Kenyan retail B2B and end-to-end distribution platform Market power said sources familiar with the case laid off some of the workforce in July.
In an email from Marketforce CEO Tesh Mbaabu and obtained by londonbusinessblog.com, the layoffs were part of a restructuring strategy in Kenya, one of five markets, including Nigeria, Rwanda, Uganda and Tanzania.
Mbaabu confirmed the news during a phone call with londonbusinessblog.com, adding that the company had let 54 people go. Marketforce had more than 600 employees for the event last month, so about 9% of its total workforce was affected, mostly from the field service, supply chain and customer experience departments.
Some of these roles have been vital to Marketforce’s growth over the past year as the company focused its efforts on onboarding thousands of traders in its RejaReja platform. However, they had become obsolete as the company aims to generate more revenue per trader, the CEO said. “We were at the stage where we focused on growth, but we have come to a point where we are optimizing towards profitability,” he added.
In February, Marketforce raised a series A of $40 million in debt and equity (evenly distributed across the board) from V8 Capital Partners, Ten13 VC, SOSV Select Fund, VU Venture Partners, Vastly Valuable Ventures and Uncovered Fund. Mbaabu founded the company with Mesongo Sibutic in 2018 as a SaaS platform for retail distribution. Two years later, the company launched RejaReja, its super-app and marketplace for asset-light merchants that can use casual merchants to buy goods directly from manufacturers and distributors, place and pay for orders digitally, and accept payments for utility bills.
Since its launch, RejaReja has grown exponentially, with over 87,000 orders placed through the platform with an average basket value of $151. Growing 40% monthly, the company expects to exceed $60 million in annualized transaction volumes at the end of last year. to achieve, the company told londonbusinessblog.com in February. Some of its competitors include players such as Wasoko, TradeDepot and Omnibiz.
Last year, the four-year-old company said it would introduce buy now, pay later (BNPL) options to give merchants access to fast-moving consumer goods (FMCGs) on credit. Marketforce also emphasized expansion into more markets in East and West Africa; however, these plans may be shelved for now after this restructuring move in Kenya.
Sources also suggested Marketforce may be struggling with its business as suppliers pull out. Mbaabu brushed aside the claims, saying, “As part of optimizing for sustainability, we’re driving more consignment-based operations and reducing SKUs, which means fewer suppliers overall.”
Mbaabu reassured employees in the email that the company still has plenty of arsenal in its coffers and attributed the company’s decision to “adapting to global economic uncertainties” and “optimizing the company for different growth rates.” Some roles in the Kenyan market will become obsolete and new ones will be added; all of our other markets will not be affected, he said. According to the CEO, Marketforce has started hiring in Tanzania to scale up its RejaReja product; previously, companies in the country only had access to the SaaS platform.
To employees affected by the reorganization, Marketforce said it:
- Offer you consultancy services on managing change and dealing with fear in uncertain times.
- Offer a training session on revamping your resume, optimizing your LinkedIn profile, and interview preparation techniques.
- Work with recruiters who will consider you for opportunities within other organizations looking to hire.
- Provide a service certificate and letter of recommendation if necessary.
- Pay your notice period in addition to a 15-day severance payment for each full year of service and unused leave.
“Just to be clear, it’s a path to a profitability conversation. I think for a lot of people, even internally, it’s been hard for them to understand why we’ve been raising money and having cash, but still taking layoffs,” said the CEO of how employees took the news. “But every extra month you spend with redundant staff means you have to trim your runway. And so I think ultimately you have to think about how to handle layoffs in a humane way. But also make sure that the interests of the company come first.”
Compared to the rest of the world, there have been few layoffs in the African tech scene. Last week, news circulated that Kenyan logistics platform Sendy was laying off employees, in addition to previous reports from Swvl, Vezeeta and Wave. This, and the fact that funding data shows that the African ecosystem has already seen inflows of about $3 billion in the first half of this yearfar more than what the continent yielded at this time last year has prompted many onlookers to express optimism about the region’s chances of coming out of this bear run unscathed.
But as the African tech scene has grown into one of the most popular tech markets in the world, buzzing with opportunity, it could start to see a rapidly changing landscape, especially in the second half of this year as more startups build bridges. , trim staff size and accept lower valuations. “The moment of truth will be the end of summer,” says Max Cuvellier, co-founder of The big deal, londonbusinessblog.com told a June interview. “August [and] Especially in September, because then we saw a boom last year.”