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2026 Salary Increase Forecast For Nigeria

As we approach the budgeting season for 2026, the dreaded question will soon be asked:

“What 2026 salary increase can we use for the Nigeria budget?”

Implementing a salary increase that is fair to all stakeholders in Nigeria has been a significant challenge in recent years. The primary reason has been the persistently high inflation rate. In 2024, the average inflation was 33.2%, and we forecast an average of 21.06% for 2025.

Clearly, most companies we not able to match inflation with equivalent salary increases. In response, we previously recommended that employers consider introducing an Inflation Allowance to help mitigate the impact on employees. (You can view that article by clicking here.)

Considering Real Salary Growth

In addition to inflation, it’s important to factor in real salary increases. Employees have experienced negative real wage growth in both 2024 and 2025. Unfortunately, we are only forecasting 3.9% GDP growth for 2026, which suggests limited room for aggressive salary increases without impacting company profitability.

Considering Real Salary Growth

There is cautious optimism that 2026 may be more manageable. The graph below illustrates historical inflation trends alongside our forecast for 2026:

While inflation in Nigeria remains difficult to predict, we are confident it will continue to decline throughout 2026. This view is supported by the Monetary Policy Committee (MPC), which stated at its 23 September meeting:

“Staff projections suggest a sustained disinflation over the coming months, driven by the lagged effects of previous rate hikes, continued stability in the foreign exchange market, and a decline in the price of PMS.”

Recommendation

Based on our analysis of inflation trends, economic growth, and employee welfare, we recommend a salary increase of 16.5% for 2026. This figure aims to balance affordability for employers with the need to restore purchasing power for employees.

We recently formulated our preliminary salary forecast for Ghana – another country which presented immense problems over the last two years – you can read that article by clicking here.

Ready to Finalise Your 2026 Budget?

Need assistance with your 2026 Nigeria payroll and budget planning? Contact us today to discuss how to implement a fair and affordable salary increase strategy.

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2026 Salary Increase Forecast For Ghana

As we approach the budgeting season for 2026, the dreaded question will soon be asked:

“What 2026 salary increase can we use for the Ghana budget?”

While forecasting salary increases for 2025 proved challenging due to high inflation rate, the outlook for 2026 appears more stable and predictable. This report outlines the economic context, inflation trends, and our preliminary salary increase forecast for Ghana in 2026.

Economic Context and Inflation Trends

2025 Inflation Overview: Inflation began 2025 at 23.5%, creating significant difficulties with salary planning and determining an equitable salary increase for 2025. However, the economic landscape has shifted considerably over the year.
Recent Developments: In September 2025, inflation declined to 9.4%, marking: * The ninth consecutive monthly decline. * The first single-digit inflation rate since August 2021.
Central Bank Expectations: The Bank of Ghana had anticipated inflation breaching their 6%–10% target range only in early 2026. The current pace of decline has exceeded expectations, surprising many analysts, policymakers and us.
2026 Inflation Forecast: Despite the downward trend, inflation is expected to remain relatively elevated over the course of 2026 albeit at a much lower range than in 2025. Our model is currently forecasting an average inflation rate of 8.6% for 2026.
Exercise appropriate due diligence before investing in the use of cloud computing and/or offshoring.

Salary Increase Forecast

2025 Real Salary Impact: With inflation expected to average 15.2% in 2025, many employees experienced negative real salary growth, eroding their purchasing power.
2026 Preliminary Forecast: We propose a salary increase of 10.0% for 2026. This translates to a real salary increase of approximately 1.4%, offering modest relief and acknowledging the inflationary pressures employees faced in 2025.

The historic inflation rates, and our economic model forecast for 2026, are enumerated in the graph below:

Ready to Finalise Your 2026 Budget?

Don’t budget based on guesswork. Use our data-driven salary increase forecast as the foundation for your 2026 Ghana payroll planning. If you require detailed market benchmark data, specific sector insights, or a consultation on how to apply this forecast to your organizational structure, our experts are here to help.

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Changing South African Payroll Platforms Is A Pain In The…

A Pain in the Payroll:

Navigating the Complexities of Switching Platforms in the New Employment Equity Era

Switching payroll platforms quickly reveals unexpected hurdles: complex data migration, compliance requirements, and employee questions.

One of the most significant challenges — and costs — in switching payroll systems is the migration of biographic and financial data. Payroll data is sensitive, intricately calculated, and subject to strict audit and compliance requirements. Ensuring its accurate transfer without compromising integrity or breaching regulations is no small feat

Traditionally, South African companies have timed payroll system changes to coincide with the start of the new tax year in March- in other words, to “go live” in March. This approach minimises implementation costs by avoiding the need to migrate historical financial data.

The recent changes to Employment Equity (EE) legislation have scuppered this strategy. The new EE reporting period starts 1 September, and this period is compulsory for all designated employers with 50 or more employees.

The consequence is that a March “go-live” must include all financial data for the period from September to February to enable the payroll platform to automatically populate the prescribed EE submission forms.

