On March 29, the Nigerian government rolled out measures to curb the spread of the coronavirus by initiating a two-week lockdown in the FCT and two states– Lagos and Ogun.
While the government allowed for essential services to continue operations, the lockdown restricted movement, temporarily shutting down businesses unable to rely on remote workers, the Internet, or cloud services.
For other businesses like startups, adapting to the situation and introducing remote work options to keep their businesses afloat became paramount.
At the same time, with market uncertainty and to reduce the anticipated financial strain of the lockdown on their businesses, some startups asked their employees to take salary pay cuts.
Asides salary pay cuts, some startups placed employees on unpaid leave.
According to a source, a payments company immediately took this course of action in the first week. Staff who weren’t required to work during the lockdown were placed on unpaid leave while those required to work got their pay revised.
However, one wonders what the future holds for startups and their employees given the announcement made by the president, extending the lockdown in Lagos, Ogun, and the FCT for another two weeks.
… effective from 11:59 pm on Monday, 13th of April, 2020.
I am therefore once again asking you all to work with Government in this fight.
— Muhammadu Buhari (@MBuhari) April 13, 2020
In an ecosystem that has created thousands of jobs, directly and indirectly, this will raise fresh layoff concerns in the minds of startup employees who know startups will have to take cost-cutting measures after the president’s announcement.
Michael (not real name), a software support engineer working with a startup in Lagos, was shown the door last week Wednesday as the downturn in business immensely affected the company he worked for.
“I knew something like this would happen but I didn’t think it would be so sudden. For now, I just have savings for two months. Hopefully, the lockdown gets lifted soon because I don’t know how I’ll get another job if I continue to stay at home,” Michael tells Techpoint.
Although underreported, Michael’s case shows that layoffs were already happening in the startup ecosystem during the initial 14-day lockdown. What it also shows is how things could worsen and the unprecedented challenge startups will definitely face in the coming weeks and, probably, months.
To paint a picture, just a few weeks into the lockdown in the US, thousands of startup employees were laid off from both low and high-profile startups. The severity of the situation has seen companies like home rental unicorn startup, Airbnb, stop hiring altogether and subsequently raise $1 billion in order to survive.
While large companies like Airbnb, and other established startups, might have the capacity to sustain employees for some time, that’s not the case for a majority of Nigerian startups.
With a looming cash flow crisis and a downturn in operations, most startups will feel a lot of pressure and how they handle these problems will affect the decisions they make regarding their employees if the lockdown continues over the next few months.