Category: General

A couple of decades ago, India was an economic backwater and China was pretty messed up too but their present economic realities are miles ahead of that now. China was lucky to start manufacturing early while India took a different route and became the leader for Business Process Outsourcing (BPO) centers. 

BPO is the practice of outsourcing aspects of a business’ functions to a third-party provider, usually to reduce costs and allow the business to focus solely on core business activities. BPO for customer support call centers is one of the most popular BPO services.

India, with its large population and relatively cheap labor, saw an opportunity and went on to become the backoffice for everyone. They didn’t have to manufacture anything; they just created tons of customer service agent jobs and trained people to speak passable English and find their way around the different back office software for their BPO clients.

If India could do it then, why can’t African countries do it now?

Many African countries, like India, have abundance of talent and lower labor costs. So, we have to ask; why isn’t the same happening in Africa?

You don’t need to be a graduate or even attend a polytechnic to excel in customer service. I recognize that these jobs are often undervalued and considered to be lowly and at the bottom of the economic pyramid. But if the average person in Africa today earns even just $150/month, they’d live like kings.

This opportunity exists, so why aren’t we seizing it?

Even though much of the continent still struggles with challenges like unreliable electricity and limited internet access, somehow, people have found ways to manage these issues with inverters, solar power, generators, and basic internet connections. 

We’ve got companies like iSON BPO and Outcess doing great things in Nigeria and supporting big companies like MTN. What stops more African-based BPO providers from springing up and even extending their services to foreign companies?

Ultimately, it boils down to a few things.

Nigeria as a case: key barriers keeping African BPOs out of foreign markets 

I’ll use Nigeria as a case study for the challenges barring African providers from serving the global market. The reason Nigerians (and Africans) struggle to enter foreign markets effectively can be attributed to several key factors:

Quality

There’s a pervasive issue with the quality of products and services in Nigeria. We often tolerate mediocrity and are always ready with excuses when things aren’t done well. Let’s compare the responsiveness and quality of assistance from a Nigerian company to that of a foreign company like Apple, for instance. Try this: send an email to a Nigerian company and raise a complaint about using their product or service, then send a similar email to Apple. 

It’ll be quite interesting to hear about your experience if you do this. But I can also tell you what’ll most likely happen. While Apple may not always respond promptly, the quality of their responses, compared to what you might get from a Nigerian company,  is usually exceptional. 

This discrepancy calls attention to the fact that in Africa, until we get to the point where people are well trained and accept that we can all do so much better, we’ll never be able to tap into the opportunities that exist even in our backyard. 

Not all companies are bad with quality; I’ll forever rep Cobranet for the customer service. In fact, they are a little bit too intense and personal but I can count on them come rain or shine.

P.S. Don’t try this experiment with Google, they’re notorious for their bad customer service; especially in the ads department. But when it comes to Google Workspace, customer support is surprisingly great.

Reliability 

Reliability is essential in building trust and credibility, and without it, businesses will struggle to gain the confidence of their clients or partners. Unfortunately, the average Nigerian worker is entitled, extremely unreliable, isn’t principled and lacks effective communication skills. 

With a reputation like this, how can we expect people to entrust us with what’s important to them?

Trust

As a BPO provider, businesses will have to give you access to their back office, and for financial services for instance, that means being able to see customers’ balances and confidential information. Establishing trust is crucial, particularly when dealing with sensitive information like this. Unfortunately, Nigeria’s reputation for being the hub of fraudulent activities and the infamous “419” central, often undermines trust in Nigerian businesses. 

In reality, most major frauds aren’t perpetrated by Nigerians but when it comes to Nigeria, it’s the bad stories that are pushed aggressively, so the negative perception persists. To overcome this, we need to work on repairing our image by sharing more positive stories, showing that we hold wrongdoers accountable and that we’re actively fighting fraud. 

Addressing these issues is vital for Nigerian businesses to gain traction in foreign markets and build sustainable relationships based on trust, reliability, and quality.

Africa as the next BPO capital of the world – it’s a good look

If we can effectively address these challenges, Nigeria could potentially become the next global hub for Business Process Outsourcing (BPO). We have 100 million young adults ready to work. Let’s provide them with proper training, cheap laptops, and internet access and begin to utilize this potential.

Contrary to the common belief, not all BPO activities require employees to communicate verbally and attempt (and usually fail woefully) to speak with fake foreign accents. Often, people just need to simply be able to read, write and answer questions.

