Local manpower stunts tech sector growth

Local manpower stunts tech sector growth

The Nigerian tech ecosystem has been in the spotlight for its record-breaking strides. But the sector is currently witnessing mass migration of talents which is becoming a challenge. In this article, TEMITAYO JAIYEOLA writes about how start-ups are battling to retain local talents who are being hunted by foreign firms.

Despite attracting record funds in recent years, Nigerian start-ups are struggling to compete with global tech start-ups for local talents.

The success of Nigerian start-up companies has been well-documented and celebrated. From dominating the number of funds raised on the continent to lead the pack in terms of the number of unicorns on the continent, the Nigerian start-up sector is the crème de la crème of the African start-up scene.

This success has been attributed to the resilience and talent of the workers in this sector. This success has caught the attention of foreign companies. With better salary offerings, work flexibility, and migration opportunities, a lot of Nigerian start-ups have begun to struggle to fill roles and retain talents.

In 2021, a growth partner at AnD Ventures, Victor Asemota, said, “We are laughing about this, but it is decimating companies. Founders are leaving too as they can’t hire any more. I laugh when people are raising, and I look at how much they want to raise. Investors’ money is effectively now used to train people to migrate. It is what it is.”

In recent times, Nigeria has been faced with a mass exodus of skilled workers. Professionals are leaving the country like people jumping out of a sinking ship. The Nigeria Association of Resident Doctors has said six out of 10 doctors in the country plan to leave the country for greener pastures.

According to the Medical and Dental Consultants Association of Nigeria, 500 medical and dental consultants have left the country for developed countries in the last two years.

As of August 2022, the Nigerian tech start-ups had 19,334 employees according to a report from Disrupt Africa. The report explained that the fintech space was the biggest employer, accounting for 8,653 jobs.

The report read in parts, “Nigerian start-ups employ a combined total of 19,334 people, dwarfing the 11,340 employed by their counterparts in South Africa.

“The average headcount per start-up stands at 40. The fintech industry accounts for almost half of Nigerian start-up employment, with 8,653 jobs, while between them the fintech, e-commerce, mobility and logistics, and e-health spaces account for 74.9 per cent of all jobs.”

According to Google, the number of professional developers in Nigeria rose to 84,000 in 2021. It stated that 38 per cent of African developers were working for at least one company based outside of the continent because of the higher demand for remote development work.

In its ‘Africa Developer Ecosystem 2021,’ the firm said, “Increased global demand for remote tech talent, which was accelerated by the pandemic, created more remote employment opportunities for African developers.”

Since the onset of the pandemic, the demand for remote work has been on the rise. A recent report by Brookings disclosed that there were 920,000 unfilled information technology positions in the United States in 2020.

It explained that while there were 920,000 unfilled IT positions, the US had fewer than 50,000 computer science graduates to fill over 500,000 roles in 2020. With the demand to hire tech talent expected to increase by 22 per cent between 2020 and 2030, the US is set to lose $162bn worth of revenue annually by 2030 if these tech roles are not filled.

It said, “The situation is projected to get worse by 2030. The demand to hire tech talent is expected to increase by 22 per cent between 2020 and 2030, substantially faster than for all other occupations.

“This shortage could have cascading consequences: By 2030, it is estimated that the U.S. will lose $162bn worth of revenue annually unless it finds more tech talent and that tech talent shortage could result in $8.5tn in unrealised annual revenues globally.”

Despite recent layoffs by tech companies, there is a global tech talent shortage, and the world is beginning to look towards Africa to help it solve this problem. Also, when compared to their foreign counterparts, compensation packages for African developers are cheaper.

According to Google, it cost $25.5k to hire a mid-level developer and $55.5k to hire a senior-level developer in Africa in 2021. Glassdoor estimates that it cost an average of $95,325 per year.  Also, a downturn in the economy and the constant devaluation of the local currency have made earning in dollars a very attractive option for Nigerian tech workers.

