Need to pay your workers in Africa?
- Last updated: November 1, 2024
Can you pay your workers in Africa easily, without facing any legal, financial, or operational trouble?
Yes, but not without some help.
Payments already carry a level of difficulty: from correctly calculating the amounts that need to be paid, to sending payments on time, and accounting for cash flow and exchange rate issues – there is more than meets the eye when it comes to make employee payments in an African country.
Let’s take a closer look at what paying workers implies for you, how you can get the help you need to thrive, and which other services you may want alongside worker payments.
The risks of paying workers by yourself in Africa
Paying workers is unfortunately not as simple as settling a bill at the end of the month. Many factors need to be considered before payments can even be made, among which are:
1. Different African countries = different legislations
Africa is a continent made up of 54 countries – and each one is different, with its own specific labour laws stating how workers ought to be treated and paid.
A worker in Senegal, for example, will not be entitled to the same statutory compensations as a worker in Eritrea or Mauritius. A worker in Mali will not be paid overtime at the same rate as a worker in Tunisia. Because each country is different, companies looking to manage their worker payments in-house must not only dive in-depth into relevant labour laws, but they must also learn their different interpretations. And this, all before the payroll process has even begun. Otherwise, these companies will risk being reported by their workers, and may even be fined by local authorities.
2. Being out of date with the law in Africa
Not only must your in-house team learn about the local law in one or more African countries – it is also crucial for them to keep up to code with the latest legislative changes. After all, laws often change and are updated to better face the new realities that crop up. This is something that your in-house team ought to look out for, but which too often proves immensely difficult to follow through with.
3. Not accounting for exchange rates in Africa
Which currency/ies will you be paying your workers in? In Ghanaian Cedi? US Dollar? Euros? Or maybe the Ethiopian Birr? The problem is that currencies fluctuate, and it is immensely complicated to navigate these changes without sustaining a loss. Take the Ethiopian Birr, for instance. In late July 2024, the currency was floated, which means that its valuation depends on that of other currencies like the US dollar. This has led to the Birr going down at least 30% – a real blow to individuals and to businesses like yours.
4. Not accounting for the time that financial transactions take in Africa
Unlike in Europe or in North America, bank transfers across Africa tend to take time: payments can take as long as 4 days or even a week to be processed. When you have an in-house team making payments and also simultaneously handling other responsibilities, it can be all too easy for them to forget to make a payment on time – resulting in issues for your business.
5. The cash problem in Africa
In many African countries, cash is still king. Across the continent, banking infrastructures are not sufficiently developed and as such aren’t very popular with the locals. This has led to a cash-only situation, where in some countries, it is customary to pay workers in cash and to issue payslips manually.
That being said, more and more workers are now accepting mobile payments. As such, as an employer, you find yourself in the unenviable situation of catering to both traditional and digital payment methods at the end of the month.
6. Filing and remitting taxes at the right time and to the right authorities in Africa
Beyond monthly taxes that need to be calculated and remitted, there are other taxes which come up more infrequently – and which need to be paid on time and accurately. With an in-house team with a diverse set of responsibilities, such seasonal tax requirements may be forgotten or may not be remitted on time.
7. Different pay rates
Not all workers and employees are paid at the same rate. Blue-collar workers such as masons and stoneworkers tend to get paid more frequently: around every 2 weeks. Cleaning personnel may require to be paid every week, or every cleaning day. Meanwhile, office workers are typically paid monthly. It may seem like a detail, but the difference in how often your employees are paid can make your salary payments infinitely more complex and time-consuming.
For a worker getting paid each 2 weeks, your in-house payroll team will have to calculate earnings, overtime, and other statutory allowances over twice a month. Meanwhile, your team will also have to separately calculate the earnings, overtime, and other statutory allowances for employees who get paid monthly – not to mention that there will at least be one overlap of these 2 pay cycles. This creates a rush and more stress for your in-house team, inevitably opening the door for more human errors.
Only looking to pay workers in Africa?
Payroll partners: what they are, and how can they help you
Partnering with a payroll provider is the safer option when choosing how to pay your workers in Africa. Why is that? Because payroll providers are experts. They understand the intricacies of payroll, and already have a system in place to maximise efficiency and limit errors when calculating your payroll.
Payroll providers take on all payroll responsibilities for you: they ensure that the right deductions and contributions are made to the correct authorities, they calculate overtime hours, and leave taken, and overall ensure that your employees are paid on time, at the correct pay rate, and in the right currency.
Payroll providers like Africa HR Solutions will also help you maintain 100% compliance with legislation that has a bearing over payroll, namely the labour law. Because Africa HR Solutions covers 46+ countries in Africa, we also have the deep, diverse understanding of local law that you need to confidently outsource your payroll.
Beyond this, we offer a modern, digital outlook on payroll thanks to our use of software. Your employees will also have easy access to an Employee Self Service Payroll System. There, they will be able to log in all their leave requests, among other things.
Additional services: looking to offer employee benefits?
If you are looking to go beyond simply paying your employees and wish to offer benefits like complimentary health and life insurance to your workers – a payroll solution may not suffice. You may then wish to look into Employer of Record (EOR) and Professional Employer Organisation (PEO) structures to help you administer these benefits.
Do you have an entity in Africa? Consider using a Professional Employer Organisation (PEO)s
If you already have an entity in an African country, and wish to offer additional benefits to your employees, consider partnering with a PEO (Professional Employer Organisation). PEOs are fully legal entities which partner with you to become a co-employer. They take care of many HR responsibilities in your stead, too: employee onboarding, payroll, tax remittance and filing, benefits administration, compliance, offboarding, and more.
With PEOs, you can not only pay your employees in Africa, but you also share in the burden of managing employee admin work with an expert.
No entity in Africa? Consider using an Employer of Record (EOR)
If you have no entity in Africa and wish to offer additional benefits to your employees, Employers of Record (EOR) may be the most suitable solution for you. Why is that?
Because EORs not only take on payroll duties, but they also take full responsibility for any administrative actions they take. EORs absorb any risks for you, all while shouldering the responsibility of many HR tasks – only so you will not have to.
Besides, EORs can actually help you get access to better health and life insurance plans for your employees. Because they have numerous clients and special relationships with insurance companies, EORs can offer you more valuable insurance plans.
With an EOR, you are shielded from all administrative risks because the EOR legally becomes the employer – although you do retain full ability to manage your employees however you see fit.
Choose Africa HR Solutions
With over 400 satisfied clients across 46+ African countries, Africa HR Solutions is a payroll, PEO, and EOR solution provider that has left its mark on Africa. We have the local understanding and payroll know-how you need to pay your workers in Africa – and also go far beyond. Ready to find out more about our offer? Get in touch with us now.