Nigerian video-on-demand (VoD) company IROKO has furloughed 28 per cent of its team members in the country as it aims to minimise losses in the wake of the COVID-19 crisis.
IROKO, which sold ROK, its African film studio and international TV network, to CANAL+ Group last year and had been targeting an initial public offering some time this year, has been hit hard by the economic fallout from the crisis after initially seeing positive signs.
“Very early out of the gate, I encouraged aggressive cost cutting at the startups I am involved in. I didn’t for IROKO, as things appeared like a boom time for us. I took a more cautious “wait and see” view,” chief executive officer (CEO) Jason Njoku said in a blog post.
Initially, IROKO subscriber numbers started surging, with Njoku saying it set its highest daily addition record within the first few days of Nigeria’s lockdown.
“It seemed that consumer sentiment was pretty high, folks seemed to view the lockdown as some kind of additional holiday. Until the widespread and widely reported incidents of insecurity became a major issue, and then (Nigeria’s President) Buhari extended the lockdowns. Just like that, consumer sentiment/confidence seemed to collapse,” he said.
This prompted IROKO to furlough – or place on unpaid leave – approximately 28 per cent of its Nigeria team members, a total of 83 people, while another 49 individuals have taken a pay cut. Njoku said IROKO decided to furlough rather than lay off staff so as to safeguard the business.
“I also wanted to hedge my doom and gloom bet that things may not be as bad as I thought they were. So we retained the option of scaling up again pretty quickly during the furlough period,” he said.
Whilst furloughed employees are unpaid, they are still eligible to use IROKO’s health insurance. Njoku said the company still expects to lose between US$200,000 and US$250,000 per month for the rest of the year.
“Our ambition remains to reach cash flow positive, but in the meantime we are planning on very conservative fundamentals,” he said.