The scarcity of fintech talent in Africa means that competition between companies for the best people is incredibly high. One strategy for attracting the best people to your company is to pay them better than anyone else. With this in mind, Digital Frontiers Institute (DFI) surveyed more than 400 employees at 69 companies in 10 African countries to develop a benchmark for compensation practices across the continent.
Common sense would dictate that the highest salaries in the sector would appear in the most developed digital economies such as South Africa and Nigeria, which also made up the bulk of the respondents to our survey. However, what we found was surprising.
The data we collected was broken down across four skill levels: executive, senior management, professionals and skilled workers. We compared compensation practices across base salaries and total guaranteed packages, and also did a second comparison after adjusting for purchasing power parity (PPP).
In almost all instances, the highest salaries and guaranteed packages in our survey were found in Kenya. They paid the highest base salaries across all skill levels. Even after adjusting for PPP, they still ranked highest in skilled salaries. Nigeria, after adjusting for PPP, stole the top spot in the other three categories but ranked last in skilled salaries.
Before adjusting for PPP, Malawi ranked lowest in every category, but the bottom spot in the first three categories went to Ethiopia afterwards. Surprisingly, South Africa and Rwanda, two of the most developed digital economies in Africa, consistently ranked among the lowest payers on the continent.
The same trends were reflected when comparing total guaranteed packages. Kenya led every category but professional, where it was edged out by Nigeria, before adjusting for PPP. Malawi ranked last in every single category.
Kenya still led executive salaries after adjusting for PPP but Nigeria took the other three categories. Ethiopia ranked last in executive and senior management, while South Africa had the lowest total guaranteed packages in the skilled category and Malawi ranked last in the professional category.
It’s no surprise that Nigeria, with its massive economy, is one of the highest payers or that Malawi’s relatively small economy puts it in last place. Kenya’s clear lead in most categories is a surprise, though. What is it that sets Kenya apart from the others?
Gavin Krugel, CEO of DFI, points out that “Kenya has the highest drive for fintech services on the continent”. He explains the significantly higher salaries in Kenya as a function of supply and demand. “There are so few fintech professionals in Kenya, so the cost for them is very high. Through a series of focus groups, we found that many of these companies face a nine-month staff turnover rate. Every time someone leaves a company for a competitor, they are offered a better package, usually 20% more than what they currently earn,” says Krugel.
While this is obviously great news for professionals in Kenya, the high staff attrition rates do mean companies struggle to build institutional memory, and it becomes difficult to maintain momentum.
The data in this report paints a clear picture of talent scarcity on the continent. The fewer professionals there are in a country with high demand for fintech services such as Kenya, the more salaries will be inflated. The result is considerably higher overheads for businesses. On the other hand, more saturated markets such as South Africa see lower salaries but also face lower demand.
Matching your company’s compensation practices to the context you find yourself in and the kind of talent you want to attract is crucial. With this benchmark and understanding of the lay of the land across Sub-Saharan Africa, companies will be better equipped to attracting and retaining the best people. You can read more by downloading the Fintech Talent Africa Report and the Compensation Report. We talk about these issues and others affecting the DFS community in our group, League of DFS professionals, on LinkedIn. Sign up to the group to join the conversation.