JOHANNESBURG and Cape Town have become less affordable destinations in 2021 for expatriates, mainly due to a stronger rand against the US dollar.
This information is contained in Mercer’s 2021 Cost of Living City Ranking of 400 global cities.
Johannesburg is listed at 184 while Cape Town is rated at 178.
The rankings aim to provide insight for multinationals on the cost of recruiting or relocating an expatriate in Africa, and also help human resources leaders to structure a remuneration package to attract the right skills for an assignment.
Mercer is a New York Stock Exchange-listed retirement and investment firm. It operates in over 130 countries.
Mercer senior associate Stevens Kawoubouga said: “In fact, in September 2020, the rand was trading around 17 against the US dollar as the economy was experiencing a decline in growth of 7% resulting from the impact of the pandemic,
“The government started implementing stricter lockdown laws, which in turn limited prospects of economic recovery and growth. Various key local sectors of the economy suffered a decline in economic activity, the worst the country has experienced in a century,” said Kawoubouga.
The report listed N’Djamena, as the most expensive city in Africa for expatriates. Lusaka in Zambia is rated the least expensive in the continent.
Kawoubouga said N’Djamena in Chad remains the most expensive city in Africa again.
“The Chadian economy is still recovering from pressures from a plummeting oil price, growing internal and external debts, and a relatively small expat market. Despite relatively low inflation, rentals in N’Djamena remain among of the highest on the continent. In some instances, accommodation prices are similar to what one could expect to pay in much-developed cities such as New York and London,” he said.
The firm said on a positive note, Nigeria showed some improvement compared to 2020.
“Lagos and Abuja’s ranking moved down following a 4.53% depreciation of the naira against the US dollar. Yet, Nigeria is slowly recovering from the worst recession in four decades with the government easing off Covid-19 restrictions,
“Following a tough economic year in 2020, resulting from the health crisis, social distancing regulations and the oil price collapse, the government implemented new fiscal reforms to control inflation and an increasing poverty level,” it said.
Kawoubouga said given the impact of the Covid-19 pandemic on African economies, organisations could use the cost of living rankings to consider implementing regional pay structures to enable talents to move more efficiently across borders by mitigating some of the key challenges when it comes to cost of living, pay competitiveness and purchasing parity.
“Furthermore, more organisations are introducing virtual assignments, where an employee performs the same job remotely as they would do if they were to relocate to the host location. For example, a professional based in Ghana would perform tasks and be responsible for operations in Kenya. Alternatively, organisations could start hiring more local foreign talents to fill in the gaps in their talent acquisition programmes,” he added.
The report found Ashgabat the most expensive city for international employees, pushing Hong Kong to second place. Beirut ranked third, climbing 42 positions up the ranking due to a severe and extensive economic depression due to the escalation of several crises — the country’s largest financial crisis, Covid-19, and the Port of Beirut explosion in 2020. Tokyo and Zurich each dropped one spot from third and fourth respectively to fourth and fifth positions, and Shanghai ranked sixth, up to one place from last year. Singapore moved from fifth place to seventh.
“Other cities appearing in the top 10 of Mercer’s most expensive cities for international employees are Geneva (8), Beijing (9), and Bern (10). The world’s least expensive cities for international employees, according to Mercer’s survey, are Tbilisi (207), Lusaka (208), and Bishkek, which ranked as the least expensive city at 209,” it said.
BUSINESS REPORT ONLINE