‘Social, sustainable and economically resilient’, that’s the promise of the sharing economy for our cities in the West. Is this also the case in developing countries? And what is needed to become a true sharing society? An opinion column by Samantha van den Bos (shareNL) and Matthijs Nederveen (Light for the World).
The rise of the sharing economy
The sharing economy is not a trend, but a transition. This is what consumer research indicates: an increasing number of people are familiar with the concept, saying to make use of sharing platforms. In the Netherlands alone there are more than sixty sharing platforms operating, in the U.S. there are more than four hundred. Last year PricewaterhouseCoopers estimated that the digital sharing economy will globally increase with a quarter to thirty percent per year. And not only in the West. The two cities with the highest growth in registrations on Airbnb are Capetown and Marrakesh, both African cities.
Also in Kenya there is a growing number of offers and users on sharing platforms. In 2016 alone the number of short term rental housing and apartments offerings has tripled compared to 2015. In the sharing economy apps and platforms allow us to make better use of underutilized capacity by directly bringing together supply and demand, eliminating the traditional institutional intermediary. Think of SnappCar, a platform where peers can rent out their cars without the intervention of a rental company. With this model, there are fewer cars needed and it reduces car ownership.
The scope and scale of these platforms is what makes the sharing economy innovative. It's not just individual groups of people who organize themselves, but online communities with sometimes millions of users, across borders. We are in the midst of a system change; we’re moving from hierarchical structures and traditional institutions towards a system of interconnected networks. From ownership to access. From distrust to trust. Technology and smart algorithms are making trust between strangers possible and ensure greater transparency. For example BlaBlaCar, the modern version of hitchhiking. People step into a stranger’s car; they are brought together by the platform that creates trust through verification and reviews on the internet. Meanwhile BlaBlaCar has more than 25 million users in over twenty countries in Europe and also in Mexico, India and Brazil.
These platforms are arising in a time of extreme excesses of a failing capitalist system, which is based on greed and resource depletion. The contrasts are ever greater: a small group of rich is getting richer at the expense of the rest of the population. A new economic system is needed, which includes a greater focus on the community and sharing. However, the sharing economy is not immune from criticism. Is it truly about sharing or a disguised form of capitalism? Companies like Uber and Airbnb have become multinationals with the same values s companies in the "old economy". Yet they have made us change the way we think about ownership and sharing. The sharing economy has demonstrated that we do not live in a time of scarcity, but of abundance, and that anyone can be an entrepreneur and have access to goods, knowledge and mobility.
The phenomenon obviously raises questions: Is it about profit or influence? Is it efficient or social? Are you a consumer or producer? If tomorrow nobody owns anything anymore, who will? And who owns the data? It is now up to us to explore together and experiment to decide on which way we want to go. How do we apply this breakthrough innovation to reshape our society locally and globally and have our cities become more economically and socially resilient, and sustainable. In July, the European Commission called on her Member States not to clamp down these early stage sharing economy initiatives, and first gain a better understanding of what are the opportunities and challenges. We must start thinking outside the box and come to solutions for the problems currently not being solved because of the inadequateness of our current system.
The Sharing Economy in the Netherlands, a tool for poverty reduction?
In the Netherlands, forty percent of households do not have enough savings to cope with financial setbacks; So poverty is always lurking. Precisely this group of people could benefit the most of the sharing economy. People on a limited budget can get access through the sharing economy to services and goods to which they otherwise would not get access to. For example, children's clothing and toy exchange via Krijgdekleertjes.nl, rent a carrier bike through Peerby, help and care on WeHelpen, assistance in writing a cv via Konnektid, traveling through NightSwapping or with a motorhome for the whole family through Camptoo.
In addition, the sharing economy also offers opportunities for small-scale and local entrepreneurship. Through TringTring you can deliver errands in the neighborhood with your own bike for five euros per trip. With Thuisafgehaald you can cook for your neighbors and break even with the dinner costs, or even save a little extra. With Konnektid you become a teacher in your own neighborhood, or the neighborhood handyman through Croqqer. You become as it were 'prosumer' in the new economy: producing and consuming locally. This strengthens the local networks and thus social capital, which in itself has a positive effect in finding a job, for example. It also gives people the chance to develop their talents, and thresholds are lower to try out new things - which leads to having a better self-image and it encourages participation.
However, in spite of the potential, user data shows that people at the bottom of society are not enough organically reached by the platforms. In our view, there is a task for the government and for welfare and charity organizations to examine why people do or do not participate and to inform them. Often people do not know these platforms, while at the same time, we have designed a system based on control and sanctioning that whoever does know these platforms doesn’t dare to use them in many cases (because regulation is unclear). Also, social workers and other professionals aren’t sufficiently aware of the various options within the sharing economy. Experimenting together, exploring what works and what doesn’t; that is what is needed today. Which buttons do we have to turn to unlock the potential of all of us?
