Nairobi has for the first time in three years dropped out of the world’s top 100 most expensive cities for expatriates, highlighting the impact of Kenya’s coronavirus-related tax cuts announced last year.
The Kenyan capital improved 47 places to become the world’s 145th most expensive city this year, according to a Mercer Cost of Living report released last week.
This was the best position in seven years for Nairobi, which had last year ranked 95 out of the 209 cities surveyed.
Mercer’s ranking is based on changes of more than 200 items in each location, including housing, transportation, food, clothing, household goods and entertainment.
The survey also captured price changes that resulted from Covid-19 relief measures announced by various states, meaning that tax cuts may have improved Nairobi’s ranking.
Kenya cut higher income tax band from 30 percent to 25 percent and lowered value-added tax (VAT) from 16 percent to 14 percent in a raft of measures to soften Covid-19 blow.
“The latest data show few significant price variances resulting from the pandemic as various measures were adopted by governments worldwide, such as lowering or refraining from collecting VAT for a period of time,” said the report.
Kenya introduced tax cuts weeks after the country reported its first case of the coronavirus. The items are grouped as food, alcohol and tobacco, domestic supplies, housing, utilities, clothing and footwear, recreation and entertainment, home services, personal care and transportation.
Nairobi had stayed in the list of the top 100 expensive cities to live in for two consecutive years. The previous best position was in 2014 when the global consultancy firm placed it at number 147.
Mercer conducted special analyses on the categories of goods that saw a relative increase in demand as the pandemic crisis affected consumer buying habits.
Kenya’s inflation rate averaged 5.28 percent last year.
“The data also helps employers determine and maintain compensation packages for employees on international assignments and when working abroad,” said Mercer.
N’Djamena (13), Lagos (19) and Libreville (20) were ranked the first, second and third costliest cities in Africa for international employees. Lusaka was the cheapest in Africa at position 208.
