CHAPTER 6

UNLEASH AFRICA’S TALENT

As we close our journey though Africa’s business revolution, let’s make a return visit to Kibera, the massive informal settlement in Nairobi described in chapter 2. You’ll see little presence of big business here, yet Kibera teems with entrepreneurial activity. Any possible sliver of value, whether a product or a service, that can be sold or traded is—from use of the primitive toilet facilities to downloads for iPods to guides promising safe passage through the warren of paths that crisscross the settlement. There are tailors, barbers, carpenters, and caterers plying their trades. The Economist called Kibera “an African version of a Chinese boomtown, an advertisement for solid human ambition.”¹

For many young residents of Kibera, though, their ambition is to rise out of informality and enter the world of formal business—with all the opportunities for career progression and personal development it represents. That’s why, if you visit the local community center any weekday morning, you’re likely to find it full to bursting with students of the Generation youth skills program. You might just find some of your next frontline staff there: Generation’s purpose is to bridge the gap between youth who lack job training and employers who struggle to find the skills they need for business growth. (Full disclosure: Generation, today a global nonprofit organization, was founded by McKinsey. We continue to support it, alongside major philanthropic groups such as USAID.)

The Kibera center is one of thirty-seven Generation training locations across Kenya. Each offers immersive “boot camp” training programs targeted at building job readiness in areas such as retail and financial sales, customer service, and apparel manufacturing. Not only do these programs teach relevant technical skills, they also use role-play and team exercises to impart behavioral and mindset skills such as punctuality and resilience. For example, a module aimed at building students’ sales savvy requires them to sell bottled water on the streets of Kibera and then debrief in their teams about what worked, what didn’t, and what to do differently.

By 2017, more than eight thousand young Kenyans had been through a Generation program, and 89 percent of them had found formal employment within three months of graduation. One of them is Stanley, who was born and grew up in Kibera. One of eight children, Stanley was raised by a single mother who often struggled to find money for necessities like food and shelter. Despite performing well in school, Stanley could not find the money to study further. Unable to find full-time employment, Stanley worked odd jobs at a construction site and sold clothes to earn a meager income.

Yet he dreamed of a stable, professional career, and when he heard about Generation, he leaped at the opportunity to join the financial sales program. The skills and confidence he built enabled him to apply for the same jobs as university graduates. Soon after graduation, Stanley received an offer from Old Mutual, a South Africa–based financial services company with operations in many African countries. “After just six weeks I was in a good job as a sales associate. Generation was the platform for me to move from one step to the next,” he said.

AFRICA’S TALENT: CONSTRAINT OR OPPORTUNITY?

Africa’s growing businesses need talent: among the global and African executives we surveyed, fully half said they expected to expand their African workforces over the next five years. Even in an era of digitization and cost-efficiency, only 2 percent said they planned to reduce their employee numbers. That makes skills shortages a pressing concern. Many African-based companies have reported challenges in attracting and retaining the talent they need to run and grow their businesses. For example, 31 percent of companies surveyed in South Africa in 2015 said they had difficulties filling jobs, despite a national unemployment rate exceeding 25 percent.²

Africa’s continued underperformance in education is a major factor in such shortages. The average time African children spend in school increased from 3.2 years in 2000 to 5.3 years in 2010, but the rate of improvement has subsequently slowed. To put this into context, children in other emerging regions spend an average of 7.5 to eight years in school. Sub-Saharan Africa’s student-teacher ratio in primary schools was forty students per teacher in 2013, almost twice that in other regions. Africa’s rate of tertiary education enrollment is half that of India’s. Compounding this situation is a brain drain: by one measure, more than 10 percent of Africa’s university-educated professionals live and work on other continents.³

On the other hand, Africa is generating raw talent on a massive scale. In 2020, it is projected to have a workforce of 504 million–122 million more than in 2010. By 2034, Africa will have more working-age citizens (ages fifteen to sixty-four) than either China or India. By 2050, its working-age population will exceed 1.5 billion (figure 6-1). A large proportion of Africa’s workers are young people. And as the stories of Stanley and other Generation graduates show, many of them are bursting with the desire to learn, and the ambition to build stable careers and improve their lives and those of their families.

