‘Meta to lay off 10,000 more workers after initial cuts in November; Chipper Cash executes second round of layoffs less than three months after axing 12.5% of staff; Bolt laid off 17 of its 70 workers in Nigeria to restructure its operations in the country.’ These recent news stories are a spillover from last year’s tech layoff wave.
According to data from layoffs.fyi, a tech layoff tracker, 161411 employees were laid off from 1051 tech companies in 2022. Post-COVID-19 effect, the looming global recession, and an unprecedented global economic downturn last year are some reasons for the layoff wave. While some of the aforementioned reasons are improving for the better, their effect persists in the global tech ecosystem. Almost three months into 2023, about 138652 employees have been laid off from 490 tech companies.
Global trends and happenings often have a significant influence on the African tech ecosystem, largely because the bulk of venture funding comes from foreign investors, and a significant percentage of these funds is domiciled in offshore accounts. So as venture funding becomes more volatile globally, the budding African tech ecosystem gets its own share of the brunt, consequently forcing startups to downsize on the continent.
For example, this year, African cross-border payments platform Chipper Cash conducted a second round of layoffs in February, just ten weeks after it cut approximately 12.5% of its workforce (affecting its engineering team the most). Since December 2022, Chipper Cash has laid off more than 150 employees, with the most recent coming last month. Following a hit from one of its investors, FTX, in 2022, and recently, the closure of Silicon Valley Bank (SVB). The former saw its valuation slashed from $2 billion to $1.25 billion. Projections are often dicey, but we may see more layoffs in the coming months.
This upward trend of layoffs makes many tech workers uncertain of the days ahead. Although junior roles are likely to be more impacted by layoffs, senior roles at some startups have also been vulnerable. Regardless of the career level, layoffs have far-reaching consequences on the individual, the company and the economy at large. For instance, this article reveals how laid-off employees scramble to adjust from lifestyles previously supported by tech salaries that are no longer available. But, amidst these gloomy statistics and lived reality, there is a silver lining.
When the African Ecommerce behemoth – Jumia started in 2012, it had only a handful of employees to kickstart its operations in Nigeria. At a point in its early years, it recorded up to 50 employees, some of which have now built companies solving critical problems on the continent today. As of 2019, at least 14 startups have been built by some of Jumia’s pioneering team. Michael Adeyeri, a former software engineer with Jumia, started Kraks TV, a platform for viral entertainment content with Femi Bakre in 2014. And Busha, a platform that helps users buy, sell, and manage their cryptocurrency portfolios with former Jumia IT support engineer Moyo Sodipo.
In the same pioneering team are Onyeka Akumah who co-founded crowdfunding agricultural platform Farmcrowdy, and Chioma Ifeanyi-Eze, who founded Accountinghub, which provides accounting and bookkeeping services, and tax support for startups and small businesses.
Similarly, Douglas Kendyson, a former customer success expert and software engineer at Paystack, founded Selar to build a service where non-registered business owners can sell their products internationally. The list is nearly endless.
While the cases mentioned above are unrelated to layoffs, Africa’s tech ecosystem may witness similar advancements in a few years with the current wave of layoffs. Many laid-off tech workers have a strong skill set and experience in their field that can be used to launch amazing products and solutions in society.
We are optimistic that the wave of layoffs ends sooner than later. But if not, we hope lemonades are made out of lemons for the greater good of the tech ecosystem.