Kenya’s capital, Nairobi is increasingly becoming one of the world’s cheapest cities for expatriates to live in, according to a new report by American consulting firm Mercer.
The 2023 Cost of Living City Ranking places Kenya’s capital as the 173rd most expensive out of 227 cities, down 13 places from last year. This is despite the fact that Kenyans are facing a harsh cost of living crisis with rising prices for many staple goods, increased taxation, and a weakening shilling. However, this has in turn inflated the salaries of expats working with global bodies such as the United Nations and diplomatic missions, who are paid in dollars, pounds, and euros.
Inflation in Kenya
Inflation in Kenya fell to 6.7% in August, the lowest in 17 months, and the shilling has hit a record low of 147.36 to the dollar compared to 123.37 at the start of the year, giving expats an upper hand in purchasing power against the biting economic times. Employees paid in Kenyan shillings, on the other hand, are grappling with new taxes such as a 1.5% housing levy or gross pay, increased national health insurance premiums, and the doubling of value-added tax (VAT) on fuel, which has driven up the cost of living.
Over the last year, for instance, petrol prices increased by 22%, electricity by nearly 50%, and household staples such as sugar and beans by 61% and 30% respectively. The government is also considering further tax hikes, such as increasing VAT and duties targeting farmers and car owners as outlined in a Treasury strategy review up to 2026/27.
“High inflation and market fluctuations impact the cost of living across the world, impacting our purchasing power and standard of living,” Mercer notes in the report.
On the continent, African cities placed highest in the global cost of living ranking are Bangui, Central African Republic (26); Djibouti (27); and Luanda, Angola (30). The least expensive cities in Africa include Windhoek, Namibia; Durban, South Africa; and Tunis, Tunisia, which follow quite closely behind Cairo, Egypt. The Egyptian city dropped 63 spots since last year.
Implications for Expatriates
The fact that Nairobi is increasingly becoming a cheaper city for expatriates to live in has a number of implications. First, it is likely to attract more expats to the city, particularly those who are working with global bodies or who are self-employed. This could boost the Kenyan economy and create new jobs.
Second, it could lead to an increase in the demand for goods and services that are popular with expats, such as housing, education, and healthcare. This could lead to higher prices for these goods and services, but it could also lead to more investment in these sectors. Third, it could lead to a decrease in the cost of living for Kenyans, as businesses compete to attract and retain expat customers.
However, it is also possible that businesses will pass on the increased cost of living to their customers, including Kenyans. Overall, the fact that Nairobi is becoming a cheaper city for expats to live in is a positive development for the city and the country. However, it is important to be aware of the potential implications for both expats and Kenyans.
How Expatriates Can Make the Most of Nairobi’s Affordability
Expatriates who are moving to Nairobi or who are already living in the city can take a number of steps to make the most of its affordability. First, they should carefully consider their housing options. There are a number of affordable housing options available in Nairobi, both in the city center and in the suburbs. Expats should research different neighborhoods and compare prices before making a decision.
Second, expats should take advantage of Nairobi’s many free and low-cost activities. There are a number of parks and gardens where expats can relax and enjoy the outdoors. There are also a number of museums and cultural attractions that offer free or discounted admission to expats.
Third, expats can cook at home whenever possible. Eating out can be expensive in Nairobi, particularly at expat-friendly restaurants. Expats can save money by cooking at home using locally sourced ingredients. Fourth, expats should bargain for goods and services. Bargaining is common in Nairobi, and expats can save money by bargaining for everything from taxis to souvenirs.
Finally, expats should take advantage of Nairobi’s many public transportation options. Nairobi has a good public transportation system, including buses, trains, and matatus (minibuses). Expats can save money by using public transportation instead of taxis or private cars.