Exclusive: Healthtech startup, Medsaf, lays off all its full-time employees amid claims of unpaid salaries

In March, Medsaf, a Nigerian healthtech startup, laid off all its full-time employees. Former employees allege that their salaries and benefits remain unpaid.

Nigerian healthtech startup, Medsaf has laid off all its full-time employees, TechCabal can exclusively report. The company’s chief operating officer (COO), Rotimi Lawal, told employees on Slack that Medsaf had to reduce its workforce following “challenges ranging from funding gaps to account receivables due to different the macroeconomic policies and dismal payment behavior of hospitals in our industry.” A source told TechCabal that about 30 employees were affected.

At the time of Lawal’s Slack message, several employees confirmed that they hadn’t been paid salaries since December 2022. The company acknowledged the salary delays and promised to make good on the payments. “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 wrote in the Slack message.

A former employee who spoke to TechCabal on the condition of anonymity said the company only paid salaries for March. Three other former employees told this publication that they still haven’t received their owed salaries and that there has been no communication from the management on the payment. They also alleged that their pensions and pay-as-you-earn (PAYE) tax were not remitted. Another source who left the company last October alleged that his pensions were paid for only three months of the 15 months he spent at Medsaf. “The best way I can describe the situation is a tragedy,” the source told TechCabal over a call.

In an email response to TechCabal, Medsaf’s CEO, Nwakah, blamed the situation on investors reneging on funding commitments. “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 said.

Unpaid salaries and financial struggles

In 2017, Vivian Nwakah co-founded Medsaf to combat the proliferation of fake and substandard drugs in Nigeria and across Africa. Its website defines Medsaf as “a curated medication marketplace for African hospitals and pharmacies.” It also claimed it grew 200% during the pandemic and had raised $2.7 million in funding in January 2022.

Two sources told TechCabal that Medsaf began to struggle in mid-2022 with delays in salary payments. According to the sources, the CEO told employees the company wanted to raise funds. “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 said.

But the situation worsened, as the November salaries weren’t paid until the fourth week of December. According to our sources, the company also didn’t pay salaries from January till March, when the layoffs happened. Two other sources alleged that Medsaf also owed some of its vendors.

Alleged financial misappropriation

A former senior executive alleged that Medsaf’s CEO withdrew company funds for personal use. According to the source, a medical service company paid Medsaf over $100,000 in early 2023 for drug distribution projects but the money “was neither in Medsaf’s bank account nor was it in medication stocks.”

“The money was used to pay other debts and siphoned out of the company. This left suppliers and employees unpaid,” the source told TechCabal. Medsaf did not specifically comment on these claims but suggested that the company’s lawyers would send a detailed response.