On the last day of March, Nigeria joined the rest of the world in trying to control the spread of the Coronavirus pandemic, by declaring lockdowns in three of the county’s most prone states/cities. The lockdown orders later extended to several states, albeit in varying degrees. Kano State is the most recent addition. Although there are differing opinions about the effectiveness of the lockdown, one thing everybody agrees on is the toll that it has taken on the country’s economy.
No sector has been spared the economic fallouts of the lockdown. Although there have been a few gainers, most companies have lost major earnings. This is why the Federal Government eventually directed the commencement of a phased easing of the lockdown, despite medical warnings against doing that.
In the meantime, employees are already feeling the effect. This is because many companies’ responses to the crisis have varied from pay cuts to outright layoffs. Companies within the tech-space have not been spared, as many of them have had to make hard decisions to ensure their survival during this difficult time.
Downsizing…
On March 25, Renmoney laid off 391 sales agents, claiming that new technology was being introduced to change the company’s mode of operation. These changes include the introduction of an app, which the company said would make field sales agents redundant.
Interestingly, this layoff came just before the commencement of the lockdown, giving room for speculations that the company simply did not want to incur additional salary costs for field agents who would be sitting at home, unable to work during the lockdown. It should be noted that all the laid-off employees received full benefits and compensations.
(READ MORE: The CBN data that can reveal whether we are already in a recession)
One thing is clear, and that is the fact that Renmoney will no longer operate with its former business model, having eliminated the direct sales channel. Although this is a great way to cut down operational costs, the technological change will have to be driven aggressively so that it can produce same results as the direct sales team.
Techadvance founder, Desmond Olotu, took to his twitter handle on April 8 to explain his company’s decision to downsize. According to Olotu, for the first time, he was left with no option but to take decisions based on ‘what the data says’, rather than following his instincts.
(READ MORE: Nigeria’s Inflation rate jumps to 12.26% in March as recession looms)
In a lengthy Twitter thread, Olotu, who also serves as the company’s Chief Innovation Officer, made it clear that it was not an easy decision “letting go of them in the middle of a crisis because the data said it was that or a dead company.”
12. Worse still, Letting go of them in the middle of a crisis because the data said it was that or a dead company. Doing that and still trusting that those left behind will continue to be motivated to sail the company through this storm.
— Edmund Olotu (@pyjama_ceo) April 8, 2020
“The hardest decision I have ever had to make in my life isn’t shutting down a non-performing company like I have done a few times; but rather letting go of high performing & dedicated staff because that’s what the data told me to do,” he said in one of the tweets.
Olotu then added that it was the first time in his 15-year entrepreneural journey that he was feeling like the rug was being pulled out from underneath his feet. He explained that he had always believed in his ability to navigate his company through any economic waters, including during the 2008/09 global recession when he won the Bill Gates grant for global health, and secured funding for his biotech company.
The option of restructuring
SystemSpecs (owner of Remita) has, however, opted for restructuring. Mid-April, the company hinted at the restructuring plan.
(READ MORE: Nigeria is in a weak financial position to absorb recession shocks —Bismark Rewane)
Although details of the restructuring have not been announced, the company recently launched Paylink, a payment solution that allows users to receive funds into their bank accounts without revealing their bank details. At a time when people have become wary of providing sensitive details on the internet due to Phishing, this solution could not be more timely.
Paylink also doubles as a virtual mall, allowing users to easily set up their online stores and accept payment by simply creating a link where customers can make instant payment. Plans are underway to launch the Paylink mobile app, and make it available on app stores.
According to Patrick Ikpelue, the restructuring will see the company relocate its corporate headquarters and roll out several other products. No mention has been made of downsizing or rightsizing. If anything, a new line of business for the company should expectedly create new jobs.
E-commerce platforms like Jumia and Konga have recently driven their marketing campaigns to higher levels with free deliveries, discounts, and free coupons. All of these just to keep the sales coming in.
(READ MORE: See 5 signs indicating that Nigeria is heading for a recession)
On Friday, May 1, Konga will launch its first online and social media auction, allowing customers to bid their desired prizes on items they wish to shop. This might be the right move to protect sales from dropping as consumers move towards buying only their essential needs.
Although there have been speculations that Paga may be toeing the same path soon, with a 50% salary cut, it does not seem likely. The fintech recently qualified to join the 4th cohort of the Ping A Insurance Company of China Cloud Accelerator Programme.
We have amazing news: Paga has been selected for the 4th cohort of @pingan_group's Cloud Accelerator programme! https://t.co/QB5u6J8Mvv
— Paga (@mypaga) April 14, 2020
Paga also did a giveaway for randomly selected users, crediting their Paga wallets with N5000 to assist them in stocking up during the lockdown period.
Paga basically operates an agent-customer system where the agents earn commissions on transactions carried out by customers in their wallets.
(READ MORE: Gold hits 8-year high, strengthened by global recession sentiments)
According to Jay Alabraba, Co-founder and Director of Business Development, the pandemic has reduced agent-customer contact thus reducing transactions. He, however, noted that there is an increase in the use of the wallets to receive foreign transfers.
Meanwhile, GTBank had in March 2020 announced plans to restructure as well, and venture into the fintech space.
Between the rock and a hard place
For any employer, the decision to lay off staff, especially high-performing ones, is never an easy one. As Olotu noted, “I suffer the same anxiety about my future & the future of my company like most founders do. Now more especially I’m anxious about the folks who work with me who have staked the success of their careers on the vision of our company. A vision that I am responsible for crafting.”
Also, they often have to battle with the reality that staff who survived the cut may leave due to lowered morale resulting from paycuts or layoffs. However, it is a decision that most will be constrained to make in the coming months as the economic effects of the pandemic is predicted to last into 2021.