Topical Press ReleasesNovember 30, 2023

Processing payroll in Africa

Processing payroll and doing business in Africa

Key factors to consider when processing payroll

The workplace has undergone rapid transformation and as businesses transition to compete in the digital economy, business leaders have to take into consideration the impact on core disciplines – especially human capital management and payroll. When it comes to Africa, no two regions are the same and compliance with labour regulations will differ.

Human Capital Management specialist CRS Technologies says Africa has a large, mainly youthful population and its future workforce will reflect this demographic, comprising Gen-Z and millennial workers.

In addition, regions will differ in their level of socio-economic and political growth rates, which has a knock-on effect in terms of access to skilled labour and opportunities to invest.

it is important for leaders to understand the legal framework and structures that govern the region in which they operate, says Nicol Myburgh, Head: CRS Technologies HCM Business Unit.

“Business owners and leaders need to conduct thorough market research, which means acquiring a good understanding of local laws and regulations, and establishing an accessible and adaptable approach. Leaders must figure out what is mandatory and what is tantamount to common practice. Other logistic and practical day-to-day considerations include language, currency, and laws governing foreign workers and payroll,” says Myburgh.

CRS Technologies adds that establishing a business operation in Africa – irrespective of size or nature – is not straightforward.

Myburgh says, “On the assumption that one has conducted thorough research and completed due diligence, one has to also consider real-life challenges that influence business in emerging economies – compliance risk, lack of skilled workers, financial costs and the time required to complete the entire process.”

Research by CRS Technologies shows that South Africa tops the list of countries ranked as the best for hiring, followed by Kenya, Egypt, Nigeria and Ghana.

Payroll is closely linked to operational costs and human resource management, critical to expanding any venture into Africa.

There are several very important factors to bear in mind as far as processing payroll is concerned.

“The first is that compliance is a prerequisite to recruiting and retaining the best talent, so it is essential that business leaders fully comprehend the dynamics of compliance in the regions they are targeting. It is advisable to use credible experts in African country regulations, labour laws and governance,” Myburgh adds.

Other issues that impact payroll processing and successful payroll administration include provisions by local laws, statutory benefits and entitlements, termination procedures and protocol, and employment contracts that are not standardised and may require some degree of customisation.

In the digital age, mobile money accounts and virtual currency platforms have emerged as game-changers in business, and most definitely impact the payroll process.

“This is especially true in Africa, where mobile money services and payment platforms are well established in many regions. Companies entering these markets must be on par with trends that involve financial technology and service provision,” Myburgh continues.

CRS Technologies emphasises the need for business owners to benchmark research across territories, with labour costs and statutory benefits in mind.

If payroll administration presents a significant enough challenge, it makes practical sense to outsource this function to experts in the field, particularly those with an established and solid track record of regional engagement and success.

Technology is important and a given in any business, but it can only do what it is programmed or customised to do. Knowledge of the latest solutions and practical options will help, but ultimately it is about acquiring the best minds in the business that will offer a solid foundation upon which to build the business.

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