Benson T
These are tough times for Africa’s tech startups, and many have begun plans to reduce costs and cushion against total collapse.
Tech startups in Nigeria have looked to survive the current economic slowdown, which is expected to get even worse in the coming months. What do these firms look to? Lay-off staff; slash wages; and furlough others.
Microfinance lender Renmoney began the survival strategies when it sent home over half of its sales agents. For the company, these employees work directly in the field, and lockdowns meant they had to stay at home. The layoffs affected up to 391 employees who worked as direct sales agents.
A fintech firm is also reportedly slashing employee wages in the wake of the COVID-19 pandemic. The same is happening at a Lagos-based engineering company, with employees told of the layoffs via a phone call. While the measures appear drastic, it points to the strategies startups have resorted to ensure they remain afloat post-COVID-19.
Big Cabal Media recently told its employees that it would cut salaries. Meanwhile, Techadvance Chief Innovation Officer Edmund Olotu posted on Twitter that the firm would be downsizing on its staff. He attributed the decision on data that said it was either “that” or the company faced a shutdown.
According to one private wealth executive, what the companies are worried about is cash flow. Companies face dips in revenue, yet they have to attend to their fixed costs, an eventuality that is forcing many to rethink their business models.
For many startup founders, the trend is to cut costs- go lean and save cash. That is what is going to take for them to ride the storm and emerge out of this recession alive.
