During the first week of April this year, the buzz around Swvl was about its entry into the African Billionaire Business Group. It achieved this by going public on the Nasdaq through a special purpose acquisition vehicle (SPAC) with Queen’s Gambit Growth Capital, a women-led blank check company, as its sponsor.
Two months later, the bus company that started in Egypt is laying off 400 people, or around 32% of its workforce, in a bid to become profitable by 2023.
This turn of events is not unusual in today’s global tech climate. Companies like Instacart and Klarna have cut their valuations to attract investors worried about rising interest rates. Uber plans to cut hiring. Meta canceled job offers. Mega-investor Softbank has lost billions of dollars to underperforming tech stocks like Doordash and Grab.
Startups in the transport sector have laid off more employees than any other sector since the start of Covid-19, according to layoffs.fyi which tracks the data. Swvl’s move is the first major sign of market corrections affecting African technology and underscores the effect of automation on the future of work on the continent.
Swvl prioritizes profitability
In a letter to employees, Swvl CEO Mostafa Kandil blamed the layoffs on a “global crisis with unintended consequences”.
“Over the past few weeks, Swvl has been hit like others around the world by shifts in its financial realities. While change is often unexpected, we believe that any attempt to resist it instead of adapting will prove futile,” Kandil said.
“We know we have to make tough decisions in order to prioritize profitability over growth to ensure Swvl thrives once we’re on the other side.”
The company, which says it bought other companies in the UK, Germany, Turkey, Spain and Argentina to spur growth, also cited automation as a reason for the layoffs. “These reductions will focus on automated roles through investments in the company’s engineering, product and support functions,” its statement said.
From its SPAC valuation of $1.5 billion, Swvl is now worth between $500 million and $600 million, according to Techcrunch. Beyond the layoffs, Kandil said the company’s top executives will take lower salaries, freeze travel, and reduce current office space, all in a bid for profitability.