Expanding to North Africa? Everything You Need to Know About Doing Business in the Region

Expanding to North Africa
  • Last updated: January 13, 2025
North Africa is quickly becoming a region of interest for expansion. It is not difficult to see why: Tunisia, Algeria, and Morocco — three of the most prominent countries in the region — offer unique advantages for businesses looking to tap into new markets, source talent, and grow their operations. However, navigating the complexities of doing business in North Africa can be challenging for companies unfamiliar with the local business environments, cultural nuances, and legal frameworks. In this article, we’ll explore everything you need to know about expanding into North Africa. We will also go over the different ways an Employer of Record (EOR) can help you overcome the region’s complexities and ensure a smooth entry into these markets.

Understanding North Africa’s Business Landscape

North Africa is a diverse region, both geographically and culturally, with its own unique challenges and opportunities. The three countries of focus — Tunisia, Algeria, and Morocco — are all members of the Arab world and share a rich cultural heritage shaped by history, religion, and regional influences. However, each country also has its own distinct political, economic, and regulatory environment, which must be understood to ensure success in the region.

Tunisia

Known for its progressive approach to reform and its strategic location on the Mediterranean, Tunisia offers a relatively stable business environment with a growing startup ecosystem. The country is open to foreign investment, particularly in sectors like technology, renewable energy, and agriculture. However, bureaucracy, local labour regulations, and a complex tax system can present challenges for foreign companies.

Algeria

As one of the largest economies in North Africa, Algeria is rich in natural resources, particularly oil and gas. While the country offers significant business potential in sectors like energy and infrastructure, Algeria has a highly regulated business environment. The government has historically been cautious about foreign investment, and companies face challenges such as limited access to foreign currency, a rigid labour market, and complex tax policies.

Morocco

Morocco has become a major business hub in the region, thanks to its favourable investment climate, business-friendly policies, and growing manufacturing and export sectors. The country’s proximity to Europe makes it an attractive location for businesses looking to establish trade routes between Africa and the EU. While Morocco boasts a relatively easy process for foreign companies to enter, navigating local labour laws and managing a diverse workforce can be challenging without the right support.

Key Considerations for Doing Business in Tunisia, Algeria, and Morocco

1. Local Regulations and Labor Laws

Each country in North Africa has its own set of labour laws, regulations, and employment practices that companies need to adhere to when expanding into the region. Here’s a brief overview:

Tunisia

Tunisia’s labour laws are generally worker-friendly, with strong protections for employees in terms of working hours, benefits, and severance pay. The country also has a well-established social security system, which employers must contribute to. Additionally, Tunisia requires companies to offer annual leave, maternity leave, and sick leave.

Algeria

 Algeria’s labour market is governed by strict labour regulations, with a high level of job protection for local employees. Foreign companies will need to navigate the complex labour laws, which include regulations on hiring, firing, and compensation. Moreover, employers are required to hire a certain percentage of local employees, depending on the industry. The government also has strong control over wages and benefits, particularly in state-owned industries.

Morocco

Morocco’s labour laws are relatively flexible, especially for foreign businesses. While there are certain regulations in place regarding contracts, salaries, and working conditions, the legal framework is conducive to foreign investment. However, companies must still comply with Morocco’s social security system, which provides benefits such as health insurance and pensions for employees.

2. Taxation and Business Incentives

Understanding the local tax environment is essential for foreign companies entering North Africa. Tax policies and incentives vary by country and often require careful planning:

Tunisia

Tunisia has a corporate tax rate of 25%, but businesses in specific sectors like IT, renewable energy, and export industries may benefit from reduced rates or tax exemptions. The government has introduced incentives to attract foreign direct investment (FDI), particularly in the technology and services sectors.

Algeria

Algeria has a higher corporate tax rate, with a standard rate of 26%, but it can go as high as 40% for certain industries. The government also imposes a tax on foreign companies repatriating profits. That said, Algeria has enacted laws to encourage foreign investment in its energy sector, which remains the backbone of the country’s economy.

