Africa’s real Missing Middle: middle management

Among friends in Nairobi, we frequently engage in a lighthearted yet telling bet: predicting when, not if, a newly launched restaurant's quality will start to wane. This pessimism is born from a well-acknowledged truth—the difficulty in securing middle management that possesses the critical problem-solving and leadership skills required to tackle the relentless challenges of doing business on the African continent.

The labels “developing” and “developed” countries are curious. They suggest that one group has decoded the development puzzle, offering a playbook for the rest. Consider the 100 meter sprint, perhaps the most prestigious sporting events. Bob Hayes made history in 1963 by running it in under 10 seconds. Fast forward nearly 60 years to the most recent Tokyo Olympics, where all finalists finished in under 10 seconds. Yet, despite decades of development efforts and billions of dollars, the GDP per capita of Africa’s leading economies barely mirrors that of their former colonizers in the 1960s, with poverty levels 43% higher than in 1990. It would seem that ‘the math is not mathing’, so why?

The pathway to development typically involves a transition from agriculture to industrial and service sectors. However, in Africa, a significant portion of employment (50-70%) remains in agriculture, despite the sector receiving more development funds than any other region globally since 2011—$5+ billion annually.

Despite billions in development dollars, Africa significantly trails the rest of the world in agricultural productivity since 1960. Despite a 6X increase in inputs, there has only been a 1.8X increase in productivity. Even with all the attention farming gets in Africa, finding a good farm manager, the quintessential middle management role, is terribly challenging. The impacts of ineffective middle management is far stretching. In Kenya, 75% of horticulture exports are sourced from just 7 white-owned farms because they’re perceived as easier to work with and audit.

The narrative around Africa's 'missing middle' often highlights the lack of capital for SMEs. However, from my nearly decade-long experience investing in African startups, a more significant challenge is finding the talent capable of achieving ambitious growth targets. A staggering 83% of African CEOs identify talent scarcity as their primary growth barrier.

McKinsey & Company has found that middle managers are crucial to employee performance, satisfaction, and well-being, with top-performing middle managers leading to 3X to 21X higher total shareholder returns than their poorly performing counterparts.

This article isn’t in favor of so-called ‘bullshit jobs’. On the contrary, effective execution in emerging markets heavily relies on competent middle management:

• Middle management are those employees at the center of action of a business.?
• Middle managers provide the ability to connect and integrate people and tasks; a gap in this area means an organization fails to function effectively.

Reflecting on my career growth, middle managers have been key in sculpting my professional skills:

• As an intern, I mastered foundational skills such as writing effective emails and pitching ideas across departments.
• As a new engineer, my technical designs not only underwent continuous revisions but also extensive lab testing. While fieldwork was always enjoyable, anticipating real-world design challenges proved equally rewarding.
• Upon entering venture capital, rigorous whiteboarding sessions and critical feedback on investment memos finely tuned my due diligence capabilities.

Only 10-15% of employment in Africa is in the formal sector, mostly within large multinational corporations. Research, from 300,000 middle managers across 146 countries, shows that multinational firms working in low-income countries have a higher cost of middle management. Low quality middle management can lead to 20-25% reductions in output and revenue. More recently, large multinational firms like P&G announced exiting Nigeria and Kenya, resorting to an import-only model and abandoning a $300M production plant in Nigeria, eliminating as much as 5,000 jobs.

Amidst the entrepreneurial hype, the development sector's focus on entrepreneurial training, costing about $1 billion annually, often misses the mark. If not entrepreneurship, the allure of higher salaries has led many African graduates to aspire to work in the development sector. Research shows that poor management is the top reason development projects fail; so like entrepreneurship, not the source of developing good quality middle managers Africa desperately needs.

The institutional and structural hurdles to cultivating quality middle management in Africa are significant. For instance, while the global adult literacy rate stands at 86%, Africa's is just 65%. In Kenya, only 20% of high school students graduate with qualifications for tertiary education; gross tertiary enrolment -Saharan Africa was below 10%. However, these challenges aren't unique to Africa. India also has a middle management issue, but have found effective solutions which have helped India become a global business process outsourcing (BPO) hub. India currently accounts for nearly 60% of the global offshoring market for BPO services. I can’t help correlate India’s improvement in middle management, to recent news that India has eliminated extreme poverty.

SMEs are often hailed as the engines of job creation in developing economies, but their growth trajectory in Africa presents a stark contrast. In the USA, firms typically expand by 7X over a period of 40 years. In countries like Mexico and India, firms' size doubles in the same timeframe. In Africa, small firms barely grow over time. And large firms do exist, but they are likely to have started big (i.e. like the FMCG companies currently pulling out of Africa).

To explore potential solutions, I sought insights from African talent management experts:

First up is Asha Mweru Mbowa, Managing Director at African Management Institute (AMI) and co-founder of Women Work Kenya. AMI, a premier provider of practical business training, helps businesses across Africa prosper. Asha leads the AMI Enterprise, focused on leadership and management training for the continent's ambitious companies. AMI's portfolio includes supporting major names like Uber, KLM, MFA Africa (Onafriq), and Burn Manufacturing

"Many companies recruit high-potential graduates but often neglect to invest sufficiently in their development. As these individuals advance into middle management, they frequently encounter obstacles, with 60% failing within the first 24 months in their new roles. In light of this, many companies seek quick-fix solutions, hoping for transformative results within tight timeframes. However, reality often falls short. For instance, the two-day "miracle" middle management workshop often proves inadequate with little translation of what the teams learn to what they can now do. Drawing from our experience, an approach centered on practical learning incorporated in their everyday work, tends to deliver superior outcomes. Effective adoption of managerial skills encompass a combination of competencies, behaviours, habits, and supportive organizational practices." - Asha Mweru Mbowa

Next is Paul Breloff, co-Founder of Shortlist, a leading search, recruiting and upskilling company connecting talent to opportunity across Africa and beyond. Paul is also an avid investor in Africa, and also the founding MD of the Accion Venture Lab, which invests in innovative financial inclusion startups globally.

"As companies look to hire middle managers, they’re no longer looking for people who can just follow checklists from management and keep their bosses happy. They’re looking for people who can come into dynamic spaces, take ownership and solve actual problems, marshal and coordinate human and financial resources. We seem to be in a bit of transition as the old school value placed on conformity, obedience and loyalty gives way to an imperative for creativity, proactivity, ownership. Certainly this new breed of leaders is coming up from the junior ranks, particularly within the startup sector as a context of such accelerated learning, but rising young professionals need even more exposure to what “great” looks like, better mentorship, and more opportunities to shine." - Paul Breloff