The City of Amsterdam is investigating how they can link the City Pass to local sharing economy platforms. In this way people with a lower income will soon be able to get cheaper meals in the neighborhood from home cooks on Thuisafgehaald with their city pass. Another example can be found in the collaboration between the cooperative ‘De Vrije Uitloop’ with Cordaid (NGO), and the city of Breda. Under the umbrella of this cooperative people on welfare have the chance to gain experience with small-scale entrepreneurship and earn part of their monthly allowance, without red tape that comes with entrepreneurship. Today, as a society, we allow too much talent and opportunities going down the drain. For example, someone can be very good at woodworking, but is struggling to get a job; the step towards entrepreneurship is too big. Through this model, people can take part again and thus increase their chances. Their value is recognized. Cordaid assists in the Netherlands the start-up phase of these kind of social cooperatives. They deploys their knowledge, expertise and network and provides the legal framework and where necessary also supports with financial resources.
More and more welfare organizations see the sharing economy as a new tool for poverty reduction. Also Stipo is experimenting at district level to promote a network of home cooks, focussing on amongst others people on welfare and others in debt. WeHelpen, a platform for support and care in the neighborhood is working with volunteers of local welfare organizations. They are plugging into the existing infrastructures and they inform the professionals how to make use of the platform. Such initiatives should receive more support, because of their ability to reach a lot of people. They could be an instrument for governments and organizations to deploy themselves.
The Sharing Economy in developing countries and emerging economies, an engine for economic growth and inclusion?
Also in developing countries, the sharing economy offers many opportunities. There already is fertile ground for the sharing economy to flourish: where Western culture is built on individualism, cultures in developing countries are much more focused on the community. It is considered normal to share and to counter setbacks together. The phenomenon of (informal) sharing is centuries old, and so is the sharing economy. This partly runs through cooperatives and ‘self-help groups’, but often also through family ties and village structures. The difference with the sharing economy today is the internet offering unprecedented opportunities to create communities that extend far beyond the family or the village, across borders.
A good example of a local system that finds its way through a digital platform is the casas particulares in Cuba; private accommodation which is embedded in the local culture, with the permission (and legal structure) of the government to host tourists. After the US lifting the trade embargo against Cuba, Airbnb has made a great start in Cuba plugging into the existing local infrastructure. Currently there are more than four thousand hosts registred on the platform with their casa particular. Other examples of online sharing platforms are the South African Task it, where professionals such as plumbers offer their services and individuals can enter their demand, and Hello Tractor, where farmers lease and rent their equipment. This has advantages for the farmers who own the machines, because they use it more productively, as well as to the farmers who do not own the equipment, because they now have access to them and can work their lands more efficiently. With a high population density, access to the internet and entrepreneurship as key factors for the sharing economy to flourish, perhaps the most potential lies in the non-Western metropoles. And these mega-cities also have the biggest challenges. In 2050, seventy percent of the world population will live in an urban environment; it is very much needed to deal efficiently with existing capacity, resources, and each other.
These examples are initiatives of (social) enterprises and (commercial) start-ups. Unfortunately, we have not seen many examples of traditional organizations in the development sector that make use of the sharing economy and sharing platforms to achieve their goals. We believe that development organizations can play a much more active role in this area. Just a few of the opportunities we see:
• improving education through the use of online courses offered by knowledge institutions;
• shared use of equipment in the agricultural sector (in cooperation with platforms like Hello Tractor);
• improving (youth) employment opportunities by helping young people with their (micro) enterprise by connecting them to platforms such as Task it;
• rural development through shared ownership of solar collectors and Internet services and connecting local cooperatives with online platforms.
Similarly to the traditional economy, also in the sharing economy there are more opportunities for the higher educated to exploit it, compared to those living in the margins of society. There are people who are excluded because of their physical or mental disabilities or limited language capabilities or internet knowledge. Especially because the sharing economy is rapidly growing and offers a lot of potential, development organizations should be committed to assisting people with fewer opportunities, and thus connecting local communities, self-help groups and cooperatives to digital communities.
Some companies are taking steps already to break down barriers: UberAssist, a taxi service for people using a wheelchair, is just one example. Also in terms of participation and conflict we see a role for NGOs. Because the discussions about the sharing economy are part of a much wider debate on an equal division of the economy and democracy, they should exert their influence to remove barriers and promote access for all groups in society. There is a role for the Ministry of Foreign Affairs and the embassies. There is a need for capacity-building national and local governments to develop a vision on the sharing economy, for economical and urban development and poverty reduction. The experience of cities in the Netherlands - as Amsterdam, profiling itself as 'Sharing City' - can be used for this purpose.
We have tried to demonstrate that the sharing economy is more than just a trend, and carries a lot of potential also in the field of development cooperation and poverty reduction. We advocate not to leave its further development solely to businesses, and we call on non-profit organizations and the Dutch government to take an active role in this process. There is a lot of room for innovation and precisely a country like the Netherlands, that is breaking down the barriers between trade and development cooperation, could be taking a leading role.
Written by: Samantha van den Bos and Matthijs Nederveen
This is an article translated from Dutch to English. The original article was published in Vice Versa (Dutch journalistic magazine for global cooperation) on the 22 december 2016. You can read the original article here.