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Luanda tops the African rankings of most expensive cities for expatriates

  • Nigerian locations have seen the largest fall in our September 2016 survey
  • UK cities fall dramatically in global rankings – Central London drops 57 places & out of top 100
  • Tokyo retakes the global top spot for first time since 2012 - Japanese locations move back into global top 10 most expensive

Luanda is Africa's most expensive location for expatriates and the 2nd most expensive in the world. This was one of the findings of the latest Cost of Living survey published by ECA International, the world's leading provider of knowledge, information and software for the management and assignment of employees around the world. Luanda has risen from 5th position last year to 2nd place this year in the global rankings, retaining its title as Africa’s most expensive location surveyed.

To ensure that an employee’s spending power is maintained when they are sent on international assignment, a cost of living allowance is often provided as part of the pay package. This allowance will be affected by differences in inflation levels as well as exchange rate movements between the employee’s home and host countries.

For the past four years, Luanda has been positioned in the top five most expensive locations in the world. The cost of goods typically purchased by international assignees in Luanda, which were already high due to poor infrastructure and high oil-fuelled demand, have been pushed much higher in the last year as the weak kwanza has pushed up import costs.

- Steven Kilfedder, Production Manager, ECA International

ECA International has been conducting research into cost of living for more than 40 years. It carries out two main surveys per year to help companies calculate cost of living allowances so that their employees' spending power is not compromised while on international assignment. The surveys compare a basket of like-for-like consumer goods and services commonly purchased by assignees in over 450 locations worldwide. Certain living costs, such as accommodation rental, utilities, car purchases and school fees are usually covered by separate allowances. Data for these costs are collected separately and are not included in ECA’s cost of living basket.

Africa highlights:

The Angolan capital is followed by Kinshasa, which sits at 10th in the global rankings and is the second most expensive African location. Similarly, the cost of importing and transporting items, commonly purchased by international assignees in this location, is high due to poor infrastructure, corruption and the ongoing risk of conflict in the area.

Khartoum, in Sudan, has seen one of Africa’s largest rises in the global rankings this year, up 32 places to 21st position. It has seen the most significant rise in our global rankings out of any African location over a five-year period*, rising 164 places. This is due to rising inflation and the fact that its currency, the Sudanese pound, is pegged to the US dollar, although there is now a thriving black market for hard currency that trades at a substantial premium to the official rate.

Nigerian locations have seen the largest fall in our September 2016 survey, tumbling 137 places on average. Earlier this year, the Nigerian Central Bank abandoned the fixed rate for the naira against the U.S. dollar that it defiantly held for 16 months and allowed the currency to float more freely, leading to a significant currency depreciation.

However, many more African cities are positioned towards the bottom of the ranking. Maseru in Lesotho, ranked 262nd globally, is the cheapest location not only in Africa but worldwide. The significant depreciation of the rand in the past five years has contributed to the lower positions of South African cities and locations where the currency is tied to the rand, including Lesotho. Pretoria is 249th in the world while Johannesburg has fallen 34 places over the period and is now in 250th position followed by Cape Town (252nd) and Durban (253rd). Kenya’s capital, Nairobi, sits in 165th position.

European highlights:

Brexit sends UK cities tumbling down global rankings due to weaker pound

Central London has fallen out of the top 100 most expensive cities in the world. One year ago, London was among the top 50 most expensive cities.

“This is the first time Central London has not featured in the top 100 since ECA’s Cost of Living rankings began. The weakened pound means that UK businesses are paying more when sending staff to work overseas, although it is cheaper to bring staff to the UK,” said Steven Kilfedder, Production Manager, ECA International. “London is now cheaper than Paris, Berlin and Brussels thanks to the weak pound.”

UK based locations have seen the largest declines in our European rankings this year and the third largest decline in the world, behind Nigeria and Mozambique. Edinburgh has fallen to 151st place globally, down from 67th last year. Cardiff is now ranked at 162nd place and Belfast has dropped 73 positions to 169th in 2016.

