Five ways to achieve payroll compliance in Africa

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When companies expand into Africa, they typically have excellent intentions. Sure, they want to advance their financial interest, but they also want to create jobs for locals, contribute to their communities, and – perhaps most importantly – follow the letter of the law precisely and without compromise.

But this is easier said than done. Payroll compliance in Africa is a complex, difficult area, and one that’s often misunderstood. But noncompliance comes with significant penalties, and while the financial cost varies from country to country, the reputational damage will be the same whether you’re in South Africa, Ghana, or Nigeria.

Here are five things your African business can do to achieve payroll compliance.

  1. Do your research

 Some basic research can save you a lot of hassle in the long run when you’re launching a business in a new country. Online research can be very useful indeed: in South Africa, for example, consulting the South Africa Revenue Service’s website can apprise you of things like income tax rates.

You should also look for concrete information about local currency and exchange rates, the start and end dates of the tax year, and what languages are spoken (these tend to vary by region within individual countries; in Nigeria, for example, people speak English, Yoruba, Igbo and other languages and dialects). Relevant tax legislation can also often be accessed online.

  1. Contact the local government

In certain African countries, the bureaucratic and political hurdles that stand in the way of changing legislation aren’t there. That means that rule changes can come suddenly and without warning.

Effectively the only way to combat this is to make contacts with the local government and attempt to establish relationships within the relevant department. Knowing someone who can relay information about upcoming changes to payroll compliance laws is invaluable; knowing somebody in the local tax office is also helpful – if only to clear up ambiguities about policy and help you negotiate any initial hurdles as you’re getting set up.

  1. Connect with a local HR and payroll adviser

Africa is a beautiful, multilingual continent – but that comes with certain disadvantages. Local payroll legislation won’t always be available in English, and when it is, it may have been translated. This can cause ambiguity and uncertainty about the letter of certain payroll compliance laws.

Employing a local HR or payroll adviser who knows the language and understands how to interpret the law will go some way towards addressing this problem. Better safe than sorry!

  1. Establish a notifications system

When you’ve made the above contacts, establish a notification system so that you get immediate alerts when there are any pending changes to payroll compliance legislation. Having someone to go to when you’ve got a burning question is nice – but having them answer your questions in advance is even better. 

  1. Choose a payroll service provider with an extensive African network.

There’s no substitute for experience, and the easiest way to ensure payroll compliance in Africa is to work with a provider that’s local to the continent. They’ll understand how to work across national and international lines, and they’ll have their own networks of government, local HR, and payroll specialist contacts to draw on. This means you’ll comply when you get set up – and you’ll comply for the foreseeable future.

Payroll compliance can be complicated, but it needn’t be daunting. Be informed, be aware, and be vigilant, and you’ll be ready.

Of course, if managing this process sounds too confusing or time-consuming, you can always call on us. Our local and international networks are extensive, and we can help you become legislatively compliant in 38 African countries.




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