Johannesburg, 22 June 2021 - 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.
Download the full 2021 Cost of Living ranking here
Notes for editors
Mercer's widely recognized ranking is one of the world’s most comprehensive, and is designed to help multinational companies and governments determine compensation strategies for their expatriate employees. New York City is used as the base city for all comparisons and currency movements are measured against the US dollar. The survey includes over 400 cities throughout the world; this year’s ranking includes 209 cities across five continents and measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. The data collected provides all of the key elements employers need to design efficient and transparent compensation packages for international assignees. Learn more here.
The figures for Mercer’s cost of living and rental accommodation cost comparisons are derived from a survey conducted in March 2021. Exchange rates from that time and Mercer’s international basket of goods and services from its Cost of Living Survey have been used as base measurements.
Governments and major companies use data from this survey to protect the purchasing power of their employees when transferred abroad; rental accommodation costs data is used to assess local expatriate housing allowances. The choice of cities surveyed is based on demand for data from Mercer’s clients.
Mercer believes in building brighter futures by redefining the world of work, reshaping retirement, and investment outcomes, and unlocking real health and well-being. Mercer’s more than 25,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a business of Marsh & McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy, and people, with 76,000 colleagues and annual revenue of $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com. Follow Mercer on Twitter @Mercer.