Africa's Talent Wars
Developing the continent's workforce for the future.
Tabbing is a newsletter providing insights & commentary on Africa's digital tech economy and startup culture. This post is public, so please feel free to subscribe and share it.
Today’s newsletter is brought to you by Turbosend.
Together with Turbosend
Turbosend allows you to send money to Nigeria from the USA for free! With Turbosend, you will no longer have to pay up to $10 every time you want to send money to Nigeria.
Sign up here to join the waitlist and get access to Turbosend!
Also, Don't leave your friends behind - share the good news with them so they can send money to Nigeria for free with Turbosend!
The changing landscape around attracting and retaining talent — Which is the war for talent, is real, urgent and global.
It isn’t simply an HR problem. It is cross-industry, challenging and complex. It is now a matter of survival for every company. And the problem is unlikely to go away any time soon.
Globally automation and digital transformation have increased competition for jobs. Many companies are increasing wages and offering hiring bonuses and other perks in response to the war for talent.
But they still struggle to retain talent. Because talent is moving very fast and it’s becoming an investable asset.
This war for talent where employees or “talent” is hard to find and subsequently retain, is now the new normal for businesses.
Many companies are struggling to compete for top talent partly because big tech companies—like Alphabet, Amazon, Apple, Meta, and Microsoft are recruiting at an unprecedented pace.
Over the past decade, tech start-ups have broken hiring history by having the fastest hiring pace seen in the business world ever — they’re doing this by increasing the size of their software engineering and developer staffs by nearly 60% each year.
Recently Amazon raised corporate and tech salaries to $350,000 from an initial $160,000.
When the pandemic created a global economic crunch resulting in companies laying off workers. Facebook (Meta) announced it would add 10,000 new product and engineering staff to its workforce, while Amazon advertised for more than 20,000 open tech jobs.
Then there's the insane number of businesses popping up around the globe, especially the tech start-ups that seem to have a vast ocean of VC money to play with These startups are also are sucking up top-flight talent at unprecedented rates.
This war for talent has intensified over the last few years as Generation Z comes of age as discerning employees and empowered consumers. Meanwhile, another talent war has been brewing, one that is being fought in parallel with the war for talent.
The war on talent.
A war Dror Poleg1 profoundly describes; as an effort to routinize more jobs and make human workers interchangeable.
This war on talent dynamic is evident especially in the on-demand services industries like transportation, food delivery, and professional services. Where human labour seems under the control of apps and algorithms. Where workers can opt-out of work (by either logging off the app or not accepting a Uber ride or task).
A particular innovation of on-demand apps is their ability to aggregate a vast number of people under one app and make these people interchangeable.
From Uber to the platforms driving the gig economy like Fiverr and Upwork and even the platforms digitizing the home services industry, all have one thing in common. They are all pitting talented people against millions of other workers that have comparable skills.
According to Dror, individuals who provide services on these platforms are Unique but Interchangeable (UbI).
The war for talent is being waged with higher salaries and office perks in a bid to recruit and retain talent that cannot be easily replaced. While the War on Talent is waged with technology that aggregates, monitors, and assigns workers in a bid to turn unique talent into an interchangeable resource.
Despite salaries for top talent being at an all-time high, power is shifting towards workers and away from companies, who are running out of perks to offer talent.
When you pay high salaries and bonuses, it’s not hard to find someone who’ll take your money. And who is likely to be reasonably qualified for the job.
Yet, despite offering the seemingly biggest office perk of all: the option to work remotely or in hybrid mode (work from anywhere), the competition for talent has only intensified.
The best talent has access to more job opportunities than ever. They're dragging employers into bidding wars. Employers, all the while are constantly seeking creative ways to widen their funnel of candidates.
Then there's the tech talent war - the biggest sub-theme of the talent wars - that is ongoing as tech talent becomes highly mobile and difficult to retain.
The need for talent in Africa and even globally is more than just the well-documented need for tech talent, there's also a rapidly growing demand for talents that help bring technology products to market and ensure that they thrive. At the same time, the scope of tech roles is widening, with new roles like customer success and product managers popping up.
Also, the tech talent market is currently skewed towards the demand for mid-to senior-level talent. This is why Andela which started in a couple of African countries as a training and placement startup for software developers pivoted to a model that focused more on senior developers around the world.
Despite Andela's controversial pivot, the unicorn2 talent startup seems to have set its sights on becoming the global marketplace for talent.