Nigeria has tons of talented content writers. I’ve personally worked with a lot of great writers in Nigeria and I can tell you that they can rule the world. Look at our artists too who are already at the Grammys, selling out shows abroad and making waves globally. We have the capacity to own content creation, video creation, etc. and have foreign businesses outsource even their creative processes to us, if we can get our act together.

If we can overcome these obstacles, Africa can dominate the global market. Countries like Ghana and Nigeria, operating on Greenwich Mean Time (GMT), are ideally positioned to provide services to European clients. Similarly, French-speaking countries like Côte d’Ivoire, Senegal, and Togo, as well as Portuguese-speaking countries like Angola and Mozambique, have the potential to cater to their respective language markets.

We can very easily take business from India who seems ready to drop this business anyway, so we don’t need to feel bad about it. With India growing out of BPO, we’ll start at the bottom. Africans will eat, we’ll put food on our tables, FX will come in and we’ll be proud of ourselves. And as we move up the value chain, other people can take it up from there. 

And we already have what we need.

While constant electricity remains a challenge in Nigeria, our neighboring countries have good electricity. Additionally, significant investments in fiber optic infrastructure, which have seen the MainOne, Glo 1  and Glo 2, and the West African Cable System (WACS) cables laid, have improved internet connectivity and lowered internet access prices over the last six years. 

Although laptops and PCs may still be relatively expensive, investing in these tools is essential for the work ahead and there are cheaper Chinese alternatives available, it doesn’t always have to be Dell or HP.

By addressing these issues and leveraging our existing resources and other enablers such as the provision of credit, Nigeria and Africa as a whole, can seize the opportunity to become a major player in the global BPO industry, leading to economic growth and prosperity for the continent as a whole.

The truth is, we already have an undue advantage with our abysmally poor currencies which makes our services cheaper and better.

It’s time to get in the game. We’ve waited too long already.

It’s almost a rite of passage for tech companies to have some software or service you developed years ago that no longer serves your needs and is perhaps already on the verge of obsolescence. 

The software was probably the result of prioritizing early deployment above all else, accumulating what’s known as technical debt; tons of it –  missed opportunities for optimization, opportunities to scale that you never took advantage of, design options that you overlooked, edge cases that were never factored in, etc. The list goes on.

What then happens as time goes on, is that you start trying to close the gaps and compensate for this technical debt. Usually, this means adding more features and fixing existing bugs. However, this approach doesn’t always yield the desired results and can even trigger unforeseen issues elsewhere in the system. 

This stage can be quite frustrating and will most likely push you to the point where you stew in your disappointment and think to yourself “we have to build a new one” because you’re so convinced what you have is no longer good enough. But there’s always someone else who isn’t ready to let go of the tears and blood you put into the existing version, who says “let’s fix what we have instead”. 

This battle of build or fix usually becomes tenuous when the company has a new product or features to launch. Or want to expand into a new territory. Or may be getting to the limits of tech infrastructure. 

So, what’s the right thing to do?  

And therein lies the conundrum. 

Build or fix? Here’s what my startup did

I’m hardly ever on the fence about anything but this is one of the few things I’d say I’m neither here nor there. I’ll share a bit more about my experience with what I will dramatically refer to from this point onward as ‘the conundrum’. 

At my startup, Lendsqr, we grappled with the conundrum first hand. Our admin console started out on Angular 8. Anyone familiar with the framework knows how ancient this is. Naturally, we got tired of feeling frozen in time and decided to upgrade to make it better. We searched all over Nigeria, our homebase, but couldn’t find decent Angular engineers to join us.  Despite attempts to fix the existing issues in-house, we couldn’t get the console to the standard we wanted. 

We tried to fix it.

After trying our best to patch things and an exhaustive search for talent for over a year, which had proven futile, we opted to switch to React and it was easier to build. 

Then we chose to build. 

And after 9 months, we had phase 1 ready and just as it was meant to go live … I scrapped it. As you can imagine, I was bombarded with all the ‘WHY?!’ questions.

Some were probably saying “our boss has gone mad again” 

My reason was simple – at least to me. When I compared all the features we had on the old version of our admin console with the first phase of the new version, it was clear that the new one – which would have also come with its own bugs and issues – would probably never catch up with the functionalities of the old console which is being improved and fixed on a daily basis. As disappointing as it was, we canceled the project. 

And we chose to fix … again.

