Talent costs have had the biggest constraints on the growth and profitability of African companies over the past one year, a new survey by PricewaterhouseCoopers shows, with East African firms among those hardest hit.

This is forcing companies to put more focus on their strategies of managing talent, said PwC in the survey dubbed The Africa Business Agenda published last week, in which it looked at opportunities for growth as well as the associated risks in doing business on the continent.

While the CEOs were optimistic about growth, 95 per cent were confident of growth in the next three years. The survey showed their top three priorities were talent, risk and strategy.

But as the CEO’s recruit more employees to drive their growth, they are worried that it is getting harder to find — and keep — the right people.

Forty eight per cent of CEOs in Africa say it is getting more difficult to hire workers in their industry and the two most difficult groups of employees to recruit and retain are high potential middle managers and senior managers, according to the report.

“The need for high potential managers has placed a premium on their worth. Over half (54 per cent) of CEOs in Africa say talent- related expenses rose more than expected over the past 12 months and many complain anecdotally about poaching and poorly trained and inexperience managers,” says the report.

The survey interviewed 201 CEOs on the continent from manufacturing, services, energy and financial services sector.

In East Africa, 33 CEOs were interviewed in Kenya, 20 each in Tanzania and Uganda and 16 in Rwanda. The rest of the CEOs were from some of sub-Saharan’s biggest economies such as South Africa, Nigeria, Ghana, Zambia and Angola.

Three out of every four CEOs in the survey said that lack of talent is a threat to growth.

As talent becomes a threat to growth, 85 per cent of the CEOs said they plan to focus on managing talent in the coming year.

“The Agenda shows that talent is a major risk to growth but it is also an area where CEOs can have a real strategic impact,” Philip Kinisu the PwC project leader said, adding that with the right talent, organisations in Africa are growing and innovating at an unprecedented rate.

Some of the CEOs in the survey said that although they can grow and expand their operations with the latest technological advancement, they still needed well trained people to connect all the dots together.

“Our belief is that even if you have the world’s best systems, excellent premises and modern equipment, unless you have a top quality, well-trained and highly motivated team, you will never achieve excellence,” said Sanjeev Anand, managing director of Banque Commerciale du Rwanda.

Though training of employees remains a concern. Many of the CEOs in the survey said the quality of learning still lacks a fundamental asset; CEOs say that graduates can pass exams but they cannot think for themselves.

“Our society has respected how many papers, how many letters beside your name,” said Ivan Kyayonka chairman and managing director of Shell Uganda.

“But the people we are looking for to drive the oil industry are professionals out of length of service.”

Ironically, those who think for themselves are leaving their jobs to set up their own companies, some in the same industry, creating even more competition.

Christopher Ford, the managing director of Songas in Tanzania, said that several of his employees have branched out on their own to start companies.

“We take that as a success story,” Mr Ford said. But he noted it is important to have plans in place to retain their skills and experience in the business.

In the search for experience some of the CEOs said they are extending it to the diaspora.

Philip Odera, managing director of Stanbic Bank Uganda, said he looks for Ugandans in the diaspora who would consider moving home for the right opportunity.

Other challenges CEOs faced were policy and economic risks. Sixty per cent of Kenyan CEOs in the survey said inadequate infrastructure is a threat to growth.

Other risks include inflation, which has been a major concern in the region since last year.