CBN vs fintechs: What's really going on

Episode 225 May 23, 2024 00:42:22
CBN vs fintechs: What's really going on
Techpoint Africa Podcast
CBN vs fintechs: What's really going on

May 23 2024 | 00:42:22

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Hosted By

Chimgozirim Nwokoma Oluwanifemi Kolawole Bolu Abiodun

Show Notes

Today on the podcast, our hosts discuss:
  • Nigerian fintechs and all things CBN policies
  • What we know about the 16-month salary delay claims at Bloc
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Link to Insight of the Week: https://intelpoint.co/insights/nigeria-the-volume-of-pos-transactions-in-2022-was-1500x-the-volume-in-2012/?utm_source=Techpoint+Africa+Podcast&utm_medium=podcast&utm_campaign=Insight+of+the+Week+TAP+225
 
Timestamps
00:00 - Intro
00:24 - Nigerian fintechs and CBN
23:12 - What we know about owed salaries at Bloc
 
Useful links
 
This episode was produced by Ogheneruemu Oneyibo and Crystal-Agnes Joseph
 
Email us your feedback at podcast@techpoint.africa. Visit www.techpoint.africa/ for more stories.
 
Music - Beach by MBB -
https://www.youtube.com/watch?v=dEnQ8dHwDSk
 
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View Full Transcript

Episode Transcript

[00:00:00] Speaker A: Hello everyone. Welcome to the Tech Point Africa podcast. I'm Oluwanife and with me in the studio today is Bolu and Chimgoju. Yes, we have a few things to talk about today. One bordering on certain fintech startups in Nigeria and the other about a workplace conversation that ensued online earlier in the week. Late last month, that was April, CBN released a directive ordering certain like four neo banks, are they all neo banks? Fintechs, let's call them fintechs, to pause any new signups on their platforms that it affected CUDA, Ope, Pampe and Moneypoint. And it means that it's almost a month now since these four fintechs have not been able to onboard new customers on their platform. It's supposed to be temporary. But what is in the news again now is that this might have to go on for a few more months. Why? Why did this happen? I think since December, right. I believe since December, the CBN has been making different moves to make sure that fintechs in Nigeria have standardized KYC platform procedures, rather, and this is to prevent fraud because of the cases of fraud and also to control this one is debatable, to control how people use these platforms to disrupt the FX market and crypto market also in Nigeria. And all these things are valid because that is where regulators are there. They are trying to make it good for the people that are playing in the industry and the people that are using them. But it seems like these things that these regulations are having affecting the fintech. And this is why I say that because there was also another, while that one was going on, another directive came. This involved the CAC that all pos agents in Nigeria should register with the CAC. [00:02:27] Speaker B: Our insight of the week is about the value of PoS transactions in Nigeria between 2012 and 2022. So it's actually very interesting. In 2022, we recorded 50 billion naira in PoS transactions. And then by 2022 we actually 1500 xed this number. So in 2022 we went all the way to 41 billion, sorry, that's actually trillion, 41 trillion error in PoS transactions. That's mind blowing. This data was supplied to us by intel point. So if you want more interesting data points like this, just go to Intelpoint code or you can just click on the link in the description and check out lots and lots of data points by intel point. [00:03:21] Speaker A: And there was this interpoint data that came out that showed how the number of PoS agents have increased between in the last, in the last ten years. That's between 2012 and 2022. [00:03:38] Speaker B: Yeah, it was between 2023 and 2024. Actually. [00:03:42] Speaker A: Yes, the spike happened between 2022 and 2024. And we see that this is a huge market and the numbers that these new banks are recording is usually from their agency banking product. Now for you to now say these people should not onboard new customers, that means it's affecting what there's not, there's no saying about it. Was it in December when Moneypoint said launched personal banking, they intended to onboard like 4.6 million new customers in three months? Let's hope they, let's, let's imagine they were able to achieve that between January and March, right? By now if they had other milestone. This particular situation that is on ground is affecting it. And we understand that regulators have to regulate. Now why are we talking about this now if you are able to bring anyone that is at the ends of affairs at these startups to this conversation, they will tell you how it's affecting them internally. Right. So we want to talk about the legality of these