Top executive talent is the single biggest challenge for investors in Africa

As Africa's growth continues to attract investors, both foreign and domestic, a key challenge has emerged—a lack of top executive talent to take over the jobs that these investments create, according to a recent survey from Russell Reynolds Associates, a global headhunting outfit.

“Scarcity of talent is very much on the mind of all corporations," a human resources director for a telecom firm told researchers.

Russell Reynolds surveyed 230 senior executives in the continent's key markets of Kenya, Nigeria and South Africa, and discovered that the talent gap has proven to be a "make or break" issue for some top companies. Nigeria, Africa's largest economy, is seen as the most challenging market in which to recruit high-level talent.

Traditional management skills are missing in particular, executives say. One explanation may be a lack of high quality education, and particularly top notch business schools on the continent. For example, the University of Cape Town is the only African higher education institution that made it into the Financial Times top 100 MBA programs in the world.

Firms are coming up with creative ways to fill high-level positions. One is to create in-house management training programs, something companies including Diageo, Coca Cola and McKinsey are doing. Another approach is to mine areas of the continent where talents exists and transfer them to countries where there is a dearth of skills. "There is an emerging trend toward pan-African leaders. It is still rare but slowly emerging," one HR executive told the survey.

The African diaspora, estimated to be about 30 million globally, is also emerging as a key source of talent for some of these companies. With the continent's growth, some Africans, who left for better opportunities abroad, are expressing a willingness to return. "The Kenyan economy is growing at a fast pace, increasingly constituting a ‘pull’ factor for diaspora talent," one executive told the researchers.

But this sentiment is not shared everywhere else on the continent. The South African diaspora is less willing to return home, firms believe. Despite being from the most developed economy in the region, economic and political factors in the country are seen as prohibitive, the survey found.

As the private sector continues to grow, companies will face challenges not only recruiting top talent but retaining it. While attractive compensation packages are proven motivators, the potential to rise to the top is more compelling, the survey shows. This gives local companies an edge compared to foreign firms, and explains why Kenyans and South Africans opt to work for local organizations. Nigerians, on the other hand, have shown a preference for multinational companies.