AfCFTA: Is skills availability a barrier to success?| SoluGrowth

04 Jun 2024
Moses Katende
Hr & Payroll Outsourcing

AfCFTA: Is skills availability a barrier to success?

Free movement of persons – and therefore skills availability – is one challenge that is slowing progress under the African Continental Free Trade Agreement (AfCTFA). Rather than skills shortages in Africa, there is more often a mismatch between the skills available in-country and the skills that are needed to staff an enterprise. Recruitment services in-country are often useful when setting up a new business or branch.

Africa boasts a young, energetic talent pool that can be upskilled or reskilled to meet their needs. In this era of digital transformation, and work from home people management, it is possible to source the right skills if one takes an innovative approach.

The African Continental Free Trade Agreement (AfCFTA) represents enormous opportunities for African businesses. While the eagerness to convert potential into tangible financial and socio-economic returns is apparent, progress remains slow. A recent report by the Economic Commission for Africa (ECA) indicates that intra-African trade as a share of global trade has actually declined from 14.5% in 2021 to 13.7% in 2022. Over the same period, intra-African exports declined as a percentage of total exports from 18.22% to 17.89%, and intra-African imports declined from 12.81% to 12.09%.

The report attributes the slow progress to mixed results in infrastructure development and the failure of member states to meet macroeconomic convergence criteria, amongst others. The macroeconomic convergence criteria includes a reduction of disparities in economic indicators such as inflation, growth levels and per capita income. The ECA report further states: “Progress in other areas crucial to the success of the Agreement relating to Free Movement of Persons, Right of Residence and Right of Establishment, and fostering peace, good governance and security, has been less encouraging.”

At SoluGrowth, we recognise that the availability of appropriately skilled labour in Africa can be a challenge as companies seek to convert the AfCFTA’s potential into real returns. Resolving issues around the mobility of people is perhaps the biggest hurdle AfCFTA now faces. But we don’t believe the hurdle is insurmountable.

Skills in Africa – lacking or simply mismatched?

Sadly, low literacy rates in the employment-age population remains a factor for several AfCFTA member states so that skills are particularly difficult to recruit in these countries. In contrast, countries like the Seychelles, Tunisia, Mauritius, South Africa, Botswana and Namibia have well-ranked education systems. So, on the continent as a whole, rather than a skills shortage there is more often a mismatch between the skills available in-country and the skills that are needed to staff an enterprise. This mismatch is often due to misalignment between the skills that are being developed within the education system, and those that will be needed to achieve the country’s goals for growth. South Africa, despite being the continent’s most diverse economy, is a good example of how this mismatch plays out, with unemployed tertiary graduates representing 2.4% of the country’s 7.8 million unemployed persons. But it’s not the only example, and many countries on the continent are producing skills that don’t align with their own growth ambitions.

Furthermore, where skills development does enjoy the Government’s commitment and a good sense of direction, such as Rwanda and Egypt, there is often a lot of focus on developing the country’s own citizens in isolation. This is where improved mobility through AfCFTA could have an impact, as it could encourage or enable Governments to collaborate across borders to advance and accelerate skills development across the continent. The continent’s infrastructure deficit plays a part, too. Though ICT is one area that the ECA says has shown good progress, there is still work to be done. Improved access to data will empower young people with access to the advice and career information they lack, leading to better study and vocational choices.

Young, energetic talent

The good news is that Africa boasts a young, energetic talent pool – in contrast to many developed countries that face negative population growth rates and aging talent in addition to skills mismatches. Skills that are in demand in Africa include commercial farming techniques, engineering, IT, economics, finance, data and even mining to name a few. Organisations seeking to expand their footprint on the continent would do well to implement interventions to upskill or reskill Africa’s youthful talent pool to meet their needs in the medium term. In the short-term, it may be necessary to partner with an organisation that can provide skilled people through outsourcing, with a view to developing local talent through skills transfer and mentorship.

Meeting short-term skills needs can be made simpler by workplace digitalisation and remote working. These allow companies to source skills where they are available, to work on projects anywhere on the continent. Though tougher to do in some environments than in others, office-based skills lend themselves to this kind of approach. For example, the South African Institute of Chartered Accountants’ (SAICA) CA(SA) designation is the top ranked professional designation for accountants in the world. SAICA accredited CAs are easier to find in South Africa and Zimbabwe than they are in, say, Mozambique. An employer looking for finance staff could consider employing qualified CAs in South Africa or Zimbabwe, to do work for a new office in Mozambique – either remotely or in partnership with a professional services company.

As an employer, this approach allows you to staff your location with the skills you need quickly, with a view to develop local employees through coaching and mentorship by more qualified and experienced peers. Partnering with service providers in business process outsourcing - that understand the importance of developing local talent – or with not-for-profit organisations that specialise in skills development, are good ways to reskill talent that is a good fit for your needs.

From SoluGrowth’s own experience, sourcing skills where they are available to work on projects where they are needed has proven a successful approach . We recently acquired a stake in a FinTech company in Zimbabwe that has the skills and expertise needed to capitalise on the growth expected in eWallets and other mobile finance options throughout Africa. The FinTech market in Zimbabwe is still limited, but the skills in the organisation are in high demand across Africa. Rather than insist that our talent should physically relocate to countries with bigger FinTech markets, we have opted to let the employees remain based in Zimbabwe while working remotely with clients all over Africa.

Identifying, employing and retaining talent

Recruitment services in-country are useful when setting up a new business or branch, especially when the service is digital, and the organisation can assist with vetting candidates through the necessary employment checks and psychometrics. Your recruitment partner should know the labour market and business culture of the country you want to operate in and have a good understanding of the skills requirements and availability for your business and your industry. Payroll outsourcing and management can also be helpful, and many businesses new to a country benefit greatly from partnering with a local company to load employee data onto systems, establish and manage web-based employee self-service, manage employee tax payments and benefits and so on.

In this era of digital transformation, and work from home people management, it is possible to source the right skills if one takes an innovative approach. Making the most of the AfCFTA’s potential to drive economic growth in Africa is a matter of skills sharing rather than a matter of mobility, at least for now.

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