Investors hiring expats in Africa must demonstrate importance of skills - Bowmans Law Firm
East African countries are grappling to balance two sometimes conflicting needs. On the one hand, they want to encourage foreign investment. On the other, they want to ensure that local skills and labour are not displaced by imported skills. This tension plays out in their approach to the issuing of work permits for expatriates: while some countries offer fast-tracked permit processing for investors, this is by no means an open-ended situation that gives investors a free hand to hire.
Generally speaking, there are two main points that investors need to be aware of when seeking to bring in expatriate skills to staff their businesses in Kenya, Tanzania and Uganda.
First, they will be expected to prove that the expatriates they want to hire have skills not available locally.
Second, they will find their host countries more amenable to the introduction of foreign skills in the start-up phase of operations and in the short term. After that, obtaining entry or work permits, as the case may be, may become significantly more difficult.
Proving that skills are not locally available
In all three countries, there is an understanding on the part of governments that investors need access to the right skills if their ventures are to succeed. Thus, there is a general willingness to allow foreign investors a certain amount of leeway to bring in expatriates whose skills cannot be sourced locally.
The non-availability of those skills has to be clearly demonstrated, however.
In Kenya, whose “Kenyanisation” policy makes local employment a priority, foreign companies are required to submit the CVs of the expatriates they want to employ, together with educational, professional and other certificates substantiating the business-critical skills sets of these people. This paperwork is submitted as part of the application for work permits.
The process can be fast-tracked if the foreign company works through Kenya’s Investment Promotion Centre, which can put in a good word for it and support its request for a given number of work permits.
But it is not a foregone conclusion that all the work permits requested will be granted. That will depend on the edge each expatriate has in terms of skills.
Uganda has two different classes of entry permits: one for entering the country as an investor and the other as an employee. There is a tendency – an unspoken rule, really – to allow new investments to be led by people whom the investor wishes to hire. That said, the authorities, in the form of the National Citizenship and Immigration Board, will closely scrutinise the skills being imported. High-level, locally scarce skills in engineering are more likely to pass muster than, say, a financial manager, whose skills are not nearly as hard to come by in Uganda.
Close scrutiny in Tanzania
Tanzania is arguably the most stringent when it comes to imported skills. Government places a premium on the employment of local people as it is their contributions that largely fund the country’s social security system. The higher local employment is, the more money there is for social pensions. Thus, the Tanzanian immigration authorities stringently apply the requirement that expatriates must have skills or expertise essential to starting or running the business.
There are also additional hurdles for companies importing skills into Tanzania. Not only must expatriates apply for a work permit, they must have a residence permit as well. These are ordinarily available from two separate authorities: the Labour Commissioner deals with work permits, while the Commissioner for Immigration deals with applications for residence permits by work permit-holders. Although it is possible for an investor to obtain both permits through the Tanzanian Investment Centre, which could reduce the time this takes, there is no getting away from the requirement for having both a work permit and a residence permit – before entering Tanzania.
In addition, investors should note that professional people such as engineers and chartered accountants must register with the Tanzanian professional body as part of their application to live and work in the country.
More leeway in the start-up phase
As mentioned earlier, expatriates do not necessarily have an open-ended invitation to stay in their host country and there could be a time limit attached.
In Tanzania, a work permit is granted for a period of two years. It can then be renewed for a further period or periods, adding up to a total period of not more than five years, including the first two years. However, for an investor who can demonstrate that its contribution to the economy or wellbeing of Tanzanians through investment is of great value, the total validity of a permit may exceed 10 years
In Kenya, the law allows a work permit to be granted for a period determined by the Director-General of the Kenya Citizens and Foreign Nationals Management Service at his discretion, subject to a maximum period of five years. In practice, however, most work permits are issued for two years. While a work permit may be renewed for further periods, the question of whether to renew depends on due compliance with conditions imposed at the time the permit is issued. The customary condition is that the employer should train a Kenyan employee or have a Kenyan understudy in place to take over the expatriate’s position in future.
Uganda may limit an expatriate’s stay to an investment’s start-up phase by issuing a work permit for an interim period. This could be for as short a time as three months but has been known to extend over three years.
As a general rule, these three countries tend to be the most accommodating about imported skills when investors are setting up new businesses, and when there is clear and compelling proof that expatriate skills are not available locally.
As long as investors observe these two fundamental requirements, they should find it relatively straightforward to bring in the skills they consider vital to the success of their investment.
Written by Audax Kameja, Sean Omondi and Ernest Wiltshire at Bowmans.