This study argues for the diversification of South Africa’s digital economy, while building a case for the support of platform co-operatives (co-ops), i.e., worker-owned and managed social enterprises in the platform economy. Platform co-ops foster structural change for fair social outcomes and digital inclusivity as a natural outcome of economic development. They represent an important counterbalance to the rent-seeking venture capital funded tech monopolies that currently dominate the platform economy. This study views the emergence of platform co-ops as a gauge for the diversification of South Africa’s digital economy.
Outline of Study
This is a qualitative study that explores key concepts in the development of platform cooperativism by drawing on local and international literature, case studies and expert interviews. The literature review provides a brief analysis of the need for the diversification of the digital economy in South Africa in addition to providing a synopsis of the development of platform cooperativism globally. By way of examining the prospects for platform cooperativism in South Africa, it offers a review of existing and forthcoming legislation. This includes an analysis of the existing policy and institutional frameworks that support cooperative development in South Africa. Moreover, as platform co-ops will be affected by start-up legislation in the digital economy, the study also critiques the ‘Startup Act Position Paper’, a paper drafted by a pro-business lobby group seeking to influence upcoming start-up legislation in South Africa.
The case studies investigate the emergence of platform cooperativism in South Africa. Strictly speaking, the study did not uncover any functioning platform cooperatives in South Africa. What has been discovered is a successful social enterprise business that also functions as a platform for collective action. In addition, two platform co-operatives that are still in their launch phase, i.e., not yet operational, were uncovered. These three examples have been written up as case studies to highlight the challenges and opportunities faced by platform cooperativism in South Africa.
The case studies are:
Abalobi, a social enterprise digital market platform that helps fishers reach buyers, such as restaurateurs, directly while circumventing traditional intermediaries.
The University of Western Cape’s ‘Digital Platform Co-operative Project’ created by the Social Law Project in the Centre for the Transformative Regulation of Work, to support the establishment of a domestic and care workers’ platform cooperative.
Trip Rider SA, an emerging ride-hailing platform cooperative that is still in its development phase with a franchise opportunity from Eva, a cooperatively owned Canadian ride-hailing platform launched as an alternative to Uber.
Findings
Drawing on lessons from abroad, this study finds that the success of platform cooperativism is highly dependent on a nurturing environment supported by a sympathetic socio-political framework and policy support that includes targeted financial assistance. However, even in cases where the socio-political framework is incompatible, a proven tradition of cooperativism and familiarity with the co-operative model nevertheless establishes a foundation to catalyse 21st Century platform cooperativism.
Neither of these conditions exist in South Africa. The study found a weak traditional co-op sector in South Africa as well as a bifurcated policy environment frustrating the emergence of platform cooperativism. The study was thus unable to locate any operational platform co-ops in South Africa.
In the current context, platform cooperatives are forced to straddle the divide between ineffective welfarist policies driving co-op development in the second economy and exploitative neoliberal policies driving start-up development in the digital economy. The neoliberal policy orientation of the mainstream start-up ecosystem is set to be further entrenched if a Startup Act Position Paper originating from the business sector is allowed to hold sway in policy debates regarding forthcoming legislation in South Africa.
The study thus found a weak policy environment to support the establishment of alternative enterprise development models, including platform cooperatives, in South Africa’s digital economy. This is exacerbated by a lack of institutional support for social impact innovation in South Africa’s start-up ecosystem.
Recommendations
This study makes the following policy recommendations:
A counter argument to the pro-business Startup Act Position Paper. The digital economy represents a new terrain of struggle for policies that produce better social and economic outcomes. In this respect, it is vital for progressively oriented organisations to develop a position paper that will act as a counter argument to the private sector’s neoliberally oriented Startup Act Position Paper, which will also affect platform cooperatives as well as other social enterprise start-ups.
The development of proof-of-concept models for alternative social enterprise businesses in the digital economy. The absence of a vibrant co-op sector that presents a viable model for simulation in the digital economy, as well as the generally anaemic environment to support social enterprise models in the digital economy, highlights the need for South Africa to develop proof-of-concept models that provide inspiration beyond the current business as usual models. This calls for targeted measures that are purposefully designed to promote alternative models for success, highlighting the need for significant institutional support as well as financial investment for proof-of-concept models to take hold and become both visible and viable.
Social impact incubators. In terms of institutional support to enable the diversification of the digital economy, there is a need to establish social impact incubators specifically aimed at launching platform co-ops and other social enterprise models in the digital economy. The location of these incubators is important. In this regard, institutions such as universities and trade unions represent opportunities to link incubators to established entities that can provide the required institutional backing.
