Good afternoon and thank you.
Let me start by giving you a short background on Who I am and What right do I have to be speaking on Employment Opportunities and how this relates to Investing in Uganda?
My name is Sarah Fitzgerald. I am a Managing Director and co-Founder of Executives in Africa. I am also co-founder of Professionals for Africa which is a networking group based here in the UK for Africans in the Diaspora and those with an interest in doing business in Africa. We have over 1200 members now and hold biannual networking events.
I have over 24 years experience in recruitment, with the last nine years focusing on Executive Search and have worked on nearly one hundred mandates across Africa.
My business partner, Richard Putley, and I set up Executives in Africa over six years ago.
EiA is a retained Executive Search Firm based out of the UK and which focuses purely in delivering executive level and ‘hard to find’ technical specialists for roles based in Africa.
By October this year we will have a team of 32 professionals who all believe passionately that we can have a positive and lasting impact across Africa through placing quality business leaders in critical leadership roles.
As a business, we are sector agnostic, being functional specialists in general management, finance, sales, marketing, supply chain, human resources and broader commercial roles.
Specifically in Uganda, we are currently actively working on a Commercial Director role, having recently placed a CFO.
We have run other mandates in Uganda across Customer Services leadership, Company Secretarial, Managing Directors and Finance Managers.
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 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
- Starting a business
- Dealing in construction permits
- Getting electricity
- Registering property
- Getting credit
- Protecting minority investors
- Paying taxes
- Trading across borders
- Enforcing contracts
- Resolving insolvency
I have always been surprised at these conferences, which is backed up by these 10 areas the World Bank Group assesses,
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.
Yet, whenever we work with Private Equity or other Companies who have invested in companies on the ground where they see huge potential for growth, they will always replace the CEO, and often the CFO and other key members of the management team as well. It’s the business leaders who will operationally deliver the growth targets and therefore effectively deliver the returns on investment.
As such, I was delighted, when invited by the Ugandan Convention, to be given the opportunity to presents some thoughts today around what we have experienced around the broader issues and challenges around talent and employment opportunities specifically in Uganda.
In preparing for this presentation I have been speaking to a number of clients over recent weeks who are based both on the ground in Uganda and based internationally but with businesses in Uganda. I have spoken to clients across the energy sector, financial services, business services, and also had input from charities and not for profit organisations.
Some of the people I have spoken to have been Ugandan nationals, some leaders from the Diaspora who have returned home and taken up key leadership roles, and Ive also spoken to also international business leaders who believe in the potential and have already made investments in Uganda.
My thoughts stem therefore from our own experiences of searching for business leaders for companies based in Uganda and also from these clients’ experiences.
But Fundamentally what you should be interested in if you are considering investing in a business in Uganda will be;
- 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.
But it highlights some critical areas, each of which I will address;
- Uganda 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 to Uganda
- 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.
Lets start with Education.
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.
More technical and sector specific programmes are needed to equip African graduates and workers with the higher quality skills that businesses need.
Speaking to Feezah Kyambadde, the Country Head of HR for Standard Chartered Bank, she feels strongly that there is the need for more specialist banking courses in the universities.
Graduates are not passionate about banking, not really knowing what it involves when they apply for trainee positions, and this results in high attrition rates which is costly for a business. Looking closer at the way subjects are taught, she feels that graduates of marketing are only taught how to market products and are ill equipped to sell a service.
Alexa Mbowa, HR Director for Living Goods, which is a social enterprise which promotes health products, thinks the problem with the educational system is more fundamental.
She feels that the educational system has not evolved from rote learning and as a result, the young Ugandans coming out of schools and universities are unable to think creatively, be innovative or challenge ideas. She feels this is critical to be able to bring a global mind set and way of thinking and for businesses in Uganda to be players on a world stage and I am sure many of you agree.
As such, she actually likes to see CVs of Ugandan candidates who have gained some educational experience outside of Uganda and will therefore have experiences and been taught a different way of thinking, and will therefore bring these soft skills around ideas formation and problem solving to her organisation.
Interestingly the Ugandan government currently provides grants for students to study abroad, with these loans being repayable if the individuals do not return to Uganda with their newly gained skills. Clearly this is a great initiative.
However these grants are currently, as I understand it, offered only for traditional courses such as law and medicine, and Alexa commented that she would really like to see the government thinking more creatively and supporting students wanting to pursue business degrees and through this, creating more commercially minded business people in the country.
But it should not end with government – corporations can play their part by sponsoring graduates through enhanced engineering or training programmes and then training and developing them internally to become leaders in their field.
Which leads me nicely onto Talent Attraction and Capability Building which are somewhat linked…
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. But the continued hiring of expatriates presents growing challenges.
For example it can take a long time to hire expatriates, and with a relatively small number of Search Firms with active networks and genuine experience of how to access suitable candidates.
And companies sometimes don’t even know where to start with getting help. I wouldn’t be that surprised if a lot of people in this room today had never heard of Executives in Africa. Whilst we are now actually the largest Executive Search team covering the continent, it’s a big continent. Those that get to hear of us are the lucky ones!
