Laid-off employees are scrambling to adjust their lifestyles as funding crunches hit the already struggling economy.
REST OF WORLD
It was approaching noon one day in mid-October when Feyi, who worked at Nigerian tech talent accelerator Decagon, received a message on the company’s Slack channel. The human resources manager was requesting to speak with her on the phone.
Feyi was apprehensive. Months earlier, Decagon had initiated gradual layoffs. Several staffers had been let go, including her line manager. Now, it was her turn. By the end of the call, she had lost her job. “It was that fast; it was that easy,” she told Rest of World.
Since then, Feyi — who asked to use a pseudonym for fear of jeopardizing her job search — has been applying for roles without much luck. She earned around 200,000 naira ($434) a month at Decagon — a healthy salary in Nigeria. Now, her income has vanished, and her savings have been dwindling. She has had to make painful adjustments: skipping meals, cutting back on mobile data usage and fuel for her generator, and relying on family and friends for help.
“When my job was terminated, my goal was that where I have to work next has to be better with better experiences in terms of pay, culture … but it is not that easy,” Feyi said. “There are a lot of jobs, but there are also a lot of people competing for those jobs. It is not as easy as you would envision.”
With few options left, she has been tempted to take a lower-paying job, even if it feels like taking a step backward in her career.
Feyi is one of many Nigerian tech workers affected by recent layoffs caused by the global tech downturn. Now, owing to the flood of talent pouring back into the job market, plus the precarity of Nigeria’s economy, they are struggling to find new roles, with many having to adjust from lifestyles previously supported by tech salaries that are no longer available. Between 2015 and 2022, at least 383 Nigerian startups raised more than $2 billion between them, according to a 2022 report by Disrupt Africa. But as global investment slowed down last year, the Nigerian startup ecosystem ground to a halt. According to CB Insights’ State of Venture 2022 Report, venture funding to Nigerian startups peaked in 2021, reaching a total of $886 million; in 2022, this figure dropped to $563 million.
In September 2021, biotech startup 54gene raised $25 million, prompted in part by the Covid-19 pandemic and the company’s focus on related testing services. But just a year later, in August 2022, it laid off 95 employees, about 30% of its workforce. Two months later, it laid off more than 100 additional employees. Despite raising $55 million in August 2021, this past September, fintech startup Kuda laid off 5% of its staff. Cryptocurrency exchange Quidax raised more than $3 million dollars in May 2021 and laid off 20% of its workforce in November. Other Nigerian startups that have laid off significant numbers include Moove, a mobility startup; Nestcoin, a Web3 startup; Lazerpay, a crypto payment platform; and Vendease, an online food market.
Sultan Akintunde, co-founder and head of tech at AltSchool Africa, a Lagos-based tech education and recruitment organization, told Rest of World that layoffs were an obvious means for companies to cut costs and stay afloat during tough economic times. “It will not be a straight line up to a billion-dollar company; the slope will go up and go down and go up again,” he said. “If you are in downtime, and revenues are taking a dip and not raising funds, it is in the best interest to downsize. For most companies, it is basic math for them.”
Luke Mostert, head of investment at Future Africa, a fund that invests in African startups, said that the current layoffs may partly be due to companies growing too quickly in previous years. “[Investors] compel founders to prematurely scale their startups in pursuit of having an outsized return on their investment,” he said. “Come a downturn — when funding dries up due to the macroeconomic climate — a correction is needed. This most typically comes in the form of bulk layoffs for all the superfluous hires, like we’ve been seeing in tech over the last few months.”
Some other African startups have left Nigeria or scaled back their operations as a result of the economic downturn. In December, Ugandan ride-hailing startup SafeBoda exited the country, citing the need for “significant investment at this challenging time in the global economic landscape.” SweepSouth, a South African cleaning platform, left Nigeria in November, just months after raising an $11 million pre-seed funding round.
As a result, hundreds of formerly employed skilled tech workers, many of whom had acclimatized to relatively high salaries, are flooding into the labor market at the same time. Their situation is further impacted by Nigeria’s ailing economy. In the past eight years, Nigeria has experienced recessions twice, and its currency, the naira, is predicted to lose 20% of its value this year.
“The labor market in Nigeria has always been hard. For a long time, we did not have a lot of opportunities and jobs for people, while we are churning out a lot of graduates and professionals all the time,” Diseye Naasin, HR lead at home services platform Eden Life, told Rest of World, speaking in a private capacity based on her experience with talent acquisition and retention. “But now, people are able to get a job because tech lowers the barrier for entry. And now, it feels like we are going back to the way it was before, to a lot of people scrambling for few opportunities.”
Tunde, 21, was laid off in February 2022, without any severance, from his role at digital investment startup Chaka.
In the first two months, Tunde, who asked to use a pseudonym for fear of being identified by future employers, said he thought the search was going to be easy. He carefully selected which jobs to apply for, turning down offers because the pay was “below par.” His pay at Chaka was 150,000 naira ($325) per month.
But the reality of the tight job market quickly dawned, and he started applying more widely. “The job market, with the layoffs, has become more competitive,” he said. “It was really tough. You get rejection mails, then it keeps going and going.”
He had held an extra job on the side of his Chaka position, helping a friend build a tech product, but soon the pay for that work was also slashed.
Tunde started going to tech conferences to make connections, hoping to meet recruiters. Eventually, he got a referral to a Cape Town-based startup, which hired him in August. But the scramble to find a new job left an impact on his self-esteem.
“You get annoyed as a man that the things you used to do without thinking — you had to think twice, or you now have to ask for help, and the help does not come, and you get more frustrated. It is actually crippling. I stayed mostly indoors, trying to get a new job,” he said.
While junior roles tend to be more impacted by layoffs, senior roles at some startups have also been axed, as Nigerian companies try to adjust to the new funding climate. Tina, 40, took a senior management role at 54gene in 2021, moving from an $80,000-a-year job in Kenya because she liked the company’s vision, despite receiving less pay. She was laid off in August 2022. She considers the layoff “a bit of a setback.”
