Kenya risks losing its prime position of hosting the African headquarters of key multinationals after the government introduced a “Kenyanisation” policy that has complicated the issuing of work permits.
The rules, which have been enforced since late last year, dictate that application for all Class D expatriates (long-term permits) must, among other things, include the name of a Kenyan understudy who will take over once the permits expire within a two-year non-renewable period.
However, multiple sources from affected companies told the Sunday Nation that the requirement has failed to acknowledge the global nature of the operations of companies that have chosen Nairobi as their headquarters, which could force them to relocate to neighbouring states.
“A company may have its headquarters in Nairobi, but some of its staff serve other countries and have nothing to do with the Kenyan market.
Having a pre-determined successor is not only incompatible with the human resources policy, but there is also no guarantee that a Kenyan must be named in such a regional or global position,” says an official from one of the affected multinationals.
He stressed that most companies were not against government rules but were unhappy at the lack of “clear information”, and requirements that created a harsh business environment.
However, Director of Immigration Jane Waikenda said the policy was to ensure that Kenyans get the opportunity to acquire foreign employees’ skills and take over, adding that the Jubilee administration was only streamlining a policy that has been in existence, but which has been abused.
“We are not giving work permits to foreigners who want to do jobs that can be done by Kenyans,” she said. “We have been receiving applications from people who want to be waiters, cleaners and cooks. We want to ensure that Utalii graduates get jobs.”
CAN'T OPEN BANK ACCOUNTS
International workers of top multinationals are also said to increasingly find it hard to obtain foreign registration cards (alien cards), meaning they cannot settle or open bank accounts locally.
One source, who did not want to be named for fear of victimisation, said last year Immigration officials gave “lack of paper” as a reason for the delays. Ms Waikenda admitted there was a challenge with the issuance of the document but said that had been sorted out.
She, however, denied that multinationals with headquarters in Kenya had been frustrated to the point of planning to relocate.
“That is untrue. If you are in charge of another region but are based in Nairobi, the policy does not affect you,” Ms Waikenda said.
“For specialised jobs, we will give permits without an understudy. We are also open to discussion if companies feel that the expats need four years instead of two before the understudy can take over.”
However, a senior staff from one of the affected companies claimed the Immigration Department has not bothered to explain the changes, including “the vague” Kenyanisation policy directly or through Kenya Private Sector Alliance.
But Ms Waikenda said the changes have been explained to the companies and accused “some alarmists” of inciting multinationals on the policy after loopholes for bringing unskilled labour into the country were sealed.
“Most companies have reported serious delays in the processing of work permits, special passes and foreign registration cards. They suspect that this could be a result of a new policy direction under the new government,” reads part of an August letter to Ms Waikenda from Kepsa.
In the letter, the industry lobby requested a meeting with the director to help the companies understand the new policy direction on immigration “with a view to developing a sustainable and mutually beneficial agreement with the government”.
Yesterday, Ms Waikenda said she would soon host the multinationals to thrash out the issues raised.
“We are not locking people out. It is a delicate balancing act because some companies have been importing unskilled labour, and those are the ones I suspect must be feeling offended.”
A source at Kepsa, who sought anonymity, said “it is unlikely” multinationals would bring unskilled foreign labour to Kenya, unlike “smaller firms” and individual investors.
“This issue is highly emotive because Kenyans will always support any action perceived to be creating jobs for them. But, looked at closely, a policy that will force multinationals to relocate their headquarters just because government wants to lock out a few senior managers will end up costing hundreds of Kenyan jobs,” he said.
Kenya Association of Manufacturers chairperson Betty Maina terms the policy as defeatist.
“The net effect is that if the human resource managers of these multinationals experience difficulties obtaining work permits for other nationals in Kenya, then they will retaliate and shut Kenyans out of jobs elsewhere,” she said.
Ms Waikenda said the government was alive to this possibility and would implement the policy in a manner that will not jeopardise the employment of Kenyans in the international arena.
But Ms Maina (inset) said the policy is being implemented in a blanket and haphazard manner which will even require major private investors to include understudies in their applications — something she said is not practical.
“We need to temper this policy and avoid sending the wrong message to investors.”
In the past, companies like Proctor and Gamble and Reckitt Benckiser have had to relocate their manufacturing plants from Kenya due to a harsh business environment, and similar moves by other multinationals could cost the government huge losses.
Kenya hosts African headquarters of at least 14 multinationals, including General Electric, IBM, Toyota, Standard Chartered Bank, Bharti Airtel, Coca Cola, Google, Chartis, CCTV, China Radio International and Xinhua.
Several other multinationals have offices in Kenya that serve the East and Central Africa region, such as LG, Sony, Blackberry Limited and PricewaterhouseCoopers.
Kenya dropped eight places in last year’s World Bank Doing Business report, from position 121 the previous year to 129.