Sub-Saharan Africa presents opportunities for Middle East companies

The findings reveal a picture that shows a surprisingly high variation in pay practices across African economies that corporate investors need to consider if they are to operate effectively in the frontier markets of Sub-Saharan Africa.

Malcolm Pannell, Managing Director of Hay Group South Africa who spoke at the event, said, "This poses a challenge for any organisation looking to operate on a regional basis: The picture is complex both in terms of country to country variations and within countries, and it is therefore not advisable for companies to implement a consistent pay policy across the entire region."

Hay Group's study shows that the highest paying markets are South Africa, Angola and Namibia. The lowest paying are Madagascar, Mauritius, Ghana and Tanzania.

Perhaps more dramatic than the differences in pay between countries is the difference of pay within countries said Pannell: "The earnings within individual countries of a general manager range from five times to thirty five times that of a semi skilled worker, depending on the country."

According to the new report, on a strict currency conversion, not taking into account any cost of living corrections, the absolute level of pay for semi skilled workers varies by a factor of four across the region, somewhat surprising when the levels of poverty and unemployment are taken into account. As job seniority increases, this differential narrows, but is still two and a half times at a general manager level.

Advising potential investors in Africa, Pannell said, "Although multinationals have a legacy in many African countries for being employers of choice, they too are facing cost control challenges while being susceptible to reputational risk that demands a higher level of governance than in the past."

He continued, "The lack of maturity in the management of pay in this region as well as the high level of variability provides multinationals with the opportunity to develop policies and practices that significantly differentiate themselves and establish competitive advantage, both in cost terms as well as in terms of an employee brand."

The expert panel spoke about the particular considerations of an employer in Sub-Saharan Africa highlighting that the perception of value is often more aligned with status than with actual monetary value, and that performance management in Africa needs to be sensitive to a collective culture in order to be effective.

The panel also noted that in Sub-Saharan Africa progression up the ranks has not been a strong characteristic of the past and many staff have extremely long tenure in a single role. He also added that African nation states are not homogeneous and there are factions which have a bearing on employment.

The Hay Group panel consisted of Malcolm Pannell, Managing Director South Africa, Tharuma Rajah, GM Asia Pacific, Africa and Middle East, Philip Spriet, Global Managing Director Productized Services, and Peter Christie, Managing Director Middle East.

Making recommendations on operating as an employer in Africa Pannell advised that there are many practices that can be introduced into these countries to good effect. These include recognition by employers that salary structures vary significantly between different countries and levels of jobs, plus consideration of different policies for different employee groups and the modification of standard approaches to accommodate unusual benefits practices.

He also highlighted the need to take a long term approach, even in an environment like Sub Saharan Africa that is characterised by high levels of variability. He concluded by saying: "Even taking these factors in to account, it is still a major opportunity for Middle Eastern companies looking for the next frontier."