NGO Expansion to Africa: Comparison and Analysis by Country

For global nonprofits, having at least a regional presence in Africa is key for fundraising, staffing, and strategic purposes. Where to establish the entity is a crucial decision that can lead to or avoid compliance headaches, long setup times, or restrictions.

The content below evaluates some of the factor's organizations should consider when deciding which country will host their NGO Africa regional hub. This report, originally drafted in 2020, focuses specifically on setting up a nonprofit presence in South Africa, Uganda, Nigeria, and Ghana, so it is by no means exhaustive.

Country Comparison Table

*This metric shows the relative cost of living / salary level among the countries in the table, ranked 1-4 (1 being the most expensive). The corruption ranking shows the country’s place on Transparency International’s Corruption Perceptions Index, out of 180 countries (1 being the country with the least perceived public sector corruption).

Analysis & Recommendations

Setting up

Across the four countries included in this report, the overall range in required time for incorporation spans from a few weeks to four months. Across this differential, the speed of entity setup seems to be inversely proportional to the level of involvement of NGO-specific governmental bodies in the early stages of formation.

In South Africa, for example, an NPC is incorporated within two weeks (on average) of submitting documentation to the CIPC – the same department which oversees the registration of for-profit companies.

Ghana and Nigeria follow the same model, though Ghana’s DSW steps in post-incorporation to classify and confirm the nonprofit’s character. Uganda, conversely, includes several community-level councils in the incorporation process, with their NGO Bureau’s monthly meeting serving as the final approval step.

This group is similarly split when it comes to receiving available tax exemptions. Both Nigeria and Ghana have built these applications into the setup process itself – adding to the initial registration timeline but streamlining the administrative procedures for new organizations. On the opposite side, South African nonprofits have a list of additional, optional applications and registrations to pursue after formation:

• NPO Status – An application to the Department of Social Development (“DSD”) aimed at providing additional transparency and credibility for nonprofits to donors. It carries no special privileges or exemptions, but some regional donors and grants will require this status as a condition of funding due to its historical use as a means of verifying an NPC, association, or trust is truly charitable in its activities and governance
• PBO Status – Granted by SARS, exempts the organization from tax on income from events, donations, and most other relevant sources
• 18A Status – Also from SARS, allows domestic donors to claim donations as tax deductible 

NPO and PBO status are largely procedural and should easily be achieved as long as the organization’s incorporation documents (a Memorandum of Incorporation or constitution) were written with appropriate foresight and consideration of the requirements. 18A status, on the other hand, has strict requirements regarding public-benefit activities, and is rarely a guarantee.

Uganda’s tax exemption process, by contrast, is limited to a single application to the NGO Bureau, but that application can be both difficult and time intensive. From our experience, it takes approximately two weeks of consistent back and forth between the organization and a local tax expert to prepare the application, and then a matter of two to four months, or longer, to receive confirmation.

Regarding the availability of exemptions, all four countries offer corporate income tax relief or exemption, and at least some degree of VAT exemption. Donor tax relief divides them in half, as Ghana and Nigeria do not allow donations to be claimed as deductible on an individual’s taxes (though Nigeria allows companies to do so).

Staffing and Operating

In keeping with its addition to the “BRIC” (now “BRICS”) political-economic association, South Africa is the clear leader in terms of GDP per capita, minimum wage, and other significant economic statistics. Pending a full comparative salary survey, it could be generalized that total employment costs may be 30-50% higher than the second most expensive country.

Despite Nigeria’s much larger size, Ghana lines up similarly on many indicators, and the two countries could switch back and forth between the second and third spot depending on the month’s labor market, or other specific factors. Uganda’s economic and development obstacles give it a secure position as the least costly option in terms of hiring and employment.

Yet before employees are paid, they have to be found. South Africa’s large nonprofit sector (source: Parliamentary Monitoring Group) suggests a pool of experienced talent, while the sheer size of Lagos, Nigeria (about 21 million) practically guarantees the availability of appropriate resources. Uganda and, to a lesser extent Ghana, also host hundreds of international nonprofits.

 In terms of ongoing compliance and maintenance for the entity, the list of required activities does not vary significantly amongst the group. Far more relevant is the pervasiveness of corruption within the governmental processes required for an entity set-up, achieve the full status and benefits of a nonprofit and remain in good standing.

For this purpose, the relative corruption perception rankings are an important statistic. From experience, a request from a government employee for a payment not tied to any formal filing fee can bring a registration or application to a standstill for weeks or longer while attempting to redirect focus to the official procedures.

Recommendations

The ease and speed of South Africa’s regulatory infrastructure allows organizations to get started quickly and focus on their core mission rather than on bureaucratic matters.

Criteria for exemptions and requirements for compliance items are well-documented and rarely vague or contradictory, removing huge potentials for headache and frustration that are present elsewhere.

 However, the main purpose of the office would be for employing a staff rather than pursuing all possible tax benefits, and therefore the answer could quite quickly change if salary costs were prioritized over ease and efficiency.

Nigeria and Ghana both seem to be a decent blend of both factors, but Nigeria’s size leaves more room for opportunity in the future scope of the organization’s activities.

In analyzing South Africa, Uganda, Nigeria, and Ghana, we had more direct NGO experience to rely on than in other regions. This experience heavily favored South Africa, but we did our best to put even deserved bias aside and investigate each option with the same method as other regions.

Ultimately, the responses from local teams on process steps and timelines, as well as the corruption perceptions index, confirmed our initial judgment.

This choice would hold if Kenya were included in this report as well, given that the country shares many regulatory characteristics with Uganda (largely due to Uganda mirroring Kenya in the former’s creation of a national NGO Bureau in 2016 to oversee local nonprofits). The two would likely end up next to each other on the rankings if both were included on the same list.

 An NPC is the obvious choice of entity type in South Africa for most organizations, as voluntary associations are designed to be truly democratic and member-driven, rather than hierarchical like a company or nonprofit organization. Trusts, meanwhile, have rather antiquated rules and guidelines, and would be more suited to a fundraising office as opposed to staffing.

We hope this guide is helpful in your evaluation of potential countries in Asia in which to pursue NGO entity registration. Please reach out to our General Manager of NGO Services, Aidan O’Neill, at aidan.o’neill@topsourceworldwide.com with any questions, or for a complementary consultation. You can also visit https://topsourceworldwide.com/ngo-expansion-services.