation rate at 50% (the global average is 63%), which means that we have young and able people who are eligible to work yet remain inactive. Just imagine, we could double our workforce if people change their attitudes and have more access to work opportunities. What exacerbates the problem is the rate of women’s participation in the workforce, a miserly 25%. And the rest you may ask? 60% of inactive women cite housework as the main reason followed by pursuing education at 20%.

Let’s ponder these numbers for a bit and think about the sharing economy, can you imagine what a young man or woman can do if given access to opportunities via their smartphones? I believe the impact would be transformational. If these women young and old were given access to opportunities via technology to work from home, trade or even learn new skills, we would have an Arab world that looks entirely different.

If we organize the informal economy onto online marketplaces and connect people with much needed skills like carpentry, masonry, repairs and maintenance, etc. with people who need these services, the impact would not only be financial, the local economy would benefit from a better workforce. Why? Because peers not government regulate marketplaces and peers would review the service providers and indirectly force them to provide better and more reliable services.

So why aren’t we jumping at this magnificent opportunity for change? One way to explain it is that we still don’t understand or even trust the sharing economy and hence unable to benefit from its transformational impact especially in the Arab world. Governments have a role to play here and that is to incentivize and regulate the sharing economy without curbing it. A great example of this public-private-partnership model was the recent agreement between the UAE's RTA and Careem. A framework would help add credibility and legitimacy to the sharing economy and its impact would trickle down into local economies one way or the other. Similarly, the private sector could benefit tremendously from the agility and knowledge transfer an independent contractor or a remote workforce can bring.

And here’s another reason why we should care about the sharing economy, 43% of independent contractors are millennials that possess a different view on employment when compared with the previous generation. Millennials are becoming managers and soon they will be at the higher echelons of the workforce and these millennials will introduce new ways of doing work as they seek more work life balance and fulfillment. The sharing economy is something they’re used to and part of their daily routine so the logical way to progress is by engaging these millennials to formulate strategies capable of tackling the challenges of tomorrow’s workforce.

Is the sharing economy good for the Arab world? Absolutely. Its impact goes beyond helping our "pastry chef to be" earn an extra $10 for instance by driving someone around as it forces its participants to be in a continuous learning mode and with the advent of MOOCs and free channels like YouTube, there are no excuses not to learn. Peers not governments will regulate the marketplaces of the future and prosperity shall follow given that the need for services will never cease. Almost 20% to 30% of Europe and the US population is engaged in some form of independent work, so let’s brace ourselves, it will happen here. In no means am I advocating that we all become someone's babysitter, driver, tutor or landlord at the expense of stable and high paying jobs, however in the lack of other and better opportunities, making a living trumps staying home!