If you won't pay me, tell me nicely
Salary delays at one startup shows why communication matters
When is it too late to say ‘Happy New year?’
While you’re mulling over that, welcome back to Notadeepdive newsletter! The last edition of the newsletter for 2021 - Nigeria’s third japa wave - went out on December 3 and what a way it was to end the year. That newsletter was read over 8,000 times, shared by tons of people and had an open rate of 55%. It means we ended the year with an average open rate of 51%. WATTBA.
This year, the newsletter has bigger goals, and like last year, I’ll always share those goals with you every month and we’ll achieve them together; teamwork makes the dream work. Speaking of teamwork, please take a moment to share today’s newsletter.
We’re starting the year with the first-ever ad placement in the newsletter, so be sure to do what the ad says when you see it. Deal?
Let’s get right into it….
How do you tell your employees that December won’t be very detty? Hint: don’t send a Christmas email
I spent December in Lagos, taking part in all the things Lagos people get up to and I took it for granted that most people were doing the same. I mean, one startup was sending members of its team on all-expense-paid trips. But as with all things, there’s more than one side to these experiences.
Word on the grapevine, which has now been confirmed by this author, was that one prominent startup didn’t pay employees their December salaries. While the occasional delayed salary payment is hardly cause for alarm when you work at a startup, the reaction of your employees comes down to how these things are communicated. And in this case, the communication and the timing couldn’t have been worse. The company didn’t break the news to employees until December 25, shattering the plans of many and leaving despair in their hearts. Even worse, the communication was via email, not a physical meeting or at least a Zoom meeting that would have allowed for a more humane disclosure of such painful development. Although the company later paid part salaries to some employees by December 31, at least 40% are yet to receive any payment at all.
Now, I will not be mentioning the startup or reproducing any parts of the email to avoid gossip and social media outrage, but suffice to say that the email did not tell employees any firm payment date. So while other startups talk about 13th-month salaries and look forward to January payday, these employees at the startup remain in the dark over when their bank accounts would be detty again.
Of course, the obvious thing in this tale is a reminder that not everything is rosy in the investor-pumped Nigerian tech ecosystem. Yet there’s also a cautionary tale on how not to communicate bad news—in this case, no money for salaries—to employees. As someone who has had a similar experience, the CEO should have communicated a lot sooner about the company’s financial situation. Perhaps rumours have been swirling, “with the way things are going, we might not get paid this December.” But the company’s leadership shouldn’t have allowed such information to circulate via the gossip mill first. There should have been official communication; and as the stark reality of zero funds became apparent, an urgent company video call should have happened at least three weeks to payday. If they were looking for an excellent entry for the “One Time My Startup Almost Died” scrapbook, this is it; yet it’s people’s livelihood we’re talking about. A more proactive measure should have been put in place.
Where else have we seen this type of shoddy handling of delicate issues? The CEO of Better.com rang up 900 employees and fired them on a Zoom call. You don’t need a crystal ball to know that the move didn’t go well, and it also explains why employees of the Nigerian startup spent most of their holidays subbing their employer on Twitter. Let’s do better in 2022.
Speaking of 2022, Nigerians need to brace up for more taxes, as the long arm of the FIRS is going to extend to tech companies that are not resident in Nigeria.
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Want to shop on Amazon or Alibaba? The long-arm of VAT is here
On Monday, January 13, 2020, President Muhammadu Buhari signed the Finance Bill into law. It made the news at the time for a bunch of reasons; first for increasing VAT to 7.5% and for taking an interesting step in “widening the tax net.” In Nigeria, if you take a shot of whiskey every time a finance minister talks about ‘widening the tax net,’ you’ll spend all of your days drunk. But what that bit of technical jargon means is that the number of taxable people in Nigeria stands around 77 million and only 13% of those people pay taxes.
It’s a small number, and while Nigeria has only paid lip service to increasing the number of taxpayers over the years, the country is now broke, so it’s doing everything it can to raise revenue. One such step is that the country will tax digital service providers that have a significant economic presence in the country. Think Amazon, Twitter, eBay, AliBaba, Adobe, Facebook. The Minister of Finance gets to decide what “significant economic presence” is, so this could be a very important tax.
“If you visit Amazon, we are expecting Amazon to add VAT charge to whatever transaction you are paying for. I am using Amazon as an example. We are going to be working with Amazon to be registered as a tax agent for the FIRS.” -Mrs. Zainab Ahmed, Minister of Finance, Budget, and National Planning.
While the Federal Government has been legally allowed to collect these digital taxes since 2020, it only now seems ready to start. One theory is that it was fine-tuning its framework for collection. As Abubakar Idris said in this 2020 article, “The Finance Minister still has to define what criteria for the potential tax. According to PricewaterhouseCoopers (PwC) “until the minister defines the criteria for significant economic presence the proposed updates would be redundant as they can only be applied if the criteria are defined.”
Some thoughts: The big worry in all of this is that moves like this don’t widen the tax bracket; instead, it increases tax pressure on the people who are already in it. When the implementation of this tax starts and you shop from Amazon, you will pay VAT and still pay Custom duty when your item lands in Nigeria. The noose keeps getting tighter for former middle-class Nigerians.
That’s enough reporting for one day. Let’s do a quick segue into some of the goals I have for 2022.
A few things I learned in 2021 and what I’m changing in 2022
The newsletter was easy to write and keep up with when I was with the Orange bank, but going to work for a startup and moving to Ghana tested my resolve. I missed a few days, took a month-long break and didn’t even do a 2021 review. I’m changing all of that this year, by having more structure and sticking with the initial promise of two newsletters per week (Friday and Sunday. There will be days when the newsletter will not be published.
For 2022, here’s a schedule of all the days the newsletter will not land in your inbox:
April 15, 2022 (Friday)
May 1, 2022 (Sunday)
June 12, 2022 (Sunday)
December 25, 2022 (Sunday)
I may also take a small number of personal or sick days, and two weeks off during the summer holidays, but that’s about it. Please feel free to hold me to account - we have now entered a contract.
Away from our contract, I thought to share some of my favourite Notadeepdive newsletters from 2021. I published 32 newsletters last year and I thought the top four editions that I enjoyed writing as well as why.
A fight over taxes is just what Nigeria needs: I often argue that one of Nigeria’s big problems is that we - leaders and followers - are addicted to bad ideas. I loved the opportunity to use the numbers to show some of the worst ideas we’ve had to date.
Why Exxon Mobil is leaving Nigeria: I often listen to people talk about the impending end of the oil age and how Nigeria is unprepared for it. But what this story added for me is the mind-boggling corruption in Nigeria’s oil sector
Nigeria’s terminal Japa wave: The ‘New dispensation’ was the phrase we associated with leaving Nigeria last year. So it was interesting to delve into the data to show why this third wave of japa is bad news for Nigeria’s future.
Digital newcomers are worth more than Nigeria’s big banks: Last year, a trusted source shared Kuda bank’s income statement with me, and it shaped my thinking on the strategy digital banks rely on. I love this story for the fairness I brought to the story; it’s the kind of journalism I aim to always do
WHAT I’VE BEEN READING:
See you on Sunday!