Software and technology have become mission-critical for businesses around the world. As a result, the war for technology talent is getting fiercer and spreading to new fronts as demand for crucial roles skyrockets.
Software has infinite scale. So it’s relatively cheap to produce. Companies can employ multiple talents on multiple projects and tasks and see which ones pan out. And no one does this better than big tech companies like Google or Facebook.
Since companies cannot know in advance which employee will come up with an outlier idea or make an outlier contribution, big tech can afford to bet on thousands of potential talents.
Both talent wars, the war for talent and the war on talent are present in Africa’s ecosystem. Yet this can pale in comparison to the fact that we're all competing in a global talent pool.
There is a hot war for talent in Africa among local companies and startups, even international companies are more in the mix now.
The amount of VC funding activity on the continent seems to be doubling every year. So more African startups have funds to compete for local talent and even foreign ones. This has intensified the war for talent on the continent especially the war for tech talent.
There has been outrage from Africa's tech ecosystem over the shortage of "tech talent" but coming up with solutions has not been easy as the continent's talent shortage is a hydra with many heads.
There are an estimated 700,000 professional developers across Africa, with over half of them located in Nigeria, South Africa, Egypt, Kenya and Morocco. Meanwhile, the state of California has an estimated 630,000 developers.
Top talent isn't just short in tech or in "African tech", It's short everywhere. It's also normal that top African talent is courted by the biggest companies both home and abroad.
Africa is one of the fastest-growing tech scenes in the world right now and is seen by some as the next economic frontier. The continent's growth is creating competing hubs and pockets of African talent who can compete globally.
It's expected that Africa's tech-led economic growth results in increased hiring as there are more vacant jobs to fill as is the case with other regions. However, Africa's talent war runs deeper than that of other regions as it has a complicated set of causes for its employment challenges.
Africa's War for talent: The Whys
Africa has a dangerous job problem. Despite the continent demographic transformation that is drastically changing its labour market.
Africa currently has the youngest population in the world with a median age of 25. A population that is expected to grow. Yet, most people in Africa (considered the poorest continent in the world), simply cannot afford not to work.
Africa’s labour force, currently estimated at 440 million people, is expected3 to grow by only about 8 million to 9 million people per year over the next 20 years.
Couple a growing youthful labour force with a continent rife with stagnant economies and might have a ticking time bomb.
Meanwhile, the continent's unemployment rate is really high, especially in the formal sector since the majority (80%) of the African workforce is engaged in the [informal sector.
Then there are the other concerning issues like under-employment and the working poor4 (low-income jobs and low familial household income).
Asides from Africa's high youthful unemployment crisis, its underemployment issues and the working poor, which forms the foundation for the continent’s war for talent. There are other aggravating factors forging Africa's small talent pool like;
Low Literacy levels. Several African countries have rapidly growing labour forces but low access to education, especially for girls.
These low literacy levels have resulted in a scarcity of technical and soft skills as well as a skills mismatch between job seekers and those sought by employers.
The continent's secondary school enrollment stands at 40% on average and the transition rate to tertiary level hangs at a measly 7%. Africa's low literacy levels mixed with different levels of economic growth and youthful labour growth is causing labour absorption challenges on the continent.
Then there are the shortcomings of local universities in Africa, who are not able to prepare students at scale for the changing demands of the global workforce.
UNESCO forecasts that Africa is likely to be home to half of the world’s illiterate people in the coming years – a situation clearly limits the number of highly qualified people available to be hired by local companies.
Enterprization of Consumers/Creators & The rise of SMEs and tech startups is also intensifying the competition for talent.
The entreprization of consumers is an ongoing phenomenon where individual consumers are increasingly becoming enterprises and brands. This trend is powered by the big overlap between the gig economy, knowledge-based economy and the creator economy.
This shift towards independent work and the trend of increasing the cohort of independent workers is not new. Especially knowledge-based gig workers who have high-in-demand skills like writing code, designing digital assets, creating content, growing an audience and owning a community, monetizing an audience online and offline as well as managing the back-office.
Job mobility is on the rise and talents are not afraid of exploring job opportunities that are remote or involve moving abroad. This is causing a brain drain of the already limited workforce of the continent.
A wave of skilled workers is emigrating from the continent, without the outgoing skilled talent being replenished.
When there is talent, market forces dictate that the best ones find the best jobs which tend to be abroad with international companies remotely. This means that a lot of skilled workers are leaving Africa for the abroad.
The future of Work is enmeshed in Remote work, Hybrid work models & Shifting employee expectations. Even Africa’s youth population are towing the lines of other youth populations (Millenials & Gen Zs) in other regions by having less interest in traditional employments and positions.
