Alerzo laid off 15% of its workforce just before the start of Nigeria’s festive season, in what could be seen as a sign of economic slowdown in the country. The decision comes just weeks after government-owned telecoms operator Telecoms NIGeria (TNM) announced it would stop providing services to unlicensed operators and suggested that this would further reduce business for FMCG suppliers. While there are no reliable indicators yet, some say that the economy may have been weakening since the General Election last year.
While the company insists that the layoffs were necessary to improve profitability and flexibility, some employees claim they were unceremoniously given no warning and didn’t have a chance to find new employment. Multiple sources report that it was especially hard for veterans of Alerzo’s previous round of layoffs in September- which also impacted around 5% of its workforce – as they had nowhere else to go. The ripple effects are felt throughout Nigeria’s startup ecosystem, as many companies have now been strained by the decreased talent pool available.
Alerzo is a textile retailer with over 100,000 retailers nationwide. They were breakeven in Q3 2021, before the company undertook major expansion and overhired nationwide. This money-saving strategy was buoyed by their $10 million+ Series A financing round. However, Alerzo’s spokesperson said that due to this overexpansion they had to let go of 6% of their workforce in late 2021.
This news comes as a bit of a surprise, as the company had been reporting brisk sales growth and expanding its e-commerce business. However, it anticipates that restructuring and cutting back payroll will help it reach profitability sooner. With the payment licenses it has received, Alerzo is confident that its merchant base will be digitalized more quickly and reduce its overall cost of doing business.
Given previous market dynamics, we hired very aggressively during the past couple of years to fuel quick growth and expansion across the country. This does not align now with the economic environment today, so we, unfortunately, had to make changes to our business to be more focused around pursuing strong unit economics. Despite these challenges, we remain committed to our mission and are confident that this restructuring will enable us to better serve our customers and pursue sustainable growth. We are grateful for the hard work and dedication of all of these employees.
Despite the uncertainty in today’s economy, I am reassured by the dedication and hard work of our employees. The restructuring we are undertaking will enable us to better serve our customers, while still pursuing sustainable growth. Thank you for your continued support.
I was recently let go from my job after 7 years. Even though I am technically still employed, my role has become obsolete and redundant. I understand that the company is going to provide me with all of the contractual notice periods and severance pay that is required by law, but I am really upset about the fact that they are not going to provide any additional help in finding a new job or providing any counseling services to help me adjust to this unexpected change. This is definitely not something that should be left up to chance; if you are faced with an unexpected career change, it can be really tough without any support system in place.
African startups have been hit hard by layoffs in recent years, with a couple of notable exceptions. Mobility startup SWVL has cut its staff by two thirds, while fintech Chipper Cash and e-commerce Sendy have also laid off a number of employees. Jumia terminated 900 positions across its 11 markets in Q4 last year as part of streamlining efforts. This trend is likely to continue as African startups face mounting pressures from investors and competition from global rivals
