p racticalities of operating in Africa: common practices & risks

preferencia clara surgió de las intervenciones de los gobiernos.

En las próximas semanas, el Director General tomará su decisión sobre esta cuestión basándose en el informe de su equipo de trabajo que trabaja en la investigación, estadísticas y publicaciones y, con suerte en las opiniones expresadas por el Grupo de los Empleadores. Él sí indicó que se inclinaba hacia la consolidación en una unidad más cohesionada.

practicalities of operating in Africa: common practices & risksstuart harrison, head of employment law

understanding africa

• second-largest and second-most-populous continent

• 54 different jurisdictions, governments, histories, cultures and mind sets

• african markets are very different - a business model that succeeds in one jurisdiction can’t necessarily just be replicated in another jurisdiction

• while it’s difficult to generalise about africa and some jurisdictions are more difficult than others to operate in, generally africa presents huge opportunities for multinationals who get it right

– just ask the Chinese!

understanding africa

democracies (map source: The Economist)

some of the growth industries

• oil and gas –

– established markets in Nigeria, Libya, Angola, Equatorial Guinea, Sudan

– newer markets in Uganda, South Africa, etc.

• mining –

– South Africa, DRC, etc.

– africa mining indaba in Cape Town 2013 (7700 delegates)

• mobile technology (little traditional telecomms infrastructure)

• retail (food, clothing, banking, etc.)

top 5 challenges & risks

(1) management of the local business: -

– appoint a local mgt team & monitoring the business remotely from North or South America / Europe?

• significant scarcity of local human capital with effective mgt skills (and no real continental framework for mobility of African employees)

• remote monitoring doesn’t work – local business will soon be out of control

– import ex-pats to be the local mgt team?

• there are often local restrictions on the % or number of ex-pats that can be employed locally (e.g. Angola; Kenya, SA);

• some local managers are needed as they understand local culture and have local credibility and networks

– a mix works best – but significant investment in training & development of locals to manage effectively is required


(2) corruption

– rule of law is generally on the rise, as is democracy on the continent, but corruption remains a significant challenge in some jurisdictions

– there is little scope for insulating American/European officers from liability given the reach of the FCPA and UK Bribery Act

– where you take on local partners, build in penalties on the equity value of their stake where corruption liability occurs

– reporting on & monitoring of compliance with company procurement policies, code of business ethics, etc. needs to be hands-on

– make sure your global whistle blower policy is accessible and trained on locally


(3) replication of first world policies and business operating procedures

– unlikely to be able to successfully replicate all policies & procedures locally without significant adjustment for local business conditions

– e.g. recruitment, training, development and promotion policies have to be materially different in jurisdictions with affirmative action (AA) obligations

• South Africa – detailed AA obligations (“Black people”, women and people with disabilities) and BBBEE

• Kenya - women, persons with disabilities, youth, ethnic and other minorities and marginalised communities

(4) health & safety risks

– can be high levels of incidents in operations - not for the faint-hearted in traditionally hazardous operations!

– personal safety & security issues for expat executives in some jurisdictions


(5) union workplace adversarialism

– workplace engagements can be very robust

– strikes can be frequent and accompanied by violence / damage to property

conclusions

• ‘the African century’ or a false dawn?

• many multinationals are overcoming the challenges and succeeding in Africa –

– be prepared to invest in filling the skills gap; and

– one size doesn’t fit all across the continent

• if you can get it right, the rewards are worth it

thank you

p racticalities of operating in Africa: common practices & risks

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