The table below outlines the number of months of financial data required for different “go-live” dates. While March remains the optimal time to switch, it now requires 6 months of data migration rather than none.

The decision when to implement the new payroll system is now more complicated – one must consider the amount of data to be taken on, the current platform’s licence expiry, and operational considerations.

Axiomatic has recognised this difficulty (and the increased cost of implementing a payroll) and can offer clients various options:

Capped data migration cost
For all future implementations, Axiomatic will only charge for 6 months of take on data irrespective of the “go-live” date.
Hybrid implementation costs
To contain costs, Axiomatic can also offer hybrid solutions which include, inter alia:

No historic EE data migration. The Client will, however, have to use both the legacy and new systems to collate EE reports.
Limited financial data migration. Axiomatic will do a YTD take-on and then the mid-year EMP501 submissions will be done via the legacy system or the new platform, and the year-end submission will be completed by the new platform.
Full data migration managed by Axiomatic, but the cost will be limited to a maximum of 6 months.

As can be appreciated from the above, the decision to change payroll platforms and providers has now become more complex. However, short-term problems can be solved, thereby ensuring that you run on a world-class payroll platform capable of addressing all your needs and requirements.

Considering a switch to a new payroll platform? The decision has become more complex due to recent legislative changes. For a free consultation to find the optimal time to make the switch, simply email us.

For a free consultation, Contact Us.

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SOUTH AFRICA 2025: SALARY FORECAST FEB 2025

FEBRUARY 2025 UPDATE

In August 2024 (click here) we published our 2025 South Africa Salary Increase Forecast article and revisited our forecast in November 2024 (click here) where we encouraged clients to adopt a scientific approach to the preliminary salary increase forecast and then to use the unfolding economic data over the next few months to update the original forecast. Wise words as inflation has been moving persistently lower. The October 2024 inflation rate of 2.8% in October was the lowest reading since the 2.2% recorded in June 2020 when we were in the throes of the Covid pandemic. Inflation has ticked up slightly to 3.9% in December 2024.

The salient reasons for the slight increase in December 2024 can be attributed to housing and utilities (4.4%), miscellaneous goods and services (6.6%), food and non-alcoholic beverages (2.5%) and alcoholic beverages and tobacco (4.3%).

The bad news is that there will be pressure on inflation over the next few months. The main reasons include the possible changes in US economic policy emanating from a Trump presidency, potentially higher oil prices resulting from the escalating Ukraine war and increased electricity and administered prices.

The MPC also warned about possible higher inflation at the January 2025 MPC meeting when they stated, “The risks to the inflation outlook are assessed to the upside. In the near term, inflation appears well-contained. However, the medium-term outlook is more uncertain than usual, with material risks from the external environment. Domestic factors such as administered prices are also problematic.”

In view of the lower inflation, we have revised our forecast for 2025 inflation down from 4.2% to 4.0%. The revised detailed forecast is:

The lower 2024 inflation does mean that employees received a higher real salary increase in 2024 – 1.5% compared to the “new normal” yardstick of 1.0%.

Our August and November 2024 articles recommended a 5.5% salary increase for 2025, and one must question whether this incoming data changes this recommendation. A purely scientific approach would recommend the following:

Inflation in South Africa is notoriously difficult to predict as same is always subject to exogenous shocks. One must recognise this danger and the concern expressed by the MPC Committee that “…the medium-term outlook is highly uncertain, with material upside risks”.

Cognisance must also be taken of the following:

- The average real salary increase granted to employees over the last 5 years has only been 0.5%. A slightly higher 1.3% real salary increase this year will compensate employees for the erosion of their disposable income over the last 5 years; and
- We highlighted in our recent article (click here) that medical aid costs will increase by between 9.30% and 12.75% on 1 January 2025. Given the dominance of the Total Cost To Company (TCTC) remuneration model in South Africa, many employees will have to foot the bill themselves for these increases.
- The National Energy Regulator of South Africa has announced a 12.7% tariff increase for Eskom. Eskom was seeking a 36.% increase so these lower increases will aid both inflation and consumers.

Despite the above concerns, we are lowering our recommended salary increase forecast to 5.0%. The salient reason is that we expect inflation to remain benign and are concerned about growth. Growth contracted in the 3^rd quarter 2024 because of agricultural production and while we do see a rebound in the last quarter of 2024, we expect growth to languish at 1.7% in 2025- hardly a booming economy facilitating large salary increase.

2025 RECOMMENDED SOUTH AFRICA SALARY INCREASE 5.0%

Unsure how to navigate 2025’s salary landscape? Reach out to our team for a personalized consultation and strategic advice.

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PAYROLL INSOURCING VS. OUTSOURCING: WHICH IS BEST FOR YOUR BUSINESS?

Payroll Insourcing vs. Outsourcing: Which Is Best for Your Business?

In the early 1970s, when the first outsourced payroll companies were formed, the debate immediately commenced evaluating whether outsourcing payroll was better than insourcing (running the payroll in-house).