Pre-Covid, most work was done exclusively at the office, but Covid lockdowns lured us into a home-only world overnight, accelerating remote work and birthing hybrid work mode.
Employee attitudes toward work are also changing: they expect work to be optional, remote, flexible and mobile.
10,000 knowledge workers around the world took a survey5. The outcome?
96% of these workers want a more flexible work schedule. Some 76% want flexibility in where they work, with 56% being open to a job change.
Flexibility has now become an important factor in the talent war. This intense war for talent has been accelerated from the pandemic's economic fallout and the ever-changing technological forces that are reshaping the nature of work. The demands of increasing markets complexity and the new hybrid work environment fermented by Covid has made sure that the office won’t go back to normal.
Plugging Africa's Workforce Gap & Talent Woes
Africa's talent wars is a real and rattling problem. The global war for talent has prompted international companies to seek talent from Africa's small talent pool, especially tech talent.
So companies on the continent, both tech and non-tech have been left holding the bag as they have a much smaller pool of talent to pick from.
One that reduces their chances of matching with an ideal employee that is specialized in the tasks the company needs.
Hiring from a smaller pool diminishes the chances of companies finding people who are an excellent fit for them. It also reduces their chances of finding outlier employees. Hiring from a smaller pool means you're less likely to recruit an outlier talent regardless of their specific skills and experience.
The war for talent was originally focused on executives, senior and mid-level talent, and that focus remains relevant today.
However, in today's work environment, the tides have turned. In the past talented employees struggled to find jobs; now they can choose from a plethora of opportunities.
In a world replete with cheap capital, where market dynamics and technology are constantly shifting and reducing barriers to entry, Africa needs to prepare its large growing labour populations from the jobs they perform and seek for today, to the skills needed to compete for the jobs of the future.
By 2040, Africa is expected to have the world’s largest labour force, ahead of both India and China, yet companies operating on the continent, both local and foreign will continue to find it hard to recruit suitable local talent.
While offering office perks to talent, increasing salaries and providing proper performance reviews that maps a path for employee growth plans are good strategies for luring talent and maybe retaining them. These strategies are proving to be unsustainable.
Top talent in Africa and everywhere in the world have upped their expectations about what a job should provide. They expect to have a work-life balance. Workers are more reluctant to stay at jobs they deem unsuitable to their new goals and ambitions. This has left companies outside big tech and big cos struggling to fill positions and operate at full capacity.
Even though the global talent market is too big and too liquid, for any single company to corner, the intense competition in the market means that the bigger companies will end up owning more of it.
The talent war is a vicious circle with big tech and big companies as the ring leaders who have the ability to poach the best talents in the world leaving other companies to scramble for the remaining talent.
So African companies shouldn't only aim to recruit and retain talent, they must become key players in overcoming Africa's talent crunch by participating in the development of a more diverse and deep talent pool that efficiently moves talent across the continent and even the world.
While improving literacy levels are important, building talent pipelines and talent communities across the African continent is critical in easing the talent wars.
Since African governments seem to not have it in them to reshape tertiary education to ensure they adequately prepare more African students at scale for the changing demands of the global workforce. More structured technical and soft skill programmes outside the tertiary environment are required to deepen the African talent pool.
A deeper African talent pool means that there need to be more investments in education and skills-based training infrastructure.
This is already happening on the continent with several African talent startups like Andela, AltSchool, Decagon, Treford, TalentQL, Semicolon, ScholarX, Moringa and Gebeya, seeking to build out out this deep talent pool the continent is hungry for. As they struggle to find the right skills and talent is one of Africa’s biggest challenges to realising its potential.
As new market entrants gain scale and resources in Africa, they are increasingly able to compete for talent, so building talent capacity and easy transfer of skills have become necessary for companies on the continent.
African companies that want to be competitive must have the capability to build out their own talent pipelines and communities or be plugged into several.
In Nigeria now, instead of choosing to go to university, you can decide to get a tech diploma like the one AltSchool offers. Imagine having hubs of Altschools (not only focused on tech training) around Africa. The progress that could make.
Talent pipelines and communities offer Schelling points (default focal points) where talents can interact with one another and with potential employers on a regular basis. While offering company recruiters some ability to share the right messaging, the right information about their organization, and its culture.
Africa needs to build a workforce for the future — one equipped to tackle the new global challenges. But it will take a concerted effort to achieve.
Till next time.