Nairobi is increasingly becoming one of the world’s cheapest cities for expatriates to live in, a new report says.
The 2023 Cost of Living City Ranking by American consulting firm Mercer places Kenya’s capital as the 173rd most expensive out of 227 cities in its cost-of-living index.
This is 13 places down from last year’s list where Nairobi was ranked the 160th most expensive city for expatriates to reside.
While Kenyans are facing a harsh cost of living crisis with rising prices for many staple goods, increased taxation and a weakening shilling, this has in turn inflated the salaries of expats working with global bodies such as the United Nations and diplomatic missions, who are paid in dollars, pounds and euros.
Inflation in Kenya fell to 6.7 per cent in August, the lowest in 17 months, and the shilling has hit a record low of 147.36 to the dollar compared to 123.37 at the start of the year, giving expats an upper hand in purchasing power against the biting economic times.
Additionally, employees paid in Kenyan shillings are grappling with new taxes such as a 1.5 per cent housing levy or gross pay, increased national health insurance premiums and the doubling of value-added tax on fuel, which has driven up the cost of living.
Over the last year, for instance, petrol prices increased by 22 per cent, electricity by nearly 50 per cent and household staples such as sugar and beans by 61 per cent and 30 per cent respectively.
The government is also considering further tax hikes, such as increasing VAT and duties targeting farmers and car owners as outlined in a Treasury strategy review up to 2026/27.
“High inflation and market fluctuations impact the cost of living across the world, impacting our purchasing power and standard of living,” Mercer notes in the report.
On the continent, African cities placed highest in the global cost of living ranking are Bangui (26), Djibouti (27) and Luanda (30).
The least expensive cities in Africa include Windhoek, Durban and Tunis, which follow quite closely behind Cairo. The Egyptian city dropped 63 spots since last year.
Globally, Hong Kong, Singapore and Zurich are the most expensive cities for international employees this year, with the least expensive locations in the ranking including Havana, which dropped 83 spots, due in part to strong currency devaluations mid-last-year, and Karachi and Islamabad in Pakistan.
New York City, ranked number six in the global index, continues to be the most expensive city in North America, followed by Los Angeles (11) and San Francisco (14).
“In general, countries and cities are continuously striving to attract international businesses as well as digital nomads and mobile employees. The most successful locations are currently those combining flexible governance for mobile talent, a high quality of life and a reasonable cost of living,” the report says.
