Why Hiring and Paying Employees in Africa Is Harder Than Most Companies Expect with Ernestine Van Rappard

[00:00:00] You're listening to the Unlocking Africa podcast. I'm the CCO of WorkPay. Within WorkPay, I'm responsible for the whole commercial team from marketing to demand generation to partnership to sales. If you are a company in the UK and you would like to expand to one African market, you have a choice to set up an entity which can be very expensive and can take three to 12 months.

[00:00:24] Using an EOR or an employer of record to avoid setting up your own entity, that can be done in 30 days. Now we need to make the infrastructure known that can serve that globalization and that's what we do at least for the African continent. Stay tuned as we bring you inspiring people who are unlocking Africa's economic potential.

[00:00:46] You're listening to the Unlocking Africa podcast with your host, Terser Adamu. Welcome to another episode of the Unlocking Africa podcast where we explore the ideas, innovations and strategies that are unlocking Africa's economic potential. So everyone talks about expanding into Africa. Almost no one talks about what actually stops it because before you can scale, you need to hire.

[00:01:17] And across Africa, that's where things can get complicated. Different labor laws, different tax systems. How do companies actually enter African markets quickly and stay compliant from day one? Today, I'm joined by Ernestine Van Rappard, CCO of WorkPay, a company helping businesses hire and pay people across Africa without setting up a local entity.

[00:01:43] We break down why payroll is real infrastructure and what companies still get wrong about expanding into Africa. Ernestine, welcome, welcome, welcome to the Unlocking Africa podcast. How are you? Thank you so much. I'm doing very well. Thank you. And it's such an honor to join this podcast recording today. So thank you for having me. As always, I like to start from the beginning.

[00:02:08] So I was hoping you can give us a brief introduction into who Ernestine Van Rappard is. Yes, thank you. So I always like to make things a bit personal. So I will start with my personal situation. So I'm Ernestine, I'm Dutch. I grew up in the Netherlands. Fast forward, I moved to South Africa with my family. We have three small kids. And then we went back to the Netherlands for one year.

[00:02:36] And then we thought, oh, wow, our dream is to go for another African adventure. And then I ended up talking to WorkPay. And because of WorkPay and the dream on moving to Africa again, we decided to move to Kenya and Nairobi last August. And ever since, I love it. And as you said, I'm the CCO of WorkPay. Within WorkPay, I'm responsible for the whole commercial team from marketing to demand generation to partnership to sales.

[00:03:05] And it's been amazing so far. Thank you. Give us an overview of what it is WorkPay does. Of course. So I'm, of course, I'm a bit biased. But what I think is the beauty of WorkPay is that, and especially why this is such a perfect fit, I think, with the podcast you make, is that when we're talking about unlocking Africa, right?

[00:03:32] And maybe expanding to Africa or testing the waters within Africa and in any kind of African countries, it can be very complicated to hire or to pay people because you have labor laws, you have tax systems, you will work with different currencies, with employment practices, contracts, different termination benefits, well, et cetera. I think the beauty of WorkPay is that that's where we stepped in.

[00:03:58] So we can offer almost like an infrastructure in any country in Africa. There's more than 40 plus countries where we offer a payroll solution so that companies can pay their people on time where all these local labor laws and tax and currencies are all incorporated in that system.

[00:04:20] And I think we can go even further because if a company would like to expand to a certain market in Africa, but they do not want to set up their own entity because you're not compliant if you hire a person without having an entity because the person should be employed under an entity in that specific country. And that's where we can also step in because we are widely spread with our own entities.

[00:04:44] And that's what we call the employer of record services, where we can then employ that person under one of our entities so that that can happen in a compliant way without a company having to set up their own entity. I guess with this approach, you've positioned work pay as enabling companies to hire across Africa without setting up an entity.

[00:05:08] Why do you believe something as fundamental as hiring has been such a, I guess, persistent bottleneck on the continent? It's very complicated, especially because of every African country has different rules and regulations and requires such in-depth knowledge to adapt to those rules and regulations and to apply those in the contracts, in the way how you pay your people, how you file taxes, etc.