Increasingly, Africa’s business lions are seeing Africa’s talent not as a barrier but as an opportunity to unlock. Nicky Newton-King, CEO of the Johannesburg Stock Exchange, told us that many South African companies expanding into the rest of Africa are impressed with the skills and energy of the workforces elsewhere on the continent. “I’ve never heard talent being raised with me as an issue,” she said. In fact, if anything, she’s heard the opposite. She adds that, alongside local talent, many African professionals who have studied and worked outside the continent are keen to “come back and do my bit,” just as many South Africans exiled during apartheid did after the country’s democratization in 1994.

Ashish J. Thakkar of Mara Corporation and Atlas Mara has a similar view: “My personal experience is that talent is a challenge, but it’s frankly not as big as people make out. For example, we set up call centers in seven countries across Africa. In six of them, there were no existing call centers—and therefore no talent pools available for the industry. So we put training mechanisms in place, and within a hundred days we had effective call-center agents.” For Thakkar, that was a reminder that Africa has “a population that is educated, entrepreneurial, and eager to learn. If we put in the necessary mechanisms and create the necessary training, you can tap into that very easily. It’s not rocket science, and I don’t think talent is by any means an excuse not to invest in Africa.”

That rings true with our own experience in recruiting and developing talent in Africa. When we opened the McKinsey office in Lagos in 2010, we advertised at university campuses in Nigeria and around the world for top students to join us as entry-level consultants. We received around a thousand applications from Nigerian schools and five hundred from international schools. Many of them were Nigerians and other Africans wanting to come back and contribute to the continent’s development, but they also included applicants from Belgium, Brazil, and China. From those five hundred international applicants, we hired twelve people. From the thousand local Nigerian applicants, we hired none—nobody made it through our tests and interviews.

We said to ourselves: “How is this possible? We know the education system has its challenges, but there are lots of smart people in Nigeria. We have to find them and nurture them.” So we rethought our recruitment process to better spot people’s potential and built more learning and development into our program for new consultants. Our first five local hires went on to top business schools around the world. If we hadn’t been willing to look deeper to spot talent, we would have lost out on their contribution.

Fred Swaniker, who founded the African Leadership Academy in 2004 and the African Leadership University in 2013, has interviewed, assessed and developed many more young Africans than we have. “The raw talent in Africa is there in large numbers,” he says. “But it just needs to be converted. And that doesn’t mean necessarily someone going through a full four-year degree. A three-month or nine-month training program could be enough to unlock the skills that companies need.”

Swaniker compares Africa’s talent challenges to those of India. “For years, companies in India used to complain, ‘The universities are not producing the people we need.’ So companies like Infosys created their own corporate academies, and they started training and developing their own people.” He adds: “To succeed in Africa, you have to take a more strategic role in developing your own talent. You need to look at talent development as part of your value chain, not as something that is outsourced to the national university system.”

By making greater and smarter investments in talent, companies in Africa will also play their part in turning Africa’s demographic boom into shared prosperity. The International Monetary Fund estimates that Africa needs to create 18 million high-productivity jobs each year until 2035 to maximize the economic benefits of its population growth—an unprecedented level of job growth. Youth unemployment today officially stands at around 10 percent in sub-Saharan Africa, but many more young people are in “vulnerable employment”; that is, they get by in informal or temporary jobs that offer little security or potential for career development. As Africa’s youth demographic grows, providing stable jobs that offer a path for advancement is imperative for the continent’s economic future.

