Over the years, I have attended many conferences on Africa where keynote speakers and delegates have talked about doing business in Africa. I have heard about financing, the infrastructure and logistics hurdles, operational challenges, and or course the potential returns. The 6th Uganda Convention on 10th September 2016 delivered many of the same messages.
The World Bank Group each year issues the ‘Economy Rankings’ on the ease of doing business in each country across the world. The Rankings are created by scoring on 10 topics, none of which mention anything to do with talent or people.
What amazes me is that the human capital requirements and the availability of suitable talent to deliver the business strategy and hit key milestones, hardly ever seems to be discussed or considered at this stage of investment discussions or when doing the due diligence on a potential investment.
Personally, I believe it is clear what the single biggest factor which affects Return on Investment is, and that’s the quality of the leader who is running that business. That person can make the difference between delivering losses or huge profits, on delivering zero ROI, even losing your capital, or delivering 10, 20, 30% or greater returns.
As such, I was delighted, when invited by the Ugandan Convention, to be given the opportunity to presents some thoughts around what we have experienced around the broader issues and challenges around talent and employment opportunities specifically in Uganda, because this is what I believe will have the biggest impact on investments. And there are parallel considerations for other African countries across the continent.
Fundamentally, as a critical part of your due diligence if you are considering investing in a business in Uganda, or indeed Africa your assessment should include the following considerations;
- Will I be able to find someone good enough to lead my business?
- Is there sufficient talent to populate my business at all levels?
- What challenges and potential barriers will I be faced with, with regards to human resources?
I was speaking to the Managing Director of an Energy Distributor based in Kampala a few weeks back. His business is delivering major infrastructure projects across the country which will triple energy output. He currently needs two senior executives to strengthen his leadership team and deliver on these key projects which will ultimately have a widespread positive and lasting impact on people’s lives as well as delivering commercial returns.
He feels strongly that the brain drain back in the 70’s & 80s as a result of poor education in Uganda back then, is now being felt in the availability of talent in the senior management pool locally. This clearly is not something which can be quickly fixed, and it’s a widespread message we hear across the continent.
But it highlights some critical areas, each of which I will address;
- Countries needs to plan for the future now by making the Right Education available now
- In the meantime it needs to Attract new Talent in or back and the role of expatriates
- The country needs to support initiatives to Grow Talent and Capability Build at all levels
- And finally it needs to Retain this Talent within the country and stop the brain drain.
It is an acknowledged fact that HR Leaders in both local and multinational companies are calling on governments across Africa to reshape tertiary education to ensure it meets labour market demands. There is the need for more technical, business and sector specific programmes to equip African graduates and workers with the higher quality skills that businesses need to compete on a global stage. One HR Director I spoke to thinks the problem with the educational system is more fundamental. ‘The educational system has not evolved from rote learning and as a result, graduates are unable to think creatively, problem solve, be innovative or challenge ideas.’ She feels this is critical to be able to bring a global mind set and way of thinking across the board at all levels for businesses in Africa to be players internationally.
Attracting New Talent: Does Africa need Expatriates?
Over the years, some companies have established a strong appetite for expatriates as being invaluable in providing specialist expertise which is seen to be lacking locally. It can take a long time to hire expatriates, be expensive and with a relatively small number of Search Firms with active networks and genuine experience of how to access suitable candidates.
The Rt Hon Lady Speaker argued passionately that Uganda shouldn’t have ‘foreigners coming in and then just going away, of Kenyans and Tanzanian taking our jobs’ but I am afraid I have to disagree strongly on this point. Whilst 74% of successful hires made by Executives in Africa in the last year were African nationals, there are occasions where an expatriate should be considered.
It is actually widely supported by clients and indeed by Executives in Africa, that preference should be given to a local African candidate where possible and to reduce the dependence on expatriates. However, in order to build capability and talent, companies do need to be able to hire the best business leaders for that specific role and not have to compromise. And this may mean hiring an expatriate on occasions.
But in order to reduce the long term dependence on expatriates, companies must foster skills transfer and commit properly to capability development programmes. And this point is so critical to building the talent pool medium to long term in Uganda as much as anywhere in Africa.
One way to support localisation but to allow companies to bring in expatriates where specific skills are required, is to link the granting of work visas to specific capability development programmes within companies and a commitment from companies to train a local candidate to do that role within a specific time frame. In this way businesses can get the required talent and skills, but would also have to commit to succession planning and skills transfer which can only benefit that country and the talent within it.
Finally, it’s no good if the government and companies invest in education, and in strategies to attract talent, to build local capability and skills, if that talent is quickly lost from the country.
Salaries are notoriously low (or ‘affordable’ as the Hon Henry Musasizi described it at the convention) in Uganda compared to many other African countries and indeed, just across the border in Kenya, for example, candidates will earn more for doing the same job as they will in Uganda. Devaluation of currencies is also having a significant impact and we have seen a rise in talent looking to leave Nigeria recently for example following the significant devaluation in the Naira. Clearly governments can help stop this ‘brain drain’ by ensuring personal tax rates are not onerous, but the management of a stable currency is perhaps a slightly more complex issue!
Companies can contribute to halting the brain drain by raising levels of employee engagement, building company loyalty, creating a strong corporate culture and investing in real talent retention strategies. It’s not just about being able to pay more, because often that is not a commercial reality. Unfortunately many don’t even have a human resource function capable of doing much more than provide a payroll and administrative service. Again the people side of businesses are widely ignored, and the value a good HR Professional can bring is generally undervalued.
In summary, there is huge potential for investment across Africa, achieve growth, contribute to local economies and generate job opportunities. In order to maximise the potential though, serious consideration and commitment needs to be given, by both the government and by companies themselves, to the human capital element; to people. They need to investing in what is needed to create the right environment which will attract the best talent to lead those businesses to deliver success and also sustainable long term growth.
And that, in my opinion, is what will deliver the very best Return on Investment.
Please contact Sarah Fitzgerald, Managing Director, directly at email@example.com to arrange to speak further on any aspect of this article.