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.

Compensation and Benefits practitioners have struggled in Zimbabwe over the last few years.

The difficulty emanates from the problem that when inflation reached 786% in May 2022, companies adopted different remedies to alleviate the plight of employees. Some introduced an inflation/ hardship allowance, others simply increased basic pay, others adjusted the mix of remuneration between Zimbabwe dollars and US dollars, while others paid employees fully in US dollars. This has made it extremely difficult to benchmark salaries in the country and, to scientifically formulate an annual salary increase.

Another curve ball has now been presented to Comp and Ben practitioners, in that the methodology to calculate official inflation figures in Zimbabwe, has changed for the second time this year.

Budgeting for salary increases in 2024 has probably already commenced and as inflation is a significant element in determining such increases, alarm bells have started ringing.

The following are the historic official inflation rates:

Public Notice No. 51/2023, issued on 10 August 2023 by the Zimbabwe Revenue Authority (ZIMRA) significantly changed the local currency employment tax bands and tax rates with effect from 01 August 2023, in a bid to provide relief to taxpayers.

Importantly, where clients pay employees in US$’s, these bands and tax rates remain unchanged.

The new tax tables are enumerated below:

Our earlier article in June 2023, detailed the employee and employer tax changes resultant from the 2023 Budget.

There has been a subsequent tax change increasing the contribution levels to the National Savings Fund.

The National Savings Fund (NSF) provides a lump sum at retirement age and is a defined contribution scheme funded by contributions from employees and employers. The lump sum provided on retirement is determined by past contributions and by the performance of investments of the fund. The fund is compulsory in respect of all citizen employees of the public and private sectors.

The rate of contribution from citizen employees is 1.0% of the basic salary and employers are required to contribute 2.5% of the basic salary of each employee. Basic salary is defined as the yearly salary compensation but excludes any bonuses and any allowance paid in cash or given to the employee in kind.

Effective from 1 July 2023, the minimum and maximum basic salary on which contributions are payable have increased as follows:

Many of our international payroll clients have heard mutterings of dissatisfaction from their Nigerian employees regarding the escalating cost of living and more importantly, that recent economic events have eroded their disposable income. Are they correct? Yes, they are.

Three recent events have had or will have, a significant impact on the relative disposable income of employees in Nigeria. We will deal with these three events in no particular order of importance.

We have summarised the changes applicable to payroll below. Importantly, the amendments will be effective from 1 July 2023 and will concomitantly affect employees’ remuneration from that date.