In chapter 3, we profiled the remarkable pan-African growth story of Saham, the Morocco-based insurer. It turns out that talent strategy is an essential component of its success. Nadia Fettah, Saham’s CEO, told us she spends one-third of her time on talent management and development. Other CEOs we interviewed put equally heavy emphasis on finding, developing, motivating, and managing their people. But what are the components of an effective African talent strategy, and what are the practical steps that businesses should take to make that strategy succeed? We advocate three talent imperatives for Africa:

1. Find smart ways to build vocational skills among entry-level and frontline workers.

2. Create robust internal talent-development processes to grow your talent from within.

3. Harness the power of inclusion—particularly the opportunity to boost women’s participation and advancement in the workplace.

TALENT IMPERATIVE 1: BUILD VOCATIONAL SKILLS FOR FRONTLINE EMPLOYEES

Data from Egypt, Morocco, and South Africa indicate that by 2021, between 41 percent and 50 percent of jobs will fall into a category that McKinsey Global Institute characterizes as “skilled entry-level,” which includes administrators, craftspeople, and operators.⁴ These roles require practical, on-the-job skills building combined with theoretical training. Unfortunately, most young Africans are not offered such training. For example, only 8 percent of African students in secondary education were enrolled in vocational programs in 2015, compared with 18 percent in East Asia and the Pacific and 17 percent in OECD countries. Africa also lags other regions in tertiary education enrollment (figure 6-2).

The result is that many of Africa’s fast-growing businesses struggle to find entry-level employees with the skills they need. One of them is Subway, the global quick-service restaurant chain, which sees Africa as a key growth opportunity as it shifts its footprint toward emerging markets. Alex Brand, an executive at Subway’s Kenyan franchise holder, told us that hundreds of young people apply each week for positions at the company’s sandwich shops. “People drop résumés at all our outlets,” he said. “They somehow find our main office and convince the guard that they have an appointment and come up and drop their résumés there too. So there are a lot of young people that really want these jobs.”

But most of them “don’t know what it means to have a full-time job and don’t understand the standards we demand here,” Brand said. Out of every hundred job-seekers, only two or three make it through Subway’s recruitment process—wasting precious human resources time. Even among those who do make the cut, retention has been a problem. “In our business, high turnover is bad: new employees don’t know the systems, aren’t comfortable talking with customers, and need training,” Brand told us.

Gilbert Cheruiyot, founder of Gilchery Skip-Trace, faced similar problems. His business has filled a gap in Kenya’s burgeoning consumer market: the need to manage customers who get behind with payments on their credit cards, car loans, or store credit. Since its launch in 2011, Gilchery has signed on several of Kenya’s largest banks as customers. The company has needed to recruit dozens of agents to its call centers, but has struggled to find people with the right skills. “Our biggest challenge has been to find the right staff,” Cheruiyot said. “Most young graduates don’t have the tolerance and emotional intelligence to deal with indebted customers, who can be highly uncooperative. Our agents need to be able to calm them down and strike a deal.” He too faced high levels of staff turnover: “For every five people I employed, I’d be left with only one after two or three months. It was very frustrating, because we’d spent a lot of time and resources training them.”

Subway and Gilchery needed a solution that would match their job openings with young job-seekers who had the right skills and workplace aptitude. That led them, along with 180 other employers, to hire from Generation Kenya. At Subway Kenya, for example, around 40 percent of local staff are Generation graduates. Partnering with Generation has greatly improved the company’s hiring “hit rate,” reduced shrinkage, and boosted employee retention. Several Generation graduates have been promoted to managerial positions. One, Stellah Jepkemboi, was appointed an assistant manager in 2017 at the age of twenty-one. She credits Generation with teaching her how to handle people—a critical skill in the restaurant business: “If a customer is upset, I now know how to stay calm, actually listen to them, and offer them a solution.”

In Gilchery’s case, Generation provided the company with job-ready call-center agents—people who have “the right attitude, high tolerance levels, and the ability to put up with anything and still remain composed,” in Cheruiyot’s words. They are also fast learners, he says: “Their productivity is improving month after month. We are able to make more collections than before, which is making our clients happy.” After hiring forty of the program’s graduates, Gilchery engaged Generation to develop a customized training for the company.

