A weaker shilling and low inflation rate helped Nairobi to improve its standing on the list of the world’s most expensive cities for expatriates, the latest global cost of living report says.
The report by New York-based consultancy Mecer shows that the Kenyan capital improved 12 places from last year to stand at position 116 as a weaker shilling increased the purchasing power of expatriates who are mostly paid in dollars.
“The main reason that caused Nairobi’s drop in the ranking is a weakening of the shilling against the US dollar (more than 10 per cent decrease) during the period in review,” Anna Panek of Mercer said.
The improved ranking means Nairobi has become a little cheaper for expatriates compared to other cities in the world. Mecer surveyed the cost of living in 209 cities across the globe for this year’s report.
Employees of multinational companies and those working for non-governmental organisations and diplomatic agencies are mostly paid in hard currency such as the US dollar which they convert to local currency to buy what they need.
The Kenyan shilling has shed 10.9 per cent to the greenback since March 2015 when a similar survey was done — meaning expats are getting more shillings for the same amount of dollars.
The exchange rate-related pay rise points to a growth in the purchasing power of the expatriates during the period when inflation averaged six per cent.
“We observed some price increases for both goods and services and rental accommodation costs in Nairobi, but it has not offset the devaluation of the currency,” Ms Panek said.
The survey tracks the prices of food, housing, clothes, transport, household goods and entertainment in dollars for comparison across the world and uses New York as the base city.
This year’s survey was conducted in March and serves as a guide for multinationals and diplomatic offices in determining allowances of workers in overseas jobs.
Generally, expatriate life is expensive compared to that of Kenyans with average rent in Nairobi’s posh estates, popular with the foreign workers, standing at more than Sh155,000 a month. A four-bedroom villa in Nairobi’s Ridgeways Estate, which has a clubhouse, swimming pool and jogging track, for instance, costs Sh300,000 per month.
The Kenyan capital is home to the United Nations Environment Programme (Unep), multinational companies and diplomatic missions whose employees are mostly paid in US dollars or euros.
The shilling ceded ground to the dollar in the review period due to falling revenues from tourism — a key foreign exchange earner — and a huge import bill that requires dollars to transact.
Source: Business Daily