African firms looking to hire fewer expats, and more from returning diaspora
Companies operating in Africa are likely to become less dependent on expatriates, while hiring more talent from the returning African diaspora and other countries on the continent.
These are among the findings of EY’s recent sub-Saharan Africa talent trends and practices survey. Over 200 multinational and indigenous organisations from across the region participated in the survey, representing just under 400,000 employees.
Even though expatriates account for just over 5% of the workforce in the companies surveyed, they are likely to be in senior positions, and therefore are a critical part of the human resources landscape.
“They are typically used to plug strategic skills gaps in labour markets, start up new businesses or greenfield sites, and lead organisations,” says EY.
The survey found that the majority of organisations have a desire to reduce their dependence on expatriate skills. One-third of respondents anticipate the demand for expatriates to remain the same over the coming year, while just over half expect to experience a lower/much lower demand for such employees with a move away from dependence on expatriate labour.
Organisations are however considering recruiting more from the returning African diaspora and other countries on the continent. “In line with the expected decline in appetite for hiring expatriates, organisations are clearly looking to other labour markets as potential talent pools for sourcing skills,” says EY in the report.
Among the organisations surveyed, recruitment from other African countries is expected to increase from the current level of 10% to 17%; while returning diaspora hires are anticipated to rise from the current 18% to 27%.
EY says the diaspora and regional employees “represent a fresh and potentially cheaper alternative to the typical western stereotype of the expatriate”.
It can be costly for companies to lure expats to the continent and to provide them with the same quality of life they were used to in their home countries. In its recent cost of living survey, ECA International found that Luanda, Juba, Brazzaville and Libreville are among the top 20 most expensive cities in the world for expatriates.
However, cost is not the only reason why organisations want to move away from expatriates; there is growing pressure to localise operations.
The majority of companies surveyed noted that skills transfer from expatriates to locals is of great importance to them.
“There is an increased desire to source skills from other African countries or the returning African diaspora. As a consequence of the desire to reduce their dependence on expatriates, some companies are looking to source skills from other African countries or from members of the returning African diaspora. Whilst this could be an innovative and cost-effective way of addressing the expatriate dilemma, EY believes this needs to be managed sensitively and should not disregard the importance for organisations to ‘grow their own timber’ by improving their ability to transfer and build local skills,” notes the report.