Kenya’s capital, Nairobi – home to the United Nations Environment Programme (UNEP) and a host of multi-national companies – dropped fourteen places to stand as the 122th most expensive city to live in globally on the Mercer’s 2012 Cost of Living rankings.
In the survey period covering the 12 months to March, the new ranking has placed Nairobi as Africa’s 22nd most expensive city dropping one place from position 21st last year. The city dropped from the 88th position and 108 in 2010 and 2011 respectively.
This development will enhance Nairobi’s attractiveness to diplomats, international civil servants and employees of multinational companies who are paid in hard currencies such as the US dollar.
According to Business Daily, the improved ranking of the Kenyan capital should in the near term ease pressure for higher wages among employees of United Nations agencies, diplomatic missions and locally based multinationals.
Locals who work for the same companies and are paid in shillings could for instance start pushing for salary increments or a migration to dollar or euro-denominated salaries.
“Employers are likely to push for a renegotiation of remuneration terms, including the currency to be used in paying the salaries, but we expect employees to resist this,” said Sammy Onyango, the chief executive of Deloitte Eastern Africa.
The Mercer report indicates that the cost of housing is often the biggest single expense for expatriates and is the dominant factor in ranking African cities where an under-supply of secure and comfortable residential units often pushes rents above the global average.
For instance, Luanda remains the most expensive city in Africa for the third straight year, with its ranking blamed on limited supply of decent housing in the Angolan capital which leads 20 African capitals in the top third of the global list.
Mercer’s Cost of Living rankings are released annually and measure the comparative cost of living for expatriates in 214 major cities. It compare the cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment while using New York City as the base city for the rankings and the US dollar as the base currency.
The survey covers 214 cities across five continents and measures the comparative cost of over 200 items in each location, including transport, food, clothing, household goods and entertainment. The cost of housing is also included and, as it is often the biggest expense for expatriates, it plays an important part in determining where cities are ranked.
