Healthtech Startup, Medsaf, Lays off All Its Full-Time Employees Amid Claims of Unpaid Salaries

Medsaf, a Nigerian health tech business, laid off all of its full-time staff in March. Since the termination of their work, former workers of the firm have revealed that their pay and incentives have not been paid. 

In regards to the laying off, Rotimi Lawal, Medsaf's Chief Operating Officer, sent to employees on the company Slack account, that the firm had to cut its employment due to “challenges ranging from funding gaps to account receivables due to different the macroeconomic policies and dismal payment behavior of hospitals in our industry.” This was what a source reported to TechCabal—it also added that around 30 employees were affected during the process.

Several employees acknowledged that they hadn't been paid since December 2022, at the time of Lawal's Slack statement. The corporation recognized the payment delays and offered to make up for them.   “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 stated in a Slack message.

A former employee who talked to TechCabal on the condition of anonymity said that the firm only paid a salary for the month of March. Three additional former workers notified this magazine that they have yet to get their unpaid salaries and that management is silent about the payment. They also stated that their pensions and pay-as-you-earn (PAYE) taxes had not been remitted. 

Another employee who left the firm in October said that his pension was only paid for three months of the 15 months he worked for Medsaf. "The best way I can describe the situation is a tragedy," the former employee told  TechCabal during a phone conversation.

Discovering more into the issues, TechCabal sent a letter to Medsaf's CEO, Nwakah, whose message blamed the problem on investors breaking financial pledges in an email reply to TechCabal. “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 explained. 

From 200% Growth to Layoffs and Upaid Salaries at Medsaf

Vivian Nwakah co-founded Medsaf in 2017 to prevent the spread of counterfeit and substandard medications in Nigeria and across Africa. Medsaf is described on its website as "a curated medication marketplace for African hospitals and pharmacies." The firm recorded that it rose over 200% in growth during the epidemic which led to a $2.7 million earning in investment as of January 2022.

According to two sources, Medsaf began to struggle with salary payment delays in mid-2022. According to the sources, the CEO informed staff that the firm was looking to raise capital. “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 explained. 

However, the situation worsened when November's salaries were not paid until the fourth week of December. According to our sources, the firm did not pay employees' salaries from January to March, when the layoffs occurred. According to two additional reports, Medsaf also owed its vendors. 

Suspicion of Financial Misappropriation by the CEO

A former senior executive claimed that Medsaf's CEO misused the company funds. According to the source, a medical service firm paid Medsaf more than $100,000 for medicine distribution projects in early 2023, but the money "was neither in Medsaf's bank account nor in medication stocks."

"The money was used to pay other debts and siphoned out of the company. This left suppliers and employees unpaid," a source informed TechCabal. However, Medsaf did not address these allegations but stated that the company's lawyers will respond.