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Private Equity in Africa part 2 – Recruiting talent in the African market

In Part 1 of the mini-series on Private Equity in Africa it became clear that, despite the less than encouraging numbers from the last year of PE activity, we are perhaps seeing the gradual emergence of a new wave of investment, and indeed approach, to PE on the African continent (Read the full article here).

Specialist sector and country focussed funds seem to be gaining more momentum and the outlook for the next few years is beginning to look more promising. However, there are some obvious problems that are only now beginning to be addressed that will have a lot of bearing on this hopeful outlook.

As mentioned in my previous post, there are some key underlying and ever-present issues at play including wildly fluctuating FX rates, lack of solid investment targets, difficulty finding the right talent and a burgeoning of competitor regulation and jurisprudence.

As such, I thought I would look in more depth into the area flagged closest to the heart of Freshminds; namely the difficulty in finding the right talent in PE in Africa and more specifically in finding the right management teams on the continent.

“You have to be brave to be in the African Investment market”

What became immediately apparent was that the entire panel struggled with these recruitment dilemmas. This ranged from Impact Investors trying to find the right people for a new venture or a Pension fund looking for a steady hand at the reigns; across the spectrum, there is a perceived difficulty in finding the right talent in a timely manner.

There was no clear consensus as to why this was the case, rather a lot of separate difficulties that added to the overall picture: 

  • The centre of PE: The weight of investment teams being based in the UK and abroad may make it difficult to acquire the critical mass needed in the individual recruitment markets in the subsequent African nations. The adage that the ‘centre of African PE is in London’ is in itself being a self-perpetuating problem.
  • Market turbulence: The continued market turbulence and macro socio-political uncertainties have kept talent at arm’s length from the markets that need it most. This continued perception of a ‘Wild West pioneer’ feel works in the commodities market where it’s an established fact of life, but in the Private Equity space, it’s perhaps a little less heard of. As one of the panellists pointed out “you have to be brave to be in the African Investment market”.
  • An underdeveloped IPO market: Similarly, the lack of sizeable business targets resulting in this underdeveloped market, and the reliance on long, complicated deal cycles that often crash, does not act as a massive draw on top talent when there are simpler, quicker wins to be had elsewhere.
  • Lack of C-Suites: There is a surfeit of strong young entrepreneurial local talent, however, there simply are not enough senior C-Suite individuals to put into boardrooms where needed; hence the resulting over-reliance on importing their talent from London or the US. This use of international ‘A-Listers’ – although tried and tested – is risky. This is a double-edged sword – it could create enough momentum behind the market that senior talent will naturally begin to accrue where it is needed, but it could also be perceived as generating only short-term thinking and seeing a stint in the African PE market as a career stop gap.
  • Existing deal expertise needed: CFOs and Strategy DNA are apparently particularly hard to find and there are new deals needing this expertise across many portfolios.
  • Replacing a founder: A preponderance of founder-owned businesses also could be causing a problem. In buying out or replacing the founder, you’re faced with having to hire three individuals in a role where the only one person was in place before. As a result, the talent gulf requirements lengthen further.

As such, the problems are legion, but hopefully not completely unsurpassable. Having worked with roles scattered across the African continent during the last six years at Freshminds, the hope would be that, as the market improves, the talent tends to follow. As well as this, the commodities boom and the subsequent adjacent growth of 5/6 years ago certainly did create a massive interest spike and a flowing out of top talent at all levels to the continent.

So overall, the very definite hope is that those who are inherently excited by the prospect of one of the world’s fastest-growing economies and their potential to be involved with the growth of its Private Equity landscape from the ground up will find their way to Africa in the coming years.

Read part 1 of the Private Equity in Africa series - 'It's not all doom and gloom'

Jon White

Jon White

Head of the Experienced and Executive Hire team

 

Jon leads the team to help partner businesses to find the top experienced or executive level talent for commercial and strategic roles.

 

Interested to find out more about how Freshminds could help you hire top talent for your business? Get in touch with Jon to discuss further.