Universities and the financial sector must work together to plug skills gaps
Africa’s CEOs are worried that there aren’t enough skilled professionals on the continent. The financial services sector is particularly hard hit by this shortage.
In South Africa, where I teach and conduct research, many financial institutions complain that a dearth of skilled professionals leaves their employees vulnerable to being poached by competitors, both local and from elsewhere in the world.
Research conducted jointly by the African Institute of Financial Markets and Risk Management at the University of Cape Town and the Western Cape province’s Department of Economic Development and Tourism confirms these concerns. One company involved in this Financial Services Sector Assessment Report estimated its staff turnover at 9% per year. More than half of this was attributed to poaching by competitors.
Companies are being forced to import skills from the rest of the world. South Africa’s Department of Higher Education and Training publishes a list of the top 100 scarce skills. Finance managers are sixth on the list; accountants come in at number 12. Actuaries feature, too.
Yet the South African government’s spending on education is at an all-time-high. R60 billion was spent on tertiary education in the 2013/14 financial year. Why hasn’t this increased spending brought South Africa any closer to plugging the skills gap? The answer lies in the disconnect between universities' existing programmes and employers' requirements.
Graduates don’t meet needs
Research by African Economic Outlook suggests that there’s a major mismatch between new jobseekers' skills and what employers want. The numbers underline this: African Economic Outlook notes that South Africa currently has around 600 000 unemployed university graduates and 800 000 vacancies in the jobs market that employers are struggling to fill.
We spoke to Paulette Bourne of the financial statutory body BANKSETA while researching this article. Bourne, the organisation’s work-integrated learning and bursaries manager, says there are a number of critical skills absent in the financial services sector. These include legislative compliance, specialist financial skills, customer interface, management and leadership, and information technology. University graduates just aren’t filling these gaps. Bourne told us that:
Universities are expected to produce human capital according to labour demand. Yet the universities' programme registration process is not sufficiently responsive to industry demand; hence the perception that graduates are not meeting industry requirements.
The Financial Services Sector Assessment Report that my colleagues and I produced back this up. The respondents, who came from a wide range of financial services companies, said that graduates didn’t understand the industry’s processes, procedures and how different business areas are connected within the type of company. The respondents added that, on average, graduates required between 12 and 18 months of industry immersion to become valuable to an employer.
There are two conclusions to draw from this. The first is that universities desperately need more postgraduate programmes that focus on professional qualifications. Apprentice-style training and internships should be a key part of these programmes.
Secondly, academia needs a close alignment with employers and potential employers if it is to produce graduates who are more in tune with a specific industry’s demands.
There are some new examples of such programmes both in South Africa and elsewhere on the continent. For instance, the African Institute of Financial Markets and Risk Management launched a Master of Commerce in Risk Management of Financial Markets at the beginning of 2016. This was done with funding support from BANKSETA. The programme has been designed as an occupational qualification and contains components of workplace immersion. There’s been deep consultation with the financial services industry. The curriculum will be reviewed annually by the industry and will be adjusted to keep up with their feedback.
Another project that’s seen the importance of this approach is the Skills for Africa Programme, which was launched in Kenya and Morocco in 2013 and South Africa in 2015. Unemployed young professionals receive training in business technology skills. The programme is developed with the help of companies that act as partners to the initiative. All graduates are guaranteed paid positions with the programme’s partners.
How industry can get involved
The way forward is clear. The academic community needs to take into account four key ingredients to producing truly useful graduates: student selection from diverse backgrounds; the acquisition of both technical skills and a comprehensive understanding of the work environment; an apprenticeship ethos throughout the degree; and a determined focus on “job readiness”.
But this cannot be achieved without industry and government involvement in every aspect of the process. That includes curriculum development and assessment, research co-supervision, teaching, mentoring and lecturing, and facilitated access to experts and data.
The PwC global survey cited at the start of this article revealed that 40% of CEOs look to governments to do more to create a skilled workforce. An overwhelming 93% of business leaders realise that it is up to them to change their strategy for attracting and retaining talent. This could include becoming more active architects of the graduates they would like to hire.