How an App is helping Mozambique’s informal service workers to earn more

Most workers in Mozambique operate in the informal economy, which typically displays low earnings and limited access to finance, markets, and networks. In urban areas, most (informal) services workers like plumbers, carpenters, electricians, and other services professionals rely on limited informal networks and inefficient strategies — such as word of mouth — to find job opportunities. But this can be inefficient as workers can miss out on potential clients who aren’t within their networks or live in different areas of the city. Most clients, who also rely on referrals because job placement agencies and formal digital work platforms are almost nonexistent, can miss out on potential suppliers. Given these information asymmetries, it can be difficult to efficiently connect demand and supply of services.

Innovation where 90 percent of jobs are informal

In 2016, Mozambican startup “UX Information Technologies” launched “Biscate”, an app which attempts to solve this information gap. Biscate, which means “odd job” in a local Mozambican language, is a platform that allows informal services workers to advertise their services and connect with clients using a USSD technology, which runs on any kind of mobile phone, and does not require internet connection (though clients access the platform through a mobile app).

The World Bank conducted an assessment of Biscate in the context of the Let’s Work Program, to understand whether this platform is an effective way to support informal workers, by bridging the information gap between them an potential clients; and whether it is an effective tool to increase earnings and productivity, and to increase clients’ demand for services. The evaluation analyzed two different cohorts of workers and one cohort of clients of the platform between 2016 - 2018.

Promising results overall

The evaluation has revealed important insights, that were also contextualized by comparing  data on workers in the platform with existing data on informal workers in Mozambique. The platform seems to be effective at increasing workers profits. The average active worker’s monthly profit of the first cohort doubled and the average active worker’s revenue more than doubled. This is related to the fact that workers in the platform increased the number of hours worked overtime.

The second cohort analyzed did even better, raising their profits by 67 percent between observations, and also increasing the average number of services offered. All of this took place during a time of economic turbulence in the Mozambican economy, including a debt and fiscal crisis.

The platform could even encourage women entering traditionally male-dominated sectors, as was the case of Danucha, a young female mechanic.

Collaboration led to design improvements

Over the course of the evaluation, we shared our survey results and insights with UX, which helped in  adjusting and improving the platform. One of the most interesting additions was the 5-star rating and comment system for workers, based on price, quality, and time for the work undertaken. In February 2020, 15 percent of the workers active in the platform had at least one comment (negative or positive) on their profile. This group also had a higher number of requests for their services. On average, workers with at least one comment on their profile have 13 times more requests than workers without comments.

Experience matters more than education

In addition, we ran a series of regressions to understand what variables lead to higher profits or number of services performed in the period of reference. Interestingly, age, gender, and level of education, are not correlated with higher profits or number of services. Only work experience in that specific occupation, what we call “tenure,” has a positive effect on the number of services performed. This shows that workers with more experience are getting more work opportunities in the platform, suggesting that workers might be getting better with time at what they do, and getting more earnings out of it.

On the other hand, a higher level of education is associated with a lower level of profits. This result can be explained by the fact that the Biscate platform is efficiently targeted at services that do not require high formal education degrees, rather good technical skills and experience acquired on the job.

What about clients?

On the client side, although the number of paid services (per client) requested did not grow over the time of observation, the total number of hours that the clients worked to perform services at home themselves decreased from 3.17 to 0.23 hours per week (significant at 5 percent). Therefore, Biscate may have increased the efficiency of this market by allowing clients to hire services when needed, instead of performing services themselves because they didn’t know who — or didn’t find someone — to hire.

Win-win for all

To help informal workers, investing in digital platforms like Biscate might make a lot of sense and does not cost much compared to other types of interventions. If the market failure to overcome for these urban medium skilled informal services workers is information, then a digital platform which connects them with potential new clients might help them in getting more work and profits. It might also help clients to increase their demand for paid services, either displacing unpaid family labor, or by increasing consumption over time (this will need to be further explored).