WORKING IN

Africa
FINANCIAL TIMES SPECIAL REPORT | Thursday October 1 2009

Inside
As globalisation reaches Africa, an environment friendly to business and accommodating to visitors has been built, says William Wallis Pages 23
www.ft.comworkinginafrica2009

Better connected
INSIDE Technology has been a significant factor behind improved living conditions throughout the continent PLUS Behind the wire in Nigeria

FINANCIAL TIMES THURSDAY OCTOBER 1 2009

Working in Africa
In This Issue
Rwanda
UPWARDLY MOBILE The

Nigeria
SAFETY FIRST Tom Burgis looks at

the claustrophobia of life for the oil industrys expatriate workforce Page 4

South Africa
EXALTED POSITION The World Bank

ranks the country highly and the legal system works, but power shortages and crime muddy the waters, writes Richard Lapper Page 5

country has zoomed up the business rankings in the past year but there are still big bottlenecks, says William Wallis Page 7
On the front page: Kenyans in downtown Nairobi on their mobile phones

AFP

Contributors
William Wallis Africa Editor Tom Burgis West Africa Correspondent Steven Bird Designer Andy Mears Picture Editor For advertising details, contact: Rebecca Grist on: +44 207 873 4909; email: rebecca.grist@FT.com or your usual representative

Kenya
COMING HOME Once, experience

Richard Lapper Southern Africa Correspondent Parselelo Kantai FT Contributor Stephanie Gray Commissioning Editor

abroad guaranteed a good career. These days, returnees find they have priced themselves out of the market, says Parselelo Kantai Page 6

A struggle to reverse the brain drain

But instability and conflict remain impediments to development, writes William Wallis

s recently as 2001 and for several years before Abeokuta was the only destination listed on the international departures board at Murtala Mohamed Airport in Lagos, Nigerias commercial capital. For those in the know, this added a certain frisson to time spent in the departures lounge. There is no landing strip in the town, so if you were to arrive by air it would be because your plane had fallen from the sky shortly after take-off. Today the old panel has been replaced with one showing an expanding range of international destinations. In 10 years there has been a sweeping makeover of what was one of the worlds most intimidating and chaotic airports travellers equipped to draw a comparison would have to agree that the experience is now far less fraught. As globalisation has

washed up on African shores, a veneer of welcoming modernity has been established at all but a handful of the continents main airports. Beyond them, in many African capitals, enough urban undergrowth has been cleared to provide an environment both friendlier to business and more accommodating to visitors. Yet a decade of accelerating economic growth stalled at the beginning of this year by the global downturn and the bubble in which expatriates and more affluent Africans live has expanded. You can zip or grind through traffic from one side of Nairobi, Dakar or Accra to another with 21st century communications at hand: a Blackberry that keeps you in touch with headquarters; a mobile phone that cuts through dense thickets of bureaucracy to reach decision-makers direct and internet that connects, albeit with variable efficiency. Thanks largely to South African and Asian businesses, you can also find shopping malls and supermarkets with abundant supplies of consumer goods. In some cities you can even go

to the cinema. You are less likely than before to reemerge and find tanks in the streets and junior officers hijacking the levers of power. There have been about 90 successful coups in Africa in 50 years, only seven in the past decade. Yet political instability and conflict remain some of the principal impediments to the development of subSaharan Africa and to the allure of working in many of its individual states. In the 1990s, Ivory Coast and Zimbabwe were among the most attractive bases for businesses, their infrastructure and services, alongside Johannesburgs, the most efficient on the continent. Today Abidjan is struggling to recover from civil war. Zimbabwes economy has shrunk by twothirds. Outside disaster zones, you can also collide with darker realities of grinding poverty, urban desolation and rampant crime lurking behind new faades of efficiency. Quality of life has improved in the upper echelons. But few African governments can claim yet to have answered the challenge of demographic

