Unique: Healthtech startup, Medsaf, lays off all its full-time employees amid claims of unpaid salaries

In March, Medsaf, a Nigerian healthtech startup, laid off all its full-time employees. Former employees allege that their salaries and advantages stay unpaid. 

Nigerian healthtech startup, Medsaf has laid off all its full-time employees, TechCabal can completely report. The firm’s chief working officer (COO), Rotimi Lawal, instructed employees on Slack that Medsaf needed to scale back its workforce following “challenges ranging from funding gaps to account receivables due to different the macroeconomic policies and dismal payment behavior of hospitals in our industry.” A supply instructed TechCabal that about 30 employees had been affected.

At the time of Lawal’s Slack message, a number of employees confirmed that they hadn’t been paid salaries since December 2022. The firm acknowledged the wage delays and promised to make good on the funds.  “In the context of how work activity has fared so far this year, with the majority of the employees staying at home and doing little or no work, the Company will be paying full salary for December 2022 to those who I haven’t paid yet and half payments for January 2023 up till March 2023. These payments will be made to the staff’s bank account in the Month of April 2023,” Lawal wrote within the Slack message.

A former worker who spoke to TechCabal on the situation of anonymity stated the corporate solely paid salaries for March. Three different former employees instructed this publication that they nonetheless haven’t acquired their owed salaries and that there was no communication from the administration on the cost. They additionally alleged that their pensions and pay-as-you-earn (PAYE) tax weren’t remitted. Another supply who left the corporate final October alleged that his pensions had been paid for under three months of the 15 months he spent at Medsaf. “The best way I can describe the situation is a tragedy,” the supply instructed TechCabal over a name.

In an e mail response to TechCabal, Medsaf’s CEO, Nwakah, blamed the state of affairs on traders reneging on funding commitments. “The funds we were expecting would have been enough to extend our run rate for 1.5 years and allow us to close on a $2m loan that would push our company into profitability. We told people not to come to work in January and told people formally that we were not extending their roles in March. So many of the employees that you are speaking with hardly worked in January and are requesting salaries that are owed to them when they were not actively working for the company,” she stated. 

Unpaid salaries and monetary struggles

In 2017, Vivian Nwakah co-founded Medsaf to fight the proliferation of faux and substandard medicine in Nigeria and throughout Africa. Its web site defines Medsaf as “a curated medication marketplace for African hospitals and pharmacies.” It additionally claimed it grew 200% through the pandemic and had raised $2.7 million in funding in January 2022.

Two sources instructed TechCabal that Medsaf started to battle in mid-2022 with delays in wage funds. According to the sources, the CEO instructed employees the corporate needed to boost funds. “Some people left, but they [the management] kept promising that things would get better, so we decided to wait out for them,” one of the sources stated. 

But the state of affairs worsened, because the November salaries weren’t paid till the fourth week of December. According to our sources, the corporate additionally didn’t pay salaries from January until March, when the layoffs occurred. Two different sources alleged that Medsaf additionally owed some of its distributors. 

Alleged monetary misappropriation

A former senior government alleged that Medsaf’s CEO withdrew firm funds for private use. According to the supply, a medical service firm paid Medsaf over $100,000 in early 2023 for drug distribution initiatives however the cash “was neither in Medsaf’s bank account nor was it in medication stocks.”

“The money was used to pay other debts and siphoned out of the company. This left suppliers and employees unpaid,” the supply instructed TechCabal. Medsaf didn’t particularly touch upon these claims however recommended that the corporate’s legal professionals would ship an in depth response.