TechCabal Daily - A wave of lay-offs and paycuts at startups

Ethiopia is getting closer to opening up its telecommunications market to private operators. A series of conversations are expected to take place between now and the 11th of May to lay down agreements on licensing, consumer rights and dispute resolution. Interested parties include Vodacom, MTN, Orange and Helios.

As one of Africa’s most populated countries, Ethiopia is an attractive telecoms environment. The current arrangement is that Ethio Telecom, a state-run
company, operates as the sole provider of connectivity infrastructure. Prime Minister Abiy Ahmed has shown a streak of liberalization since assuming office. Breaking the existing monopoly will be one more step on the country’s journey towards becoming an African economic powerhouse.

After nearly five weeks of stunting economic activity, Nigerian startups are beginning to bleed. Owing to significant shrinkage in consumer demand, companies are down on revenue with which to sustain regular operational costs.

Some are letting staff go, a few others have asked employees to proceed on unpaid leave. Another measure that has come in handy is salary cuts – not the worst idea considering the impending recession. It is the startup hard knock life but, as Olumuyiwa reports, the ordeal also probably affects relatively established players as well.

Check on your founder and developer (and writer) friends; this harsh whirlwind could blow anywhere.

Citing “very heavy economic costs,” Nigeria’s president Muhammadu Buhari announced the easing of the coronavirus lockdowns that have been in place in Lagos, Abuja and the southwestern state of Ogun. Buhari is confident that the last four weeks yielded good returns in terms of controlling the disease’s spread.

The focus now turns to aggressive contact tracing and testing. On Monday, the Nigerian Centre for Disease Control (NCDC) added two more testing
laboratories to increase Nigeria’s network of labs to 17. The latest additions are courtesy of 54Gene, the biotech startup that has been in the news for all the right reasons recently.

Lagos residents will be cautious as they gradually revive commerce on May 4, the designated date for the end of the lockdowns. Nigeria’s pace of testing and tracing are subpar in comparison to Ghana and South Africa. But because a perpetual lockdown will dramatically cripple livelihoods, it is reasonable that some leeway for economic activity has been permitted. Hopefully, this doesn’t trigger an out-of-control wave of community transmission.

The IMF’s World Economic Outlook for April 2020 advises countries with large informal sectors to further develop their digital payments systems. Those systems “may provide an opportunity to improve the delivery of targeted transfers to the informally employed.”

In this piece, I explore the opportunity for fintech and African governments to take advantage of the coronavirus period to consciously develop digital payments infrastructure. Yoco, the South African fintech, and Paga, arguably Nigeria’s first mobile money operator, serve as good reference points owing to their present activities to scale digitization and formalization in the informal sector.