While the problem of finding developers and engineers for African startups is often discussed in tech media, the investors and founders we speak to in Nigeria tell us they see a broader challenge in the marketplace. They say talent recruitment is a problem across many key leadership and administrative roles, beyond developers, making it difficult to staff up with the best team members for their startups to compete on the pan-African or global stage.
Nigeria’s tech ecosystem is the envy of many of its continental rivals. Its startups attracted up to 35% of funding for African startups last year, and Lagos has become the vibrant center of all things African tech. With a population of 200 million, mostly youthful and increasingly digital-savvy, and a high unemployment rate, you might imagine that local companies could easily pick and choose whom they want to hire.
But the problem isn’t finding people but finding talent, said industry insiders. “It’s been really tough finding good people,” said Aderonke Ajose-Adeyemi, founder of Losode, an online marketplace that connects consumers from around the world with African brands.
There’s a wide acknowledgement of the tech talent pipeline issue in Nigeria and other African tech hubs, and companies have made concerted efforts to grow and scale the talent pool via developer programs at training schools. But startup founders say it’s also been difficult to fill “generalist” roles, such as administrative, marketing, and mid-level team management positions. “There’s a shortage of talent across the board,” said Mayokun Fadeyibi, senior vice president for West Africa at Autochek Africa, a startup offering car services and sales online. “What we’ve started to do is to ensure talent search looks beyond just qualifications and tests critical thinking, problem solving.”
Most startups are already pretty rigorous and systematic about whom and how they recruit, but dealing with the disappointment of “people who say they can, but they can’t,” as Ajose-Adeyemi put it, makes this a top priority. “I don’t think there’s anything worse as a founder than investing in the wrong kind of talent,” she told Rest of World.
The backdrop to the talent issue is a booming sector with daily headlines in the local tech media about multimillion-dollar fund raises and unicorn valuations, which means there’s plenty of competition for the best talent and, as a result, rising wage inflation. This competition has further ramped up, as many traditional companies, from big banks to blue chip corporations, continue to digitize their operations and are going after similar digitally-savvy young workers.
“It’s very hard to hire for what I think are a good level of generalist skills that doesn’t effectively end up being overpriced,” said Eloho Omame, co-founder of FirstCheck Africa, an early stage investor. One solution she found was to hire remotely for roles such as communications and design work. “Most recently, I’ve hired from Egypt and Indonesia, and it’s been cost-effective,” she said.
Investors are watching this challenge keenly, as a primary use of venture funds, particularly in the early startup stages, is for talent recruitment. Eghosa Omoigui, managing general partner for EchoVC in Lagos, described the problem as a shortage of “block and tackle” management talent, including everything from general administrative roles to product managers. “The more experienced managers at big corporations have a risk aversion to joining startups,” he told Rest of World. The relative freedom, scant governance, and pace of change at a startup isn’t for every manager.
“Organized chaos is what a startup is — you’re looking for people who are not afraid of chaos,” said Samuel Okwuada, founder of Remedial Health, which develops software solutions for pharmacies across Africa. “You’re never certain what’s going to happen.”
Even if experienced managers are willing to give up the stability of a blue chip corporate environment, they’re not always favored by startups. Venture for Africa, a talent accelerator for experienced managers and operators in the African tech ecosystem, has been working to help startups build teams to compete on the global stage — but it hasn’t always been straightforward. “One of our key sources of talent is from the corporates, firms like Coca-Cola, Unilever, PwC, and big telcos, but we’ve found it interesting that lots of early stage founders have written off talent from those sources for not being ‘dynamic’ enough,” said Aaron Fu, co-founder of Venture for Africa.
Many startups have taken to internal solutions by developing training programs, particularly for team managers. Autochek Africa, founded in 2020, has rolled out a middle manager fast-track program as well as a performance management system that it hopes will improve standards across its 180-person team, while also helping with staff retention — another common problem in a competitive market.
Venture for Africa encourages this type of approach. “We’re trying to coach more companies at the seed stage to invest in talent and really help them grow through experience and to promote internally versus always looking to airdrop someone in,” said Fu.
Ultimately, employee compensation is still a major influence on staffing in the Lagos ecosystem. With the hub becoming globally known for huge valuations, employees’ expectations have changed, which makes pay negotiations more fraught. “They’re raising millions of dollars, and their employees can see that,” said Omame.
The issue isn’t just restricted to salaries. Some investors said that not enough local founders have been flexible in offering employee stock option plans (ESOPs) or similar programs beyond their most senior team members or to tech workers, who might have better offers. “When we first started, it was a hassle to convince founders to offer stock options,” said Omoigui. “We still see situations where the rank and file still aren’t being taken care of.”
The argument for employee stock options is tried and tested in mature markets like Silicon Valley and is increasingly common in African tech hubs. Mobolaji Adeoye, managing partner of Consonance Investment Managers, a Lagos-based venture firm, told Rest of World that stock options programs like this have long played an important part in ensuring a higher level of staff retention, necessary to build world-class startups, and he’s seen evidence of that in Nigeria. “What we’ve seen in our portfolio companies is that startups that take employee retention seriously tend to hold onto their talent.”