Kenya Pipeline Company engineers at work on a burst pipeline. Engineers are in demand in East Africa Picture: File
Businesses and governments in East Africa will continue paying hefty salaries and lucrative perks to hire and retain key professionals, as scarcity of skills and strict entry and conduct regulations continue to hurt labour movement, a new World Bank survey shows.
The findings run against expectations that the signing of the Common Market protocol — that should have seen thousands of skilled lawyers, engineers and accountants seek employment in the region — would ease the talent war and slow down the compensation race in the EAC labour market.
The survey shows foreign professionals constitute less than 10 per cent in any of the EAC countries, even as most of the nations suffer huge deficits. There is only relative abundance of professionals in Kenya and scarcity in Rwanda, Zambia, Malawi, Uganda and Tanzania.
Although professionals in Eastern Africa receive low nominal wages relative to their counterparts in developed and other developing countries, once their wages are adjusted for purchasing power, professionals in Uganda and Kenya are comparatively well paid — reflecting their scarcity relative to the demand for their services.
However, in legal services the very high wages earned by professionals are not necessarily indicative of their scarcity but rather of the power of professional bodies which impose strict entry and conduct regulations, says the report titled De-Fragmenting Africa: Deepening Regional Trade Integration in Goods and Service.
“Regulation affecting operations of legal and engineering providers including restrictions on prices and fees, advertising, form of business and inter-professional co-operation, are particularly heavy when compared with those in emerging economies” says the report.
It shows that the restrictions imposed on accounting firms are even more stringent, with branches of foreign firms being prohibited in Kenya, Uganda, and even the more liberal Rwanda.
Kenya and Tanzania also prohibit ownership or control of foreign accounting and auditing firms by non-locally licensed professionals. “The lack of intra – East African foreign firm participation is because each member state grants exclusive rights to certain professions over certain activities” said Kenya’s EAC Economic Affairs Director Richard Sindiga.
The World Bank wants policy makers in Eastern Africa and the continent as a whole to do more to cut down the trade barriers within Africa or it will suffer in the ongoing world economic recession.
“It is clear that Africa is not reaching its potential for regional trade, despite the fact that its benefits are enormous,” says Obiageli Ezekwesili, The World Bank’s Vice President for Africa.