Morocco

Morocco offers competitive corporate tax rates, with a standard rate of 30% and lower rates for smaller businesses or those operating in certain sectors. The country has established free zones that offer tax exemptions for businesses involved in export and manufacturing, making it an attractive destination for foreign investment.

3. Cultural Sensitivity and Workforce Management

North Africa has a diverse cultural landscape, and understanding local customs and practices is essential for successful business operations:

Tunisia

Tunisia has a largely secular society, but Islamic customs and traditions still play an important role in daily life. In the workplace, respect for hierarchy and relationships is important. Tunisian workers tend to value job security and social benefits, so offering competitive compensation packages and benefits can help attract and retain talent.

Algeria

In Algeria, understanding the country’s complex political and economic environment is key to managing relationships with local stakeholders. Algerians place a high value on personal relationships, so networking and building trust are crucial when doing business. The workforce tends to be younger, with a high level of education, but employers must navigate regulations around hiring and firing to ensure compliance.

Morocco

Moroccan culture blends Arab, Berber, and French influences, and it’s important for foreign companies to respect these cultural differences when managing teams. Moroccans are generally formal in business interactions, and respect for authority is important. Understanding how to build trust and navigate negotiations is vital for long-term success.

4. Currency and Payment Systems

Each country has its own currency and exchange rate policies:

Tunisia

The Tunisian dinar (TND) is the local currency, and the country has controls over foreign exchange transactions. Foreign businesses may face challenges when repatriating profits or converting dinars into other currencies.

Algeria

The Algerian dinar (DZD) is similarly controlled, and there are restrictions on foreign currency transactions. This can make it challenging for foreign businesses to manage cash flow and repatriate profits.

Morocco

The Moroccan dirham (MAD) is not freely convertible, but Morocco has relatively liberal exchange controls compared to Algeria and Tunisia. Foreign companies can open foreign currency accounts, which helps facilitate international business transactions.

How an Employer of Record (EOR) Can Help

Navigating the complexities of labour laws, taxation, and cultural differences can be a significant challenge when expanding into North Africa. An Employer of Record (EOR) can help you establish a presence in Tunisia, Algeria, or Morocco without the need to set up a local entity. Here’s how an EOR can assist your expansion efforts:
  • Simplifying Hiring and Compliance
An EOR handles all legal and regulatory requirements, ensuring that you comply with local labour laws, tax regulations, and employee benefits.
  • Managing Payroll and Taxes
An EOR will handle payroll processing, tax deductions, and social security contributions in line with local laws, saving you time and resources.
  • Cultural Sensitivity
An EOR with local expertise can provide guidance on cultural differences, helping you manage a diverse workforce in a respectful and inclusive manner.
  • Cost and Risk Reduction
By partnering with an EOR, you can avoid the complexities and risks associated with setting up a local branch or subsidiary. The EOR acts as the legal employer, so you don’t have to worry about compliance issues. Expanding into North Africa offers exciting growth opportunities but requires careful planning, especially when it comes to navigating local labour laws, taxes, and cultural differences. If you’re considering expanding into North Africa, reach out to us today to learn how our EOR services can help you establish and manage operations in Tunisia, Algeria, and Morocco.

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GRANT GERAGHTY - Africa HR Team

GRANT GERAGHTY

HEAD OF CLIENT RELATIONSHIP

Grant Geraghty is the longest-serving member of the Africa HR team. This resident subject matter expert and client champion is responsible for gaining a deep understanding of our clients’ unique HR needs in Africa and providing tailored solutions that align with their business objectives. Grant collabourates closely with our clients to ensure that their requirements are properly implemented, providing ongoing support and guidance throughout the process.

Grant brings a wealth of experience to his role, having served as Africa HR’s longest-serving employee. He holds a Bachelor of Commerce degree, with a major in Economics and Business Finance, from the University of Natal in South Africa. Additionally, he has completed a certification program in Payroll and Tax Administration from the University of Cape Town, further enhancing his expertise in HR operations and compliance.

His commitment to delivering exceptional service and his extensive knowledge of HR in Africa make him an invaluable member of the Africa HR team.