However, this decision didn’t last for long because our perseverance eventually paid off when we finally took the bulls by the horn and conquered. With renewed focus, 2 new committed engineers and a product designer, the first thing we did was to upgrade from Angular 8 to 16, revamp the design, and enhance backend functionality, all under 7 weeks. We then deployed everything to pilot phase and nothing broke. I was super impressed.

We ran the pilot phase for another month before we launched to all customers. We’re still fixing bugs here and there and adding new features. 

But in the end, we had to build instead of fix. 

Our experience didn’t end there, however. This happened again when we wanted to convert our core services from JavaScript to TypeScript. Our first experiment was with our Utilities microservice; a slow changing powerhouse. It was quickly done but then the devil whispered into my ears to do a massive conversion of the core Lendsqr service. It was completed in six weeks but for a very fast changing platform, it was impossible to do one massive swing and resolve all the code conflicts from the changes. 

I learnt another lesson the hard way. Software is a sassy creature that doesn’t embrace all types of change and will most likely throw a fit in response.

Here’s how to decide what to do when the conundrum strikes

When Lendsqr was faced with the conundrum, we tried our hand at both approaches at different times and learnt some crucial lessons along the way. Although we eventually decided to build a new platform, it wasn’t because we felt like building, it was because we had to build.

This is an important decision in the lifecycle of any tech company and I’ll share some pointers based on my own experience on when you should consider building or when you should fix what you have instead. 

When should you fix?

When dealing with a large continuously evolving application that’s core to your business like your back-office, rewriting is always difficult and you may never catch up with what you already have.

In instances like these, it’s usually better to think deeply about how you want to proceed and forget about the emotions and excitement that come with building new things. Choose to make what you have better because building from the ground up can be a real pain and the coverage required to rebuild and test can be quite crazy.

The Cost Analysis Paradox

Delving deeper into the conundrum, one critical aspect that often goes underexamined is the cost analysis of building versus fixing. On the surface, the idea of fixing existing software appears cost-effective. However, this perception doesn’t always hold up under scrutiny.

The costs associated with patching up old systems, especially in terms of time and lost opportunities, can accumulate, sometimes surpassing the expenses of developing new software. Conversely, building anew comes with its own set of financial and operational risks.

The paradox lies in the fact that there’s no straightforward formula to calculate these costs accurately. As leaders, we need to adopt a forward-thinking approach, considering not only the immediate but also the long-term financial implications of their decision.

When should you rebuild instead?

It makes more sense to choose to rebuild if the application is static with minimal changes and you can’t layer new features e.g. a payment engine. 

But if you must rebuild a complex platform, I strongly recommend executing incremental fixes rather than one big revamp, to help manage the migration better. There’s an approach that people use, called the strangler fig pattern where you start replacing components bit by bit in such a way that the existing application continues until it has become a new creature, and you can shut down the old one with minimal drama.

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There’s no one-size-fits-all method of addressing the conundrum but based on my own experience doing this, these are some of the ways that allow you to reduce your engineering risk and stay alive as you evolve.

The recent poor economic conditions in Africa, coupled with the funding winter from VCs are threatening the very survival of African startups. This has also exacerbated the already adverse impact of currency devaluation which has severely constrained the prospects for economic development for many African countries.

All these issues have created an avalanche of woes hitting African startups hard. Founders are now faced with situations where they are paying significantly more to use the same (foreign) services, even when the price remains unchanged. On the flip side, these service providers have also jacked up their prices because VC monies have dried up – the average minimum price of accessing these services is now about $15 – $20 per user per month.

This vicious web of complexities have led to a growing consensus that it’s time for Africans to start using local software and services. Recently, concerned founders like myself, Babatunde Akin Moses, Ebun Okubanjo and Victor Asemota have been publicly advocating for this.

This begs the question that if these services have been around for some time, why is it taking an economic and funding crisis to get us talking about making the switch and what’s holding us back even now? 

Stay with me, I’ll walk you through it.

African founders might be ready but African tech isn’t  

Making the switch to African tech alternatives isn’t a problem in itself and the availability of these services is also a non-issue. However, the biggest problem with this is that African resources are usually lacking in quality. 

I’ll admit that this applies to my startup, Lendsqr, as well. We should already be doing well and competing on a global scale but we struggle with quality, stability and elegance. 

People from different places across the globe have built things that work well. We’ve got Grammarly which came out of Ukraine; Bolt came from Estonia; Skype from Luxembourg, and Duolingo was founded by Luis von Ahn, who is from Guatemala.

