South Africa: Smoother work permit system needed to bridge skills gap

Papperitz, the president of the Southern Africa German Chamber of Commerce and Industry, who is also the MD of medical tech specialist company B Braun in Southern Africa, spoke to The Africa Report on the closing day of the German-African Business Summit at the Sandton Convention Centre in Johannesburg.

“I’ve attended President [Cyril] Ramaphosa’s Investment Summits. I applaud the South Africa government for working hard to provide a conducive business environment,” says Papperitz.

I think it would be wrong to ignore that you can be faster if you can import certain skills. Singapore has done this – they have embraced this

“President Ramaphosa, minister [Ebrahim] Patel, [and others] … have made credible moves to attract investors and to make it easy to invest,” he says. “We are working together with Invest South Africa, and it is a fruitful collaboration.”

Overall, the German business community is impressed with the positive changes witnessed in recent years. However, a speedy issuing of visas and work permits to experts remains unattainable.

“This is one of the things where I feel South Africa could do much better,” Papperitz says. “The country needs to embrace that a certain amount of foreign expertise is needed to make the investments that are the basis to train young South Africans.”

Papperitz points out that “there is a knowledge gap in this country” exacerbated by “an ongoing brain drain that needs to be stopped”.

Importing skills will assist in getting the maximum pace required for investments. Areas of need include engineering – “this is where I see the biggest lack”. There is also a shortage of trained pharmacists and even general management skills, Papperitz says.

“We have good managers here in South Africa – pragmatic, doers, but if you want to increase the pace, especially when it comes to bold projects like green hydrogen, you need people who have done this before,” says Papperitz.

“I think it would be wrong to ignore that you can be faster if you can import certain skills. Singapore has done this – they have embraced this.”

The visa and work permit challenges notwithstanding, South Africa remains the leading economy in Sub-Saharan Africa for German business, according to Papperitz.

Regional hub

“South Africa is a big regional hub. For many companies, like the one I am representing here in South Africa, Johannesburg is the anchor point. From here, we do business in the entire region all the way up to Kinshasa,” Papperitz says.

“We have business knowledge here. [We have] technical knowledge that we easily can, and do, transfer to the surrounding countries.

“It’s [South Africa’s] more than a business hub. It’s also a knowledge hub, and it will play an important role in Sub-Saharan Africa’s industrialisation.”

Papperitz says the summit exceeded expectations. “I […] feel the fact that we are now drawing attention – the vice-chancellor was here, we had seven or eight African ministers – is a clear indication we can’t be ignored.”

Papperitz concedes that, a few years ago, “Africa was not as relevant as it has become today”.

“We managed to bring Robert Habeck, who is not just the minister of economic affairs and climate change – he’s also the vice-chancellor, the second-in-command in the German government. I think it [Habeck attendance] expresses the increasing importance of Africa.”

‘New kid on the block’

Furthermore, recent geopolitical events in the global context have highlighted the dangers of a country placing all its eggs in one basket. Africa is optimally positioned to become a partner and a beneficiary of Germany’s renewed diversification bid.

Andreas Jahn, director of government affairs and foreign trade at the German Association of Small and Medium-Sized Businesses, admits that when it comes to Africa, Germany is the “new kid on the block”.

The Germans are not well represented in Africa

The association represents more than 960,000 small businesses in Germany, and has created three task forces to promote investment in Africa. There has been some activity in Senegal, Tunisia, and Rwanda, says Jahn.

Jahn and his associates brought a delegation of affiliates and members to the summit, and hosted an information-sharing session with South African entrepreneurs at a side event hosted at Nedbank’s head office in Sandton.

“The Germans are not well represented in Africa,” says Jahn. “Our focus is more on Southeast Asia, America, and, even, Mexico.”

Jahn and his colleagues aim to change that. “We opened an office in South Africa two years ago. Nedbank is a strategic partner through Ecobank, they are an active investor on the continent. We are looking at a holistic approach. The bank is committed [to] the SME sector.”

Jahn wants to see an increase in the number of German SMEs active on the continent. Out of 960,000 members, only 0.7% are interested in Africa, he says.

Due to recent global events, however, “we are condemned to look for new strategic partners. Africa is one of them, especially South Africa. Out of the 0.7% of our members interested in doing business in Africa, the majority are interested in South Africa and Nigeria,” says Jahn.

“Our job is to explain to the German entrepreneurs that they should not be shy [about Africa],” Jahn says.

Risky business

Jahn says that historical factors, including negative perceptions and stereotypes about Africa, have played into the German reluctance to invest in the region.

Sub-Saharan countries [are typically rated] category six or seven, the lowest category. That means the highest risk for corruption, civil war

One of the areas in which this shows up is the continent’s risk profile for credit assurance. In Germany, the risk rating ranges from categories one to seven.

“Sub-Saharan countries [are typically rated] category six or seven, the lowest category. That means the highest risk for corruption, civil war,” Jahn says, but “that’s not fair”.

During the Summit, vice-chancellor Habeck said the German government would review legal instruments to aid further investment in Africa.

“The minister meant … [the German government] will change this,” says Jahn. “It’s not up to date, it’s from the last century.”