The founder of Lendsqr and a trustee of Open Banking Nigeria, Adedeji Olowe, claimed start-ups cannot compete with global start-ups in terms of pay. He said, “We can’t just compete. They are offering dollars.”

The Co-founder of Truq, Folusho Ojo, explained that many of the tech jobs with competitive pay are engineering related. She stated that other roles are not as competitive as technical ones.

She said, “I think this is very specific to tech roles, maybe engineering roles. When it comes to other roles, like operational and marketing, they are not as competitive as the others.”

Ojo whose firm has lost engineering talents to foreign tech firms stated that local firms cannot compete against the pull of foreign tech firms that offer compensation in dollars and relocation opportunities.

According to her, most local start-ups do not have the luxury and competitive strength to employ senior-level engineers. She noted that while foreign start-ups are competing with local start-ups in the same talent pool, they (foreign start-ups) cannot employ everyone.

She stated, “Even though we are competing with foreign tech companies, they also cannot hire everyone. So, whoever they are not hiring is the one who will hire.

“For a lot of start-ups, what we do, because we do not have a lot of money, is to offer them stocks. In addition to salaries, we try to offer them stocks. Because even though these global companies would pay them well, they typically would not offer them stocks.

“What the local companies can offer them is stocks, so even though they are earning now, you are also guaranteed to get higher yields on your stock as the company grows and increase in value. This is typically how we approach the global tech talent hustle.”

Ojo added that the competition for local talents will not reduce with time and is likely to only increase.

Proffering solutions to the problem, she said, “My firm tries as much as possible to do a lot of talent development. So, on and off, we are always having interns.

“Presently, we have about seven interns at different units in the company. This means they are learning from other people. In instances where they are leaving, we try as much as possible to ensure that those interns have learned as much as possible from the person on the role.

“Internally, we try our best to make the work enjoyable for people in such a way that they are thinking about leaving because the job is not enjoyable or because they are not enjoying what they are doing. We also try to hire people that like what we are doing and like the work so that when they eventually join us, they are not looking for the next escape route.”

The Co-founder of Regxta, Bello Rukayat, described the loss of tech talents as heart-breaking and stated that it can derail the work of start-ups like hers.

To her, selling the vision to a prospective employee is probably more important than pay, since there would always be higher pay.

She said, “Start-ups should be able to sell their vision to the tech guys and compensate them with equity. The tech guys working for my firm have equity, and we have been able to sell the vision to them. The majority of tech guys are looking for where is comfortable for them, everything is not about money.”

Local start-up founders are finding creative ways to keep their firms afloat in a market where foreign firms can cherry-pick the best talents. Founders are developing in-house internship programmes to ensure the continuous supply of talent for their firms, but many argue that Nigeria and Africa by extension do not have enough tech talents to start with.

With one of the youngest populations in the world, there were 716,000 developers in Africa in 2021. This is 0.4 per cent of the continent’s non-agricultural workforce.

Africa has about 450 million working-age individuals, with most in Nigeria. About 40 per cent of Nigerians aged 15-34 are unemployed.

According to the Founding Partner at Ajim Capital, Eunice Ajim, there are not enough Africans in tech. She said, “I think we still have a talent issue. Here is the reality, a lot of  Africans are not necessarily in tech.

“Right now, tech is the most valuable skill. If you work in tech, you are very valuable. With the size of our population, we need to train more and more talent to leave physical working jobs, where they have to lean on their physical ability and provide them access to the laptops and internet and show them how to use their minds to be able to make a living.”

Ajim reiterated that founders on the continent have their job cut out for them. She said, “You need to be able to impress investors and that is what it takes to be a founder and to able to succeed out there.

“It is not because you are smart or special. You need to have the right temperament to be able to attract the right people to believe in your vision.”

The Nigerian tech start-up scene is one of the few lights in a country, where darkness is a familiar theme. The sacrifices, skill, and dedication of local talents have made this possible and the world is aware of this. Now, local tech start-ups must brace up and create solutions as foreign tech start-ups intensify their recruitment of local talents.

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