The Scramble For Africa: Why This Continent is on the Cusp of Being Discovered All Over Again? The vast continent of Africa has much to offer in terms of Shared Services & Outsourcing capability. And while its colonial past has produced a cultural familiarity that is attractive to much of Europe, there are a host of other reasons why companies around the world should be taking a second look at the region.

1. The Scramble For Africa:
Why This Continent is on the Cusp of
Being Discovered for Services Delivery
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2. The vast continent of Africa has much to
offer in terms of service capability. While
its colonial past has embedded a cultural
familiarity to certain European countries that
is today proving valuable, it’s also the language
capability, cost-competitiveness, and convenient
time zone location that is causing companies
around the world to take a second look at this
still relatively untapped continent. Anirvan
Sen, MD of Asia, Middle East & Africa, Chazey
Partners, expects to see an uptick in interest.
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3. Morocco and Tunisia – North Africa
These countries have the advantage of language, namely French,
English, Spanish, and Arabic. They are of interest, specifically, to a
European clientele, offering a nearshore location with time-zone
advantages, and cultural familiarity.
In addition, Morocco is experiencing an influx of second generation
Europeans of Moroccan heritage who are moving back (“reverse
migration”) and helping to set up or kick-start local businesses and the
economy. The cultural familiarity and know-how that these people are
introducing into the country also acts as an inducement to European
business.
Kenya and Uganda – East Africa
Highly talented, English speaking workers with
technical skills that can support operations. These areas
are not focused on competing with the Philippines or
India however; instead, they offer real value and
opportunities for regional operations – for example
across Tanzania, Ethiopia, and Malawi – to leverage
skilled staff for support services by running shared
services in these countries.
Ghana – West Africa
Politically stable, native English speaking. Offers
opportunities for neighboring Nigeria, as it has a
significantly lower cost of living, and can provide support
services to Nigeria’s oil industry. Additionally, Equatorial
Guinea, Ivory Cost and Democratic Republic of Congo –
all of which host significant oil operations – are keen to
leverage the native English language speakers of Ghana
to support their operations, whose business language
tends to be English. Ghana was one of the first countries
in Africa to gain independence, and is one of the most
stable countries in the region. It also offers cultural
affinity across African countries and thereby has a
significant advantage over Asia or East European
operations.
South Africa
Financially, South Africa is structured like a Western economy (eg, fiscally) and is leveraging this to attract
high-end knowledge processing work – whether outsourced or captive. The country offers a convenient time
zone and also cultural familiarity to European countries (especially the UK and other North-western European countries). However, the majority of the shared services business conducted here is internal to South
Africa or extended to Southern Africa (Botswana, Mozambique, Zimbabwe, Zambia, Namibia). Its relatively
European lifestyle has lead many companies from Europe to establish their African operations here first.
Government is fairly transparent and it's relatively easy to set up and run a business. In addition, language
skills are very strong: apart from English and Afrikaans (Dutch), there are also native German and Portuguese
speakers. As a result, South African centers are able to support Portuguese-speaking operations in Mozambique or Angola. Finally, it is also an attractive destination for skilled workers from other African countries,
and thus benefits from talent immigration. However, government needs to actively promote their strengths
more actively compared for example to India, Malaysia or the Philippines.
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4. SO, WHAT DOES THIS MEAN FOR YOUR OPERATIONS?
5 reasons to consider Africa… and a few warnings
…if your business is based in Europe,
Morocco and South Africa present the main
opportunity. Middle Africa (Ghana, Kenya and
Uganda for example) would be of interest mainly to
organizations wanting to set up a Center of Expertise
for the continent especially if a large part of the
business is in Sub-Saharan Africa
1.
2.
3.
4.
5.
The main advantage for European business is
time zone and the same working week, and
in South Africa especially, a similar working
culture
Availability of plenty of talented people
and native language capability (English,
Spanish, Portuguese, German, Dutch,
French), especially given the trend of reverse
migration for some African countries. Native
English speakers are an enormous advantage.
Regulatory framework in South Africa is
based on Europe, and therefore tax or fiscal
environment is inherently familiar.
Countries that are developing their capability,
especially South Africa, are investing in an
excellent infrastructure, while still at lower
cost than Europe.
Growth of industries that are attracting
foreign companies. A recent McKinsey
Report cites agriculture, banking,
infrastructure, consumer goods,
telecommunications, mining, and oil & gas as
growth markets that will provide the engine
for pan-African growth. And with more than
a quarter of the world’s arable land in Africa,
that statistic alone gives pause for thought,
and paints a picture of a future worth
investing in.
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…if your business is based in Asia,
South Africa, in particular, is viewed as a relatively
low-risk entry point for the continent. Whether
mining, shipping, computing, technology, or
oil – any company wanting to grow across the
African market will be considering South Africa
as the natural starting point. Sahara Computers,
for example, is one of the largest PC suppliers
across Africa, but is owned by an Indian-based
conglomerate. Its South African operation is
spearheading pan-African operations. So for any
Japanese, Chinese, Korean or Indian company eyeing
the African market, South Africa presents an obvious
opportunity.
Africa’s leading industries are mining and petroleum,
and it is in these sectors that we are seeing significant
interest from companies around the world, and
especially Asia. Though mineral rich, the region
tends to lag in technical or financial muscle power
to exploit these industries and still relies on foreign
operators for implementations.
And while some African countries are still boycotted
by international business as a result of perceived
human rights or other violations, Chinese businesses
are increasingly stepping into the breach and
expanding relations in these markets. The mineral
and the oil and gas resources across middle African
countries are acting as a huge lure to Chinese and
Indian enterprises in the same industry, who see
opportunities for expansion.