A business owner said to me only this week, ‘I wish I had known about Executives in Africa when I was running my business in East Africa. I could have saved half a million dollars which I spent on hiring the WRONG people’.
At this point I would like to mention that, whilst we are UK based, we are really passionate and really rather good at finding local talent!
We did some analysis of the nationalities of our successful hires over the last twelve months, and 74% of them were African nationals.
Specifically, the blue wedge on the pie chart represents 59% of our successful hires, being local African candidates, who may have been sourced by headhunting from within the country, from elsewhere on the continent or indeed internationally based candidates.
Furthermore, the grey wedge of dual African / European nationalities basically represents candidates in the Diaspora.
So the good news is that there is good local talent out there and the companies who understand the value of engaging a Search Firm like ourselves, will ensure they are able to access the best candidates.
However, there is not always local talent available. 26% of our hires were expatriates. Sometimes there is simply the need to bring in skills and talent where it doesn’t exist.
But in order to reduce the long term dependence on expatriates, companies must foster skills transfer and commit properly to capability development programmes.
Hiring expatriates clearly raises the issue of work visas. One of the recurring frustrations of companies on the ground trying to grow businesses in Uganda is the very recent increases in work visa costs and the difficulty and increased complexity in obtaining them. The cost of work visas jumped from $900 to $2500 this year. Whilst the big businesses can absorb these costs, it’s the smaller companies who suffer.
In a similar way to there being a more affordable work visa cost of $250 for NGOs, perhaps one solution would be a reduced cost work visa for SME’s to encourage entrepreneurial business activity and investment?
I should point out whilst talking about work visas, that it is widely supported that preference should be given to a local candidate where possible. However, in order to build capability and talent, the Ugandan companies do need to be able to hire the best business leaders for roles and not have to compromise. And this may mean hiring an expatriate on occasions.
One way to support localisation but to allow companies to bring in expatriates where required, is to link the granting of work visas to specific capability development programmes within companies. In this way businesses can get the required talent and skills, but would also commit to succession planning and skills transfer which can only benefit Uganda as a country.
There is also clearly issues with the complexity of applying for work visas which has been described as; cumbersome, with conflicting information being given out, and sometimes taking up to 4 months to get a one year visa. Clearly this needs to be addressed in order make Uganda an easier place to do business.
Whilst on the subject of visas, it was also mentioned in my research, that visiting business visa costs have recently also risen to $100. I spoke to one specific client who told me that the result of this has been, instead of coming into Uganda for meetings as often as they used to, staying in hotels and bringing revenues into the country, they undertake business meetings by Skype.
If the aim is to encourage businesses to come to Uganda, the government has to make it easier, and indeed cheaper, for business people to move around.
Interestingly, I was surprised to hear that it is equally difficult to get a work visa for an African from elsewhere in the East African Community (EAC), as it is to get a work visa for another ‘expatriate’. It would seem sensible to me to promote growth in the whole EAC region and at least make it easier and cheaper for EAC candidates to get work permits in Uganda than for those from further afield.
Finally, on the subject of talent acquisition, is how to attract junior and middle management candidates back. There are no doubt people here today who want to return to Uganda but simply don’t know how to tap into the job network and who don’t fit into the Executive category covered by Search Firms like ourselves.
Perhaps there is the opportunity to explore the marketing of a CV portal or website aimed at the Diaspora. There certainly are a number of specialist companies starting to do this across Africa but perhaps there is the opportunity for the government to take the initiative here and send a very positive message out to the Diaspora through that?
Finally I need to talk briefly about Talent Retention. It’s no good if the government and companies invest in education, and in strategies to attract talent and build capability and skills, if that talent is quickly lost from the country.
Salaries are notoriously low in Uganda compared to many other African countries and indeed, just across the border in Kenya, candidates will earn more for doing the same job as they will in Uganda. Arguably living costs and quality of living is better and this is indeed a big attraction, but clearly salaries will also have an impact on the ability to attract talent INTO the country too.
One client suggested that, 9 out of 10 Ugandans, if offered more money across the border, would leave. More specifically, if offered more money at the end of the month in their bank account. Because NET salaries are what actually matters and the current levels of personal income taxation are unanimously considered to be one of the biggest challenges to attracting and retaining candidates in Uganda.
Until 2012, the rate of personal tax was the same as Kenya’s, at 30%, but with it now sitting at 40%, companies can’t compete to pay candidates in order to be able to offer them the same net salaries they can get elsewhere. This is a particular frustration for one company I spoke to, a Norwegian investment and relatively new business called Laboremus which is a software development company.
The company exports services, which is surely to be encouraged. However, with no physical product, salaries represent their single biggest cost, and at the current levels of income tax, the salaries they are having to pay their software developers is making the business model almost unworkable.
If the Ugandan government wants to promote Uganda as a BPO destination (business process outsourcing), then personal income taxation levels need to be addressed.
Overall, and as we have clearly heard today, Uganda has huge potential for businesses to come in and achieve growth, contribute to the economy 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 investing in what is needed to create the right environment which will attract the best talent to Lead those busiensses to deliver success.
Thank you for listening.