Zurich has fallen off the global top spot this year, moving into 3rd place in the rankings. Despite prices falling in the previous year, Swiss cities continue to top the European rankings with all ranked locations placed in the global top 10.

The relative strength of the euro between surveys has seen most Eurozone locations rise in the global rankings with French, Dutch and German ones among those rising most in the past year. However, over a 5-year period, locations in the Eurozone have fallen dramatically by 51 places on average, with the most significant declines seen in Spanish and Greek locations. Madrid (154th globally) and Barcelona (157th) have fallen 91 and 73 places respectively while Athens has fallen 86 places to 150th most expensive in the world.

Moscow has risen nearly 50 places in the rankings this year, to 118th in the world, after the rouble strengthened. However, it has a long way to go to reach the heights of five years ago, when it was ranked 17th in the world.

Asia Pacific highlights:

Tokyo retakes the global top spot for first time since 2012

The city of Tokyo is the world’s most expensive location for expatriates. Tokyo rose by 11 places over the past year to top the global rankings for the first time since 2012. All four of the ranked locations in Japan rose in the regional and global rankings. Within Japan, Tokyo (1st globally) is just ahead of Yokohama (5th), Nagoya (7th) and Osaka (9th).

Shanghai, which was ranked as the most expensive location for expatriates in the Asia Pacific region a year ago, has moved down six places to 7th. Within China, Shanghai (13th globally) is just ahead of Beijing (15th), Guangzhou (25th) and Shenzhen (32nd). 13 out of the 14 ranked Chinese cities sit in the global top 50 most expensive locations for expatriates, with only Xiamen ranking just outside at 51st.

Rest of world highlights:

Once again, Manhattan is the most expensive location in North America for expatriates. Manhattan has fallen to 24th place globally, down from last year’s 15th spot. This was one of many US locations to have fallen in the global rankings, with the 30 ranked locations here falling three places on average.

The Argentine capital, Buenos Aires, now ranks 77th globally – in sharp contrast to last year when it was 21st. The peso significantly weakened after the currency was allowed to float following the presidential elections in late 2015.

By contrast Brazilian cities in ECA’s rankings rose by an average of 60 places, one of the largest single-year rises in the survey. The real rebounded strongly, despite Brazil’s economic recession deepening, as a new government took power after the impeachment of Dilma Rousseff.

Israel remains the Middle East’s most expensive country for expatriates with Tel Aviv and Jerusalem occupying the top two spots in the region, at 19th and 22nd place respectively in the global rankings.

Africa top 20 rankings

-ENDS-

Notes to Editors

* Please note that when ‘five years’ is referenced in the text this is referring to the period between ECA’s September 2011 and September 2016 surveys.

Figures used in this release were taken from ECA's September 2016 Cost of Living Survey.

About ECA's Cost of Living Survey

ECA International's main cost of living surveys are carried out in March and September using a basket of day-to-day goods and services commonly purchased by assignees. The data used above refers to year-on-year movements between ECA's September 2011 to 2016 surveys. ECA’s Cost of Living Survey rankings began in 2004.

Cost of living indices are used by ECA clients to calculate cost of living allowances for assignees. The survey covers:

Food: Groceries; dairy produce; meat and fish; fresh fruit and vegetables 
Basic: Household goods; recreational goods; general services; leisure services
General: Clothing; electrical goods; motoring; meals out; alcohol and tobacco

Certain living costs such as accommodation rental, utilities charges (electricity, gas, and water), car purchases and school fees are not included in the survey. Such items can make a significant difference to expenses but are usually compensated for separately in expatriate packages.

This comparison of cost of living was calculated on a base composed of various developed countries and is used to reflect an international lifestyle. Other indices available from ECA reflect specific city-to-city comparisons, and different levels of shopping efficiency.

ECA's blog provides updates and commentary on currency, inflation and expatriate cost of living. Follow the blog here

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