Sub-Saharan Africa contains investment opportunities for US firms in a nearly limitless number of sectors—extractives, power generation, financial services, infrastructure…you name it. However, perhaps the most pressing problem faced by the private sector in Africa (both domestic and international firms) is the scarcity of skilled workers. Despite significant improvements in the past two decades, sub-Saharan Africa as a whole still has the world’s lowest levels of literacy and education, contributing to a severe shortage of skilled workers. And even though most African countries have shown strong numerical gains in regard to school attendance and graduation, educational quality remains uneven, with teachers often not much better educated than their students.
This human capital shortage should give pause to any firm looking to establish or expand operations on the continent, particularly if governments have domestic hiring quotas in place. However, the picture is not universally bleak; a handful of countries have strong educational traditions and turn out highly skilled graduates (many of whom attend university in Europe or the United States). International firms should pay close attention to these countries—selected for a combination of literacy rates, performance on international surveys, and quality of educational institutions—when looking to set up operations or recruiting. Firms should remember that Africa’s myriad economic communities give their participant citizens job opportunities throughout the region; a Togolese citizen can work in Mali, and vice versa, without a work visa since both are members of the Economic Community of West African States. Even where formal agreements are not in place, it is relatively easy for Africans to work in other countries on the continent. Using Africans outside their home countries could prove a cost-effective solution for companies looking to find qualified workers.
Zimbabwe: Once the shining star of southern Africa, Zimbabwe has been buffeted by political and economic crisis in the past 15 years. Its economy, plagued by hyperinflation, contracted by nearly half between 2000 and 2008, causing as many as 3 million citizens to leave the country. Although the economy has stabilized in the past five years, this crisis took a toll on the once exemplary education sector—school attendance fell as parents struggled to pay school fees, and the tertiary sector deteriorated in the face of budget cuts.
So why include Zimbabwe? Despite all of these problems, Zimbabwe retains one of the highest literacy rates on the continent, between 85 and 90 percent. While school attendance rates are down, they remain among the continent’s highest. And most importantly, Zimbabweans retain a culture of prioritizing education for their children not often found across Africa. These factors contribute to Zimbabweans filling a disproportional number of skilled positions wherever they are found, particularly South Africa.
Ghana: Ghana has easily the best education system in west Africa, and one that has seen significant growth and improvement in the past 15 years. It has seen big jumps in primary and secondary enrollment, while the tertiary sector has seen massive expansion—there are now more than 50 tertiary institutions in the country, compared with only a handful in 2000. These educate more than 300,000 students, but even this is not enough to keep up with demand. Ghana’s literacy rate of about 70 percent does not rate highly by continental standards, but it is significantly higher than other west African states, and is much higher among Ghanaians under 25. Much like in Zimbabwe, Ghanaians have a culture that values education, and skilled Ghanaian workers are highly sought-after in the region and abroad (notably in the United States, where there is a large diaspora).
Kenya: Kenya has many similarities to Ghana in the education sector—strong gains in all sectors over the past 15 years; a rapid expansion of tertiary institutions; and a literacy rate of around 70 percent, but much higher among young people. Kenya, however, has the added advantage of being the continent’s most technologically savvy country. The country has Africa’s highest level of Internet penetration (about 57 percent of Kenyans have access), a burgeoning community of programmers in Nairobi, and booming usage of smartphones. These advantages have positioned Kenya as a continental leader in the tech sector, drawing interest from firms like Google and Microsoft. Any firm looking to expand in the tech sector should consider Kenya as a base or source of workers.
Rwanda: Compared to the other countries on this list, Rwanda is a bit of an outlier, but it’s one to watch for the future. This is due to the single-minded focus of President Paul Kagame to transform this small, relatively isolated country best known for its 1994 genocide into a tech and services hub for east and central Africa. The government has been almost fanatical in its commitment to improving the education sector, and this is generating promising results. The literacy rate is nearing 70 percent, almost double what it was 30 years ago, and primary education is near universal. The secondary and tertiary sectors remain underdeveloped, but the government’s stated commitments to boosting them suggests Rwanda will emerge in the next decade as a major source of skilled workers.
Gabon: That Gabon is the only French-speaking country on this list is a reflection of how poorly Francophone Africa has performed since independence in educating its citizens. Only a handful of Francophone states have literacy rates above 50 percent; most rank among the world’s worst in regard to educational outcomes, particularly for girls. That Gabon is different is largely a product of luck; with a small population and large-scale (if dwindling) oil production, Gabon has long had one of the continent’s highest per capita incomes. This has translated to strong government investment in the education sector (nearly 10 percent of the government’s budget) and one of the continent’s highest percentages of students completing secondary school. Gabon’s small size, costliness, and oil dependence makes it of limited attractiveness for firms looking to set up operations, but Gabonese nationals could prove of great value in other parts of Francophone Africa.
South Africa: South Africa since the transition to majority rule in 1994 has made massive strides in expanding education to its black majority, which under apartheid rule was robbed of anything more than basic education for more than 40 years. The government spends nearly 20 percent of its budget on education, and literacy is more than 90 percent. However, this rapid expansion has led to major questions about quality, with a recent World Economic Forum study of 148 countries ranked its math and science education above only Yemen and Libya. The public system also is plagued by poor quality (and often absent) teachers. All of this has contributed to a shortage of skilled workers in South Africa’s modern economy.
So why should firms look to South Africa to fill their human capital needs on the continent? Even despite its problems, South Africa retains major advantages compared to the rest of the continent—large numbers of skilled workers in all sectors, with salaries far lower than in the West and even other African countries; the only tertiary education sector on par with the United States or Europe; and millions of skilled foreign workers. South Africa’s economy is the draw for Africans across the continent, with hundreds of thousands of skilled Africans willing to work menial jobs in South Africa rather than stay in their countries. This expatriate population alone holds tremendous, and still largely untapped, potential for firms looking for skilled Africans.
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