FINANCIAL TIMES THURSDAY OCTOBER 1 2009

Working in Africa
Waiting for arrivals: recruitment agencies are finding a steady flow of business from the diaspora
Alamy

change, bulging younger populations, widespread poverty and unemployment. Reliable statistics that capture the resulting trends in migration and labour

markets are hard to find. But the broad picture is fairly clear. Each year, tens of thousands of poorer Africans risk precarious and illegal

crossings to Europe in search of work. At the level of skilled workers and professionals, the brain drain continues apace. By some recent estimates, 20,000

skilled Africans leave annually, at huge cost to states that have invested in their future. Conversely, as much as a third of development aid is spent on the salaries of expatriates filling the gaps. In recent years there has also been a reverse trend. Economic liberalisation and increased investment have provided new opportunities for educated and experienced Africans. Recruitment agencies are finding a steady flow of business from a diaspora that tapped into renewed optimism about Africas future as economies boomed between 2000 and 2008. Rupert Adcock, managing director of the Global Career Company, says that over the past decade he has received a 56 per cent annual increase in the number of Africans seeking jobs back home, and 46 per cent yearly growth in the number of companies wanting to employ them. Where 10 years ago these were mostly multinationals, now a growing number of African companies are seek-

ing to draw the skilled diaspora back. So, while state sectors, where salaries are low, continue to haemorrhage doctors, nurses, technocrats and teachers, the private sector is drawing talent back. As barriers break down within regional economic blocs there is a steady growth in intra-regional job markets too. It is impossible to generalise about the 48 countries in sub-Saharan Africa. So an

Each year, tens of thousands of poorer Africans risk precarious crossings to Europe in search of work
e-mail questionnaire sent to hundreds of contacts among African and expatriate professionals captured a predictably diverse range of opinion on whether the frustrations of working life in Africa outweigh recent gains. The replies suggest that skilled Africans returning home often do so because they have reached a glass ceiling in the companies they worked for in the west,

and can go further and contribute more in their countries of origin. There was a consensus that technology, in particular the advent of the mobile phone, has been a significant driver of change in terms of quality of living, connecting Africa to the world and contribution to income growth. On the bleaker side, were complaints many from Nigerians about inadequate infrastructure, electricity cuts and corrupt, lethargic bureaucrats. Most of all there was frustration at the venality of government and lack of leadership. Things may have improved on this front too, but relative to a less than perfect past. The World Banks annual rankings on the ease of doing business around the world gives an idea of how much more could be done. With a few exceptions notably Rwanda this year which leapt 76 places after a big effort to spur investment African countries still fill nearly all the bottom slots. The most exciting thing about working in Africa is the potential, says an investment banker who travels the continent. The most frustrating, are the obstacles to achieving it.

FINANCIAL TIMES THURSDAY OCTOBER 1 2009

Working in Africa

Isolation breeds insecurity

NIGERIA

Tom Burgis on the impact of a big kidnapping industry

At the GQ Club by the waterfront on Lagos Ikoyi Island, the beer comes with popcorn. Behind the bar, bedecked with miniature stars and stripes, is a faded photograph of a US navy vessel. To get in, you have to be an American, or friends with one. The club is the focal point of US expatriate life in Nigerias commercial capital, a serene piece of home away from the uproar of Africas megacity. Yet even as they enjoy the clubs comforts, the members are conscious of the claustrophobia in which most westerners in Nigeria live. Nowhere is that isolation more acute than in the countrys dominant industry: oil. The upsurge in violence in the oil-producing Niger Delta this decade has led energy groups to impose

draconian security regimes on their personnel. The unease is understandable, particularly in light of a booming kidnapping industry. Yakubu Lame, minister of police affairs, said in July that 512 kidnappings have been reported in the first half of this year, compared with 353 for the whole of last year. We are very restricted, says Anh Tran, project adviser at ExxonMobil, the US oil group, amid preparations at the GQ for a golf tournament that will require an armed escort to the course. We are not allowed to venture beyond Victoria Island and Ikoyi, the pair of well-to-do islands, separated by a stretch of water from the mainland where most of Lagos 18m people live in conditions that range from habitable to atrocious. Thats our territory. If you want to go beyond that, you need an armed escort. Mr Tran has reasons to be cautious. Two years ago he was shot in a robbery that his driver survived despite the 18 bullets left in his

body. A Vietnam-born US citizen, at 45 Mr Tran has worked on energy projects in tricky places from Burma to Angola. Nigeria is the most difficult, he says. Angola is a piece of cake compared to here. Equatorial Guinea was even easier. Apart from security constraints, oil men complain of the logistical nightmares of operating in a country