regulations. It might sound weird, but CBN said they are not winch hunting them. Right. But in the way it's looking is as if there's a target on the back of these new banks or these fintech platforms. So I think we should just start from talking about all these things that I expected from neo banks and fintech platforms, startups. Rather interesting question. [00:05:33] Speaker C: Okay, so which one do you want me to start with? [00:05:36] Speaker A: Everything. There are a lot of, as I mentioned, they are going through a lot. Right. You can start with the onboarding stop, like especially telling them to stop onboarding till further notice, although temporary. You can start with that. Then you can move to, um, making them, um, making their agents to register their businesses. Right. [00:06:03] Speaker C: So the only thing here that probably looks not legal, I don't use illegal. So I know what you carry me in the night, but the only thing here that looks not legal is asking banks, sorry, new banks to post new customer onboarding. That's about the only thing that, um, looks suspect. First because at least to the best of our knowledge, only four banks or four new banks are affected, are affected. And also because there are better ways for you to manage fraud than, say, stop new sign ups. Right. Um, I don't know how many people could have, for example, on boards in a day or less in a month, but they are likely to be onboarding. It's very unlikely that at least, let's say, see, it's very unlikely that they have up to 30% of them as fraudulent entities, which if you say you want to convert fraud. Um, you'd probably say, well, that's, that's on the high side. I don't know the exact numbers, obviously, but it's very, very unlikely that a huge chunk of your new sign ups for a business that is that established too. Yeah, it's very unlikely that a huge chunk of your signups are fraudulent entities. [00:07:28] Speaker A: Right. [00:07:29] Speaker C: So that's the only problem. That's the only. [00:07:33] Speaker A: So adding to that, you know, they've also, CBN has also introduced new KYC requirement procedures as is required. So I'm just looking at it now. Between the last four months, for instance, you've introduced ways for them to like get better with their KYC, but now you're telling them to stop onboarding just for this KYC reasons. [00:07:54] Speaker C: It's so, it's targeted at different segments. So what you're telling them now to do is like update your KYC docs, basically. So what details do you have when your customers updated? And I mean, standard KYC documents have always been your BVN or your NIn or like passports and all of that. They would also ask you for a few other documents, but now they are going to step for dancing. We are going to verify your address. [00:08:25] Speaker A: Okay. [00:08:27] Speaker C: There are some people on social media who have expressed surprise, annoyance, whatever disappointment that they have been asked to verify addresses. And while I get where some of that is coming from, it's nothing unusual. Yeah, I remember when I was in school, my roommate had a, he had a job where he helped first bank verify customer data. So basically where do you live? They would just hand him a pile of forms and then he had to go around town along with a lot of other people. And their job was basically find out where these people live and make sure that what is written here matches with what matches with reality. But for fintechs, what has happened is in the last four or five years we've had startups like what's the name again? I think, ok, hi. That are saying, no, we can help you verify who these customers are. We can help you verify addresses as well. We've had people like smile id, identity pass, I think, who are now saying, okay, fine, we don't, we don't. I mean, they may not help you verify addresses, but they can help you verify that the person who is doing it is actually real. So face id or selfie verification, as most of them call it. So we've seen a few others and then now the CBN is saying, okay, include addresses. [00:09:54] Speaker A: Okay. [00:09:54] Speaker C: Um, I can understand why any bank customer in Nigeria would be wary of submitting. Submitting address details. But, bro, you're already doing that. [00:10:05] Speaker A: When you submit your traditional banks. [00:10:07] Speaker C: Yeah, with traditional banks, with everybody. When you submit utility views. Right. You are, you're not just submitting utility views. Your utility bills usually carry your address. [00:10:17] Speaker A: Yes. [00:10:17] Speaker C: Right. So if someone really wants your address. [00:10:21] Speaker A: They just need to. [00:10:22] Speaker C: Yeah. They already have it. So that's, that's only problem. I think part of every problem comes from, is we are just seeing, we've seen the