Africa is an opening frontier for international relocation. We examine what cultural factors an organisation should consider when planning an operation there.

Conducting business in your home environment within a familiar culture is challenging, but venturing out into the unknown is a far greater risk. A great deal of research on cultural differences is required before starting any operation in Africa.

Defining culture

Culture is the “way things are done here;” the differences found in practically all everyday activities such as language, religious practices, clothing, education, meals and foodstuffs, and games and leisure activities. Professor Geert Hofstede defines culture as "software of the mind," or "a collective programming of the mind that distinguishes the members of one group or category of people from another."

Living in familiar, well-structured, and predictable environments makes understanding easy. We decipher the meaning of expressions, gestures, and behaviours all the time without thinking about it. When we encounter foreign environments, we have to make an effort to understand what is happening. We have to learn new things and expand our thinking.

Expats prefer to be paid in their home country currency

Values are the basic foundation of any culture in any country. They are deep-rooted attitudes that have a significant influence on people’s behaviour and express people’s attitudes toward the most important topics in life, such as their roles in society, attitudes toward relationships, time, and nature.

Values determine how we feel, think, behave, and reflect our cultural background. They are influenced by the history of a group or nation and learned as part of socialisation. Understanding the difference in values will bring us closer to cross-cultural effectiveness.

To understand how other people think, it is vital to understand their value system, which we you can do most effectively by first understanding your own value system.

Africa's cultural diversity

The cultural diversity in Africa must be considered a major factor in any African operation, as no company can succeed without ensuring that the culture in a specific country is understood and respected. It is estimated that there are more than 800 languages spoken in Africa.

In South Africa alone there are 11 official languages: English, Afrikaans, Tsonga, Xhosa, Ndebele, Southern Sotho, Zulu, Tswana, Venda, Northern Sotho, and Swati.

There are many cross-cultural challenges that are critical to success and organisations should be prepared to face, including switching from a bureaucratic approach to a relationship-building approach, acclimating to more autocratic procedures and a more hierarchical system, being in a less straightforward and more political organisational environment, addressing the paternalistic attitude of some cultures, understanding the role individualism plays in a collectivist culture, tolerating ambiguity and understanding the concept of time.

Physical and logistical challenges

But there are plenty of physical and logistical challenges, as well, including, in some areas, the lack of reliable basic support infrastructure, roads, electricity, communication, water, logistics, and airfreight challenges.

Many of the technological factors that are taken for granted in first-world countries need to be considered when planning expansion to Africa. Utilities are not as reliable as you may be accustomed to—power outages and communication breakdowns are frequent.  There are no daily flights in and out of most countries, which severely affect the ability to meet deadlines and deliver results according to business plans.

Spare parts and consumables are not always available the next day—they may have to be freighted from another country and could take a few weeks or longer to arrive. Forward planning is of the utmost importance to ensure that a business is able to continue with stock on hand.

Risk factors in Africa

Governments may change legislation regarding work permits, visas, duration of assignments, or extensions of assignments. Quotas have to be approved by authorities.
Tax laws may change and not all countries have double taxation agreements with the home countries of all expats. Currency restrictions for moving both individual and corporate funds out of the country differ in various regions. Employers must at all times take appropriate measures to ensure compliance.

Companies also need to take into account political unrest, faction fighting, and ethnic disturbances, as well as weather conditions such as rainy seasons and arid conditions, and geological concerns such as volcanoes.

Medical factors need to be examined, with focus on diseases such as malaria and other tropical diseases. Plus the standards of medical facilities need to be looked at including the availability of ambulances, the distances between remote areas and the state of the roads. Incorrect diagnosis is not uncommon because of lack of proper equipment.

Remuneration concerns

Globally, expatriate remuneration is one of the biggest challenges for organisations. The shift to global business is still in process, creating new concerns and issues to be dealt with. Factors such as location or hardship allowances and cost-of-living (COL) allowances are vital for providing legally and intellectually justifiable methods in arriving at the final package offered to expats.

Location (hardship) allowances are identified by ranking all countries against a specific home country to host country on a variety of factors such as climate, health, culture, goods and services, language, religion, isolation, housing and education, security risks, and social and political tensions. All of those have a major affect on the total cost to the company for all assignees. Companies should use data from specialist organisations that conduct regular research around the world in calculating location allowances.

Cost of living is the difference between the cost of a basket of goods in the home country as compared to the cost of the same basket of goods in the host country. Most salaries are offered net in a common hard currency, which in Africa is predominantly the US dollar.

However, with the decline of the dollar’s strength and the volatile nature of most African currencies, many expats demand to be paid in their home currencies. Such practice is impractical, as each payroll would result in running conversions of many different home currencies against the selected hard currency.

The cost of benefits to the company is high; usually double the cost of salary alone, if not higher. Most expats are given free housing, a vehicle, fully-furnished living quarters, schooling, a flight home for the whole family once or twice a year, satellite television, internet access and, in some countries, domestic workers, gym contracts, and drivers.

The company also pays medical aid, medical evacuation insurance, pension contributions, and life insurance. Given those exorbitant costs, it is vital that the company not only protect the investment in the business, but in the people, too.

There are many different reasons for an employer to deploy expatriates to foreign countries. Organisational objectives may vary from establishing a new company in the host country, skills transfer, governance, mentorship, or career advancement for the assignee.

The duration of assignment will be determined by the company’s business requirement, taking into account the task to be achieved and the longer term effect on the company in the host country. Skill availability in the host country in Africa is a big factor, as the labour market provides highly-qualified graduates with very-little-to-no work experience.

Another reason for culture transfer from headquarters is when a specific culture is to be entrenched into a new company. In that situation, it is critical for the incumbent to understand the culture of the country and the values of the local nationals in that country if he or she intends to succeed

Should the assignment be purely to advance the career of the assignee, a different remuneration philosophy should be applied, as the assignee is not a specialist going out to train the local nationals but going for his or her own development.

Clearly, it is imperative that a company research and plan in great detail the specific cultural, economic, and physical differences between its home country and the intended host country.

The better the understanding of the environment in which a company may wish to expand into and the greater the planning and preparation, the greater the chances of successful integration into the foreign country and overall success of the business. Companies will be able to invest in and grow with the local nationals in every country they expand into.

May 2006

Barbara Parry is international human resource and remuneration manager for MTN Group, Johannesburg, South Africa; deputy president of South African Reward Association (SARA); chair of SARA Expatriate Management Group (EMG); and a member of the MOBILITY Global Editorial Advisory Committee. She can be reached at +27 832126084 or e-mail parry_b@mtn.co.za.

Reprinted with the permission of Worldwide ERC® from the May 2006  issue of MOBILITY".

Subject: Managing relocation to Africa, HR and remuneration for expats in Africa