By Bruce van Wyk, director, PaySpace
Africa’s annual growth is currently set at 4.3%, positioning the continent as the second-fastest growing region in the world. A young population hungry for work, an increasingly urban and growing middle class, and a rapid adoption of technology are just some of the factors contributing to this economic progress.
Understandably, multi-national businesses in search of new markets are enthusiastic about entering these dynamic African countries and many have opened up new offices across the continent. However, as with any new business endeavour, unforeseen challenges can upset, delay or even completely derail operations. The lay of the land and letter of the law changes from country to country and navigating this foreign, legislative terrain can be tricky – even for those companies that have been ‘around the block’ more than once.
Fortunately, it’s not impossible for your company to achieve full compliance while enjoying all the rewards of expanding into Africa. From our knowledge and experience of 37 African countries, here are three important guidelines to help you stay on the right side of the law.
- Do your research
There are 54 countries in Africa, each with their own languages, customs and legislation. Even with the help of a translator, it can be difficult to access the relevant powers that be – not to mention the correct rulebook. Some international businesses make the mistake of assuming that what works in say Nigeria, will work in neighbouring Cameroon. It won’t, and this error can be very costly in the long-run.
As no two countries operate in the same fashion, it’s imperative that your business prepares itself accordingly before stepping into any new market. For example, depending on the country in question’s level of development, there may only be one hardcopy of local legislation available. Regardless of the source, it could be many months before your company is able to access the legislative rulebook and once it does, further research will need to be done to ensure correct interpretation. Any incorrectly applied laws, due to a lack of understanding, knowledge or difference in opinion, will result in non-compliance and penalties.
Inexperience is no defence, so make sure you have researched the country’s legislative framework thoroughly before renting that office space.
- Enlist local assistance
Often, the best way to overcome unfamiliar bureaucracy is to work closely with the local government and build key relationships within the relevant departments such as tax. As you establish your new office, this local knowledge can help you interpret critical policies and abide by all the correct regulations.
Over and above any government contacts, you’ll need someone with an ear to the ground to guide your growth once the new office is up and running. In certain African countries it can be common for payroll legislation to change suddenly. A local partnership with someone in the know can help you stay a step ahead of any legal adjustments and keep your company in the clear.
If your business is present in more than one African country, it pays to enlist the assistance of a cross-border service provider. Rather than try and manage separate supplier relationships, aim for a one-stop shop that can navigate the various legislative environments that are important to you.
- Check your information
Local support is vital but regardless of how well you know and trust your public sector contacts and legislative advisors, you need to double-check all information before acting on it. Cross-check any updates from the local governmental departments with your local service provider and vice versa. It’s a good idea to set-up a notification system so that you get immediate alerts as soon as any changes to any legislation are made. Go one step further and ask a local HR or payroll specialist to verify any and all changes or updates to legislation to ensure that you stay compliant and correctly up-to-speed.
Most importantly, take responsibility for what you do and don’t know and make sure that your payroll managers and relevant teams take the necessary measures to stay informed at all times.
“If you do not have patience you cannot make beer” – Ovambo proverb
The companies that are benefitting the most from Africa’s undeniable potential are those that take an honest approach to business. They respect local customs, apply the appropriate pressure when necessary but are polite and patient with local authorities. Africa is on the rise, and companies should act now to make the most of this opportunity. Knowledge of, and compliance with, local legislation is critical at all times. Get this right and your business will reap great rewards and expand successfully across the continent.