The presence of wellequipped compounds for foreigners hardly makes for goodwill
where infrastructure is crumbling, graft widespread and bureaucracy Byzantine. A reliance on imports funded by oil money has made Lagos a more expensive place to live as an expatriate than San Francisco or Luxembourg, according to a recent survey by Mercer, a consultancy. In a job that includes

meetings with Nigerian oil officials, Mr Tran at least has opportunities to interact with the country in which he lives. His colleagues in the delta have no such luck. Thousands of engineers, rig managers and their families barely set foot outside the compounds dotted among the deltas swamps. The enclosures look like a cross between holiday camps and barracks. One has an 18-hole golf course, others shopping complexes and swimming pools. In a region where militant attacks on pipelines and oil installations are commonplace, all are tightly guarded. Yet these arrangements also serve to perpetuate the insecurity. At the core of the grievances that fuel the deltas unrest is the failure of 50 years of oil production to improve the lot of locals who lack even the most basic services. The presence of well-equipped compounds for foreigners as well as the antics of those permitted to make merry in the bars and brothels of Port Harcourt and Warri, the deltas main oil cities

More than 500 hostages have been taken this year

hardly makes for goodwill. You can understand why the locals get pissed off, says a British former oil engineer in the delta. For the dozens of expatriates at the shipyard of Hercules Offshore, the oil services company, who are driven every day in convoy the 300 metres from the compound to the yard and back again, life can be intense. Some people get on edge because all they do is work, says Mr McDonough. Drinking is a hobby its a sport. You can work out but besides that its drink and work. They are also missing out on a country which, while it

lacks the amenities of Johannesburg or Nairobi, is free of the racial animosity prevalent in South Africa and Kenya, and which is brimming with energy, invention and rhythms. Keith Richards, a Nigeria veteran and aficionado of the countrys music, writes in a forthcoming book that you get out of the Nigerian experience what you are prepared to put in. That can, in this environment, mean taking a few risks or accepting some discomfort. Oilmen in Nigeria get a salary premium for their pains. But while the delta conflict continues to boil, many will have scant hope of anything more rewarding.

FINANCIAL TIMES THURSDAY OCTOBER 1 2009

Working in Africa

Life with a contradictory character

SOUTH AFRICA

Richard Lapper looks at the contrast between elements of first and third worlds

fter working for seven years in the UK, Tyron Whitley last year made the move back home to South Africa with some trepidation. But 18 months on, his company the South African Car Import Agency, which helps other returnees ship their vehicles back from migr destinations has been a success and the 34 year old now feels pretty positive about his native land. When we first came back, we wondered what we were doing. Crime was a concern and initially power cuts meant that we found ourselves sitting in the house with candles studying how generators worked, he says. But doing business here has been a breeze. His experience illustrates the contradictory character of South Africa as a place to work. On the one hand, its legal system, banking and financial facilities and road infrastructure compare favourably with those of the devel-

oped world. On the other, the supply of electricity can be as erratic as it is in the countrys poorer African neighbours. And the incidence of crime, especially violent crime, is among the worst anywhere. A glance at this years tables measuring the ease of doing business and prepared by the International Finance Corporation the business arm of the World Bank highlights South Africas advantages. Of the 30 countries clustered at the bottom of a league table of 183 nations, more than two-thirds are from Africa. By contrast, South Africa ranks 34th, only three places behind France, well ahead of other European countries such as Spain, Portugal and Italy and substantially ahead of fashionably large emerging markets such as Brazil, Russia, China and India. Several factors explain the countrys exalted position. Investor protection regulations surrounding the registration of a property are relatively straightforward. It is easy to pay taxes and open a business. South Africans and foreigners alike can rely on courts to enforce contracts and, if things go badly wrong, businesses can be closed down without too much fuss.

More broadly, business has access to a sophisticated legal system based on a mixture of AngloSaxon and Roman Dutch law. Ravi Pillay, public affairs manager at Nestl, the Swiss company that has extensive operations in South Africa, says, for example, that well-developed copyright, patents and trademarks law all help ensure the companys intellectual property is protected. These advantages have been buttressed of late by a sound banking system that has remained largely unaffected by the meltdown in global financial markets, and by consistent macro-econ omic man age ment. True, earlier this year there were fears that, under President Jacob Zuma, whose election
Zuma: he recognises the extent of South Africas difficulties

campaign was backed by the leftwing trade union movement, the government might intervene more frequently. But, so far, Pravin Gordhan, the new finance minister, and Gill Marcus, the incoming central bank chief, look set to stick with established policies. On top of that, investors like the fact that physical infrastructure is reasonably solid. Nevertheless, South Africa also provides frequent reminders that it is still a developing country, and, in terms of average income levels, some way behind the other former British dominions with which it is often compared, such as Australia and Canada. The poor quality of public education remains a big problem, contributing to p r o nounced shortages of technical skills. Complying with

