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30th Jun 2015

Demand for job skills heating up in Africa

Africa has the fastest-growing middle class on the planet and accounted for nine of the 15 fastest-growing economies in the world in 2014. The McKinsey Global Institute, meanwhile, predicts that Africa’s consumer spending will rise from US$860 billion in 2008 to US$1.4 trillion by 2020. For all these reasons, Africa remains a highly engaging continent for many international investors and educators, despite the political instability and security issues that have challenged some African countries of late. A survey exploring the foreign investment potential and attractiveness of the overall African market for investors, EY’s attractiveness survey Africa 2015 - Making choices, found that Africa holds the #4 spot in the world in terms of perceived attractiveness as an investment destination, behind Oceania, North America, and Asia - but ahead of Europe, Latin America, Central America, and the Middle East. Survey respondents who are already investing in Africa were far more likely to find Africa attractive than those who are not. Among that first group, Africa emerges as the single most attractive market to invest in, ahead of all other regions. But even that group, as bullish as it is about Africa, considers Africa home to highly challenging labour force deficiencies. One of the most significant issues they face on a daily basis is a skills and education shortage among local African populations.

Many workers, but not many with the right skills

PwC estimates that by 2040, Africa is expected to have the world’s largest labour force, ahead of even India and China. But as of today, it is a labour force with some serious skills and education challenges. For example, in Sub-Saharan Africa (SSA) the secondary school enrolment rate is only 40%, and only 7% of students continue to tertiary education. UNESCO predicts as well that Africa will be home to half of the world's illiterate people in the years ahead. Experts see these factors as important roadblocks to further skills development that will hinder the continent's economic and social development going forward. Perhaps it comes as no surprise then that the EY survey also found employers are having trouble recruiting workers with the right skills today. Seven in ten African firms surveyed by EY are recruiting to support planned growth yet "vacancies are taking longer to fill and employee turnover is high." The report concludes in part that:

"African governments need to reshape curricula at secondary and tertiary institutions to ensure they meet the needs of the labour market. More technical and vocational training programmes are required to equip African workers with high-quality skills that business needs."

Some of the most in-demand skills are in the technical and professional categories. Over a third of companies said their need for technical and professional skills was likely to grow over the next 12 months.

Education, yes, but also company-led training

The sheer scale and breadth of current education requirements, coupled with the dramatic growth projections for many African economies in the years ahead, suggests a wide range of student recruitment and offshore delivery opportunities in selected African markets. Another EY survey, Sub-Saharan Africa talent trends and practices, found that local employees with relevant skills training are increasingly mobile, since there is so much competition in the market that it makes it easy to move from job to job. In addition, it found that companies are having trouble filling vacant positions quickly enough. The result is that they are becoming increasingly reliant on expatriate workers, who constitute a ready supply of skills for specialist positions. Ideally, the number of local workers with suitable skills would increase to the point where the demand for expatriate workers would decline, with the effect of also bolstering spending (and stability) in local economies. EY’s Attractiveness Survey Africa 2015 advises:

"To reduce overdependence on expatriate workers, companies must foster skills transfer from expatriates to local staff."

And to have local staff remain in their jobs, the survey’s authors emphasise the need for appropriate human resource strategies:

"There is a rising war for talent in Sub-Saharan Africa. As companies gear up for growth, the demand for skills needed to support such ambitions has increased, and is being matched by greater mobility in the labour market...Clearly, organisations need to become more deliberate in how they plan for, attract and retain staff. To secure the talent they seek, they will need to make training and career development part of their brand, developing processes to monitor and reward employee performance and ensure management continuity."

Local knowledge is key, both for students and companies

To operate successfully in any international market, foreign entrants need deep local knowledge and involvement, not only for commercial reasons but also for sustainability (e.g., acceptance by populations and governments). Foreign companies are increasingly considering this concept, also known as "shared value," but some argue that higher education in Africa is actually becoming less "local," with possibly troubling repercussions. At the 14th General Assembly of CODESRIA (the Council for the Development of Social Science Research in Africa), Dr Ramola Ramtohul, a postdoctoral research fellow at the Institute for Women's and Gender Studies at the University of Pretoria in South Africa, worried about some aspects of internationalisation. She said:

"Whereas the internationalisation of higher education in Africa is widening access to tertiary education and is often seen as a tool towards political stability, democracy, peace and development, it also carries risks of brain drain, which has increased mobility of professional and skilled workers leaving African universities."

Professor Ibrahim Oanda Ogachi of Kenyatta University, Kenya, added that this internationalisation "… had stunted the ability of African universities to take off and effectively tackle the developmental needs of African society." The discussion also touched on the one-way mobility characterising internationalisation in Africa, with African students going abroad to pursue higher degrees and very few foreign students coming to Africa "largely because of the perceived low quality of academic programmes, and poor institutional infrastructure and facilities." There was a sense at the conference that the current state of higher education internationalisation in Africa is a colonial legacy, one that may even be impeding African countries in joining the global knowledge economy. This, plus the aforementioned tendency of companies to hire expatriates to fill specialised jobs, may not be a sustainable direction for a continent poised for enduring growth. Yet for now, families in Africa that can afford international and/or private education are rushing to it, eager to keep their children out of state schools that some say "have left millions with skills suitable only for manual labour." Reuters notes that this recognition is also driving demand for better education at home:

"Rising incomes among the continent's vast population have created a pool of customers willing to pay for better schooling for their children. That in turn is driving an explosion in education businesses that means Africa could soon rival Asian countries like India as the next big hit with school investors."

As we have reported previously, this demand is leading to a rapid expansion of private education, including school openings by international providers or joint ventures with local partners. Private schools account for 10–40% of K-12 education in Africa, with key markets such as Kenya and Nigeria at the upper end of that range. Observers expect this demand to strengthen in the years ahead as further economic growth takes hold across the continent and as the middle class continues to expand.

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