How Vodacom was stunned by denial of work permit for CEO

10Oct 2018
By Financial Times Reporter
DAR ES SALAAM
Financial Times
How Vodacom was stunned by denial of work permit for CEO
  • SHALLOW POOL Ali Mufuruki, Vodacom Tanzania Board Chairman, insists that he finds no fault in appointing competent foreigners as chief executives of big companies due to a shortage of potential candidates in the country 

IT was supposed to be a routine process. Vodacom Tanzania Plc appointed a Kenyan national, Sylvia Mulinge, in April this year to replace its managing director, Ian Ferrao, who decided not to renew his contract.

Ali Mufuruki.

But the approval of Mulinge's work permit application took unusually long and Vodacom Tanzania hit a brick wall every time it sought answers from Tanzanian government officials.

After a flurry of reforms to the work permit system, which led to the sacking of the Labour Commissioner, the official responsible for issuing work permits, and the appointment of a new Commissioner for Labour, Vodacom Tanzania finally got the answer it was dreading -- work permit rejected.

Vodacom confirmed last month that the Labour Commissioner has officially turned down a work permit application for Mulinge to become its MD for yet-to-be explained reasons.

In an exclusive interview with the Financial Times, the Chairman of the Board of Directors of Vodacom Tanzania, Ali Mufuruki, expressed his disappointment at the government's decision and explained the difficult challenge in finding competent chief executives for top companies in Tanzania.

"As far as I am concerned, I thought it would be an easy kind of decision to make -- unfortunately it was not. We are disappointed. We haven’t had the opportunity to sit down with the Labour Commissioner and others in government to engage with them and find out what happened, what was the problem, how we should handle this in the future," Mufuruki told the Financial Times.

"But we respect the government’s decision and that is why we requested for their permission because we know they have a final say on decisions like this. But if you want to know how I feel about it - I am disappointed."

Mufuruki said Ferrao's unexpected decision not to renew his contract earlier this year after a 3-year tenure as Vodacom Tanzania's MD forced the company to scramble to find a replacement and they thought they found the perfect CEO in Mulinge.

"We were lucky that the person who was identified (to replace Ferrao) is an East African. We have the East African Community (EAC) here, we have regional integration, we have free movement of labour and services," he said.

"So it actually never occurred to me that we would have any problem. But because we don’t know all the reasons the government based its decision upon, maybe there is something, but I don’t know."

As Vodacom Tanzania was awaiting the determination of the work permit application for its MD, President John Magufuli earlier last month sacked the Commissioner for Labour, Hilda Kabisa, who was responsible for issuing work permits and replaced her with Gabriel Malata, a former principal state attorney and assistant director in the Attorney General's Chambers.

No reason was given for the dismissal, but the move came just two months after Magufuli publicly criticised the Labour Commissioner’s office for irregular issuance of work permits.

Tiny pool of top CEOs in Tanzania

Mufuruki, who is a former Chairman of the CEO Roundtable of Tanzania (CEOrt), explained just how difficult it is for recruiters to find potential candidates in Tanzania to run top companies like Vodacom.

"I can understand the clamour for wanting to have more Tanzanian CEOs running big companies in this country. But are we developing them? Where? What school in this country is producing managers of business? We are producing a lot of people with PhDs on things that I don’t know about. Where are the managers? The marketers? The engineers? To be a CEO of a telecom company, you have to have a fitting background," he said.

"When I'm hiring a CEO, I don't look at nationality - that is not the first thing that comes to mind. I look at the person's qualification. I have a responsibility to make sure that this company has the best leadership we can find. If I limit myself to a tribe, a race, a country, I would not get the best leader."

He explained that for a country such as Tanzania that was in the nascent stages of industrialising its economy, there was nothing wrong with having foreign chief executives.

"There are a lot of foreign CEOs, and there's nothing wrong with that. But there are foreign CEOs in the UK too. There are foreign CEOs in the United States. The CEO of Microsoft (in the US) is an Indian. The CEO of Vodafone in London who is now just retiring, is Italian. So this is why I'm really surprised that in Tanzania we become so parochial when it comes to this kind of conversation," he noted.

He said Vodacom Tanzania had a robust programme for grooming Tanzanians to assume senior leadership positions in the telecoms company.

"We are competing for global business. We are in the global marketplace, so I get the best CEO. Now it is up to the Tanzanians to be in that pool. When I call a head hunting firm, I say I'm Vodacom, I’m looking for the next CEO of this company, of this business, I don’t tell them to look for a Tanzanian, I tell them to look for the best CEO. I don’t tell them to look for a man or woman, I say look for the best CEO. I don’t tell them to look for an African, just look for the best CEO," he said.

"And then, when they bring the best CEO, they have maybe a list of 10 candidates. We go through them and shortlist them to three. It is up to Tanzanians to be in those 10, up to Tanzanians to be in those three. Is that my job?"

Mufuruki said comparatively, neighbouring Kenya has a bigger pool of potential CEOs compared to Tanzania due to the size and diversification of its economy.

"In Kenya, if I'm looking for a CEO who has experience in leading a listed company, who has managed a business that is bigger than maybe a thousand people or 500 employees, complex with a turnover of hundreds of millions of dollars, there is such a big pool in Kenya," he said.

"Look at Tanzania. We have to be honest with ourselves. Where are we at? Nobody in his right mind would invest money deliberately, year after year hiring expatriates with all the attendant costs of having an expatriate. No serious business is going to do that. So if we are honest with ourselves, we would be investing seriously in developing business managers and business CEOs in Tanzania."

Mufuruki revealed that the CEO Roundtable of Tanzania is next year expected to launch the CEO apprenticeship programme to help produce more Tanzanian business managers.

"We have recognised that every time some of these big corporations want to hire their next CEO, they don’t find within their companies people who are ready. They are there, but they are not quite ready. They are there, but not quite well-polished, well-exposed," he said.