South Sudan labour directive to hurt Kenyan workers

Kenyan businesses with operations in South Sudan are faced with a human resource crisis after Juba ordered foreigners holding key positions in private businesses and NGOs to be replaced by locals within one month.

This means that Kenyan multinationals such as banks, insurers, manufacturers and airlines will have to terminate the employment contracts of their non-Sudanese employees by October 15.

They also have to scramble to fill the vacancies with Sudanese nationals, which could deprive them of key personnel they need to oversee their subsidiaries.

“All non-governmental organisations, private companies in general, banks, insurance companies, telecommunication companies, petroleum companies, hotels, and lodges working in South Sudan are directed to notify all the aliens working with them in all the positions to cease working as from October 15 forthwith,” reads part of an order issued on September 12 by South Sudan’s labour minister Ngor Kolong Ngor.

The order requires the companies to advertise for the positions of executive directors, personnel managers, secretaries, HR officers, public relations officers, procurement/logisticians, front desk officers, protocol officers and receptionists.

Tom Gichuhi, the executive director of insurers’ lobby group, the Association of Kenya Insurers (AKI), said he was shocked by the directive, terming it unfeasible in its current sweeping form.

“You cannot remove everybody. Every foreign investor should have the right to appoint key people to oversee their businesses and provide strategic direction,” said Mr Gichuhi.

“The reason Kenyan companies have hired expatriates in South Sudan is because of shortage of skilled staff. The idea has never been to export labour,” he added.

The positions are to be filled by “competent South Sudan nationals”, as per the order. The decree did not specify what penalties will befall the firms that will not comply by the set deadline.

Tens of Kenyan firms are operating in South Sudan through subsidiaries or cross-border sales networks including UAP Holdings, East African Breweries Limited (EABL), KCB, CFC Stanbic Bank, Equity Bank, Co-operative Bank, and Kenya Airways.

Most of the multinationals have appointed Kenyans as executive directors and middle-level managers besides other positions, signaling a major management shake-up if the decree is not amended.

The one-month notice could particularly prove unsettling for the affected firms given the lengthy process of recruiting top executives.

The envisaged simultaneous compliance means companies will be fighting for the same talent pool, a move that is expected to see firms offer generous compensation packages to attract and retain skilled staff.

Kenyan firms will have to retrench or transfer scores of their expatriate staff in South Sudan, significantly raising their operating expenses.

Most multinationals second several expatriates to oversee their foreign units and the blanket order by Juba is seen as a case of rising economic nationalism in the East African region.

Uganda has also directed that insurers operating in that country to limit their expatriates in top management to two, setting the stage for potential appointment of more Ugandans in underwriters headquartered in Kenya and elsewhere.

The South Sudan order came on the back of an investigation revealing that foreign firms employed more expatriates than South Sudanese, according to newspapers in that country.

Mr Ngor said his ministry is not fighting foreign investment but rather ensuring that the laws of South Sudan are adhered to.

“We have many of our nationals who are graduates with full capabilities to work in all these sectors and institutions and we cannot see them lingering jobless while in some of these institutions 90 per cent of the workers are aliens”, the minister is quoted by The Citizen newspaper.

It remains to be seen how Kenyan and other multinationals will respond to the unfolding labour crisis, with Nairobi expected to step up diplomatic pressure to have the order amended to suit its economic interests.

Kenya has major interests in South Sudan, having helped broker a 2005 peace agreement between the country and its northern neighbour.

Local firms, including banks and insurers, have been attracted by South Sudan’s economic prospects, with oil expected to fuel the country’s development in the coming years.

Despite its oil wealth, the country is still largely under-developed with the government struggling to provide basic services to its citizens. The new labour rules are seen as part of Juba’s response to its socio-economic challenges.