Payroll central to Africa expansion strategy

The African continent has enjoyed its best growth decade on record and today is one of the world’s fastest growing regions, with 6 of the 10 fastest growing economies in the world. It therefore makes business sense for South African firms to look at expanding into Africa and opening branches in other parts of the continent.


VIP Payroll’s Gerhard Hartman. (Image: VIP Payroll)

Companies expanding into Africa either need to send South African staff into these countries as expatriates or need to open an operating entity in that country with local staff members. “Either way companies face challenges in expanding into Africa, especially in setting up their auditing and taxation systems and accounting and payroll systems, and being able to comply with the local legislation of that African country,” says VIP Payroll’s Gerhard Hartman. “Companies need a partner on the auditing and taxation side to help them comply with local legislation and practices, they also need payroll systems in place to be able to pay their staff correctly and accounting practices to comply with local accounting legislation,” explains Hartman.

In response to this trend, and in an attempt to aid local companies in their expansion plans into Africa, Sage VIP Payroll has partnered with BDO Audit, Advisory and Tax services and Sage Pastel Evaluation to provide local companies with all they need when entering a new country of operation.

One of Sage VIP Payroll’s main strategic goals is expansion into Africa – with Sage VIP now being available in 24 African countries. The VIP Payroll Africa Division has offices in Gaborone; Windhoek and Nairobi, with active alliance partnerships in Zimbabwe; Zambia; Malawi; Nigeria; Ghana; DRC; Kenya; Tanzania; Uganda; Angola; Mozambique and Rwanda.

“Companies in Africa are beginning to realise the importance of automation and how VIP Payroll can help them make more informed decisions which creates more efficient environments for company growth and return on investment,” says Hartman. “Salaries continue to be one of the biggest expenses in any organisation. The market for employment is becoming more competitive making HR part of any company’s strategic advantage. VIP Payroll provides an integrated solution for any size business to manage salary payments and HR strategies. The system enables statutory compliance with local authorities in other African countries and local support is provided through alliance partners in the country of operation.

BDO has a large amount of experience servicing multi-national companies from across the globe. The organisation aids companies to build a country specific business model for operations in Africa. BDO also has in country contacts and alliance partners in every country in Africa, except Somalia, making it the best business to partner with when expanding into Africa.

BDO’s three phase process includes advising companies on the implications of doing business in another African country, implementation of licensing and permits, registrations and applications in that country, and setting up compliance and business controls for payroll, auditing and accounting.

“The most common mistakes companies make when expanding into Africa include not having sufficient knowledge about the country they are entering, and a lack of planning about how to go about operations in that country,” says BDO’s Mark Stewart. “Companies need to prepare properly and make sure they understand the local tax laws and company legislation. They also need to educate themselves on the foreign exchange regime in that country, the economic environment, the legal system and the foreign company processes,” explains Stewart. BDO is able to help companies with all this information so that they are adequately prepared for their new venture,” he says.

Pastel Evolution has been operating in Africa since 2001 and has offices in South Africa and Kenya. The organisation has over 2500 corporate customers in Africa and over 70 business partners on the continent, as well as 15 project implementation consultants and 50 call centre support staff. Pastel Evolution empowers business management through finance, inventory management, relationship management, payroll and business intelligence. These systems streamline business processes and enable employees to make informed decisions.

“Many companies purchase systems for accounting, HR, payroll and auditing for use in their new ventures, but this software never goes live as they do not have the in-country support to help implement the software, or the software does not comply with the local legislatory environment,” says Pastel’s Wesley Ekman. “VIP, BDO and Pastel have a support base of local partners to give advice on what to look out for and provide on-site support to African businesses. In addition, all VIP, BDO and Pastel software is customised to comply with local legislative requirements, taking the hassle out of setting up branches in other countries,” Ekman explains.

Africa’s population of 1 billion people currently makes us 14% of the global population, half of which are under 35 and nearly half live in cities. The African economy of $1,6-trillion is expected to grow to 2,6-trillion by 2020.

Since 2009, Angloa; Nigeria; Ghana; Zambia and DRC have been top investment destinations. In 2012 Ghana is expected to show the strongest GDP growth, with Nigeria in 4th position. New investment destinations also include Equatorial Guinea, Guinea, Madagascar, Gabon, Cameroon, Mozambique, Liberia and the Congo. The main sectors for investment include mining, construction, property development, retail, supplier services to the oil, gas and mobile telephone industries, ICT, security, agriculture, tourism and hospitality.

Staff Writer