Wasoko Employees Claim the e-commerce Startup Hid Deal for Six Months

Kenyan e-commerce startup Wasoko, is facing backlash from its employees, who claim that the company hid its merger deal with Egypt’s MaxAB for over six months. 

The merger, which was announced in December 2023, has led to significant uncertainty and job cuts within the combined workforce of both companies. 

The employees, who were not informed about the merger until its public announcement, have taken legal action to halt the layoff of nine employees and to ensure fair treatment during this transition period.

The Human Cost of the Wasoko-MaxAB Merger

The B2B e-commerce startup Wasoko, founded in 2013 and funded by investors like 4DX Ventures and Avenir Growth Capital, informed employees about the merger with MaxAB in a video call attended by MaxAB executives in early December 2023, the same month the deal was announced. 

On January 15, Wasoko laid off over 100 employees across engineering, product, and business intelligence departments in Kenya and India. 

Following the layoffs, nine employees sued Wasoko, claiming they were unfairly fired. The court has blocked Wasoko from firing the nine employees. 

Other employees who had taken bank loans believing their work was secure said that Wasoko promised to discuss the matter with its banker, Standard Chartered, and ease repayment for six months. 

Wasoko said it would provide health insurance coverage until March 2024. The case will be heard in court on February 13th.

The Impact of the Wasoko-MaxAB Merger on the Employees 

The meeting, which was not recorded, surprised many employees, although some had figured out there were plans for a merger and eventual redundancies. 

The severance package compensated employees based on how long they had worked with the company, how many leave days they had accrued, and the number of days left before their January 15th exit. 

The former employees told a court that the severance package favored those who had been with Wasoko for an extended period. 

Wasoko, a Kenyan e-commerce platform, did not share its merger plans with Egypt’s MaxAB with employees for over six months, fearing leaks. The merger is expected to be completed by the end of March 2024.

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Management Responds, Vowing Improvement

In response to the employee backlash, Wasoko’s management released a statement acknowledging the communication gap. 

While refraining from commenting on the specific allegations, the statement emphasized the company’s commitment to improving internal communication and transparency in the future. 

“We recognize the concerns raised by our employees and sincerely apologize for any communication shortcomings,” it read. “We are committed to fostering a more open and transparent work environment moving forward.”

Industry Implications

This incident within Wasoko sheds light on a broader challenge faced by many startups experiencing rapid growth and potential acquisitions. 

Balancing the need for confidentiality during negotiations with the importance of employee transparency can be a delicate act. 

The Wasoko case serves as a cautionary tale, highlighting the potential consequences of neglecting internal communication during critical business transitions.

Looking Ahead

As Wasoko integrates into its new parent company, the disgruntled employees’ demands for transparency and open communication remain unresolved. 

Whether management can mend the broken trust and foster a more inclusive work environment will be crucial in navigating the challenges ahead. 

The company’s future success may hinge on its ability to address these concerns effectively and rebuild trust with its workforce.