The 5 Obstacles Your International Company Will Meet in Africa

by Grant Geraghty | Sep 12, 2023 | Business Expansion, Compliance, EOR, PEO

Obstacles International Companies Will Face in Africa

It’s decided! Your company is expanding to an African country.

By now, you have probably read all about every perk and downside the country has for your business. But between the fearmongering and the outdated information you may have come across, you’re not sure what the reality is anymore.

As active participants in the African economy across more than 52 countries, Africa HR Solutions is here to help you paint a better picture of what the obstacles to growth in Africa really look like.

As a bonus, we will also help you find out how to overcome them!

1. Language barrier

It’s no secret that Africa is mostly divided between francophone and anglophone countries, as a result of colonisation. So the answer would be to work with a translator or someone who is fluent in either language, correct?

Unfortunately, things are not so simple.

In some countries like Cameroon and Mauritius, English and French are both very commonly used. They are both used in business, whether formally or informally, in writing or in speech.

Besides, there are the local languages to think of. In Botswana for instance, natives typically speak Setswana, while South Africa boasts a total of 12 official languages, including English.

And while English or French are usually the main business languages, you must also consider the cultural aspect of speaking and understanding the local tongue. When doing business with and employing locals, using the commonly spoken language can help build closer-knit teams, and foster greater understanding between the employer and employees.

Further down the line, this also helps prevent high employee turnover rates.

How to overcome this barrier?

Working with a third-party service provider that can communicate in both English and French is imperative.

Here at Africa HR Solutions, not only are our teams fully bilingual (English and French), but we also work with reliable local partners who have a sound understanding of the local culture and languages.

This helps prevent pesky communication errors and create a more inclusive work environment.

2. Currency exchange and inflation rate

Payments in a single country already prove to be a headache.

Now imagine payments in multiple countries, each with their own exchange and inflation rates. On top of that, you must also include the time imperative in this equation. The final result? Late, inaccurate payments that haven’t been properly thought out and which are probably costing you much more than they should in terms of transaction fees.

How to overcome this barrier?

Making payments in Africa, either in a single country or to other African nations, is a task best left to those with a sound understanding of local finance.

Africa HR Solutions offers speedy cross-border payment solutions in Africa, ensuring accuracy and 100% compliance during transactions. The result? A worry-free and timely payment solution.

3. Foreign policies and geopolitics

While the language barrier and payment options are issues that are very much within your control, there are larger issues that may come up as well.

By larger issues, we mean large-scale geopolitics. This can include trade agreements, border or territorial acknowledgements, and climate agreements among other things.

As a foreign-owned entity in an African country, your company will also be subject to foreign policy changes. At any moment, a new change can upset your manner of functioning or halt your business’s growth.

How to overcome this barrier?

In these moments, as a business-owner, you must acknowledge that there is little you can do to change any laws that are passed. What you can do, on the other hand, is find out where there is room for interpretation and how far that law applies to you.

A good understanding of local law is therefore crucial in those instances. Partnering with a PEO or an EOR like Africa HR Solutions may prove to be the best course of action, as we collaborate with local service providers. As such, we are able to offer you sound advice on how to move forward in the most optimal way.

4. Talent onboarding and retention

While Africa is bursting with new and increasingly qualified talent, onboarding and retention can prove rather difficult. This is because, firstly, onboarding must be done in compliance with local legislation – a difficult task when one is first expanding to a new country.

Secondly, employee retention can prove to be as difficult in Africa as it is elsewhere around the world. And, as previously mentioned, cultural differences can factor in quite significantly.

How to overcome this barrier?

This particular barrier can be overcome by a better understanding of your workers. This includes understanding their motivations, their salary expectations, the relationship they want to have with their job, as well as cultural aspects surrounding work. In some countries for instance, it is customary for companies to pay out 13th month bonuses, even if it is not mandated by law.

It is details and subtleties such as these which can help improve employee retention.

5. Compliance

Many businesses tend to put compliance on the backburner when they expand to an African country. The understanding is that they will take care of compliance once everything else has been set up and business is running successfully.

Unfortunately, these businesses often suffer the consequences of such a choice. When found in breach of local law, they can be fined or made to go through extensive legal proceedings, costing the company time, money and resources. Besides, non-compliance can also be damaging to a company’s reputation, making them appear less trustworthy to both investors and potential employees.

How to overcome this barrier?

Compliance is a matter of expertise in local legislation. It can be difficult for new businesses to be 100% compliant, especially when they are trying to grow and make the expansion to Africa a success.

Outsourcing compliance to a service provider, typically through an EOR or PEO offer, is often the best solution for new businesses. This frees up time and resources, allowing companies to focus on their core business without worrying about compliance.