The co-founder of a freight logistics startup has taken charge of the struggling company, aiming to revamp its operations by addressing its substantial bank debt of at least ₦10 billion. Plans are underway to restructure this debt and secure new financing to resume operations by the second quarter of 2025.
However, the road ahead is tough. The company’s success hinges on securing long-term haulage contracts from major shippers and demonstrating to lenders its ability to generate consistent cash flow. These contracts are vital for obtaining contract-backed financing, where banks provide funding based on future guaranteed revenue.
In a message to laid-off employees, the co-founder mentioned that crucial deals are in the pipeline and operations are set to restart by Q2 2025, with a target to rehire employees by 2026.
Prior to its financial challenges, the logistics-tech startup had garnered praise in Africa, raising substantial funds from various investors. However, its rapid expansion was not sustainable, relying heavily on short-term bank loans rather than revenue generation. When a key banking partner withdrew its credit line, the company faced difficulties meeting financial obligations.
As financial troubles escalated, some investors withdrew their support while key executives resigned. By late 2024, operations were halted in multiple markets, staff were laid off, and the company was on the verge of closure.
Despite the setbacks, the co-founder is determined to turn the company around by focusing on cost reduction, debt restructuring, and rebuilding core operations. Nevertheless, uncertainties linger regarding the new business model and the status of securing financing.
Remaining optimistic, the co-founder emphasized the resilience of companies that have overcome severe challenges to emerge stronger.
Editor’s note: The correction has been made regarding the IFC’s investment in the company.