Spotlight on Africa

February 4, 2016

This is the first of our new Spotlight series exploring different regions across the globe. We hope to provide you with the most up to date and relevant information should you wish to expand to new destinations.

Why Africa?

There is a growing interest in Africa and many companies are now considering Africa as a place to do business. Africa’s long-term economic potential has never been in doubt. The continent has 600 million hectares of uncultivated arable land, 40 percent of the world’s gold, 90 percent of its platinum, 8 percent of its oil, 26 percent of its liquid natural gas, and abundant additional resources. However, it has been seen as a region of frontier nations, mostly too risky or ill-developed to invest in — except as a source of commodities. But businesses are finally recognising the potential in this region.

Since 2000, Africa has been growing consistently at about 1 percent above the global average and the ambitious consumption-hungry middle class has tripled in the last three decades to around 400 million people. Foreign direct investment created 188,400 new African jobs. Yet economic growth across the continent remains resilient. Despite the headwinds, growth in Sub-Saharan Africa (SSA) will beat the emerging markets average, and be outstripped only by developing Asia. Ethiopia, Kenya, Tanzania, Mozambique, Zambia and Cote d’Ivoire are among 22 economies in SSA that are expected to grow by more than five percent this year.

The top 5 sectors which offer the highest growth for Africa over the next two years are Agriculture, Mining & minerals, Oil & gas, Hotels & tourism and Infrastructure projects.

Challenges

Infrastructure – reliable infrastructure remains a key risk in Africa. There are no uniform standards deployed to measure quality. Roads are poor and congested. There are also natural disasters which take their toll – flooding and earthquakes are common.

Power and communications – Africa’s energy grid and communications infrastructure is chronically underdeveloped and inadequate leading to outages, poor connection and unreliability.

Political issues – during 2014, a number of African countries — including the Central African Republic, South Sudan, the Democratic Republic of Congo (DRC), Burkina Faso and the Gambia — experienced political and social unrest. Insurgency was a factor in Nigeria and parts of East Africa. Yet despite these setbacks, 12 elections were held across the continent last year, and 7 resulted in a change of leadership. This year’s elections in Nigeria, Africa’s most populous country, notably achieved a peaceful transfer of power.

Bribery and corruption – many companies cite corruption and bribery as a big barrier to investment. Companies will need to establish robust monitoring of processes and decisions to identify and manage potential practices.

HR issues – much of Africa’s growth will rely on finding skilled and experienced staff. Africa’s labour markets generally lack people with the necessary technical skills and relevant industry experience, meaning that companies must grow their own talent. While a lot is being done at local level in schools and universities, it will take time for this to filter through to the workforce. In the meantime companies will need to rely on existing employees willing to transfer to Africa to transfer key skills and knowledge. Many employees cite health and safety as concerns in relocating to Africa.

Companies should ensure their global mobility programme supports transfers to Africa. A notable inclusion particularly for Africa should be support of the employee’s health and safety concerns. The company should fund the cost of immunisations, provide local briefings on arrival to ensure employees are supported with their health & safety being a priority. The employee should know of the potential cultural differences and know how the company will offer local support in that regard. Many companies are realising now that not offering  employees a visit in advance the transfer can have a detrimental effect on the employee. Culture shock can lead to the loss of productivity and revenue if not addressed correctly. If an assignee has only limited time in which to achieve their objectives, and they struggle to adapt on arrival, the company risks financial loss and assignment failure.

Visa/immigration issues

Immigration in Africa is complex and often full of uncertainty in terms of application of the laws and time-frames. It is an area fraught with attempted bribery and widespread corruption. However, failure to have the correct permits to work in a country can result in imprisonment/deportation of employees and cancellation of business licenses for the employer. The stakes are therefore high, and getting it wrong, can have severe ramifications. Recent applications for visas and work permits were often prepared in-house.  This is changing and companies are seeking to engage specialist immigration service providers to manage their immigration compliance. Not all countries offer permanent residence or allow dependants to travel with certain types of short term work permits.

How can we help?

With many of our clients operating in Africa for many years, Newland Chase’s Global Immigration team can provide you with the expertise and specialist knowledge you need to ensure your Immigration programme adapts to local requirements to ensure compliance in Africa. We highlight below considerations for you when considering moves to Africa.

Sponsors

Sponsor are needed in the host country but depending on the country you may be able to have a client sponsor the application.

Assignment v employment

Some African countries allow the continuation of an overseas employment contract but many do not. Countries such as Angola, Ivory Coast, Ethiopia, Mozambique and Nigeria require a local employment contract so a long term assignment is not an option into those countries. Nigeria and Mozambique offer a temporary work permit option to facilitate short term work usually up to 2 months.

Local payroll v overseas payroll

Interestingly in Africa, some countries allow a choice of payroll location. This can be the case where a local employment contract is required. Nigeria and Kenya are two such countries. With security concerns, employees may welcome the idea of splitting payroll.

Restrictions on employing foreign nationals

While some countries allow a client to sponsor applications and not all require a local contract, there are certain countries where it is not possible to employ a foreign national without having a local entity, as the entity will need to employ a certain amount of foreign nationals in order to employ foreign nationals, or have authorisation from the Ministry to employ foreign nationals in certain positions.

Training of local employees

Immigration policy is being used as a vehicle to train and develop local employees. It has been a concern of the many that relying on an expatriate population is not sustainable to growing the economy. With that in mind, some countries require an understudy to be selected and even named on the application form to grant the employment permit to the foreign national.

Processing time

The application process can vary from country to country. Nigeria requires the application to be submitted in the Nigerian Consulate in the employee’s home country. This can be perceived as a quicker process but a work authorisation has already been secured in Nigeria in the form of the expatriate quota. 

Ethiopia requires the employee to be in Ethiopia to submit the work permit application.

For all counties be mindful of the documents needed for the application process. Legalisation of documents can take time depending on the origin of the document and the country concerned. Some countries require translations in addition to legalisations. In South Africa for local hires, there is an accreditation process which verifies the employee’s professional and/ or academic background which can take several weeks/months to conclude before an application can be submitted.

 The often uncertain application of the legislation and a high level of bureaucracy and corruption mean that assignees and their employers need to take extra care to ensure compliance. The assistance of in country service providers to keep the company up to date with legislation changes and to assist with the work permit applications is considered best practice.
 

This is article was written by Maude Burger-Smith and Jeanette Ryan.

Newland Chase can help with your African requirements. Please do not hesitate to contact us at [email protected].