South Africas black economic empowerment rules under which companies are effectively obliged to cede a share of ownership and management positions to the majority black population can also be problematic. Energy is a potential worry. Power cuts became a regular feature of life for several months in the first part of last year, largely because the state-owned utility, Eskom, had failed to build enough generation capacity. Last but not least, crime remains a significant preoccupation. Mr Zuma at least recognises the extent of South Africas difficulties in this area. In August, he appointed Bheki Cele, a close associate from KwaZulu Natal, to be South Africas police chief, filling a vacancy unaccountably left open for 18 months by former President Thabo Mbeki. Mr Mbekis decision had done little to help the fight against serious crime but recent statistics have only served to underline the scale of the task faced by Mr Cele. Although the murder rate continues to fall it has now nearly halved since the dark days of the late 1990s in the 12 months between April 2008 and April 2009, robberies of businesses increased by an alarming 41.5 per cent.

FINANCIAL TIMES THURSDAY OCTOBER 1 2009

Working in Africa

Political uncertainty unsettles returnees

KENYA

Parselelo Kantai talks to a repatriate banker about employment conditions back home
By the time Maina Mwangi returned to Kenya from Nigeria in 2007, he had already spent most of his adult life away from home. An investment banker for the past 22 years, Mr Mwangi, 45, has lived and worked everywhere in the world, from London and New York to Singapore and South Africa. Everywhere, that is, but home, apart from a brief stint in the mid-1990s when he brokered a series of IPOs in the recently deregulated Nairobi Stock Exchange. It was time, Mwangi explains. I have two kids. They were both born in South Africa and had never really lived at home. He took up a job with Renaissance Capital, a Russian investment back that was expanding into Africa. And then came the credit crunch. The Russians retreated. Mr Mwangi moved to Equity Investment Bank, a newlylaunched branch of a vibrant, midsized local bank, Equity.

Mr Mwangis return home, just before the rumble of the financial crisis had become a storm, is not exactly typical. There is little reliable data that suggests that Kenyans, squeezed out of their jobs abroad, are returning in droves. Although remittances, a good indication of diaspora numbers and economic activity, were down almost 10 per cent by July this year at $342.3m compared with 2008, it was still a significant increase on 2007 figures, says a central bank report. Last year was a record one for remittances. The CBK attributes this to both the massive investor interest in the IPO of Safaricom, the mobile phone company and, somewhat cryptically, the post-election violence, which attracted large funds for consumption smoothing. There are anywhere between 1m and 2m Kenyans living outside the country. In the euphoric aftermath of former President Daniel arap Mois exit in 2002, many in the diaspora felt confident enough either to resettle back in Kenya or to begin investing in projects other than the sustenance of close relatives. Much of the real estate boom, for instance, was driven by diaspora Kenyans. Apartments in the posher parts of Nairobi rose

like hosannas. Average share prices on the stock exchange tripled. Estate agents were doing booming business, many actually setting up online transaction systems to deal with demand. The optimism has since faded, reaching its nadir with the disputed 2007 presidential election

The motivation to come back is that jobs are disappearing. But in Kenya, they have been priced out of the market
Maina Mwangi, Investment banker
that led to the deaths of 1,500 people and the displacement of hundreds of thousands of others. The stock exchange bubble burst and leading real estate agents these days are lucky if they make one sale in a month. The reek of retrenchment pervades the private

sector. So, burdened with the effects of economic meltdown in the west, the desire for Kenyans in the diaspora to return is complicated by political uncertainty at home. Furthermore, if events at home rather than the credit crunch abroad, have determined how Kenyas beleaguered diaspora behaves, there are few assurances these days that a Kenyan professional returning home, degree certificates and work references bulging in her hand luggage, will land kindly on her feet. Fierce competition for both specialised and administrative jobs in virtually every sector has forced the repatriate to take her place quietly in the queue. It is very different from a generation ago. Study and work abroad for those coming of age in those heady years just after independence in 1963, the hallowed word referred to England or the US, rather than India or say, Bulgaria almost certainly guaranteed a scorching trail up the career path. Emma Lebo, an epidemiologist in her late 20s, returned from Sydney, Australia, last year with a specialist masters degree in public health. After struggling to get a permanent job, she now finds herself