[00:05:36] So I think if you are a company, let's say in the UK, where you are based and you would like to expand to one African market, you have, of course, the choice to set up an own entity, which can be very expensive and can take up three to 12 months, right? To set up an own entity, which can delay your expansion because you cannot hire that person in a compliant way. So I think that's the first thing.

[00:06:02] But of course, if you intend to hire many people, there is a business case to indeed set up an own entity, right? But then you can still, you still need to pay your people according to all the local laws and the tax system. So I think work pay can do both. And I think the beauty of it is that you have a faster time to market in a month. Let's say if you need a person next month or you're about to run a temporary project next month, you can employ those people under our entity. And you're compliant and you can employ and pay your people.

[00:06:32] So I think that's a faster time to market. It can lower the cost, definitely. It can also be a temporary solution until you have an own entity in place. And if you have an entity in place, let's say in Togo and you're a UK NGO, it can still be very complicated to have an infrastructure that is connected with all the bank systems, etc. to pay your people on time according to all the local rules and regulations.

[00:06:57] And last thing on top of that is that we see the complexity especially kicks in when a company is spread across multiple African countries. So then it certainly is, I think, amazing, a great solution to have one single point of contact or one stop shop that can help you provide insights.

[00:07:20] And to, of course, also pay your people across all these markets where all these local labor laws and taxes and currency complexities are part of. Interesting. So I guess from what you've mentioned, payroll in any country requires in-depth knowledge. So trying to understand it across multiple countries isn't very realistic. So what would you say getting payroll wrong actually looks like in Africa?

[00:07:47] You know, what are the real consequences when people get payroll wrong? Yeah. First of all, we really want to pay the people on time, right? It can be very impactful, especially, I think, in Africa, where people is the lifeline, of course, of people, right? To get your salary on time. So I think that's by far number one is for the people, that you have a very safe and well-working infrastructure to pay your people on time.

[00:08:16] I think there are many other difficulties when we are talking about multiple currencies across all these different countries, different tax regimes, the social contributions vary per country. And you also have, of course, manual processes per country that can add up with regards to the time investments.

[00:08:40] So you could, of course, hire a local person per country to help you with the payroll. But if things are automated and part of a great technology platform, why not all hand it over to one company who can cover you for the entire continent? I agree. So we've touched on the compliance and hiring friction. But I guess underneath all of that is the issue around payroll and the system that drives it.

[00:09:10] I know that WorkPay started as a human resource information system in terms of a platform and then evolved into payroll. So what did you and the founders see on the ground and made payroll, I guess, the bigger problem to solve? So first of all, important to mention that I am not the founder of the company. Yes, yes, yes, yes. It's founded by two amazing Kenyan founders. They're called Palkimani and Jackson Kulu.

[00:09:37] And they are working every day with everything they have on this company. And they initially started more as an HRS. So WorkPay, it still also has HRS functionality. I will address that later.

[00:09:54] But I think the difference here is that during these HRS years, I think both Jackson and Paul found out that the real demand and the real complexity is the local differences and the local specialty in every single country, especially when it comes to payroll. Right. Like performance management or leave management or that's less.

[00:10:18] Of course, you can have leave rules different in Nigeria versus South Africa, but it's a bit more of a common tool. So during these years, they found out that the real complexity and the real needs and the more the in-depth local knowledge is more needed for payroll. And you cannot just cover it all.

[00:10:38] Right. So you also have a tech team with great developers who should also focus on what to build and what to build for a full hundred percent instead of building a unicorn that want to do it all.

[00:10:54] But it's also good to mention that we are still a platform that also provides a platform for the HR manager or the finance manager and also for the employees where they can find their pay slips, where they can apply for their expenses, where they can apply for their leave. But the thing we have phased out is more the, for example, the performance management functionality.

[00:11:17] So the more the real HIS topics, because we also think that other companies who live like performance management can can do that better than us trying to do everything. I understand. So if we strip away the tech language, would you say that payroll in Africa is essentially an infrastructure problem or more of a software problem?