KEVINA TAKOORDYAL Africa HR Team

KEVINA TAKOORDYAL

HEAD OF OPERATIONS

Kevina Takoordyal has a BA Hons Business Management from the University of Glamorgan, UK, with MBA in leadership and Innovation, MBA General, PMP Certified, and Agile Scrum Master. She currently works as the Head of Operations at Africa HR Solutions Ltd with more than 20 years of proven leadership capabilities in Operations, Business Development, People Management, Process Optimization, and Project Management in the Financial Services, BPO, Banking Industry, and Heath Care Industry. In Senior leadership roles with an international footprint across Europe working and extensive Pan- African experience from a compliance, finance, and operations angle, Kevina comes across with a panoply of cross-functional skills. Kevina also serves on a few Boards, Non-Independent Executive at MioD and for NGOs on a voluntary basis, a coach and mentor to aspiring female leaders across Africa and Mauritius.

Kevina is a firm believer in Servant Leadership with a strong focus and commitment to uplifting others, with the ability to deliver through a highly engaged – diverse team, and works towards consistently synergistic value creation. While being a focused and adaptive thinker and Kevina is actively participating in panel discussions on Innovation, CX, Digital transformation.

Kevina serves as Project Assessor for the National Youth upskilling program. She has been recognized as Global Talent in a few companies, Ceridian, and International SOS Ltd whereby she has been awarded a few scholarships and had the opportunity to be mentored by Senior Vice President in the US. Award Winner in various fields and at a national level and recognized including Super Achiever Leader Award in Africa in 2016, Awarded Africa Women Leader 2018.

VILOSHNA PACKIRY POULLE​

VILOSHNA PACKIRY POULLE

Head of Finance & Business Support

Viloshna is an experienced finance professional with 18 years of expertise in strategic financial planning, financial analysis, cash flow management, systems and controls implementation, financial reporting, and continuous process improvements. She currently serves as Head of Finance & Business Support, where she has successfully automated and leveraged the financial reporting system capabilities to ensure efficient company operations.

Viloshna’s background includes senior roles in a multinational pharmaceutical company and a large listed Mauritian conglomerate. Her meticulous attention to detail and strategic thinking have streamlined financial processes, making her a valuable addition to any finance team. Viloshna is a qualified finance professional with an FCCA qualification and an MBA, bringing valuable expertise to any Organisation.

In her current role, Viloshna leads the company’s Treasury and Payments function, including the fulfillment of the company’s cross-border payments into Africa. With her strong educational background and extensive experience, Viloshna consistently demonstrates her ability to optimize financial operations, minimize risks, and improve profitability. Her expertise in financial reporting and process improvements make her a valuable asset to any Organisation.

MARK DU PREEZ​

MARK DU PREEZ

Head of Legal & Compliance

A qualified lawyer who joined Africa HR Solutions in July 2020, Mark Du Preez has experience working in private practice for a reputable law firm in South Africa. He also played commercially focused roles at a leading private bank, wealth management company, and outsourcing firm in South Africa and Mauritius.

Mark has played a pivotal role in Africa HR Solution’s risk mitigation strategy, which positively impacted P&L performance over the years.

He currently leads the Partnerships function of the company including relationships and oversight with in-country partners (ICPs) across Africa.

Alex Daruty - Africa HR Team

ALEX DARUTY

Head of Commercial

Alex has more than 15 years of experience in the global, strategic development of both enterprise and consumer brands in categories including technology, transport, enterprise software, entertainment, and travel.

With experience in roles on both agency and corporate side, he has worked across international brands and has led the development and execution of multi-discipline campaigns across EMEA, NORAM and Asia Pacific.

His focus is on driving meaningful business impact through brand differentiation and building high-functioning, digitally oriented, and analytically driven capabilities. He is motivated by working with, and developing dynamic people, teams, and Organisations.

He leads, manages, develops and mentors the Key Account Management department, including line management responsibility for the team of Key Account Managers and Key Account Administrator who represent the Company as the primary communication link between all relevant stakeholders, including clients, third party in-country partners and internal functions.

Originally from Mauritius, he holds bachelor’s degrees in International Business, Finance and Management from the University of Nevada, Reno.