This debate has continued and even escalated since those early days with a plethora of articles having been written promoting either option. When Googling “payroll outsourcing versus insourcing”, there are 58,000 results and the debate has not been settled. Why?

There is no generic correct answer and/or better option

it depends on the company, their specific needs, unique requirements, geographic location and distinctive circumstances

One could argue that outsourcing is relatively inflexible. A counterargument is that in-house personnel often lack compliance experience in complex jurisdictions like Africa. Arguments and counterarguments can be made ad infinitum.

The Goldman Sachs study for the American Payroll Association found that the prevalence of outsourcing decreases as the number of employees increases – refer to the chart below. Larger companies can afford to spend significant sums on payroll systems. Whether cost savings or increased efficiency is obtained is debatable. However, in the in/outsourcing argument this inverse correlation appears to be the only quantifiable fact.

Axiomatic Consultants currently provides insourcing and outsourcing options to clients in 44 African countries, so we understand this debate. Further, one would expect this article to vehemently promote the superiority of outsourcing. However, we firmly believe there is no better or worse option. The question to be asked and evaluated by each company is- what is best for my company?

Instead of adopting the route followed slavishly by many of the 58,000 articles which list advantages and disadvantages, we have elected to opt for a simplistic approach and pose the question – why would one model be better than the other from a simple logic basis?

Outsourcing companies use economies of scale across multiple clients to achieve what a corporate payroll would refer to as a centre of excellence. Economies of scale facilitate investment in superior technology, consulting, compliance, tax expertise, processes, administration and most importantly, human capital. The economies of scale achieved by payroll outsourcing vendors are logical. It is equally logical that large companies can also achieve similar economies of scale which facilitates the insourcing of large payrolls.

To achieve the holy grail of economies of scale, outsourcing providers force their clients to adopt their practices and procedures. A company with an insourced payroll can completely customise the process, procedures and technology to achieve what works for them. Critically though, customisation comes with additional costs which may destroy any ROI. As such, larger companies can achieve ROI with significant investment; it is the smaller companies who typically struggle with the debate.

Commonly used methodologies by Axiomatic.

Outsourcing: A full end-to-end service offering where both the technology and administration services can be provided to complete the payroll function across 44 African countries. At Axiomatic, we believe in continuous improvement, embracing technology, employing integrations and AI while simultaneously attempting to provide clients with as much flexibility as possible. Further, we manage our client’s good governance in Africa and mitigate any damage to reputational risk.

Insourcing: A service offering where the technology is provided across the 44 African countries we service. This is backed up by best-in-class support to our clients to ensure they have a trusted partner with an extensive and superior pool of resources.

Hybrid Model: This model provides the company with flexibility- we do not believe that every time a company changes their payroll model/ platform it should have to repay for the set-up. The salient advantage of this model is that with the flick of a switch, the client can change from insourcing to outsourcing and visa versa. Our experience has shown that enhanced efficiency is obtained where a hybrid model is employed by a company – some payrolls are insourced, while others are outsourced but where all payrolls use a common true cloud-based technology platform.

This enables common reporting in a base currency. Most importantly, if the company experiences problems with an insourced payroll for a myriad of reasons, that payroll can immediately be “transferred” to an outsourcing model. This also furnishes the company with an insurance policy against key man risk- Axiomatic provides a parachute in case the payroll manager and/or staff resign.

To reiterate – this arrangement is almost like having a free insurance policy, a free put option or a golden parachute which leads to a seamless transition between the two models ensuring that employees do not experience any delays to their pay.

The success of the hybrid model is attributable to flexibility

Payroll, like any other process, is simple:

Input – Process – Output

Input – Most systems and providers are working with integrations and/or AI to minimise manual processes in the collection of Input. Axiomatic via our innovation called AxioOnline, aims to not only provide greater flexibility in the collection of input methods from the client but also to automate validations to ensure the accuracy of the source data.

Process – Payroll systems are embroiled in a race to achieve better automation and speed of processing. Many vendors are claiming AI automated checking will replace payroll managers in the immediate future.

We estimate that our AxioOnline system, in conjunction with integration, will decrease administration processing by 90%.

Output – Payroll systems have made tremendous strides with reporting. The emergence of BI tools, coupled with APIs, has enhanced reporting to unprecedented levels. A word of caution- before embarking on these projects scrutinise the costs to determine if they do provide an ROI.

Will continued technological advances spell the death knell of outsourced service providers? Cognisance must be taken of the following:

No matter how sophisticated automated checking processes become, you will still need highly experienced professionals to support this process.
No matter how good automated input and processing systems get, you will still need highly experienced professional to back this process up.
No matter how hi-tech payroll systems get, you will still need highly experienced professional to back this process up.

Systems enable compliance and, accuracy and the on-time nature of payroll they do not ensure it.

We posed the question at the beginning of this article- which is better – insourcing or outsourcing? The unfortunate conclusion is it depends.

Your Payroll, Your Way Why settle for a one-size-fits-all solution? Axiomatic offers customized payroll services designed to fit your business. Get in touch today to find out more!

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