5. …if your business is based in Latin
America, a significant attraction is the Portuguese
language capability of Mozambique and Angola,
for Brazilian operations. Much of this is driven
by technical needs, and financials, and Brazilian
companies are leading most of Latin America’s forays
into African markets.
…if your business is based in North
America, and if you are involved in the mining,
petroleum, or coffee industries, Africa’s markets are
acting as a strong draw for your operations. Ethiopia
and Ghana are amongst the largest coffee producers
in the world, and every coffee drinking economy will
want to get in on the action. Additionally, a large
percentage of aid, or NGO, types of organizations
are operating in Africa, many of which are run
by European or American organizations. For
these organizations the advantages of setting up a
centralized services or support center nearshore in
Africa are very convincing.
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However, there are also significant challenges
inherent to operations in the region.
1. South Africa, for example, insists on a
percentage of jobs allocated for the domestic
workforce (B-BBEE), and as this element of
the population gains in training from BPO
providers or captive services centers, it also
becomes more mobile
2. Infrastructure and office space: outside the
main urban areas it can be difficult to find
quality office space in a secure environment.
Utility services are not always reliable in rural
areas.
3. Benchmark data: it may be difficult to get your
hands on comparative data – so start compiling
your own or reach out to peers to create
informal networks.
4. Talent retention: Set up a talent pipeline
and invest in your staff to ensure business
continuity and minimize knowledge loss when
someone leaves.

6. Summary
Africa has always been seen as the
final frontier, and has, over the
past two decades, enjoyed greater
stability than in the past. As
more economies mature, thereby
offering business opportunities,
they attract international
investment. Africa is emerging
as the new battleground for
global economic powers. What
this means is that companies
need to have a robust “Africa”
strategy, to succeed. This strategy
will dictate where and how to
establish posts from which to
grow. With the wide-spread
European and native English
language skills on offer, a time
zone conducive to European
markets, and large-scale
industries that are attracting some
of the biggest companies from
around the world, Africa finds
itself at a remarkable pivot point
in its economic history.
Tips on Remuneration Strategies for the
African Market
With Africa being promoted as the next wave for
business growth and expansion, more and more
multinationals are looking to set up an outpost from
which to manage and guide their growth strategies
across the region. One of the significant factors
driving this decision is cost, more specifically:
wages. A recent report* by the Hay Group on pay
trends quotes:
“
The lack of maturity in remuneration
management 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.”
The report goes on to recommend the following
best practices to any organization wanting to set up
operations in this region:
1. Recognize that remuneration structures vary more
significantly between different countries and levels of
job than might be expected.
2. Consider different policies for different employee
groups.
3. Understand the career progression dynamics, which
have an impact on both organizational structure and
pay mechanisms in certain countries.
4. Modify standard approaches to accommodate unusual
benefits practices.
5. Establish pay “zones” rather than market rates in order
to pay competitively and compete effectively.
6. Skills scarcities are acute and long-term sustainability is
dependent on in-house development of local talent or
incurring high costs of expatriates.
7. Undertake a long-term approach- the ability to establish
a distinct advantage through introducing best practices
in an environment characterized by variability and lack
of sophistication is a major opportunity.
8. Take the lead and use benchmarking to confirm the
competitiveness of policy, not to establish it.
*Source: <Rewarding Africa: Opportunities in the Pay trends,
differences and dynamics of sub-Saharan Africa (2013)> by
Hays Group South Africa
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CHAZEY PARTNERS SOUTH AFRICA
Anirvan Sen
Managing Director, Asia, Middle East & Africa
E: anirvansen@chazeypartners.com
www.ChazeyPartners.com
Copyright © 2014 Chazey Partners
All rights reserved.
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