[00:11:42] No. Well, I think what is complicated here is that every country is different. Right. So one of maybe one of the biggest misconceptions is that Africa is one market, but it's not. There are 50 plus countries and they all have different labor laws, different tax systems, different currencies and different employment practices. And so what could work maybe in Kenya won't work in Nigeria or South Africa.

[00:12:10] And to have that really in-depth knowledge, to give you an example, our CEO is currently in Benin on the ground. He has to be there to also have meetings with the local banks, et cetera. Right. That requires such in-depth, it's so time consuming. But I think the absolute strength of work is that we are able to, with also a great operations team and a legal team,

[00:12:35] to have all those in-depth knowledge and compliance, because that's what it is, because there are also so many changes. Right. When it comes to law and regulations per country. But I think that our absolute strength besides the tech part is to have that covered in our services and systems.

[00:12:58] So that the service that we offer to our customers, that we can really say that they will be compliant always if they work with WorkPay for every single country in Africa. You rightly mentioned that every country is different on the continent. So how fragmented would you say the regulatory landscape across Africa is when it comes to employment and payroll? It's very fragmented. I could say that every country has its own determination.

[00:13:26] Work can work different in country A versus country B. The employer obligations that you should pay as an employer are different in country A versus country B. The maternity leave, let's say, I think it's in Kenya, I think it's three months, but that can be totally different in Egypt.

[00:13:47] Right. So and to know that all and to have that A reflected in the in the contracts you have with your people and to get the advice, what you should have, what is optional in a contract, whether or not pension is mandatory or optional or health insurance, all these kinds of criteria that could be part of an employment. And for some countries, it's mandatory. And for some countries, it's mandatory.

[00:14:15] That can be like if you are widely spread across Africa and you are active in 20, 20 countries, it can be a full time job or maybe of multiple people to make sure that that's all reflected in a compliant way in not only in the contracts, but also in how you pay people and also how you manage the people during their employment.

[00:14:37] So if payroll and compliance are disfragmented and complex, I guess the natural question is how do companies practically navigate this when entering Africa? Well, that's why I think they really need an advisor to help guide them through that like complex landscape.

[00:14:58] And I think what I'm really proud of is that our team, I can say the people in my team can really help more like almost more like during a consultative session. Like, OK, so you are an NGO in the UK. You would like to run three projects in Togo, Benin and in South Africa. What do we know? Like, for example, work permits can take very long in South Africa, right?

[00:15:27] So let's maybe not start with South Africa, but let's set up the work permits. But let's start in Togo, for example. And I think that local adaption of that knowledge can be so helpful in guiding companies to also prioritize in when and where to expand or when to launch a certain project.

[00:15:52] And I'm really proud to say that we have such a great workforce at WorkPay to advise companies on those topics. So it's more than just, of course, we also sell software. I'm happy we do. But we have much more flavors, more on the advisory part. And it can be of such a great help to any company expanding to Africa. But we also help companies within Africa, right?

[00:16:21] That expand or run a project in a different market or just a Kenyan company that would like to have a solution to pay their people. So it can be also as simple as that. So that whole variety of services we can offer spreads so widely across the entire continent. I think that's the strength of WorkBay.

[00:16:44] But I think that's also a great, I hope it can also, it also sounds like a great opportunity that there's almost like a payroll and employment lifeline out there in the market that can help people that can potentially have so many questions on these topics. I agree. So if we take the instance of, say, a UK or US company looking to expand into Africa, what would you say is a typical timeline for setting up versus using a solution like WorkBay?

[00:17:14] So you either set up your own entity that can take up depending on the country where you would like to set up that entity, but it can take up three to 12 months, right? And it requires most likely also a high investment. You need to have most likely also a local partner to help you with setting up that entity.

