Mercer Survey on cost of living: Africa in the ranking

The results of the 22nd Cost of Living Survey conducted by Mercer have just been published. With Luanda ranked 2nd, Johannesburg 205th, Cape Town 208th … living in some African countries when expatriate is still quite expensive.

Hong Kong leads while Kinshasa is soaring on the scale of the 22nd survey of the cost of living conducted by Mercer. Luanda remains one of the most expensive cities for expatriate employees. Johannesburg declines by fourteen places and Cape Town by eight places.

The 22nd Mercer survey on the cost of living shows that some elements such as currency fluctuations, cost inflation for goods and services and volatility of housing prices contribute to the cost of the remuneration of expatriate employees in international mission . The survey was conducted on more than 375 cities worldwide. The ranking this year includes 209 cities on five continents. It measures the cost by comparing over 200 items in each city such as housing, transport, food, clothing, and entertainment. Although global markets are volatile and security issues increasingly worrying, organizations continue to drive global expansion strategies in order to remain competitive and grow.

However, few organizations are prepared for the impacts that world events have on their business, not to mention those related to the cost of packages offered to expatriates. « Despite the technological advances and the rise of labor, the deployment of expatriates remains an increasingly important aspect of the strategy of any competitive multinational company » said Ilya Bonic, senior partner and president of Mercer’s Talent Management Service. It stresses the importance of ensuring the profitability and not to lose sight of the remuneration of expatriate employees in particular due to market volatility and slower economic growth in many parts of the world. « Gradually, as organizations continue to aspire rapid growth, they need accurate and transparent data in order to pay a fair way all types of missions, including those in short term and « more local status « he added.

Support for expatriate employee compensation strategies

According to the Mercer survey 2016 on the cost of living, Hong Kong is leading the list of the most expensive cities for expatriate employees, relegating Luanda in Angola, in second. Zurich and Singapore are respectively third and fourth. As for Tokyo, the city gained six places since last year and occupies now the fifth place. Moreover, Kinshasa, ranked thirteenth last year, is now ranked sixth. It appears for the first time among the top ten most expensive cities for expatriates. In this ranking, are also find other cities such as Shanghai, which is seventh, Geneva eighth, N’Djamena is ninth and tenth Beijing. The survey by Mercer also shows that the cheapest cities in the world for expatriate employees, are Windhoek in the 209th Place, Cape Town 208th and 207th Bishkek. Highly recognized, the Mercer survey is one of the most comprehensive in the world. It is also intended to help companies, multinational corporations and governments to determine their remuneration strategies for their expatriate employees. The city of New York is used as the basis of all comparisons and currency movements are measured against the US dollar. « The task of maximizing the return on investment from reduced resources and face talent shortages around the world makes multinational growth initiatives harder, » said Ilya Bonic, adding that « organizations must ensure they are able to facilitate the necessary steps to generate business results by providing fair and competitive compensation plans.  » For him, the costs of goods and services fluctuate with inflation and currency volatility, which may increase or underestimate the costs of overseas missions. Low levels of inflation have resulted in fairly constant cost increases worldwide.

Several African cities in the ranking

If the Angolan city of Luanda is not on the top of the list, it remains in the 2nd place the most expensive city in Africa followed by Kinshasa, in the 6th position. This city has gained six places since 2015. Progressing by one notch N’Djamena is in the 9th place. Lagos follows in 13th place, not to mention Nigeria, which jumped 7 places. The capital of Namibia, Windhoek has meanwhile, dropped three places. It occupies the 209th place and is also ranked as the least expensive city in the region and worldwide. Johannesburg and Cape Town also fell, respectively fourteen and eight positions. According to Carl Van Heerden, head of international mobility for the Africa region at Mercer, « the volatility of exchange rates in most African currencies and its impact on inflation, more or less imminent, directly contributes to varying results compared to 2015. the excessive prices of rental housing for expatriate employees in Luanda contribute to its strong unchanged status as one of the most expensive cities in the world from a life cost perspective« . This investigation proves to be useful not only to governments and institutions but also to large companies that  use the data from this study in order to protect the purchasing power of expatriates.


By Darine Habchi

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