Generation provides heartening evidence that young Africans entering the workforce for the first time have what it takes to become high-performing employees in modern businesses. All that’s needed is a smart approach to preparing them for the world of work. Generation is one such approach, but there are others with strong track records, such as South Africa’s Harambee Youth Employment Accelerator. Moreover, Africa’s most successful companies are increasingly making vocational training—whether outsourced or insourced—a core part of how they do business. One example is Aviation Industry Corporation of China (AVIC), a diversified Chinese state-owned enterprise that has its roots in aviation but also has manufacturing, services, and construction business units. AVIC has set up technical and vocational training programs in six African countries to develop the skills needed not only for its own subsidiaries but also for other Chinese companies.

In Gabon, for example, the company has set up training programs focused on machinery, electronics, aeronautical maintenance, and skills for the country’s petroleum and timber industries. It has also partnered with African governments to launch the Africa Tech Challenge, a competition aimed at building technical skills such as machining and mobile app development. Initially focused on Kenya, the contest now also covers Ghana, Uganda, and Zambia. The winners receive cash rewards and offers for full-time employment with AVIC.⁵

TALENT IMPERATIVE 2: CREATE ROBUST INTERNAL PROCESSES TO GROW TALENT FROM WITHIN

Getting job-ready frontline staff is one challenge, but finding and developing employees with technical, managerial, and leadership skills is an even more complex undertaking. In our survey of African and global business, 27 percent of respondents said they faced pressing challenges in finding experienced technical workers, while nearly the same number said they struggled to find appropriately skilled senior managers and frontline supervisors. For example, e-commerce company Jumia has found it difficult to recruit middle managers. “This is the critical role when it comes to talent,” said Sacha Poignonnec, Jumia’s CEO. “But it’s very difficult for us to find people who are good at managing a team of ten people.” Many businesses also said they faced gaps in digital talent. Gro Intelligence, the Nairobi-based technology startup, is one such firm. CEO Sara Menker remarked: “We get a massive influx of résumés for software engineers, but very few make it through our technical screening process. It’s a very, very young market.” She added: “When we do find talent that makes it through our hiring process, they are world-class.”

A pessimistic view of these talent gaps would suggest that businesses in Africa should embark on a “war for talent,” outbidding one another for scarce technical and managerial skills. Certainly, successful companies need to shape and communicate compelling employee value propositions. Mobile operator MTN, for example, created the “MTN Deal,” which includes a promise of employee development, celebrating diversity, competitive reward, and recognition.⁶ Companies also need to tailor such value propositions to different talent segments, ranging from global highfliers in the African diaspora to local hires with rapid advancement potential.

But a more optimistic view—one we share—holds that companies can grow the leaders, managers, and specialists they need from within their organizations. Competition for talent will remain a daily reality, but smart investment in people development is the true differentiator of companies that win in Africa. Indeed, that recognition is at the heart of employee value propositions like MTN’s: it emphasizes mentorship, coaching, and training just as much as compensation.

Arguably, Africa is at the early stages of a corporate education revolution, with many companies investing heavily in internal training programs and institutes. Among high-performing firms in our executive survey, more than 60 percent run such programs in their African operations (figure 6-3). The Dangote Group, for example, established the Dangote Academy in 2010 to train employees in technical and managerial skills, on the explicit recognition that “we cannot rely on universities and colleges to provide the very specialized technical and managerial training required to run major industrial factories such as ours, particularly in the large numbers of such people that we will need.”⁷

But there is clearly room to expand such efforts, and to increase their impact. Nadia Fettah told us that Saham Finances struggles to spend its full training budget—because it is difficult to find training providers across African markets who meet the insurer’s standards. “We find the external training offers poor, so we have to build our own solutions internally.” Sacha Poignonnec of Jumia has had the same experience, despite “looking constantly” for training providers to invest in. To close the gap in middle-management skills, Jumia has created an internal program covering topics such as time management, priority management, and how to manage a team effectively.