[00:17:36] So using an EOR, an employer of record, meaning that you either temporary or indefinite employer people under our entity to avoid setting up your own entity, that can be done in, say, 30 days. There are some dependencies. So let's say South Africa, we're talking now local people. So it's slightly difficult if you're talking about expense because then work permits may delay the whole process.

[00:18:05] But if you are hiring local people, I think I'm pretty confident saying that you can be compliant and have your people employed under an employer of record in 30 days. So sticking on the theme of employer of record, I know this model is becoming very popular globally. So in the Africa context, would you say employer of record is becoming a necessity or is it a convenience? That's a good question.

[00:18:31] So I think it's now a great option that we have EOR providers on this continent because I hope that companies will now consider expanding to Africa because it's not that complicated anymore because of not needing to set up an entity anymore to hire in a compliant way.

[00:18:56] So I hope it just opens a whole new variety of doing business where Africa as a continent or any other market where employer of record is active. I think it just pushes the globalization we see happening, right? Yes. And of course, I'm very much the biggest advocate of inviting people over to expand on this continent or to do business here. Fantastic.

[00:19:26] So would you say employer of record has changed how companies think about testing African markets? Yeah, or maybe even any market, I would say yes. Okay. So I keep using this, but we work a lot for NGOs. So that's why I use these NGO examples a lot and they often have temporary projects, right?

[00:19:49] And for that, I think employer of record is perfect because you don't have the intention to permanently set up an entity in the country where you run that temporary project. But let's say a retailer in China is a retailer. A retailer in China who is just maybe even data-driven testing the waters. Okay, what could be an interesting market? Where do I make some marketing investments online?

[00:20:19] Where do I see traction? If I see traction, okay, let's test the waters even further with some boots on the ground by hiring some local people in four or five markets. Invest even more and see if you can get traction on those markets. And there too, the upfront investments of setting up an entity and becoming compliant are not that high while using an EOR. So you have a faster time to market.

[00:20:47] You don't have all these upfront costs. You don't need to hire a local payroll expert or a local Nigerian consultant who can tell you anything about the law and the compliance of that country. And you can just do your business. And if you then see enough traction to further invest, then you can still consider in setting up your own entity.

[00:21:09] And if you then, once you set up your own entity, still need help for your payroll or would like to outsource your payroll, then we can also step in to help you with that. So I think in this whole life cycle of a, in this case, Chinese retailer, we can guide them through all these steps in that life cycle. So you've given the two great examples of say temporary projects run by NGOs and the Chinese retailers.

[00:21:37] So with that in mind, what type of companies would you say typically use work pay? Are they startups, multinationals or somewhere in between? We do see changes there because given our history more in the HRIS, I think the profile of the, of our customers were more local.

[00:21:55] But I'm very happy to see with our focus on payroll and payroll outsourcing and the employee record services, we see more and more international companies coming in, which is a good thing. And then indeed it's, we see a lot of, let's say tech or services consultancies, VCs that are also expanding. Indeed NGOs, renewable energy and also retail.

[00:22:24] I think any company that runs a kind of project or is about to run a kind of project within Africa or an African company that would like to hire also a person in, in any market. That's also fun. I was also in my first three months, I was officially employed under an employer of a regular company in the Netherlands because I was still based in the Netherlands.

[00:22:49] So I think it's the perfect way for, in this case, work pay, not needing to set up an entity in the Netherlands to, in a compliant way, hire me. And it was done in a month. So I'm really happy that we can offer those services and be the accelerator for companies on the African continent.

[00:23:08] And I'm pretty confident to say that I think we are maybe, well, at least for Africa, of course, not globally, because there are also amazing players that more play the US or the Europe game. But in Africa, I think we can, I can say I'm pretty confident to say that we are maybe the most widely spread African EOR player at the moment. And that's something we can be really proud of. Fantastic.

[00:23:33] So if we move from the type of companies or the sectors and look at where they are targeting from a business perspective, where are you seeing the most demand geographically for your services? Currently, the payroll software demand, because we are still very well known in Kenya and Nigeria. And yeah, I think that whole area. So I think for the, for the software itself, we are still relatively African, well, or Kenyan local.

