Africa’s payroll systems are undergoing a major
transformation, with automation increasingly viewed as a driver of growth,
financial inclusion, and employee retention, according to a new report by
FaidiHR.
The report, The Future of Payroll in Africa, released
in August 2025, indicates that businesses across the continent are moving away
from treating payroll purely as a cost center and instead adopting digital
systems that improve compliance, enhance employee experience, and unlock new
financial services.
“Payroll has been a cost center for the past several
decades. However, visionary companies are now looking at payroll as a gateway
to financial inclusion, talent retention, and operational efficiency,” FaidiHR
Chief Executive Officer Peter Muchemi said.
The study notes that regulatory reforms, such as Kenya’s
Social Health Insurance Fund (SHIF) and NSSF changes, as well as Nigeria’s
evolving pension laws, have placed greater pressure on businesses to adopt
compliant systems.
Cloud-based platforms, the report says, are increasingly
being used to ensure accurate deductions and avoid penalties.
“Instead of looking for a payslip maker, our clients require
a compliance partner,” Muchemi explained, adding that automated payroll
guarantees transparency in statutory deductions, from tax to social security
contributions.
Beyond compliance, the report highlights a shift towards
payroll as a tool for employee financial empowerment.
Systems are increasingly integrating savings plans,
salary-linked loans, and insurance services, making such benefits more
accessible to workers in both large companies and SMEs.
“With payroll, employers can now enable their workers to
access cheap loans, save, and insure themselves without the red tape of
traditional banking,” Muchemi said.
The report also points to mobile-first payroll as a growing
trend, driven by Africa’s rapid adoption of mobile money.
Demand is rising for cross-border solutions that integrate
with mobile wallets and multi-currency systems, making it possible to pay
workers wherever they are.
“We’re already seeing demand for cross-border payroll that
integrates with mobile wallets and multi-currency systems,” Muchemi noted.
Looking ahead, FaidiHR predicts the next wave of innovation
will be powered by payroll analytics and artificial intelligence.
Predictive payroll, capable of forecasting tax obligations,
cash flow needs, and compliance risks, is expected to become standard practice.
“Payroll information is one of the richest but uncapped
datasets for African enterprises,” Muchemi said.
“We are shifting from reactive payroll to predictive
payroll, where employers can plan more effectively, employees receive their pay
faster, and governments receive revenue sooner.”
The report concludes that companies adopting advanced
payroll systems will not only avoid compliance pitfalls but also position
themselves competitively in attracting and retaining talent.
