Why IROKO is placing 28% of its Nigerian staff on unpaid leave, cutting pay amid COVID-19 pandemic 

As organisations count losses due to the effect of COVID-19 pandemic on their businesses, Nigerian entertainment company IROKO has taken steps to put some employees on unpaid leave as the company brace for life after the lockdown.

Ordinarily one would have expected that the surge in the use of internet services, especially streaming platforms like Netflix and YouTube, by people who are confined to their homes due to lockdown would lead to an increase in revenue for IROKO, an internet platform that provides paid-for Nigerian films on-demand, but the company said its revenue dropped in Nigeria during the lockdown.

Netflix, on the other hand, said in a statement last month that it gained about 15.77 million new users in the first quarter of 2020 and a total revenue of $5.77 billion. The company also said it expected to add another 7.5 million members in the three months to the end of June. It, however, warned investors that viewers and growth would decline as governments lift lockdowns around the world.

Meanwhile, IROKO, whose CEO Jason Njoku said its number of subscribers in Nigeria started going down when the government extended lockdown, has placed 28% of its staff in Nigeria on unpaid leave.

Njoku in a statement via his Just Me. Jason Njoku. blog, revealed that the firm had earlied ended the contracts of about 100 contract workers in its offline and outbound marketing teams.

He said when the lockdown started, the company was experiencing a surge in number of subscribers, and “we hit our highest daily addition within the first few days of the lockdown. It was interesting. It seemed that consumer sentiment was pretty high, folks seemed to view the lockdown as some kind of additional holiday”

Njoku added that said trouble started for his business in Nigeria when reports of widespread incidents of insecurity became a major issue, and the lockdown was extended by President Muhammadu Buhari, “just like that, consumer confidence seemed to collapse”.

See Also

Here’s What To Expect At The Second Edition Of Entertainment Week Lagos

Internationally, Njoku said subscriptions were increasing and remained stable unlike Nigeria where they started dropping.

“When I saw Netflix and other international streaming services numbers surge, I wasn’t surprised. But that is an out of Africa thing. For us, the one of a kind paid-for product, that hasn’t been the case. So we had a decision to make. We had to right-size IROKO for any reality. Because you know what? No one knew what was going to happen next,” he wrote.

In response to the drop in revenue and expected loss of $200,000 – $250,000 monthly for the rest of the year, Njoku said the company decided to place some staff on unpaid leave rather than lay them off. “Whilst employees would be unpaid, they were still eligible to use IROKO’s health insurance,” He said. 16% of the retained staff also had their salaries slashed, six positions representing 2% of the staff were made redundant while more than 50% of the company remained on full pay.