I’m not asserting that success is determined by geography, but we can’t deny that there’s a correlation based on the existing order of things. However, despite challenges within the African tech space, notable successes like OnaFriq and Paystack demonstrate Africa’s potential for delivering innovative solutions that scale globally. Disclosure: I’m Chairman of the board  at Paystack but that’s as objective an assessment as any. 

Demystifying challenges within the African tech space

I’ve identified five key areas that African startups must address effectively for us to advance in this crucial cause in favor of homegrown solutions. 

Stability

Stability is critical for any platform to be widely successful. Unfortunately, many African platforms aren’t as stable as our foreign counterparts’ platforms and suffer frequent downtimes, which indicates that there’s still much work to be done.

The quickest way out is to suggest that perhaps African engineers aren’t good enough, but the truth is that when many of these engineers leave to take up jobs in foreign companies, they end up doing such great things. The real issue here is that, more often than not, we give mediocrity a free pass and we’re always ready with excuses for why we’re not doing well. 

Elegance

Elegance presents itself in platforms that are well thought out. Elegant platforms perform well and execute functions gracefully – this can’t be said for many African solutions. Many of our platforms are clunky and slow, don’t work well on mobile and just generally ensure such a horrible user experience. 

An annoying but common instance is when platforms return error messages that don’t make sense (you do A and get an error message that implies B happened) or you’re told to contact support for issues that a more thoughtful approach to user experience could’ve easily taken care of.

This was a problem at Lendsqr and shame wouldn’t let me rest. We worked with the good guys at Assurdly, a quality assurance and product delivery shop to fix this late 2023. Things have improved but we are just starting; I’m not stopping until we are the best at what we do.

Speed of delivery

People want fast service at all times. And when things go wrong, they want quick resolution. With most companies abroad, a reported issue receives swift attention – not every time, but most times. 

People want you to attend to their issues promptly and ensure that the problem isn’t just fixed in the part of the platform you reported, but every other place that might present friction. 

Customer support

African customer service is often poor and lacking in empathy. You send an email to report an issue and not only are you made to wait eons for a response, but when an agent finally gets back to you, they tell you rubbish that gets you nowhere. 

At Lendsqr, I’ve seen instances where customers send an email to find out more about a feature on our platform and we reply poorly or don’t give them the correct information. Of course, we’re addressing this problem but these are the realities that turn people off.

Documentation

Majority of African software is poorly documented and this poses a significant barrier for those who wish to access these solutions. Poor documentation often means that short of reading the minds of the founder or product manager, people can’t understand how to use the software optimally. 

API services are the worst; the documentation provided by legacy players across the continent (I won’t mention names) are usually some old PDFs that haven’t been updated in years with current APIs behaving totally different from what is documented. New players have documentation rife with errors. 

The average time to first API call, a global metrics for API provider, is in weeks and months for most African tech providers rather than minutes. At Lendsqr, this is also poor, but we are working with Assurdly again to lower this to less than 30 minutes.

Complexity doesn’t scale. Simplify it.  

With all the issues highlighted so far, it’s evident that the effort it takes for a single African fintech/startup/SaaS provider to onboard and service customers is infinitely greater, although that shouldn’t be the case. 

We use a lot of software created abroad that’s simple; we sign up, use without hassle and move on. But in Africa, and sometimes even in Lendsqr, you can’t start using some services until someone comes to hold your hand and walks you through it. 

My team and I often argue about these issues internally and they stress that Lendsqr is complex. This is inconsequential, in my opinion. AWS is also complex but when a customer gets in, they find enough documentation that guides them on what needs to be done. 

That’s the hack. Simplicity. 

No matter how robust your offerings are, if you can’t simplify access to your tech, you won’t get very far. That’s food for thought for us over at Lendsqr as well.

A patriotic software is a good software

I’m intentionally putting my business out here because I strongly believe that discussing these issues openly will help us all to do better. Pushing people to patronize African tech alternatives solely for the sake of patriotism is a weak argument. 

Only when our services are good can we sell patriotic usage. Producing in Africa already means we can offer competitive prices and if we are able to effectively pair this with excellent services, there’s no stopping us. We could even do what China did to the American producers and ship output that’s cheaper and better.

Let’s set a minimum benchmark for excellence and pride ourselves in stability, quality, elegance, sane customer service, good documentation and speed. When we do this, we can finally enjoy the blessing that comes with our devalued currencies.

