- N’Djamena is the most expensive city for expatriates in Africa and Lusaka the least expensive
- The rankings provide an important insight for multinationals on the cost of recruiting or relocating an expatriate in Africa
Mercer’s 2021 Cost of Living City Ranking of 400 global cities has listed N’Djamena (Chad) as the most expensive city in Africa for expatriates with Lusaka (Zambia), the least expensive. Based on the ranking, N’Djamena moved up two spots in 2021 from 15th to 13th place, while Lusaka moved from 201 to 208 in the rankings.
The rankings provide an important insight for multinationals on the cost of recruiting or relocating an expatriate in Africa, and also help human resources leaders to structure a remuneration package to attract the right skills for an assignment. This is because a more expensive destination for expatriates makes it a costly to multinationals since the cost of sending an employee on an assignment increases.
Importantly, given the impact of Covid-19 pandemic on African economies, organisations could use the cost of living rankings to consider implementing regional pay structures to enable talents to move more efficiently across borders by mitigating some of the key challenges when it comes to cost of living, pay competitiveness and purchasing parity, says Kawoubouga.
“Furthermore, more organisations are introducing virtual assignments, where an employee performs the same job remotely as they would do if they were to relocate to the host location. For example, a professional based in Ghana would be able to perform tasks and be responsible for operations in Kenya. Alternatively, organisations could start hiring more local foreign talents to fill in the gaps in their talent acquisition programmes,” he says.
Kawoubouga says N’Djamena in Chad remains the most expensive city in Africa again. The Chadian economy is still recovering from pressures from a plummeting oil price, growing internal and external debts and a relatively small expat market. Despite a relatively low inflation, rentals in N’Djamena remain one of the highest on the continent. In some instances, accommodation prices are similar to what one could expect to pay in much developed cities such New York and London.
Johannesburg (184) and Cape Town (178) have become less affordable destinations in 2021 mainly due to a stronger rand against the US dollar. In fact, “in September 2020, the rand was trading around 17 against the US dollar as the economy was experiencing a decline in growth of 7% resulting from the impact of the pandemic. The government started implementing stricter lockdown laws, which in turn limited prospects of economic recovery and growth. Various key local sectors of the economy suffered a decline in economic activity, the worst the country has experienced in a century,” says Kawoubouga.
On a positive note, Nigeria showed some improvement compared to 2020. Lagos and Abuja’s ranking moved down following a 4.53% depreciation of the Naira against the US dollar. Yet, Nigeria is slowly recovering from the worst recession in four decades with the government easing off Covid-19 restrictions. Following a tough economic year in 2020, resulting from the health crisis, social distancing regulations and the oil price collapse, the government implemented new fiscal reforms to control inflation and an increasing poverty level.
In the francophone Africa, more specifically in the CFA (Communauté Financière d’Afrique) zone, the most notable moves have been for cities such as Libreville (Gabon), Abidjan (Ivory Coast) and Bangui (Central African Republic) jumping 13, 12 and 19 positions respectively. Even though their governments managed to control the price levels across the countries, a weaker dollar in 2020 increased the cost of living in US dollar denominated terms. In fact, the CFA Franc appreciated by 10.79% against the US dollar between March 2020 and March 2021.
Interestingly, Lusaka (Zambia) is currently the cheapest city in Africa according to our latest Mercer’s report. Zambia has been experiencing macroeconomic challenges such as high inflation and tight liquidity. The Kwacha depreciated by close to 47%, making Lusaka a more attractive destination for expatriate in 2021. Lusaka is followed by Tunis (Tunisia) and Windhoek (Namibia) as the least expensive African cities; they ranked 206 and 204, respectively.
Globally, Mercer’s 2021 Cost of Living City Ranking found Ashgabat the most expensive city for international employees, pushing Hong Kong to second place. Beirut ranked third, climbing 42 positions up the ranking as a result of a severe and extensive economic depression due to escalation of several crises — the country’s largest financial crisis, COVID-19 and the Port of Beirut explosion in 2020. Tokyo and Zurich each dropped one spot from third and fourth respectively to fourth and fifth positions, and Shanghai ranked sixth, up one place from last year. Singapore moved from fifth place to seventh.
Other cities appearing in the top 10 of Mercer’s most costly cities for international employees are Geneva (8), Beijing (9), and Bern (10). The world’s least expensive cities for international employees, according to Mercer’s survey, are Tbilisi (207), Lusaka (208), and Bishkek, which ranked as the least costly city at 209.