Nairobi moves two places in expensive cities’ ranking

Nairobi moved two places higher to rank at position 95 in the list of the most expensive cities in the world for expatriates working for governments, multinational organisations and companies.

Last year, Nairobi was ranked number 97. The latest ranking have seen Kenya’s capital city listed as the 15th most expensive in Africa, according to the latest Cost of Living Survey by consultancy firm Mercer and which was conducted in March.

The survey ranks cities based on an international basket of goods and services, including rental accommodation costs, taking into account exchange rates.

Governments and major companies use data from such studies to set compensation of their employees transferred abroad.

“New York City is used as the base city for all comparisons and currency movements are measured against the US dollar,” Mercer said of its rankings.

The survey examines over 400 cities throughout the world. This year’s ranking includes 209 cities in five continents and measures the comparative cost of more than 200 items in each, including housing, transportation, food, clothing, household goods and entertainment.

Expatriates living in Nairobi have seen their purchasing power rise significantly after the Kenyan shilling’s depreciation since the country confirmed its first Coronavirus case on March 12.

The local currency has depreciated 3.9 percent since then to trade at 106.6 units to the dollar, boosting the earnings of those paid based on the greenback. This means that the dollar has appreciated 4.1 percent against the local currency.

Mercer says wild foreign exchange movements can also hurt expatriates in various ways depending on their particular location.

“Sudden changes to exchange rates has been mainly driven by the impact Covid-19 is having on the global economy,” said Yvonne Traber, Global Mobility Product Solutions Leader at Mercer. “This volatility can affect mobile employees in a variety of ways, from shortages and price adjustments for goods and services, to supply chain disruptions or when employees are paid in home country currency and need to exchange funds into the host country for local purchases.”

Chad’s capital, Ndjamena is the most expensive city in Africa, ranking 15th globally. It is followed by Lagos (18), Kinshasa (24), Libreville (33) and Abidjan (36).

At 209, Tunis is the cheapest city in Africa and globally. On the continent, it is followed by Windhoek (208), Banjul (204), Lusaka (201) and Gaborone (199). An increase in the cost of compensation for expatriates –usually senior executives and technical staff —ultimately raises the cost of doing business for the companies making the difference among cities.

Cost of living is one of many factors that influences a country or city’s ability to attract foreign investors and organisations.

Others include growth opportunities, political stability and government policies including taxation and investor protection. Nairobi has emerged as a major regional transport and investment hub, attracting more multinationals over the past decade.