African Payroll: DRC Inflation & 2024 Salary Increases
The Democratic Republic Of Congo (DRC) has a significant dollarized economy which is a legacy of extremely high inflation during the rule of Mobutu Sese Seko. Like Zimbabwe and some other African countries, US dollars are accepted in restaurants and shops and big-ticket-item purchases are usually made in US dollars. Estimates of the degree of financial dollarization in the economy are around 90%.
Given the dollarisation of the economy, the rapid depreciation of the currency, the Congolese Franc (CDF), from May 2023 is of grave concern.
US$ to CDF: 1 YEAR
Despite the currency depreciation, we remain relatively bullish on growth in the DRC as evidenced by the table below. This is relatively good news for future corporate profits.
HISTORIC AND PROJECTED DRC REAL GDP
2018
5.8%
2019
4.4%
2020
1.7%
2021
6.2%
2022
8.9%
2023 (*)
6.5%
2024 (*)
6.4%
* Represents Axiomatics’ forecast
While growth is expected to remain relatively strong, the economic theory postulates that a depreciating currency, exacerbated by a highly dollarized economy, must lead to higher inflation- and this is exactly what has transpired. The graph below clearly illustrates that inflation has moved significantly higher during the first half of 2023.
As Comp and Benefit practitioners are acutely aware, one of the most important inputs into the salary increase decision is the projected future inflation. While it must be acknowledged that there is no generic or standard methodology in Africa where one can state that the salary increase would be a real increase of, for example, 1.0% (the projected future inflation rate plus 1.0%) – one must accept that high inflation typically does concomitantly mean higher salary increases. Such salary increases must be tempered by the financial affordability of the company and the macroeconomic environment of the specific country.
DRC salary increase forecasts for 2024 are therefore extremely difficult to estimate.
The central bank has tightened monetary policy significantly. At the 8 August 2023 meeting, the policy rate was increased by 14.0% to 25.0%- the highest level in over a decade. The rationale for the extraordinary increase was justified because of the “… accentuation of pressures on the exchange rate and inflation”.
One will have to wait for more incoming inflation data to gauge whether the August 2023 draconian policy rate increase and the tightening of monetary policy, arrest the upward inflation trajectory and reduce the inflation rate in 2024.
However, employers should budget for significantly higher salary increases for 2024 than those granted in 2023.
The caveat to the above assertion is that higher salary increases in 2024 would only apply to employees being paid in CDF. Local employees being paid in US$ would have experienced an increase during the year to date of 28% in their local purchasing power due to the exchange rate having depreciated from 2,050 to 2,625- less of course, the applicable inflation rate.
A further action that employers can consider, is to ensure that employees are enjoying all permissible allowances and exempt income, in accordance with the applicable legislation and tax regulations. These exempt or partially exempt items include inter alia:
- Pension contributions
- Housing allowance: for a value not exceeding 30% of gross salary.
- Transport allowance
- Family allowance
- Telephone charges (professional use)
- Home leave for assignee and family
- Business trips
- Medical charges
About Axiomatic
In addition, we have significant experience integrating the payroll platform with SuccessFactors, Workday, and other related systems.
Should you wish to know about our offering, please:
COOKIE POLICY
Welcome to our website.
1. Introduction
This Cookie Policy explains how we use cookies and similar technologies on our website axioconsult.com. This policy is designed to help you understand what cookies are, how we use them, and the choices you have regarding their use.
2. What Are Cookies
Cookies are small text files that are stored on your device (computer, tablet, or mobile phone) when you visit certain websites. They are widely used to enhance your online experience by remembering your preferences and actions over time. Cookies are not harmful and do not contain personal information like your name or payment details.
3. How We Use Cookies
We use cookies for various purposes, including:
- Essential Cookies: These cookies are necessary for the basic functioning of our website. They enable you to navigate our site, use its features, and access secure areas.
- Analytical/Performance Cookies: These cookies help us understand how visitors use our website. They provide information about which pages are visited most frequently, how long visitors stay on each page, and whether they encounter any error messages. This data helps us improve the performance and usability of our website.
- Functionality Cookies: These cookies allow our website to remember choices you make (such as your username, language, or region) and provide enhanced, personalised features.
- Targeting/Advertising Cookies: These cookies are used to deliver advertisements that are relevant to your interests. They may also limit the number of times you see an ad and help measure the effectiveness of ad campaigns.
4. Your Cookie Choices
You have the option to manage your cookie preferences. You can usually modify your browser settings to accept, reject, or delete cookies. Please note that if you choose to block or delete cookies, some features of our website may not function properly.
5. Third-Party Cookies
We may allow third-party service providers to use cookies on our website for the purposes outlined in Section 3. These providers may also collect information about your online activities over time and across different websites.
6. Updates to This Policy
We may update this Cookie Policy from time to time to reflect changes in technology, law, or our data practices. Any changes will become effective when we post the revised policy on our website.
7. Contact Us
If you have any questions about our Cookie Policy or how we use cookies on our website, please contact us at
By continuing to use our website, you consent to the use of cookies as described in this Cookie Policy.