whole requirements about should you include social media details in account opening. Right. And I mean, at this point, it's still up in the air. The court says you open social media, social media accounts out there in the public. Anybody can access it. So your bank asking for it is no longer a big deal. I don't know why you need my social media account. For a financial, for a financial service. I really don't know why you need my social media account. [00:11:04] Speaker A: I get my covering your basis. [00:11:06] Speaker C: I get, considering that I can open and close a social media account, I cannot see why someone thinks that. That's a very good, that's a very good suggestion, but let's, let's do as I said. I'm thinking that anybody who is skeptical about sending in address details is doing that as a result of the government's antecedent. We are seeing crackdowns on how people, we've seen crackdowns, rather, of how people use social media. So anybody would be, would be smart or well within their rights to be wary of that. But really, it's not a big deal. [00:11:43] Speaker A: It's not a big deal. I think it's just one of those. [00:11:45] Speaker B: Things, something we are not, we are not looking at in terms of all these things that all these new regulations that they are trying to put into place. And one reason why I think these four banks or four fintechs have been targeted, I think it still goes back to their fight against crypto p. Two p. It has to be crypto. [00:12:10] Speaker A: A quick one. If you're listening to us on Spotify or Apple podcasts, please leave us a review. [00:12:16] Speaker B: The reason why I say that is because, one, the first point is a good number of people that are crypto merchants that do crypto p two p use fintech. Use this fintech. So one, let me, let me just, let me, let me finish. [00:12:34] Speaker C: So, one, can you authoritatively say so? [00:12:36] Speaker B: One reason why I say that is I recently saw a document, right, of, of accounts that were frozen right where they placed a lien on them. And when you look at the owners of these accounts, they put the account number and the names of the banks. [00:12:50] Speaker A: The banks. [00:12:51] Speaker B: So when you look at the traditional banks, they had very few names there. But when you look at money points, when you look at op, I think moneypoint and op are the largest. Took like a whole page. [00:13:05] Speaker A: It makes sense, though, to cope. [00:13:07] Speaker B: So I think it is when you transact a lot, if you do a lot of p two p, if you go on p two p platforms and use, you do crypto, p two p very often go to bybit, you go to binance. The most. The amount of account numbers you see usually pound pay money. Right. [00:13:28] Speaker A: Those are the, it sounds fair. You know, here's the reason why I. [00:13:34] Speaker C: Don'T think it sounds fair. Right. One. Who are the people more likely to use cryptocurrencies? [00:13:45] Speaker A: Young people. [00:13:46] Speaker C: Good. Who is more likely to open a new bank? An account with a new bank. So could it not just be circumstantial that the best one? [00:13:55] Speaker A: Maybe. You know, the thing is, you know, especially with the fact that crypto is, we don't know where Nigeria is standing. We don't know where the CBN is standing with crypto. So if you want to be safe, you would go for a platform where maybe regulators are not regulated. And yes, they are about, they are, but, so do you think, do you. [00:14:18] Speaker C: Think differentiate what is a crypto transaction and what is just another, another transaction? [00:14:24] Speaker A: Will you please help with that? [00:14:26] Speaker C: Do you think that guys cannot, so. [00:14:27] Speaker B: You actually, you're actually making my point. So if you are saying that it is more likely for, if you say a particular demography of people, right. Young people use crypto platforms and those people are most likely to open accounts with the likes of, you know, these neo banks? [00:14:42] Speaker A: Yes. [00:14:42] Speaker B: Would it not make sense that if you are, if you have a fight against people doing crypto p two p. [00:14:48] Speaker A: You go after those people that are enabling them. [00:14:51] Speaker C: Why did you not go after all fintechs? [00:14:55] Speaker A: Or do you remember that out of the time that this, that CBN started this, this issue with, oh, financial, they, they focused on all financial institutions around December, October, December when they started coming after them for KYC. Before KYC, their memos and their circulars were targeted at financial institutions. [00:15:20] Speaker B: They have the most users. And you already made the point that. [00:15:26] Speaker C: If you want to stop crime, you do not just say, oh, let's look at the fall address because here's the