Jumia, Alerzo, Renmoney top the list of 10 African tech companies with highest layoffs since 2020


The African tech sector has faced substantial layoffs since 2020, with Nigerian eCommerce platforms like Jumia and Alerzo, together, laying off up to 1,300 employees, and Nigerian startups leading the list with 13 out of 23 most notable layoffs, according to data collected by Businessfinancing.co.uk

The COVID-19 pandemic, coupled with a more cautious economic climate, triggered a wave of layoffs across the tech sector. A quieter force has been silently reshaping the industry: the rise of Artificial Intelligence (AI).

A report by McKinsey Global Institute, “Jobs lost, jobs gained: Workforce transitions in a time of automation,” in 2017, suggested that automation, driven in part by AI and robotics, could displace up to 400 million jobs globally by 2030 at ‘mid-point automation’ of workplace activities and processes. 

“Our scenarios suggest that by 2030, 75 million to 375 million workers (3 to 14 per cent of the global workforce) will need to switch occupational categories,” McKinsey wrote.  While new positions will undoubtedly emerge, the current wave of layoffs suggests a period of significant transition within the tech industry. 

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Like the rest of the world, Africa’s tech scene has witnessed phenomenal growth. But, significant layoffs have also taken place in the last 3-4 years. The most notable ones are: 

  • Jumia, an e-commerce platform, laid off up to 900 employees, saying “We expect these headcount reductions to allow us to save over 30% in monthly staff costs starting from March 2023.”
  • Online marketplace Alerzo laid off staff twice: in June 2023 (400 employees) and November 2023 (100 employees) with the company’s chief financial officer Harish Venkatesh saying the decision was to reduce headcount was done “in discussion with our supplier partners and their market views along with investors and management in an accelerated manner to get us to profitability by summer.”
  • Fintech company Renmoney also let go of 391 sales staff in April 2020, as it moved to carry out lending and other services with new technologies.

Regionally, Kenya also experienced its share of layoffs, with eCommerce platform Copia letting go of 350 employees in July 2023, and subsequently shutting down, citing the market environment and prioritising profits as contributing factors.

Twiga, a business-to-business platform for fresh food supply chains, reduced its workforce twice: 211 in November 2022 and 283 employees in August 2023. According to the company, the layoffs were a measure of cost-effectiveness to keep the business afloat in the face of microeconomic headwinds.

Senegal and Ghana also appear on the list, with telecommunications company Wave laying off 300 employees in July 2022 as it adjusted “rapidly to the jarring changes in capital markets in recent months”. mPharma, a pharmaceutical distribution and financing platform, let go of 150 employees [40 in Nigeria] in April 2023, “in light of the current macroeconomic conditions driven by the devaluation of the Naira.”

The last on the top 10 list is Seychelles’ BitMEX 75 staff lay-off in 2022, as part of a pivot away from the exchange’s “beyond derivatives” strategy, which included a push into spot trading, brokerage and custody services.

Top 10 layoffs by African tech companies since 2020
IMG: Businessfinancing.co.uk

You will find a more comprehensive list of studied companies and the number of layoffs at the end of this report.

Google and Meta dominate as the US leads the global layoffs scene

It is a bigger rope on the global scene. 

The data reveals a troubling trend for the American tech sector. With six out of the ten biggest layoffs since 2020 from the US, including the staggering 12,000 job cuts at Google in January 2023, the largest single layoff in tech during this period. This move was driven by the need to streamline operations amid changing market conditions.

Meta has also been a significant contributor to the layoff trend. The company announced several rounds of job cuts, including a major layoff in November 2022, which saw over 11,000 employees lose their jobs. This decision was attributed to declining ad revenues and a shift in the company’s focus towards the Metaverse.

Across the globe, other major tech firms have followed suit. For instance, in January 2023, Amazon laid off 18,000 workers, citing the need to improve efficiency and cut costs in its sprawling operations.

Similarly, Swedish telecommunications giant Ericsson laid off 8,500 employees in February 2023, the largest layoff event by any European tech company. This decision was part of a broader effort to cut costs by $860 million, reflecting the company’s strategic shift to remain competitive in a challenging global market.

While the story from Africa showcases a wave of job cuts in recent years, data from Business Financing.co.uk reveals a broader phenomenon impacting companies worldwide. Interestingly, the specific companies affected in Africa differ from the global leaders.

Top 10 layoffs by African tech companies since 2020

IMG: Businessfinancing.co.uk
Global similarities

Both datasets point to a clear connection between the layoffs and a general economic slowdown.  Investors, likely seeking safer bets, may be shifting their focus away from high-growth startups, particularly in Africa. 

Many high-growth startups, including those in Africa, focus heavily on rapid expansion and market penetration at the expense of immediate profitability. Investors are becoming wary of funding ventures that may take longer to generate returns, especially in uncertain economic climates.

They prefer to allocate funds to more established companies with proven profitability and lower risk profiles​. 

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In some sectors, market saturation and increased competition have made it harder for new startups to gain a foothold. Investors might perceive the competitive landscape in African markets as particularly challenging, leading them to redirect their investments to markets or sectors where the competitive pressures are less intense or where they see more clear-cut opportunities. 

Also, the rise of automation across various sectors, potentially fuelled by advancements in AI as discussed earlier, could be impacting tech workforces globally.

How should tech companies and talents respond to the cause of the layoffs? 

While the job cuts are a stark reminder of the economic realities faced by even the most robust sectors, they also open up opportunities for innovation and strategic realignment. The tech industry’s ability to recover and thrive will depend on how companies and workers alike can pivot and embrace new directions in the face of adversity. 

The African data showcases a dominance of e-commerce and fintech companies experiencing layoffs, which might be specific to the continent’s development stage in these sectors.  In contrast, the global data reveals a broader range of tech giants experiencing workforce reductions, potentially reflecting a more mature industry landscape with established players consolidating their positions.

As we navigate through these challenging times, it’s clear that the landscape of the tech industry is undergoing significant changes. The substantial layoffs across major tech companies highlight the need for adaptability and resilience in an ever-evolving market. 

How companies embrace emerging technologies like AI responsibly and cultivate a skilled workforce prepared for the future of work, will be too important. 

S/NContinentCountryCompanyLocation# of Employees Laid OffDate of Layoff Event
10AfricaSeychellesBitMEXProvidence Mahé754/4/2022
Companies with top lay-offs in Africa, 2020-2023…

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