[00:24:03] But for the EOR services, I think that's more, we do see more and more international companies finding us. So there's a difference between EOR and payroll outsourcing and the more software part of the business. Fantastic. I guess we've talked about policies, process, systems, infrastructure, the businesses.

[00:24:28] But behind all of this is ultimately people, you know, within the Africa business space. We always talk about Africa's younger workforce. So from your point of view, how real is that opportunity versus how much there's still some type of friction when it comes to recruiting or hiring young people on the continent? Yeah. As we speak, I'm also hiring myself for our team. It can be difficult.

[00:24:57] And I think that also differs per country. So it's not, I cannot say that that's the case for the entire continent. But yeah, I think it's a different market compared to Europe, for example. I think it's harder to find the right talent.

[00:25:14] But I think if you have good senior leadership and senior managers who really have also their passion in helping to grow people and to find talent and to find that rough diamonds, that can even be more amazing, right? To not only drive business and help a business grow from a revenue perspective, but also to grow people and to provide them with a better future and a better career future.

[00:25:44] So that's how I see it. So I'm very happy to see that people in my team, that they really pull themselves up. And the people who are so ambitious and really want to be there, they can, of course, still like we can all make mistakes. I also make mistakes every single day, right? But it's really nice that we can help that talent grow. So there is enough talent. Maybe some of them still need to be shaped.

[00:26:09] But if you have the right management and the right leaders in your company that see that and would like to do so, I think there is so much potential on this continent. But for me, it's hard to say. I know it's harder to find the right talent in Africa, but I cannot say that for the entire continent.

[00:26:26] So from your experience of hiring people and also the services that you offer at work, what would you say are some of the misconceptions that global companies have about hiring African talent? I think many of them would not even consider it or see it as an option. And that's a shame, I think, because it is an option. And there are no difficulties in how to hire them or, right?

[00:26:55] I already explained that because there are companies, that's also what Workplay does, to enable companies to be able to hire them. But there are, of course, also great recruitment agencies that can help people with finding the right people. But it's been more difficult to find the right talent. But the costs are lower, the labor costs. So I think that's a good thing. You just need a few good managers who think alike and who are willing to invest in the people to help and grow them. But there is so much talent.

[00:27:24] I see it in my team. I have really the most amazing people that deliver on the same level as you would see it in Europe. And in some cases, they're not there yet, but they really want to learn and they are very adaptive. So it's good that we see that we can help and grow the people. And therefore, the teams and with great performing teams, you can also help grow the business.

[00:27:49] But I do now know that being successful as a business, it is a people thing, right? You can have a great product, you can have a great whatever, but you really need to have the right people. That's very important. And I always tell my people in my team that, especially the first months when I joined, I told them I'm not looking at results at the moment now.

[00:28:11] The only thing I care of is the work mentality and the eagerness that people should have to work for a company like WorkPay. Because that's the only thing I need. I can work with anyone who wants to be here and who is really eager to learn. But I cannot work with people who are not eager and not motivated to learn or to work. So for me, that's by far the number one thing I assess the people on also in hiring.

[00:28:38] It's more like it's an energy, it's a mindset, it's the will to learn. That's for me most important, way more important than the skills itself or the commercial skills or the marketing skills or the skill skills. I can teach them. That's fine. Yes, yes. I guess the good thing about working with young people is the energy and innovation that they bring to the workforce or the space that they work within.

[00:29:02] With that in mind, in terms of innovation, with the work that you're doing in payroll, workforce, are there any new innovations or trends that you're seeing that you're quite excited about? Yeah, this is an interesting discussion because with AI, right? And with Cloud, for example, I use Cloud a lot myself in building my dashboards. And you could also say that Cloud, it could be a potential threat for SaaS companies, right?

[00:29:31] Because in theory, any company could build their own in-house payroll tool or forms tool or whatever tool you can think of that's software as a service. With the right coding and prompting, you can build it yourself, almost. So not to be too scared of those changes, I still think that high-tech, high-touch becomes more important than only high-tech for these businesses, for SaaS businesses.