thing. Okay, fine. You stop the fall address, people from onboarding. Right. Good. It looks like a smart strategy. Abhi, do you think you're the only smart person, you're not. I would simply move on to other people. [00:15:45] Speaker A: Okay, for instance, now before you move on to those other people, let's answer the question of why people go for this particular, these ones that have become the largest one that gives up skill onboarding. For now for, okay, the reason why, the reason why you make a choice for, for which of these fintech sort of you are making a choice for one, you are looking for one that is more seamless and the one you can still trust with your money. Right. The other fintech that might not be doing as much as they are, people might still have this skepticism that, okay, maybe I can't trust them with my money. And even though there is still, there's less barrier to entry, and then you are trying to protect yourself from going to traditional banks to avoid the awali. [00:16:30] Speaker C: Someone that really wants to carry out the crime. Yeah, they will do what they want to do. I'm just saying that it looks suspicious. Yes, you can do the whole 80 20 rule, or you can say that's what they are trying to do, where the vast majority of customers are probably going to come from a handful of platforms. But here's the thing. If I do not want to be logical, it looks, it looks very suspect that you're focusing on just four people. If you want to stop crime, there are better ways to do it than stopping onboarding. [00:17:04] Speaker B: But why do you think they are focusing on these four people? [00:17:06] Speaker C: That's the problem. It's not clear. I could make, here's the thing. I can't authoritatively see why they are focusing on any of these four people without making it look like you're wechaunting them. And anything we have, anything we discuss is just going to be, except you are in the heart of the person who is making the decision, and this. [00:17:24] Speaker A: Person has made decision that they are not. We chaunting them. They're just trying to regulate. [00:17:30] Speaker C: If that's the case, we should never debate any government policy because they say one thing and they do understand. [00:17:35] Speaker A: I'm just trying to let you know the mind of the people that are doing it, trying to say now that these things should have been in place before now, which one? All these regulations that are coming, making sure that they are not stopping on boarding, the reason they are stopping onboarding is to make sure these people get. [00:18:02] Speaker C: Their KYC makes absolutely no sense to me. All you need to do is say, chief, your KYC, your customer onboarding process is suspect. Can you improve it between in the next three weeks? [00:18:19] Speaker A: But you know if they tell them to. Now this is not mimicking case for CBN. I'm just trying to say, I'm not. [00:18:25] Speaker C: No, no, go on, go. [00:18:26] Speaker A: I'm just trying to say that, okay, for instance, now if you say, okay, do this thing between this and then like, and they still go ahead. So it is, it will be a work in progress. [00:18:34] Speaker C: Regulators crying out loud. Yes, you tell me to do something within a. [00:18:37] Speaker A: When have, when has regulators said they should. [00:18:40] Speaker C: Regulated entities. Op has a license. CUDA has a microfinance bank license. You could take it from them if they do not go ahead with what you said they should do. Moneypoint has a license as well. I think Vampy also does. So if you, if you are a regulator, this is very, very simple. Someone has lax processes according to you. [00:19:01] Speaker A: Yeah. [00:19:01] Speaker C: Then you say, okay, see, we have a problem with your processes. Right. Fix it in the next four weeks. [00:19:06] Speaker A: If you do not fix it, you take your license. [00:19:08] Speaker C: No, I mean, it's probably not going to get to that. But if you do not fix it, you pay x fine, for example. Or if you do not fix it within four weeks, we are going to stop you from onboarding. We did not see anything like that. You just woke up one morning and you said, oh, all of you stop onboarding. How does that make sense? [00:19:24] Speaker A: Four of you, rather four of you stop on board. [00:19:26] Speaker C: How does that make sense? Here's the thing, right? If I'm looking, the thing is, yes, you could say you're trying to kill or is debatable, but you could say, you could say, you could say stuff like that. But look at bigger implications of all of this, right? You get, you get to the point where, and yes, it's going to look like I'm siding the fintechs, which is very weird. But look at it holistically, whether holistically or not, look at the wider ramifications of all of this shit, right? You have a CBN that just wakes