working under a former classmate. The main challenge is getting back into the system, she says. With the recent proliferation of mostly private universities, Kenyans are loading up on qualifications. On a weeknight in downtown Nairobi, the streets are crammed with students, young, old and in mid-career, dashing to and from school. Work experience and night-school the parallel degree programme has given many non-graduates a fighting chance against their repatriate colleagues in the hectic race for certificates and degrees. It has had some unexpected outcomes. Maina Mwangi, who now heads a team of 17 at the Equity Investment Bank, recently found himself in a recruitment dilemma. Ive got a recruitment agency scouring the earth for Kenyans. They cant find them. There are very few Kenyans in investment banking abroad with the kind of specialist skills I am looking for. Whether you are talking about South Africa, London or New York, most Kenyans in the industry do back-office work. So its actually cheaper to hire locally. The motivation to come back is that jobs are disappearing out there. But back in Kenya, theyve been priced out of the market.

FINANCIAL TIMES THURSDAY OCTOBER 1 2009

Working in Africa

Making it easier to do business

RWANDA

But reality has not matched the rhetoric, writes William Wallis

frican countries habitually monopolise the bottom slots in the World Banks annual ease of doing business rankings, which provides comparative measures of business regulations and their enforcement across 183 economies around the globe. Until this year, Rwanda was no exception. It landed at 143 in 2008, an indication that starting up a business, registering property, paying taxes and enforcing con-

tracts could be prohibitively slow. The ranking was sharply at odds with President Paul Kagames mission. In the 15 Homecoming: returnees are building houses in Kigali Getty years since the genocide, he has established his author- who took the bait found the World Bank ratings this ity and secured Rwandas rhetoric did not yet match year, rising to 67th position borders with ruthless single- the reality. According to overall, and fifth in Africa. mindedness. Mr Kagame has government insiders, hun- It now takes a Rwandan since been trotting the globe dreds of millions of dollars entrepreneur just two procepersuading businessmen of potential investment have dures and three days to that his government is seri- languished, blocked by regu- start business, the World ous about promoting private latory delays and the pace Bank reported last month. sector-led development as a of decision-making. It has An eclectic range of busimeans of overcoming its b e e n a c h a l l e n g e w e nesses are taking advantragic past. should have learnt more tage. A Tanzanian Asian is With generous infusions from local investors before setting up a steel rolling of foreign aid, his govern- going out there to promote mill with plans to recycle ment is attempting to trans- Rwanda as an easy place to abandoned hardware from form a small, predominately do business, admits one regional wars into steel peasant farming nation, into official. rods. Another entrepreneur a regional hub for financial But the experience has has set up a silk business services, communications, also galvanised technocrats with imported worms, and tourism and transport. into action. Rwanda was the an army of farmers growing Most foreign investors worlds top performer in the mulberry trees.

Nigerian, South African and Kenyan banks are entering the market, and the US company, Contour Global, is ploughing tens of millions of dollars to harness methane gas compressed under the waters of Lake Kivu to boost electricity generation. The diaspora has also been encouraged to invest. Some returnees are building houses in Kigali, a city that has been transformed since the dark days of 1994. Others are coming back to set up business. People like ourselves who had careers in the US have returned because we know the country is going somewhere. We came back because we are ready to make a sacrifice, says Patrick Kabagema, a graduate from Lafayette University in Pennsylvania who cashed in his US pension to set up an IT business, Rock Global Consulting, in 2006. A series of reports by the countrys private sector federation are also helping to galvanise improvements. One of its reports found that complying with regulations was costing business at least RwF55bn in 2007 equivalent to roughly 3 per cent of gross domestic product. That may have been partly addressed by recent

reforms, captured in the World Banks rankings. Electricity shortages are another obstacle and, among foreign investors, a frequent concern is the lack of skills among Rwandans. This is partly addressed by an influx of trained Kenyans and Ugandans taking advantage of recently relaxed of work and residency regulations within the East African Community and a proliferation of young graduates from the US and Britain working in non-governmental organisations and ministries. Ambitious schemes for vocational training for Rwandans themselves are taking longer to get off the ground and have been stymied according to government insiders by officials within the ministry of education. Therein lies another tale of the continuing gulf between Rwandas huge ambitions, and the capacity to see them through. According to a range of business people, local and foreign, interviewed in Kigali last month, there is still a relatively thin layer of determined technocrats on message with Mr Kagame. Below them, old mentalities are slower to change.