[00:30:00] Because it can be just duplicated by any AI tool anytime soon, right? Or it can already be duplicated. So what is important and why I'm so much more focusing with the business of payroll outsourcing and on EUR services is because that has a high service element in it. And that's what Cloud cannot duplicate those services and those things, right?

[00:30:25] And that's, I think, also the future for our company is that we focus more on those services. And I think, and I know, and I see that that's the strength, right? That we can have that widely spread in-depth knowledge, but also the execution of those services that incorporate that knowledge. So the statutory filing for you, if you have a company and if you cover 26 countries in Africa, well, good luck with the statutory filing of all your people when it comes to payroll.

[00:30:54] And that's, I don't think that's something Cloud can do anytime soon. So, of course, you need a tool. And, of course, AI is a disruptor in many, many industries. And it will, of course, also be a disruptor for our industry. But I think if we lean more on the high tech combined with the high touch and with high touch, I mean, the human and the services that strengthen the tech, I think that's the innovation we need to focus on.

[00:31:24] We are focusing on that combination. So that's why we really double down also on peer outsourcing and employer of record. So if we move from current trends and look ahead into the future, five to 10 years from now, do you think solutions like WorkPay will fundamentally change how companies expand into African markets?

[00:32:15] I hope. Who can help you with that? And I hope in five or 10 years from now, it's a very common thing to just say, oh, we're just temporary high. It's more about then I hope that we can then make the talent and the person centric and not the country where they are doing their business. So it should be more on talent, right? So it should be the best person for the right job, regardless where they are based.

[00:32:42] And I think COVID did a lot of good things in there already with working remotely and have more a global workforce and it enforced globalization. So I think that's a great thing. But now we need to make the infrastructure known that can serve the globalization. And I think that's what we do, at least for the African continent. Quote of the week.

[00:33:06] As people, we often have quotes, mantras, African proverbs, affirmations that keep us going when times are challenging or when times are good. Do you have one that you can share with us today? I don't think it's an affirmation, but I'm just the person that only listens to one, not only, but I just work mainly based on my intuition.

[00:33:30] And maybe especially in times of AI, cloud, rapid changes, let's say human as much as possible. Let's feel what's right. I think those are the things that are very important to me. When I just moved here to Kenya, to Nairobi, I was very uncertain if I would be able to also lead a big team of maybe African people, right? Because I am not from Africa.

[00:33:59] And I was like, oh, in Europe, I did so much. I tried to reach people, right? Just in who they are and what they do and try to sense them. And I thought, hmm, I hope I can do the same in Kenya. And the answer was, it doesn't have to do with culture or where they come from or language. It's just a human is a human. So I think I'm pretty well in reading people regardless of where they're from. And that's the biggest lesson that this job is teaching me.

[00:34:28] And stay human, listen to yourself and follow your intuition. I do almost anything on intuition. What I feel is needed or what I feel I should prioritize. And so far, that's going pretty well. Fantastic. I think that's a great way to end today's conversation. I think what this conversation has highlighted is that expansion into Africa isn't just about strategy. It's also about execution. And it's one thing to identify a market opportunity.

[00:34:56] It's another thing entirely to hire, pay and manage people across multiple jurisdictions. So Ernestine, absolute pleasure having you on the podcast today to have this conversation and sharing your experience, knowledge and skills with us. So thank you. Thank you. And keep up the good work.

[00:35:18] I think it's great what you're doing with this podcast and to also show the beauty of doing business on this continent. It's an amazing continent with so many treasures and so much beauty and especially the people are absolutely amazing. So I can highly recommend to either visit travel here or to expand your business or hire one of these amazing people that live here. Thank you so much.

[00:35:47] Thank you to everyone who has listened and stayed tuned to the podcast. If you've enjoyed this episode, please subscribe, share or tell a friend about it. You can also rate, review us in Apple Podcasts or wherever you download your podcast. Thank you and see you next week for the Unlocking Africa podcast.