up one morning and pulls regulations and then businesses are basically scrambling. [00:20:05] Speaker A: Yeah. [00:20:05] Speaker C: Now for four weeks, like I said earlier, I don't know how many people these guys on board, but let's assume that they are adding, um, let's see, 300K users every month. It's, it's, now you're hearing like we are hearing that this, um, this is. [00:20:20] Speaker A: Not going to be on for a couple of months. Like now. [00:20:23] Speaker C: That means for the foreseeable future, because a couple of months could be anything from one month to several months, um, for the foreseeable future, you can't board new customers, which means you can't make money. [00:20:34] Speaker A: Yes. [00:20:35] Speaker C: If I am an investor looking at you and I'm saying you were just on your own one day, government came and said don't board new customers. What feed do you pass? And you are simultaneously trying to cut investors for kind of like making mistakes. You're cutting investors and you're still cutting the legs from under the. [00:20:53] Speaker A: Yes, we understand how difficult these times, these times are for, for this Ford, Fintech especially. And now you are telling Pos agents to register, which is, which is we are not debating the legality of that. But from what we found out when we went out to ask people on the street, some of them are willing to just drop it and not just do pos again. So that means they might even still be losing customers in that aspect. So business, banking, business, I'm not saying the register, I'm just trying to say that a lot of things is happening with them at the same time. Right. So they might be losing customers on the business agency banking funds, then they are losing on personal banking front. So it's as if they are not catching a break. So. But it seems like it's good that they keep having meetings every other day. CBN has meeting with Fintech stakeholders every other day. I'm just hoping that this thing, they get it over with soon because these are businesses. Businesses. I understand that this and the POS business came at a time where there is actually, there's somewhere to be filled. And it came, came with a lot of hope for people that are looking for jobs and everything like that. It's like it came to fill in something, but it's, it is still business. And I'm hoping that CBN and these people speak like they talk about it. I'm not see, you see, we did not focus, you see, we did not focus on design business. We did not focus more on it because yes, they have to, as it should be. Right? So we are wishing this vintage. No, let me finish what I'm saying. Now. We are wishing them the best, the likes of ope, Pampe, money points and Kuda. Because we understand this is trying times and we're open that any of you can come and discuss whatever it is you are going, um, going through internally on a podcast like this, if you don't mind. Right. Uh, maybe some conversations you're having with CBN. I'm supposed to make it out, but this is a good place to also talk about, um, what the companies are going, what the startups are going through at a time like this because we understand it is difficult. Now let's move on to the next story. Last week, a former employee from a nigerian startup, a banking as a service startup block, came online to not, not the person, but yes, affiliated. Let's just say the person came online to mention how she has been owed some outstanding salary which has lasted for 16 month. It generated a lot of outrage. If you are on twitter, if you are on Nigeria tech twitter, it will have come across your timeline. Different people are talking about it from different angles, owing salaries, people's faves and all. What's not? Well, we decided that since this has to do with a nigerian startup and for posterity sake, these are the things we get to document. We want to talk about it on this podcast and look at some of the things that has been, some of the projections or conjectures that have been raised concerning this particular matter. So Bolu is going to give us a rundown of what really ensued between what the founder mentioned, what the, the ex employee said, what the total take points and everything. We give you a load and then we would discuss about it in a few minutes. So, Bolu, give us a load down. [00:24:47] Speaker B: All right. So, yeah, it was a very controversial issue. You know, caused a lot of tweets going up and down on Twitter. And, you know, we're able to reach out to the employee and ex employee, ex employee and the employer. And they gave us their sides of the story. [00:25:08] Speaker A: By the way, the employer is Edmond. Edmond Olotu. [00:25:14] Speaker B: Yes, very active on Twitter, tech Twitter. You most likely know him. [00:25:19] Speaker A: And then the ex employer, employer employee is