Life & Work

Why Nairobi is on most expensive list

nairobi

A view of Nairobi Central Business District. Photo/SALATON NJAU

Ian Cox, an American, is not surprised Nairobi was named one of the most expensive cities in the region.

The businessman, who runs South Sudan Company Lorry Boys Limited, which is based in Nairobi, has just recently returned from Johannesburg where he spent a month.

“In comparison, it (Johannesburg) offers a better standard of living at a much cheaper price,” he says.

The recently released survey by the Economist Intelligence Unit (EIU), which looked at prices, in dollars, of everyday items in 131 cities listed Nairobi as one of the most expensive in the region.

The increased cost of living has pushed Nairobi up the list of Africa’s most expensive cities in the index. Of the 131 cities surveyed, Nairobi was ranked 72 ahead of Johannesburg at 90, and Lagos at 106.

Last year it was ranked the second least expensive city in Africa, after Egypt’s Cairo, which ranked 104 this year.

With $1.4 (Sh122) you can get at least a kilogramme of bread in Nairobi. The same bread costs $2.47 in Lagos and 1.74 in Johannesburg. In the most expensive city, Tokyo it costs $9.06 (close to Sh800) compared to $0.86 (Sh59) in the least expensive city, Mumbai.

Cost of living

The 2013 EIU survey found the Kenyan capital particularly expensive for the middle and upper class residents who consume luxury goods and prefer private cars to public transport.

The high cost of living in the Kenyan capital is mainly driven by the prices of consumer goods such as petrol, beer and wine, whose taxes have been on the increase.

Ian says a dinner for two with a bottle of wine at a very good restaurant in Johannesburg will cost about Sh3,500, while the same in Nairobi would cost much more.

The average price of an OK bottle of wine in Nairobi is $12.23 (Sh1,064) compared to $7.81 (Sh679) in Johannesburg, and $11.48 (Sh999) in Lagos, according to the survey.

“It is sorely tempting to figure out a new base in Africa at times because Nairobi has become so expensive. However, due to its geographical location and excellent connections to the rest of the continent, the Middle East, and South Asia, I will most likely keep it as my base. Because of this, it will continue to grow and attract multi-national companies and organisations,” he said.

The EIU survey lists expensive cities should look at in terms of cost before you pack your bags to either relocate to a new city or go on holiday. It helps you to know how far that dollar can stretch.

If Japan has been in your bucket list then maybe you need to re-think it, that is if you are a shilling-stretcher. Two of its cities Tokyo and Osaka, topped this year’s list of the most expensive places in the world.

For Tokyo, it did not have come as a surprise as it has remained top of the world’s most expensive cities for 14 out of the last 20 years, said survey editor Jon Copestake. When it was not tops, the position was either held by Zurich, Paris or Oslo, who are still ranked among the top 10 this year.

Expatriate

The EIU’s 2013 index survey looks at over 50,000 individual prices which are collected in the 131 countries surveyed. It looks at everyday goods and services including food, drinks, rent, petrol, clothing, household supplies and transportation, the prices are then converted into dollars to help create the index whose base city is New York.

The Economist list is only one of the other lists mainly used by expatriate and government workers to determine compensation and allowances. It is also used by travel companies to advice their customers when travelling to these cities.

One other popular one is the Mercer’s cost of living survey, taken annually in March. This survey covers over 200 cities and though it covers some of the same things as the Economist, the strength of the local currency against the US dollar is considered.

Currency swings

Mercer, an international consultancy firm, also uses New York as its base city. In the 2012 Mercer survey Tokyo still emerged the most expensive city with Osaka emerging third. T

he capital city of Angola, Luanda emerged second mainly driven by the mining activities in the county; however the city is not covered by the Economist.

Nairobi emerged 122 in the Mercer Survey, a drop from 108. This made the city the 22nd most expensive city in Africa.

Nairobi is expensive but it can’t be compared to cities in Australia. Two of its most popular cities, Sydney and Melbourne, rank as the third and fifth most expensive, with Oslo ranking fourth.
The report notes that 10 years ago there were no Australian cities among the 50 most expensive cities but from two years ago, they have begun to feature mainly driven by economic growth and currency swings to make them more costly.

Asia
South Asia provides some of the cheapest cities, according to the EIU.

The Indian subcontinent - India, Pakistan, Bangladesh, Nepal and Sri Lanka – provides five of the 10 least expensive cities in the world. Mumbai and Karachi share the position of the least expensive cities.

The irony is, if you take Asia as a whole, it is the continent that has six of the 10 cheapest cities and at the same time the world’s 20 most expensive cities fall in this vast continent.

So before you pack your bags to go on holiday or to relocate, take a look at one of these lists, they will give you good insights on how far that dollar will stretch.