These issues of poor quality and mediocrity with our software output also spill into other things we do as Africans, but we’ll discuss that another time. 

For now, let’s get to work and crack this or die trying.

Let me start by asserting that no nation can be more prosperous than its average citizen. The experience of the common man in any country is the most accurate representation of the state of that country, and any contrary position is misinformed.

When we compare the economic landscape of prosperous nations against that of poor nations, the prosperity of the majority of the citizens takes center stage. Despite the vast resources and potential in many African countries, there is a stark contrast between a handful of wealthy individuals and the majority of the population struggling in penury. For instance, countries like Nigeria and South Africa have notable billionaires, yet the average citizen struggles to make ends meet.

That’s not to say the ‘1%’ don’t exist in the better developed and more prosperous countries. However, what you see in those countries is that despite a concentration of wealth at the top, most people are doing just fine and living decent lives. 

There is more data available to support the provision and access of a robust set of financial services to a significant proportion of the populace in developed countries. Although African countries struggle with a largely underbanked and financially excluded populace, there is a strong argument for the application of open APIs using mobile phone data to support financial inclusion and even create a credit scoring mechanism better suited to developing countries. 

So how do we attain prosperity in Africa?

If we’re talking about prosperity, this means we’re thinking about African countries stepping up to provide enabling environments for people to develop ideas to fruition, build successful businesses and create generational wealth.

Building this enabling environment is a key component of lasting prosperity. It’ll allow for individuals to pursue quality education, establish businesses, and improve their lives. However, obstacles such as the inability to afford quality education and access resources to support entrepreneurship hinder progress.

Think of the average person who wants to go to school, become a professional or set up a business and build a life for themselves. Such hope is snuffed out by the bleak reality that quality (higher) education isn’t free or cheap. Even if the fees are subsidized, what about the money needed to pay teachers and buy equipment to teach specialized courses? What you get from this is usually underpaid, overworked, apathetic teachers and under-equipped schools. 

This is a recipe for generational disaster, but that’s a conversation for another day.

The solution is clear. 

To address the myriad of issues in our economic landscape and bridge this prosperity gap, there must be a shift towards empowering the broader population through access to credit. Let’s provide the means for individuals to invest in their education, start businesses, and ultimately contribute to the economic well-being of their nations.

Credit has a primary role in stimulating economies

If you take a closer look at countries that are doing well across the globe, there’s always some form of credit in the background driving value creation and prosperity. This makes it easy for us to build a case for credit in Africa. Although, I will always advocate for accessible and affordable credit, otherwise, it’s just a waste of everyone’s time. This is what also underscores the work we do at my loan management SaaS fintech, Lendsqr.

Let’s say we were to create a structure for people to access credit in Africa. It would require short-term, medium-term and long-term facilities which should look somewhat like this: 

Short-term credit facilities could be used to empower small traders and entrepreneurs. They could stock their shops or address immediate financial needs that will allow them to expand their businesses, employ more people, and contribute their own quota to overall economic growth. Even for those who perhaps have a small contract to execute and are strapped for cash; they should easily be able to get a loan from the bank, do what they need to do and pay back within 90 days. Same applies to the use of credit as a safety net during emergencies, ensuring that individuals can overcome health challenges and return to productivity.

Need I point out that taxes only get paid when people make money? And only people who are willing, able and equipped to be productive make money.

In the medium-term, credit could support buying equipment and establishing small factories. An injection like this can stimulate domestic production and promote import substitution. People may import the machines but at least they’ll produce domestically, employ people and everyone gets paid and in turn pays their taxes. It’s a win all round.  

Recently, I watched a video of pressure pots being produced in a local factory in Asia and I think it serves as a compelling example of how domestic production can satisfy local demand and even prepare goods for export. This way of doing things is good for the economy and we’ve seen it work in China as well; millions of people producing varied quantities of things to cater to the domestic market and also reach into foreign markets.

When it comes to supporting heavy industries and large investments, long-term credit facilities should come into play. Dangote’s ventures in Nigeria, such as cement factories and the recently commissioned oil refinery which cost about $20 billion, demonstrate how large-scale projects, though requiring substantial investment, contribute significantly to a nation’s economic development over time and generate value through which the loans can be repaid.

On the less tangible side of things, education is also a long-term investment and a critical aspect of building generational wealth. It enables individuals to build careers, enter the middle class, generate income, and even contribute to government policies. The long-term impact of an educated population extends beyond individual success to national progress.