Benita. [00:25:26] Speaker B: The name of the company is block, in case you don't know. It turned out that sometime in 2022, block decided to slash salaries by 60, by 40%. So this means that they'll be paying, if your salary is 10,000, you now start paying 6000 naira. But then they said they are waiting for a particular liquidity event. And when this liquidity event happens, the remaining 40% that they were supposed to pay you to round everything up, and then they will pay you. So if they kept paying you 6000 naira, January, February, March, April, 4000, 4000 put together and pay, that was the agreement. So by the time Benita got into the company, this happened two weeks after Benita got into the company. Right. She got into the company and two weeks later they are slashing salaries because. [00:26:26] Speaker A: The company was struggling. [00:26:27] Speaker B: Yes, because the company was struggling. [00:26:28] Speaker A: And it was like an agreement between them. We assume they agreed that all the employees agreed. [00:26:36] Speaker B: Okay, you can slash screenshots. We saw and according to the statements we received from Edmond Olutu, the CEO of the company told us that it was a difficult time, spoke with employees, the management. They all came together and they decided to do that instead of laying off 40%, they would do that instead. And Benita's side of the story was that, yes, they said they were going to do that, but even that 60%, it was not regular. There were some months where salaries were delayed. Right. Altogether, I think it was almost three months. Two or three months. The CEO also confirmed it. He said, yes, there were times salaries. [00:27:23] Speaker A: Were delayed, but the backlog of the 60% were paid. [00:27:26] Speaker B: Yes, 60% was paid in full. Benita left the company. I think she decided she was leaving the company. There were some issues within the company, and she decided she was going to leave. Right. She was removed from. She was in management, she handled compliance. So she was removed from the management group. And, you know, there were some back and forth, and she felt she could not work there anymore. And she trained the person that will be our successor. And she left sometime in December 2023. And now the bone of contention is she still owed money because they were told that, because the 60% salary payments continued throughout the time she was there. So she still owed the 40% that she was promised. Right. That all employees were actually promised to be paid, because right after, when we get a liquidity event, we'll pay you that amount. CEO Edmund Oluse also confirmed that. Yes, we said that. And this is where the issue is. Right. That 40% is where the issue is. That 40% totaled 3.7 million that will be paid to Benita. 7 million naira. One millionaire has been paid. [00:28:49] Speaker A: Okay. [00:28:49] Speaker B: But there's still remaining 2.7 million naira that needs to be paid. The one millionaire was. It wasn't gotten immediately. I think Benita had to bring in our lawyers, you know, to get them to write a letter to the company and tell them that, okay, this is the amount of money you are owing me. Please pay up. And they paid 1 million naira. Now there's 2.7 million. That's now the issue. So I guess from this little story, you understand what really happened. [00:29:26] Speaker A: Yes. And I'm also sure that the founder also mentioned that this liquidity event has not happened yet. So which means that it's probably not only Benita that has not been paid that 40% backlog yet, since it is contingent on the liquidity event. [00:29:48] Speaker B: Yes. That money is continuous, like you said, on a liquidity event. Unfortunately, we've not been able to confirm with other employees that block, because we've reached out to a number of them, but they did not respond. So we've not been able to confirm if received. Though we saw people on Twitter saying that they are ex employees also, and they did not have a really good experience working at the company, but none of them are scumful to, like, tell tech points. Okay, this happened. This happened. This happened. Right. And yes, the 40% is dependent on that liquidity event happening. And according to the CEO, it has not happened yet. [00:30:29] Speaker A: Now, the reason we're able to hear about this is because it's made it to Twitter. [00:30:34] Speaker B: Yes. [00:30:34] Speaker A: So it seems that it didn't go to the court. [00:30:39] Speaker B: It has not made it to the court. [00:30:40] Speaker A: It has not made it to the court. So if you want to talk about that, what would have been the best approach to this? [00:30:49] Speaker B: Okay, so it's, it's. I spoke to a lawyer about it, and he said it's a very tricky situation. Right. [00:30:55] Speaker A: Okay. [00:30:56] Speaker B: Your employee promised