COVID-19 and its impact on Africa’s co-working sector

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Innovation hubs and co-working spaces have become the backbone of Africa’s tech startup industry over the last few years, with the number of such organisations increasing to 618 by the middle of last year, according to GSMA research.

But how has a sector that is not exactly conditioned for “social distancing”, reliant as it is on filling physical spaces with members, as well as organising events, cope in the age of COVID-19. And what is the industry doing to survive the “new normal” going forward”?

A hard-hit sector

Inevitably, as a sector built around collaboration, networking and events, co-working was hard hit by COVID-19 and its associated lockdowns. Spaces across the continent were suddenly closed, services members had paid for were cancelled or unavailable, and even now some are starting to open again people are still social distancing and fearful of the virus.

Hannah Clifford is director of Nairobi Garage, one of Kenya’s best-established co-working brands and one that has been busy expanding pre-COVID-19. She said the pandemic had been tough on her company and others like it.

“Many members opted to work from home during this period. And many companies who were looking at taking up space hit pause. I think that’s the case for all real estate, and most businesses actually,” she said.

Nairobi Garage had to adjust, and fast.

“We’ve quickly implemented a lot of the necessary measures that the government has recommended – plus moved our events online and generally just been more proactive in communicating with members, suppliers and our employees,” said Clifford.

Adjusting to the “new normal”

Other co-working companies have done similar things. Another fast-growing brand, South Africa’s Workshop17, was badly-hit by the government’s hard lockdown, and launched an online community in the meantime. MEST Africa, which is a school and incubator but has a host of co-working spaces across the continent, put in place a COVID-19 crisis management plan, and offered COVID-19-focused office hours to founders. 

“MEST has been able to properly plan around and adjust to reach the greatest impact during COVID-19. MEST has launched new resources such as making MEST’s monthly community newsletter to a weekly newsletter focused on COVID-19 content for startups, the webinar series ‘MEST Presents’, and an increase of COVID-19 content targeting African tech startups on its Medium,” said head of marketing Veronica Mulhall.

Nairobi Garage, Workshop17 and MEST are all well-established and well-resourced companies with multiple spaces, however. Smaller, growing brands have struggled, with many closing their doors for good during this time.

“I think those spaces at the lower end of the market will struggle to build up trust with their members on their ability to adapt to the new focus on hygiene and safety. And I think a lot of co-working spaces who’ve had a history of not paying rent, or paying late, have struggled to go back to their landlords and get deals from them that would allow them to get through this time,” said Clifford.

An uncertain future

What the future holds for co-working spaces is still unclear. Nobody knows how long the COVID-19 crisis will last, and whether or not it will usher in permanent behavioral changes when it comes to how, and where, people work. 

Britta Dahms is marketing manager at Workshop17. She says the impact on the space will be dictated by how an individual co-working company makes its money, and whether working from home becomes a real new trend. People are slowly returning to spaces, but it is still unclear to what extent, and additional revenue streams will prove tough.

“Events like seminars and big event spaces might have to convert into offices or larger meeting rooms as we don’t see traditional events picking up again until next year at the soonest,” said Dahms. 

Clifford said Nairobi Garage is still in the process of planning and evaluating, as there are still a lot of unknowns. Yet she says she is already seeing “a bit of a normalisation”. 

“And I actually think things will go back quicker than it feels like right now when we’re in it. But I also think there will likely be lasting effects, though it’s too early to tell what they will be,” she said.

Reasons for optimism

Most are confident that co-working will recover, as such spaces provide real value and support to entrepreneurs.

“It’s hard to envisage that companies will no longer need work space – I don’t think working from home is all that practical for many people. I think there will be an increased demand for flexibility, and therefore traditional office space will have a much harder time to convince people to sign leases,” said Clifford. 

“I also think there will be an increased focus on flexible work strategies, which sees more teams considering working in a remote or dispersed fashion – which could mean co-working spaces become a secondary space to offer employees options, other than working from home or coming to the main office. Or companies going fully flexible working, where employees have memberships to a co-working space with multiple locations and the employee chooses which space to work from, depending on preference for that day.” 

Mulhall thinks in-person support for startups is vital, and hubs and accelerators will remain pivotal.

“MEST knows while work-from-home has been vital to keeping tech startups operating during the pandemic, startups have an invaluable resource of human capital and networking while working in hub spaces,” she said.

Like Clifford, she also expects positive changes.

“MEST is also expecting an influx of larger startups closing their offices and joining co-working spaces to use with a combination of a work-from-home set up for their staff,” said Mulhall.

Reasons for optimism at larger co-working providers, then, as companies in the sector continue to muddle through and make plans for a post-pandemic world.

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Passionate about the vibrant tech startups scene in Africa, Tom can usually be found sniffing out the continent's most exciting new companies and entrepreneurs, funding rounds and any other developments within the growing ecosystem.

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