What’s Africa waiting for?

Credit is a powerful tool that leaders can utilize to transform their countries. It sometimes can even supersede the impact of political leadership – no matter how good a leader is, without credit, the desired progress is impossible to achieve but even with a bad leader, the availability of credit can still make great things happen. 

Perhaps for African leaders who are genuinely trying to transform their country’s economy, the oppressive thought that the government would have to provide the money for credit makes them get stuck with inaction. However, this is far from what is actually required of them. All they need to do is enact laws and policies that remove friction and aid the emergence of credit, and watch things take shape.

The ideal direction would be policies that allow lenders to access capital, reinforce fraud prevention structures and provide a legal process that protects lenders and allows them get their money back from bad borrowers without hassle.

In addition to these, lenders operating in Africa also need a framework for easier reporting of credit and access to cheap but quality data for credit scoring to significantly lower underwriting costs. 

Borrower education and protection are also equally important for this to work as intended. Consequently, the law must provide a strong framework to guard against predatory lending, and also create a process that addresses financial education for people to understand how to handle money, especially when borrowed.

A good example of leadership’s advocacy for credit  is the structure for student loans in Nigeria, created by the current President of Nigeria, Bola Ahmed Tinubu’s administration. The student loan scheme officially launched in Nigeria this month.

On the businesses’ side of things in Africa, we also have companies like Fiducia and Bridgement, making credit available to companies through invoice financing.This is proof that growth we need and desire in Africa is possible.

Let’s stop looking for external aid, grants, or handouts, African nations should focus on securing proper loans and promoting accountability. While credit comes with challenges, it is a potent force for building a better life.

This is a  call to action for leaders at every level, from local to national, across the 54 African countries. By addressing the credit problem and empowering individuals to build businesses, pursue education, and create generational wealth, Africa can break free from the cycle of poverty and usher in an era of sustained prosperity. 

When our people are engaged in building something meaningful, they are more likely to contribute positively to society and turn away from crime when they have a sense of ownership and responsibility.

It’s no secret that startups are weathering the harsh winter. It’s not an African problem but a global one. Funding has dried up and left many out in the cold to meet whatever end awaits them. While some companies were going to die anyway because their business models were flawed from the jump, others with potential for survival, who had previously been told the only way to grow is to throw money at their problems, are now forced to navigate this turbulent weather.

The mantra for all startups in these times is clear: be frugal or die. Now that the money has stopped flowing, the only way to grow is to first survive. 

The reality is that survival has always been the bedrock but it might have been all too easy to temporarily lose sight of that when the money was flowing freely. 

But not to worry, I’ll share some of the most essential strategies any startup needs to run a cost-efficient shop; most, if not all, of which I’ve been operating with in my LaaS startup, Lendsqr. 

Let’s get right into it:

#1 Infrastructure: Optimize cloud resources

Every startup probably runs their shop in the cloud with most on AWS, Google, and to a small extent, Azure.The most significant drain on a startup’s budget is unnecessary spending on cloud infrastructure. 

Many startups lack competent engineers. Truly great engineers are hard to come by and with the number of startups we have around, let’s face it, someone definitely drew the short straw on talent. What happens is these engineers overspend by spinning off more services than required at that moment, which is the fundamental sin against the ethos of elastic cloud. I’ve seen engineers spin off servers that can carry as much as 1 million customers doing 100 requests per second for a company that’s just starting out. Absolutely unnecessary.

The key is to use the lowest configuration that serves the purpose and then scale resources as the startup grows. Avoid unnecessary features like Multi-AZ (multiple availability zones); unless you’re operating at a scale comparable to Netflix and co, you don’t need it.

At a certain scale, you might even be better off having your own server instead of using costly services that don’t scale. I once helped  a tiny startup crash their infrastructure costs from about $3,000/month to about $250/month from just shutting down redundant services.

#2 People: Hire and manage people resources ruthlessly efficiently 

A common mistake startups make is hiring expensive resources just because they can. Don’t hire anyone unless you absolutely need them to survive. This ensures you remain agile and efficient. You’d be surprised to find out that you don’t actually need so many people to survive. 

It’s also important to let go of people who aren’t aligned with your goals as a startup trying to survive by all means. People who aren’t in it for the long haul and care more about work-life balance and having a soft life, need to go. It’s not a matter of being mean, you’re simply fighting for your life and you need only those willing to fight with you, come whatever may. If your startup dies, everyone goes away anyway.