you so so and so, and they've not fulfilled on that promise. Now, it's a question of, it's kind of like a contract. Right. But the only difference now is there doesn't seem to be a written contract that says, okay, I'm going to pay you this for now. When this happens, I'm going to pay you this. Another issue is it seems like the liquidity event was supposed to happen sometime in April 2023. Right. But founder said. According to Benita. Right, but the founder is saying it wasn't as if there was a specific date that was given that, okay, this liquidity event will happen at this time. Right. It is. When it happens, it can happen today, it can happen tomorrow, five years. That is kind of what it sounds like. So the fact that there is no written document make it difficult. Kind of difficult. Right. To make a case for this, for the employees probably come forward and say, I'm owed this, I was promised this and I'm owed this, and I should be paid. Right. So one thing that could. That could probably have been done was you say I was not paid my complete site. According to my contract, I'm supposed to be paid 1 million every month. It was slashed by amount. [00:32:32] Speaker A: Yeah. And bank statement to prove that. [00:32:36] Speaker B: Okay, so that is one way to go about it. Right. But now there's also the issue of, okay, but then you receive this for this duration of time and nothing was said. Right. And then the founder will probably have people to back him up and say, oh, communicated this, and before then, there's no paper true. Right. So it's a very, it's a very tricky, very dicey situation. [00:33:05] Speaker A: Hmm. Yeah, it's, it's, it's. I think that's the lesson. To any employee that's listening to this document, let it be a paper trail, like email tree or paper trail written, something written to back up some of this. It goes beyond the gentleman's agreement. Sometimes, you know, it can come in and at any point to save. To save you. And there were other issues that were raised. Of course. This are just comments from people that were reacting to the story. And some people mentioned the issue of how the possibility of this being related to wage theft and how it can be pursued in that line. Okay, wage theft, where I heard about it for the first time from that, from that person's comment. But yeah, we went ahead to dig and see if there's anything there at all. Did you find out? [00:34:05] Speaker B: So the thing about which theft is which theft was used in a bill? A bill that was passed. It wasn't, doesn't have been passed, but I think it went through 2023. The name of the bill is the Employees Remuneration Protection bill. Right. So while you might want to make a case based on a bill, it's not an act. So it's not law yet. Right. There might have been things within that bill that could be used in favor of those employees, but it's not an act yet. Right. So one of. Very interesting bill, actually. And I really do not see a lot of things need to be tweaked within that bill. Because if we assume that that bill is already an act, it would mean that the fact that some of their pay. Right. The fact that their salary was delayed at some point, they could actually, the employer could be criminalized for that bill. [00:35:04] Speaker C: Never. I can assure you. [00:35:06] Speaker B: Yeah, because. [00:35:07] Speaker C: Because your government owes salaries. [00:35:09] Speaker A: I remember, I think it was going to prison. Well, it went through second and third. [00:35:16] Speaker C: Reading, but it will never be passed because, you know, government, in this country. [00:35:21] Speaker A: There are employers too. So what do you want to send? You send your governor to. Well, see, maybe they might not go to prison, but since this is criminalized, that means you can pursue it. [00:35:33] Speaker C: You can. You guys have talked about the witch theft salary backlogs and. No, my own is with. So I'm thinking about it. Right. Either you slash salaries by 40% or you slash head count by 40%. Both difficult decisions for anyones, for any honest entrepreneur, business, lawyer. But it now looks like a case of. Okay, maybe you're trying to, I don't know, it feels like you're trying to take the easy decision here and. [00:36:16] Speaker A: Are you kidding me? No. [00:36:18] Speaker C: It's easier for you to tell people I would slash your salaries than I'll let, let 40% of you go. It's easier. [00:36:25] Speaker A: Yes. But it seems like the most main thing to do. [00:36:31] Speaker C: Yes, that's what I'm saying. Yeah. Like, for you as a person, okay. It's easy for you. Like, it's the easiest thing, but for your business, it may not be. So if you're slashing 40% of your workforce, it's because you just need to extend your own way. Whatever it may be, you need to extend your own way. And, um, we see, I mean, nobody likes to be laid off. [00:36:52] Speaker A: Right. [00:36:52] Speaker C: I know some motivational speakers say it was when they laid me off that my life turned around. Right. But nobody really likes to be laid off, especially in Nigeria. And any employer would probably not, most employers would probably not want to go down that route. But sometimes for both your sake and even the employees. Right. That might be the best thing. And the reason I say this is, um, so now you've promised that you pay 40% on a liquidity event or whenever it does happen. Right. And I'm looking at it is I don't know how many employees they had. Well, let's say they had 30 employees. 