While the East African region begins to open its borders to the free flow of skilled workers, Tanzania is slamming them shut on expatriate communities. Aamera Jiwaji asks: Is the country killing the geese that have been laying the golden eggs? In a scenario where Africa is being touted as the continent which holds the greatest promise for tomorrow, it is easy to forget that Tanzania just entered its third decade of capitalism.
Before then the economy was centrally planned and led by government and public parastatals. “The private sector was almost nonexistent,” says Stephen Kirama, a public economist at the University of Dar es Salaam. “These public parastatals were not profit oriented. They relied on government subsidy and greatly operated on loss.” And so it wasn’t a surprise that when the economy liberalised in the early 1990s, there was a mass influx of investment and skills from many countries including neighbouring Kenya which had a 30-year head start with private business. A number of Kenyan companies such as Jubilee Insurance, Kenya Commercial Bank and Nation Media Group opened subsidiaries in Tanzania – all three of which are now cross listed on the Dar es Salaam bourse. Kenyan company Jubilee Insurance was the first privately owned insurance company to be licensed in 1998, and in the 15 years since, all of its CEOs have been either Kenyan or Indian nationals. The current CEO is Kenyan George Alande. The experience is mirrored across the financial sector.
The CEO at Reliance Insurance is Rajaram Parameswaran, an Indian; at DTB (Diamond Trust Bank) Viju Cherian, an Indian; at Equity Bank Joseph Iha, a Kenyan; and at NIC Bank James Muchiri, also a Kenyan. Dr Amit Thakker, Chairman of the East African Health Platform, can say the same about the Tanzanian health sector.
“Tanzania has a much larger mix of professionals from India, Cuba, Europe and South Africa,” he said. Suresh Kumar, Principal Officer at APA Insurance, who worked in the Tanzanian insurance sector for five years, estimates that 90% of CEOs in the country come under the expatriate category, and Tanzanian economist Kirama concurs. “Yes, most of the companies in Tanzania are led by non-Tanzanian CEOs. This is a fact,” he said. And both accept that the predicament is caused by a lack of sufficient local skills. Heri Bomani, former MD of the Tanzanian subsidiary of Kenya Commercial Bank, once attributed the bank’s inability to turn a profit to the lack of sufficient skills among the Tanzanian workforce. Once it did in 2008, he remarked that the tide may be turning and attributed the change in fortunes to a combination of downsizing in the UK and US, increased opportunities in Tanzania that attracted skilled workers from the diaspora home and greater skill transfer spurred by the arrival of multinationals. In terms of the insurance sector in particular, Kumar explains that only around 20 people in Tanzania have the UK-based ACII compared to between 600-700 people in Kenya. While the push today is more for a local qualification – from either the Insurance Institute of Kenya or of Tanzania – he feels these statistics still accurately reflect the skills set of the Tanzanian workforce.
Putting the lid on expatriates
And yet the Tanzanian government persists in instituting outright protectionist policies that make it difficult for foreign nationals to work in their country. In addition to dictating a company’s ownership structure – majority shareholding must be Tanzanian – the country’s investment laws specify that if the CEO is not Tanzanian, the deputy must be. The proportion of executive members also needs to be shared between Tanzanians and non Tanzanians. Non-Tanzanian executives are also given a period of time within which to train and prepare a Tanzanian to fill the CEO position.
Section 24 of the Tanzanian Investment Act 1997, for instance, specifies that every business enterprise will be granted an immigrant quota of five persons for the start-up period as an incentive, but that applications for additional persons will weigh the availability of qualified Tanzanians, complexity of technology employed and investor agreements.
The situation is somewhat similar in Uganda, where the Insurance Regulatory Authority specifies that each company cannot have more then two expatriates and that the finance director cannot be an expatriate.
In October 2012, Tanzania further enhanced its protectionist stance. It doubled work permit fees from $1,000 to $2,000, making it the highest in the region. The East African Business Council spoke out strongly, albeit unsuccessfully, on how this endangered the gains made by the East Africa Community in facilitating free movement of persons.
A year later, in October 2013, the government ordered over 1,500 foreign teachers to leave over expired work permits and illegal immigration. Tanzania charges $2,050 (TSh3.3m) for a two-year work permit for foreign teachers, and it is a fee that the Tanzanian teachers’ association has protested against for being too high. The dispute is especially interesting because of the high demand for English-medium schools in Tanzania in an attempt to bring the country’s language skills to par with the global economy.
In November 2013, Labour and Employment Minister Gaudensia Kabaka told a Tanzanian daily that a new Bill was to be tabled in Parliament which would centralise issuance of all work permits under the ambit of the Ministry and no longer involve the Immigration Department or the Tanzania Investment Centre. According to her, the new law will not only prohibit dubious employment of foreign experts, but will save 20%-30% of the employment opportunities that are being illegally taken by foreigners. It is unclear how far the legislative process has reached, but the move signifies an extension of the cold shoulder to expatriate workers, and is fuelling doubts about Tanzania’s commitment to the East African Community.
“The fear [on Tanzania’s part] is if we open up [to regional blocs], how are we going to build capacity in our next level of managers,” says Marcus Watson, Strategy Consultant at development advisory group Dalberg.
Tanzanians have long been wary of foreigners dominating their job market but, paradoxically, figures from Tanzania’s National Bureau of Statistics show that foreign workers in Tanzania make up just 0.9% of the labour force, with the majority concentrated in the education, manufacturing, construction, hotels and wholesale and retail trade sectors. Tanzanian citizens comprise 99.1% per cent of workers, and make up 97.6% of new workers hired in 2012.
source: African Business