Contract-based arrangements are also a way to go, however, I recommend that they be tied to output rather than a fixed monthly payment. For instance, with some of the external engineers I work with, I apply a pay structure of a base pay plus sprints delivered. If there’s no work done, no one gets paid. So no one earns off you unless they work for it. There’s no need to fund people irresponsibly. 

At Lendsqr, some of my content writers are on pay for content delivered. If there’s a mental block, we both “pay” for it.

Additionally, for founders operating in Africa, stop looking for fancy engineers outside of Africa; it would do nothing but destroy your startup faster than you can whistle. Hire locally and save money on what foreign engineers will charge you.

#3 Marketing: Focus on tracking metrics and organic growth

In challenging times, you can’t do without reevaluating your marketing activities. Stop spending unnecessarily on events and sponsorships; most don’t yield any substantial value. At Lendsqr, we tried sponsorships last year and only found out they didn’t work because we were tracking everything. 

Channel your efforts into metrics-driven marketing and you can still create the buzz you need by  leveraging the expertise of senior team members like founders, CMOs, and CTOs and encouraging them to blog and engage in relevant spaces online. This performs much better for driving sustainable organic growth.

#4 Software: Go cheap when you need to

Most people believe the most expensive option is the best way to go. Maybe. But have you considered if it’s best for you? Stop using expensive software especially for support functions that deviate from your core business. For instance, my company switched from Camtasia ($179.88 / year) to CapCut ($0 / year) to save money and since we’re not planning on becoming a movie production house anytime soon, I’d say we’re good.

The same logic applies to our other tools like Figma and Postman where only those who need it have access so we don’t rack up license costs. The only tool we splurge on is Github where we use the Enterprise plan because cutting costs without compromising productivity is key. So don’t skim on what’s crucial. 

Some of the other great but affordable tools we use include Metabase for analytics, Google Workspace and Google chat (goodbye Slack); Typesense for our search engine – which is just as good as Algolia – and Sentry for code quality. Opting for open-source solutions and selecting tools based on necessity rather than popularity can significantly reduce software expenses.

#5 Haggle: Negotiate the services you use like pepper and tomatoes

Don’t be quick to take pricing at face value. Sometimes you could just call the vendor and haggle your pricing. I have saved as much as 50% on some critical software or services just by haggling with the provider. There’s no shame here. 

And if you can get a significant discount by going for a yearly contract instead of monthly, bite the bullet and pay up. Sometimes, you can get as much as 40% on some software and services (AWS for example) if you have a multi-year commitment. 

#6 Operating costs: Embrace remote work if you can

In the era of remote work, startups can forgo the need for fancy hardware and expensive office spaces. Adopting a remote work model not only aligns with the current trend but also allows you to save significantly on office-related expenses. 

In my company, we work remotely; my employees love it and so does my pocket. Although we do hybrid once in a while; rent a place, have everyone come around, we get a ton of work done and everyone has a great time.

Another great benefit of remote is that you can employ great people from all over the world (please, be aware of time zones) who would do great work at a significantly lower cost of employment. You aren’t cheating anyone; you are giving opportunities. Brownie points for you!

#Bonus tip: Audit. Audit! AUDIT!!

Listen, I cannot stress this enough: audit as often as you can. Sit down with your finance people and audit your infrastructure bills monthly. If you have services no one uses running at night e.g test environment and the likes; get your engineers to write a script that shuts all these things down automatically whenever they’re not in use and they can bring them back up again when needed. Query extensively and strip what you need to without compromising on quality.

Review salary costs, bonuses, allowances and other operating costs and adjust where you find you’re spending on things you shouldn’t be spending on. Everyone has to be prepared to make sacrifices and if they’re not then let them go; they’re not for you.

Auditing bills and removing redundancies can lead to substantial cost savings. Run numbers on these costs every single month and never stop asking, “how low can this number go?” 

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For startups looking for funding, these are challenging times and the only way to survive and ultimately thrive is to tighten our belts and adopt a frugal mindset. 
With these strategies, based on lessons I’ve learnt firsthand from running a startup, you can optimize your infrastructure, manage your resources better and save about 60-70% on redundant costs to significantly extend your runway and increase your likelihood of long-term success. It’s not just about how rapidly you can grow when you’re flush with cash, it’s about setting yourself up for sustainable growth and like it or not, frugality is a necessary evil.