Several of Africa’s leading companies have gone a step further and created in-depth development programs for high-potential employees. (Such internship programs are a differentiator of success among high-performing firms in our executive survey.) GE, for example, runs a year-long “early career development program” for the recent university graduates it hires in Africa. As Jay Ireland, GE’s Africa president, pointed out to us: “When you’re hiring young people out of university in the US, almost every one of them has interned somewhere, so they know what a corporate environment is like. In Africa, that’s generally not the case. Our program helps solve that—and we’ve had very good success. Many of our graduates have gone on and done very well in higher roles.”

Smaller companies can adopt similar approaches. Brooks Washington, CEO of Roha Ventures, struggled to find engineers with the right skill set to build and operate its state-of-the-art glass bottle factory in Ethiopia. “We’ve found great people who are clearly very capable. But it’s rare that you find someone who’s a perfect fit, especially when you’re building something that’s never been done before. So we recruited strong local engineers, then added a budget to take them to South Africa to train them for six months. It’s expensive, but it will give us a completely trained local workforce with the best glass manufacturing skills in the world.”

Mark Bowman, former Africa CEO of SABMiller, has a name for this international training and development approach: industrial tourism. He told us: “We would take a unit manager from one of our breweries in Nigeria, for example, to work with colleagues in Colombia or Peru for a few weeks. It was a transformative experience—they’d return fired up. It was a great way to tap into the intrinsics of people’s motivation.”

In fact, the companies leading the way in talent development are making geographic mobility a requirement for career advancement at senior levels—a key step in building a pan-African business with shared values and practices. Saham has instituted a rule that, in any given African country, the deputy CEO of its local operation can never be the next country CEO. “That pushes people toward greater mobility,” said CEO Nadia Fettah. “You can grow in your own country, but if one day you want to have the number-one position, you need to travel.”

Together, these talent-development processes are creating a new generation of savvy, energized business managers and operators across the continent. Africa’s business growth will itself help to close the talent gap by creating opportunities for young Africans to build their skills, advance their careers, and become leaders. One example is Mary Karuthai. She works at the Kenyan subsidiary of the Chinese broadcasting company StarTimes, which has risen rapidly to become one of the largest pay-television providers in Africa. In 2010, two years after graduating from the University of Nairobi with a commerce degree, she joined the company as a customer service representative. By 2017, she had risen through the ranks to become the assistant director of operations, overseeing some four hundred employees across several departments, including after-sales service, maintenance, and the company’s call center. “StarTimes is giving many people opportunities to grow fast in their careers,” Karuthai said. “If you look at the managers here, you’ll see that most of them are young people.”

TALENT IMPERATIVE 3: HARNESS THE POWER OF INCLUSION—PARTICULARLY WOMEN’S ADVANCEMENT

In corporate Africa, stories of women’s advancement like that of Karuthai are unfortunately still quite rare. As part of McKinsey’s global “Women Matter” initiative, we undertook a major research effort on women’s participation in business and government in Africa. We found that, despite progress in recent years, there is a large gap to close.⁸

In the African companies we surveyed as part of that effort, women accounted for 47 percent of nonmanagement professional positions. At the middle-management level, this figure fell to 40 percent and at senior management level to 29 percent. From start to end, this amounts to “leakage” of 18 percentage points. In these companies, women made up 45 percent of the workforce but received just 36 percent of promotions. Some companies manage to promote women into middle-management roles but then encounter difficulties promoting them to senior management positions. Women are effectively locked out of the top.

As a result, Africa has far too few women CEOs. At executive committee level, women hold 23 percent of positions in corporate Africa. At CEO level, though, they hold just 5 percent of positions. Although that makes Africa the top-performing region alongside the United States, it’s far from satisfactory if the pool of senior executives from which CEOs are typically selected is nearly one-quarter female. At board level, African women hold just 14 percent of seats.

In corporate Africa, most women managers hold staff roles such as HR and legal, rather than the line roles that offer more exposure to decision-making forums, core operations, and promotion to CEO positions. In the companies surveyed, 56 percent of female senior managers hold staff roles, and there is a substantial pay gap between men and women holding senior positions in private-sector companies—arguably another indicator of women’s lack of influence. In South Africa, for example, women board members earn 17 percent less than their male counterparts.

