Is Addis Ababa Really One of the Cheapest Cities in the World for Expats?

Addis Ababa, the capital of Ethiopia, has been ranked as one of the cheapest cities in the world by Mercer’s 2010 Cost of Living Survey.

Mercer’s Top 50 expensive cities are found here.

Addis Ababa is ranked at 208th position out of the 214 cities surveyed. According to the survey, “the cost of housing – often the biggest expense for expats – plays an important part in determining where cities are ranked”. Based on this fact, I expected Addis Ababa to be in the top 20.

Please keep in mind that the survey is for expatriates, not for local people. Typical expats in Addis Ababa include embassy officials, NGO employees and those in other similar positions.

I must say that I do not agree with the report when it comes to Addis Ababa. How can Addis Ababa be one of the cheapest cities in the world? A decent family home, say, 6 bed room house with 2,200 sq. ft with 7,000 sq. ft lot is going for $200,000 to 700,000 USD depending on the location of the property. You can check house for sale and rental prices at Ezega’s website.

The exchange rate for $1 USD is about $13.75 EBR (Ethiopian Birr).

What you pay for 1 house in Addis Ababa, could buy you several houses in the USA these days. Having said that, however, in the rest part of Ethiopia (out of the capital city) living expenses are cheaper, especially housing.

World’s Most Expensive Cities

I recently came across a Yahoo! post regarding most expensive cities in the world, as ranked by ECA International. Canada is no where closer to these expensive cities. This is a separate study from the Mercer’s report, mentioned above.

ECA International surveyed in 290 cities around the globe, and was based on a basket of 200 items, including:

• food
• daily goods
• housing
• transport
• household goods
• clothing
• electronics
• entertainment

ECA researchers and local partners gathered prices in September 2009 and March 2010 for domestic and imported brands that are internationally recognized—such as Kellogg’s cereal or Sapporo beer.

While lower-priced goods and services are available in these markets, the study estimated the cost of supporting the standard of living expected by expatriate employees.

The weakness of US dollar has also contributed for some cities to jump up in the rankings.

African Cities

I was very surprised to find out that Luanda (Angola) to be one of the top 10 most expensive cities. Other expensive African cities include N’Djamena (Chad), Libreville (Gabon) and Freetown (Sierra Leone).

I have summarized the top 10 most expensive cities for 2010 in an easy to read format:

Rank, 2010	City, Country	Lunch	Can of Beer	Rice, 1Kg	Eggs, Dozens	Movie	Washing machine
01	Tokyo, Japan	$18.00	$3.37	$8.47	$3.78	$22.00	$879
02	Oslo, Norway	$43.00	$4.71	$5.66	$6.72	$16.00	$880
03	Luanda, Angola	$47.00	$1.62	$4.73	$4.73	$13.00	$912
04	Nagoya, Japan	$19.00	$3.08	$9.14	$3.33	$20.00	$621
05	Yokohama, Japan	$17.39	$3.26	$6.54	$3.72	$19.50	$630
06	Stavanger, Norway	$33.00	$4.76	$5.71	$6.34	$15.50	$749
07	Kobe, Japan	$16.00	$3.09	$8.57	$2.81	$20.00	$470
08	Copenhagen, Denmark	$36.00	$2.10	$4.85	$6.99	$15.00	$1,196
09	Geneva, Switzerland	$30.00	$2.02	$3.81	$7.64	$16.00	$1,304
10	Zurich, Switzerland	$25.00	$2.01	$3.36	$5.81	$16.00	$974

Based on the survey above, if I were to open a business in one of these expensive cities, I would choose the following businesses:

• Restaurant business in Luanda, Angola
• Beer factory or restaurant business in Oslo or Stavanger, Norway
• Rice farming in Nagoya, Japan
• Chicken farming in Geneva, Switzerland
• Movie theater business in Tokyo, Japan
• Washing machine importing into Geneva, Switzerland

Yes, there are other considerations before you launch a business, but just looking at the numbers in the table above, these business are attractive, but I am not sure how easy it is to start a business in these cities, whether there are major red tapes, bureaucracy, etc.

What do you think? Do you have any business idea, whether in Canada or Ethiopia? Please share with us.

In 2009, the top 10 expensive cities were the following:
01- Luanda, Angola
02- Tokyo, Japan
03- Nagoya, Japan
04- Yokohama, Japan
05- Kobe, Japan
06- Copenhagen, Denmark
07- Oslo, Norway
08- Geneva, Switzerland
09- Zurich, Switzerland
10- Basel, Switzerland

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Source: Yahoo! Finance

My next blog entry will be on Thursday July 15, 2010.

Mullkam Samint!