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Lagos and Abuja listed among top 4 most expensive cities in Africa

By on March 16, 2013

Lagos and Abuja have been listed among the top four cities in Africa with high cost of living, according to an index released by the Economist Intelligence Unit (EIU) on 25 African cities.

The key results of cost of living per city by the EIU reveal that Abuja is the second most expensive city with total expenditure score of 107.4, next to Luanda with a score of 131.8, while Lagos comes fourth with 100.8 total expenditure, as Addis Ababa came last with a score of 60.8.

A breakdown of the index shows that Abuja emerged number 12 out of 25 cities, in terms of consumption of alcoholic beverages, tobacco and narcotics, scoring 78.3, while Lagos scored 63.8 to emerge number 21 of the cities that consume same.

Meanwhile, Khartoum in Sudan comes tops on the list of cities with highest consumption of alcoholic beverages, tobacco and narcotics, scoring 121.3. On the other hand, Douala in Cameroon ranked last of the 25 cities sampled with 46.9 consumption rate.

In terms of transport, Lagos and Abuja emerged 15 and 22 out of the 25 cities, scoring 107.5 and 91.7, respectively. Top in the list is Abidjan with 172.0 score spent on transportation, while Alexandra in Egypt came last with a score of 71.7.

According to the EIU, per capita expenditure is higher in each of the sampled cities, as the index indicates that citizens in cities spend 94.4 percent more, per capita, than their counterparts in the countryside.

“Africa is urbanising fast and cities are attracting more and more migrants. As a result, we are witnessing the emergence of “super cities”- each bringing considerable opportunities. The demographic profile of these cities can be much different than the national level picture,” the EIU notes in the survey.

Africa’s growth is becoming more diverse as a result, companies are more interested than ever in expanding into Africa, it says further.

A recent survey conducted by The Economist Group of 217 global companies based in 45 countries reveals that expansion in Africa is a priority for two thirds of them within the next decade.

EIU’s key result of expenditure per capita differs markedly across cities. For instance, US$/per capita expenditure of Abuja and Lagos are 2,185 and 2,159, respectively, in terms of total expenditure on all items.

Johannesburg in South Africa emerged number one of the cities with highest US$/per capita expenditure, scoring 7,436, while Dar es Salam in Tanzania spend is lowest, scoring 572 US$/per capita expenditure.

A breakdown of the US$/per capital expenditure indicates that Lagos and Abuja scored 4 and 3, respectively, in terms of spend on alcoholic beverages and tobacco.

In the area of transport, US$/per capita expenditure of Abuja and Lagos stood at 157 and 147, respectively. Tripoli in Libya emerged the top most city with 1,780 US$/per capita expenditure on transport, while Lusaka in Zambia is at the bottom of the list with 31.

Even though, it says challenges remain, which include corruption, poor roads, inefficient border posts, inadequate railway networks, poor skill base, congested ports, and unwitting airports, among others.

To the EIU, to expand, companies need Africa city-level data and analysis, as “companies looking to expand into Africa want to concentrate their strategy where growth and demographics are most favourable – in major cities. It is not enough to plan a strategy around nationally-forecasted growth, but rather to have critical forecasting and business information on a particular city.”

The Economist Intelligence Unit also notes that 25 African cities present best opportunities for growth – based on key economic drivers, client feedback and a survey of economists.

In Corporate Network members, the EIU identifies 25 African cities (across 19 countries) that are of particular interest. The EIU collects and analyses the data needed to support the case and strategy for market entry.

 

[Business Day]