Nigerian Startups: 4 Talent Retention Challenges & Solutions

By Gebeya

April 8, 2022

Nigeria is blooming with tech talent but facing a retention struggle. On one hand, the African tech talent population increased by 3.8% in 2021. However, Nigerian startups struggle to find and keep skilled developers and other key tech professionals on their teams.

The issue of the talent crunch among Nigerian startups is a serious concern. Other African countries with vibrant startup ecosystems face similar challenges in Africa’s war for talent. What’s the solution? Here, we highlight various causes behind the talent retention issue, along with some suggested remedies to the talent crunch in Nigeria.

1. The Challenge: Nigerian Startups Can't Afford Seniors

According to the Africa Developer Ecosystem 2021 report from Google and Accenture, Nigeria has a significant tech talent population along with a well-funded startup ecosystem. Startups have access to key resources, like funding, to grow and prosper. In 2021, Nigerian startups raised the highest amount of funding in Africa: $1.4 billion with 215 deals. Many of these deals were in the fintech space.

In the initial stages, startups employ limited professionals to maintain a balance between funding and workforce. They recruit most of the junior talent in Africa. Due to less experience, startups often offer 3-to 6 month-long internships to juniors. This practice saves the company expenses and allows the junior talent to get acquainted with key processes.

However, it also means the startup must spend an inordinate amount of resources on training and upskilling, which costs both time and money. A real risk also includes that full-time, permanent staff will make money, upskill, and leave a startup after only a year, for another opportunity.

The Solution: Augment Teams with Experienced Freelancers

Local Nigerian startups employ tech talent with an average of 4 years of experience, while international companies hire those with 6-plus years of experience. Multinational companies are more likely to invest in established talent i.e. mid-level or senior-level than juniors. Therefore, Nigerian startups are mostly left to choose from an inexperienced junior workforce.

How about augmenting existing teams with professional freelancers? This team structure ensures more flexibility and budget control for a startup that can’t afford to hire seniors and pay benefits on a full-time basis, plus instils more structure and leadership among the entire team, as junior staff are able to learn from more experienced senior talents.

2. The Challenge: Remote Work Increased Competition for Top Talent

In 2020, companies went “suddenly remote.” Professionals arranged their personal setups and geared up for the Work from Home era. This practice left a significant impact on their psychology. Remote work-based engineering teams have increased by 61% in the past two years.

As familiarity with the online working model grew, the interest to find remote jobs became stronger. Skilled professionals grew confident of their ability to deliver the same results even without an in-office setup.

As advanced talent grew, intermediates and seniors started looking for better opportunities abroad. A coding boot camp educator in Nigeria reveals that “90% of our applicants expect to get international remote jobs”. Of all levels, senior tech talent in Africa is more likely to secure remote jobs.
Remote work unlocks the opportunity to embrace global diversity. Tech talent get the opportunity to master the latest frameworks and technologies while working in international companies. It improves the technical skills and upgrades their overall persona.

However, experienced senior tech talents can command higher compensation. The average pay for intermediate to senior-level developers in Africa ranges between $25,000 to $50,000 per year. In contrast, developers from the United States, Switzerland, and Israel earn an annual pay of $110,638, $95,394, and $76,791 respectively.

The Solution: Partner with Freelance Marketplaces with Perks

There is no shortage of skilled African talent. Instead, the problem lies in the fact that local startups struggle to compete against multinational tech giants that can offer senior talents attractive compensation and benefits. This is why it is difficult to find the best talent in Nigeria. However, smart partnerships with freelance marketplaces like Gebeya can round out the perks and benefits available to teams beyond only salary.

For example, Gebeya’s pool of freelance talent gain access to:

  • Upskilling & international certifications
  • Mentoring & Coaching programs
  • Healthcare benefits
  • Cross country payroll management
  • Microlending schemes to access equipment like laptops

All of the above reduce the burden on startups to offer attractive perks geared toward talent retention.

To full-time permanent staff, startups can also consider offering ESOPs, or Employee Stock Option Plans. Employees get partial ownership of the company in the form of stocks, which creates a sense of ownership and tends to increase productivity, as employees feel more invested and a sense of ownership in the startup’s fate. ESOPs also help in improving the employee retention ratio. Nigerian startups that offer such benefits are more likely to attract, and more crucially, retain, high-quality tech talent. 

3. The Challenge: Data and IP Concerns

Nigerian startups face a real dilemma when they can neither afford to hire remote overseas tech talent nor find experienced ones locally. Plus, there is a trust issue, when it comes to the country’s hottest industry in the startup space: fintech.

Early-stage startups lack the resources to carry out robust recruitment drives and conduct reference checks, background checks, skill tests, and other vetting practices that help establish a relationship and rapport with their talents. Unlike established companies, startups do not have a full-fledged human resources team at the initial stages.

The Solution: Trusted Partners to Supply Specific Resources

By hiring freelancers to focus on executing specific tasks, startups reduce the risk of exposing all of their data and trade secrets to staff who will eventually leave. Plus, leveraging online talent marketplaces like Gebeya ensures working with reputable talent who have clear contractual obligations around data privacy of their clients.

At Gebeya, we collect, maintain, and then present a wide portfolio of candidates to companies. As an early startup founder, you can choose any professional from our vetted pool of talent. The entire process is seamless and quick: a simple search term like “mobile application developer” or “graphic designer” will instantly return a selection of pre-vetted talents who can be further refined by tech stack, location, rate, and other key preferences.

Whether faced with the challenge to find the best talent in Nigeria or expand teams in different verticals, we take care of it all. Check out our robust and intuitive platform here and hire the best talent in Africa for your growing team.

4. The Challenge: Outdated Talent Expectations

Given the current labour market trend, which is saturated by Millennials, you will be lucky to retain tech talent for 1 to 2 years. This also has been accelerated by COVID and the ability to remotely work. Which gives talent more flexibility and choices in picking where and for who they want to work for.

Furthermore, there are too many opportunities out there for growth and better compensation packages for good talent. We have seen in Kenya the market shook when Microsoft came to Kenya and pretty much poached all the good talent from companies like Safaricom. Primarily because of the compensation package.

The Solution: Smart, Agile Staffing

While we espouse the advantages of leveraging freelancers, though, the hiring startup needs to make sure that certain things are structured internally first. The product owner, CTO, VP engineering, and other senior leadership must have a very clear pathway on where they need the talent in the product development cycle, down to the feature the freelancer needs to work on. That way the freelancer understands precisely his scope of work, agrees on the exact timeline of delivery for the feature, fix or otherwise, and finally expectations and delivery will be more predictable, budgeted accordingly.

Once the task is done the startup can choose to retain the freelancer for another time frame for another task or release her/him back to the market. If the freelancer is not capable of producing within the first 2 weeks of engagement, he can be let go and replaced by another. This is a total contrast from a complacent permanent staff whom you can’t replace easily for fear of local labor laws and, who knows too much, who has several tasks to deliver on a tight schedule, or who does not have a sense of urgency.

Concluding Thoughts on Nigeria's Talent Retention Challenges

With this analysis, in order to build your product or keep improving it as an Africa startup, hiring freelancers is pretty much inevitable; when done smartly, it can make your startup more competitive and go to market faster. Consequently, startups need to educate themselves more on hiring freelancers, including the “do’s and don’ts.” Freelancers marketplace like Gebeya can partner with your startup to help you clear that hurdle.