Despite the strong business case for gender diversity in leadership, only 31 percent of the African companies we surveyed saw it as a top strategic priority for the CEO, while 25 percent thought it was of no importance. That is a major missed opportunity for business: globally, McKinsey’s research shows that companies with a greater share of women on their boards of directors and executive committees tend to perform better financially.⁹ African companies are no different; we found that the earnings before interest and taxes (EBIT) margin of those with at least a quarter share of women on their boards was on average 20 percent higher than the industry average (figure 6-4).

“Introducing more women at leadership level simply introduces broader perspectives and new ways to manage problems,” said a Moroccan executive interviewed for our Women Matter study. “Diversity is key for a successful organization. It also allows companies and public entities to tap into the entire talent pool rather than deprive themselves of half of it.” That holds true not just for companies but for entire economies. Our analysis suggests that if women participated in the economy identically to men, they could add more than $300 billion to sub-Saharan Africa’s annual GDP by 2025.

Graça Machel, an international human rights advocate, has made women’s empowerment in Africa one of her core missions. Among other initiatives, her Graça Machel Trust houses New Faces New Voices, which advocates for women’s access to finance and financial services and aims to bridge the funding gap in financing women-owned businesses in Africa. The program also pushes for policy and legislative changes to increase financial inclusion and bring more women into the formal financial system. Machel urges both male and female business leaders to make women’s advancement “part and parcel of your strategy of growth and sustainability for the next five, ten, fifteen, twenty years.” As she told us: “You need to value diversity as an element of strength, and make it part of a cultural, institutional transformation. Human resources departments and CEOs need to make upward mobility for female staff part of HR strategy and succession planning, and ask themselves: ‘How can we get more qualified women into the C-suite? How are we nurturing our female talent? How do we ensure more capable women are sitting at the highest levels of decision making?’”

Phumzile Mlambo-Ngcuka, former deputy president of South Africa and now United Nations undersecretary-general and executive director of UN Women, echoes these views. She argues that African companies must take decisive action to fix the “broken ladder” of women’s advancement, including by challenging unconscious bias in their organizations. “Even now, when we see more women graduating with the same qualifications as men, there’s still a preference for men in many companies,” she told us. “Because a guys’ club has formed, and it’s tight. They prefer to hire people who look like them and perpetuate the stereotype that men make better leaders. This is the way society has been structured: patriarchy is an affirmative system for men.”

One way to break this cycle, in Mlambo-Ngcuka’s view, is for companies to set aspirational quotas for women’s representation at board and executive committee level. High-potential women managers also need active sponsors and mentors—people whose philosophy is “I’ve got you, I’ve got your back,” in Mlambo-Ngcuka’s words. To unlock the power of gender equality in business, leadership is needed from both women and men. Mlambo-Ngcuka is encouraged that “we’re seeing more men who care about gender equality, who ask the right questions, and advocate for change.”

Those steps are critical if Africa is to unlock the talent and leadership needed to reach its full potential. Companies in Africa need to make gender diversity a top board and CEO priority and to develop a cohesive gender diversity transformation strategy—one based on solid metrics including pay levels of female versus male staff, women’s attrition rates and reasons for exiting, and the percentage of women receiving promotions. At McKinsey, we are driving our own transformation: the proportion of women in our global incoming consulting class has risen from 29 percent to 38 percent in five years. We, like many organizations, have much more to do.

Across Africa, many pioneering companies are adopting innovative approaches to convert the energy of Africa’s young talent—male and female—into productive, skilled workforces. Some have built sophisticated internal academies; others have helped cocreate multicompany programs such as Generation; while others are working directly with state education systems to improve quality and shift their focus to more work-relevant skills. In doing so, they are building a powerful source of sustainable growth for their own companies. Indeed, we believe that wise investment in talent development is perhaps the single most important step that any company can take to succeed in Africa.