40% piles up. And are you going to pay it at once? Are you going to pay it? Because here's the thing. The true liquidity event is either an acquisition or a fundraise. If you raise funds and the first thing you want to do is to clear backlogs, the salary backlogs, it doesn't really look good. In fact, if an investor knows that you have huge salary backlogs, you might be skeptical about investing. [00:38:00] Speaker A: Yeah. [00:38:01] Speaker C: So you're reading a weakened position. If an acquirer knows that because of. I don't know if we've said that, it doesn't appear that there was a paper trail. If an acquirer knows that, as they are getting into the company, one of the first things they have to do is a huge salary backlog. Right. They may be skeptical about taking you on. Right. So those are both difficult situations for the business and the founder to be in. And I, if I was the one advising you, and I'm not seeing this as an employee, if I was your investor, I've told you to let those guys go. [00:38:39] Speaker A: Yeah. [00:38:40] Speaker C: Very difficult decision. Right. When you let them go, you stop paying pension, you stop paying life insurance, you stop being HMO, health insurance, and a couple of other benefits for 40%. [00:38:52] Speaker A: Of your extend wrongly, you don't have. [00:38:54] Speaker C: Any backlog and now you don't have to deal with all of this. Right. But yeah, I mean, it's. [00:39:01] Speaker A: I imagine that the one, maybe the founder probably didn't expect it to extend that long to. [00:39:09] Speaker C: That's another issue I have. Right. I can understand you making a promise to pay salaries when you get money, but this started in 2022. Right. The liquidity event is also dependent on the market factors. Yeah. And we know that fundraising got really difficult for startups towards the, in Africa towards the end of 2022. So if you are looking around, you would have known that you are getting into like really turbulent waters. In fact, you, you should have known that it was harder for people to raise money for anything at all. And that should have informed your thinking. So while I can understand, except maybe there was an agreement that the founder felt, okay, this thing is almost getting over the line. And then, I mean, the money is going to come today, tomorrow, or something like that. Except that was the case. Right. I don't think you should have promised to pay salary backlogs after getting a liquidity event. I can understand you being very optimistic and thinking that it's going to happen. Right. But it's not. I don't know, it just feels. Just feel somehow like you should not have made that promise except you had. I mean, yeah, I mean, some people say if you have, even if you have like, strong, what do you call it? Like strong assurances, like say something is signed, but then even when something is signed, we've seen VC's pull term sheets after they have made commitments. [00:40:42] Speaker A: We've seen after stuff like that. [00:40:45] Speaker C: Right? [00:40:45] Speaker A: So regulatory, I don't know. [00:40:46] Speaker C: That's the issue. [00:40:48] Speaker A: We are hoping that they get this sorted out, maybe to go to court or not. We're hoping that both the ex employee and the employer finds a common ground to have this sorted out. No, I just. Well, keep following the story and see where it turns out. Thank you for joining us on today's episode of the Tech Points Afghan podcast. Don't forget to like and subscribe and drop a review for us if you're listening on Spotify. Share with your friends, share with your enemies and anybody in your network. We also like to hear from you. You can drop us a comment on any of our social media post or send us an email at Podcastechpoint Dot Africa. Podcastechpoint DOT Africa we still have our newsletters running, modern workplace newsletter, tech points Digest and equity Merchant. Please do well to subscribe to these newsletters. You can also check out other tech stories and everything that happened in the african tech space on tech point dot Africa. Catch you in the next one. Bye.

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