In April 2021, Twitter announced it was establishing an office in Ghana. And Microsoft opened its Africa Development Center in Lagos, Nigeria, in 2019. Twitter and Microsoft are not the only companies not founded or headquartered in Africa looking to tap into a growing pool of tech talents.
Amazon and Visa have also set up hubs on the continent in the last few years while smaller startups in Europe, Dubai, and the United States compete for African tech talents.
In June 2019, GitHub CEO Nat Friedman, on a visit to Nigeria, disclosed that the West African country had the fastest-growing developer community on GitHub.
“Nigeria is one of the fastest-growing developer communities on GitHub, and we are really impressed. Consistently, for two to three years now, Nigeria has been growing as fast or faster than any other country on GitHub,” he said.
Easing global hiring for African talents
Over the past decade, as mobile and Internet penetration has increased on the continent, the technology sector has witnessed the most growth, with African engineers increasingly courted by global companies.
Consequently, it is commonplace for local startups to lose employees to startups in Europe or the United States.
While this paints an encouraging picture, many tech talents cannot access these opportunities because of the difficulties in hiring employees in countries where the business has no legal entity.
As a result, these opportunities are entirely lost, or the terms of their employment are renegotiated to reflect these realities.
Even when they are hired, the problem doesn’t end. For example, contract employees have to raise an invoice at the end of the month, which would then be sent to the company’s accounting department.
Unsurprisingly, this could result in delayed salaries. Finally, they must convert their salaries to the local currency when they are finally paid. In Nigeria, for example, that means battling with banks and FX agents.
Victor Alade, CEO and Co-founder of Raenest, experienced these problems first-hand as a software engineer searching for remote jobs and later while trying to recruit a Ugandan software developer during his time as an Engineering Lead at Acumen Fund.
“While I was in Lagos consulting for companies in the US and UK, most times, getting paid for my job was not easy. Before I got the remote job, I missed out on several jobs because the companies did not have a legal entity in Nigeria and did not know how to process payments. Later, while I was leading the engineering team at Acumen Fund, we couldn’t hire a Ugandan engineer because we did not have a legal entity there.”
Realising that he was not the only one facing these challenges, Alade decided to team up with Richard Oyome and Sodruldeen Mustapha to launch Raenest, a startup that helps businesses “hire and pay employees compliantly.”
Raenest handles the hiring and payroll, making it easy for startups to hire from anywhere in the world without having a legal entity. They also handle taxes and contracting and ensure that the salary gets to the employee in minutes. Employees can also convert their wages to their local currencies at great rates.
To enable companies to manage employee expenses, the startup gives an employer a virtual card on which they can set a spending limit and give their employees for official expenses.
Furthermore, employers can use one currency to power payments in over 50 currencies. Raenest offers employees multiple pay-out options, including their bank accounts, mobile money, PayPal, Revolut, and TransferWise, at zero charges. They can also make transfers using their email or Raenest tags.
The startup also has products for freelancers working with foreign clients. With this option, called Geegpay, individuals create a virtual foreign account, which they can give to employers. This enables them to receive instant payments.
Raenest provides a solution that enables users to automatically generate invoices that employers can pay them with. This solution integrates with accounting software like QuickBooks, making the process seamless.
Business model and hopes for the future
Raenest makes money from at least four sources: the first is a flat fee that companies pay for every talent hired through the platform.
It also plans to offer salary advances, although salaries below $30 are not charged any interest. Accessing these salary advances comes with a 2.5% interest rate, while the startup makes money from currency conversion. Its last revenue model involves charging companies $3 to create a corporate virtual card.
Although the startup declined to mention how many companies currently use its services, it disclosed that its B2C offering, Geegpay, has been used by over 6,000 people since it was launched in April 2022. Now raising a pre-seed round, the startup plans to expand beyond Nigeria while providing more options to increase employee productivity.