In a troubling turn of events for the African startup scene, mPharma, a Ghanaian healthtech platform founded in 2014, has been compelled to make significant workforce reductions. The move comes as the continent grapples with a harsh economic climate, impacting various startups across the region.
mPharma, a company that has already raised approximately $90 million, including $30 million in 2022, to fuel its growth, announced the layoffs of 150 employees, as reported by Techcabal on September 4th. Gregory Rockson, the CEO of the startup, cited the current macroeconomic conditions linked to the devaluation of the Naira as the driving force behind the decision to “resize the team.”
Rockson emphasized that this decision would enable them to continue serving over 200,000 patients who rely on their Mutti service (the startup’s online pharmacy service) for their healthcare needs each month. He also stated, “We have allowed affected employees to retain their health insurance, and we have extended the period during which they can exercise their stock options from 90 days to 3 years.”
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Throughout this year, several startups across the continent have been forced to take drastic measures to stay afloat. For instance, the Kenyan online sales platform Copia Global had to withdraw from the Ugandan market in April due to economic slowdown and limited financial markets. Nigerian fintech companies Lazerpay and Bundle Africa also ceased operations after staff reductions.
Concurrently, venture capital investments in African startups have slowed down significantly. In the first half of 2023, only $2.2 billion was invested in African startups, a 52% drop compared to the same period in 2022. The number of investment deals has followed the same trend, with just 263 reported in the first half of this year compared to over 400 during the same period in 2022. This represents a clear deceleration in the African startup ecosystem, which had previously been bucking the global trend.
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The challenges faced by mPharma and other startups in the region underscore the need for innovative strategies and resilience amid a challenging economic landscape in Africa’s emerging tech sector.
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard