When one considers where in the world rich, Western expatriates must face the most exorbitant living costs, the mind wanders east. The automatic assumption is a picture of wealthy bankers living in Hong Kong’s Happy Valley or Discovery Bay, or senior management figures driving 4x4s around Dubai and frequenting glitzy shopping malls. No doubt the cost of living for expats in these locations is expensive, but studies have shown that the most expensive place for expats to live is actually Luanda; the capital of Angola and the former Portuguese colony located on the Atlantic coast of Central Africa.
On Expat Blog, there is a forum dedicated to expats who are living in or considering moving to Luanda. There, one post asked how much money would be suitable when accepting a job offer in the city, to which the first response was “a lot”, unless you want to “lose your shirt here”. For years, Luanda has topped the Mercer Consultancy Group’s rankings for the most expensive city to live in for expats, a list that is produced annually and features many other African cities high in the rankings: the Chadian capital, N’Djamena, was number 10 this year, although in 2014 it came in at second. Victoria, the capital of the Seychelles, came in at 17, while Libreville, Gabon, stood at the 30th-most expensive. Cities in relatively wealthy sections of Africa – often with larger clusters of expats – generally were found lower on the list. For instance, South Africa’s Cape Town, a renowned hub for expats, featured way down the list at 200.
The Chinese alone purchase nearly two million barrels of oil a day from Angola
The rankings, of course, try to isolate costs for expats, not the cost of living for local and native residents of the city. The ranking features 214 cities globally, measuring the comparative cost of more than 200 items in each city, such as food, transport, household goods, entertainment, housing and clothing, using New York City as a base comparison.
The weight of legacy
Luanda, a city of five million people, was founded by a group of Portuguese soldiers and their families in 1575, who originally named it São Paulo de Loanda on the Ilha de Cabo. By 1605 it had become a city, and by the 17th century it had transformed into a thriving trading hub. It later became the launching pad for Portuguese colonialists who led raids inland to capture slaves, as well as a bust for the export of slaves to Brazil. The central role of Luanda in transatlantic trade led it to becoming known as the Paris of Africa.
In the 20th century, as the rest of Africa’s European colonisers gradually left and ceded home rule to Africans, the Portuguese persisted, leading to national liberation groups taking up arms against colonial rule. During the era of Portuguese rule, Luanda was a city closed to most African Angolans. After Portugal’s Carnation Revolution in 1974, the new rulers of the country disengaged from the country – as the Portuguese colonial settlers left the city, it began to fall into disrepair due to a lack of skilled workers in the city. This was soon exacerbated by Angola’s brutal 26-year-long civil war, which began in 1975 as a result of tensions between the communist-leaning MPLA and anti-communist UNITA group. The war saw the city fall further into disorder, although intervention by Cuban forces saw some skilled engineers and workers make a few vital repairs to the fledging capital. Refugees from across the country also flocked to the city during the war from areas of more intense fighting, leading to the proliferation of large slums and shantytowns around the city.
The civil war, which was to result in the death of around half a million soldiers and civilians, ended in 2002, with the MPLA emerging victorious. However, with the Cold War long over, the victorious group dropped its communist pretensions and began to look outward to foreign investment that would secure much-needed development. The long-time leader of the MPLA and President of Angola since 1979, José Eduardo dos Santos, courted international oil companies to drill and develop the country’s large oil deposits.
Battlefield to oilfield
Angola’s attempts at a revival through the development of oil, in partnership with a series of international firms, seem to be working. At present, the country is the 14th largest oil producer on the planet, pumping out 2.31 percent of the world’s total oil production. Today, the Chinese alone purchase nearly two million barrels a day from the country. Considering that, according to the US Energy Information Administration, Angola produced only 1.8 million barrels a day in 2012, suggesting a steady increase in production and capacity. Comparing favourably with Nigeria, Africa’s largest oil producer (which produces approximately 2.5 million barrels a day), Angola is among the top producers on the continent.
This history of civil war, followed by the boom in oil production, explains why Luanda is not just the capital of Angola, but also the costliest city for expats. The civil war led to widespread destruction, with infrastructure across the country either actively destroyed or simply left to fall apart. Roads, railways, and water supply facilities – already lacking due to Portuguese underdevelopment – were left devastated. As young men were continuously drafted into the opposing groups, much of the country’s productive capacity was left underutilised and underdeveloped, along with, once again, the active destruction of productive assets by military operations; be it farm land, equipment or factories. One of the worst features of the civil war was the widespread use of landmines, with millions being laid across the country. Many of these mines still remain buried in the countryside, meaning that a vast amount of otherwise fertile land is too dangerous to be considered for farming. As a result, Angola now imports 80 percent of consumer goods.
The climb to the top
The oil boom has attracted a range of senior managers in the oil industry, as well as engineers and geologists from the world’s largest oil firms; all handsomely paid and demanding all manner of articles, from simple home comforts to luxury items. While most Angolans cannot afford to purchase imported goods, this growing – and increasingly wealthy – expat community has created a market for importing such goods, being able to pay the incredibly steep prices.
The country’s poor infrastructure and lack of capacity for domestic production makes the importation of goods incredibly expensive – for instance, a bottle of Coca-Cola is purported to cost around $10, while a bottle of Crystal champagne can cost $1,200. Likewise, renting a house can set an expats back $10,000 a month – prices you would expect to see in New York or London – while a kilo of tomatoes can cost nearly $20 to import. For every good purchased, the cost of importation must be factored in, resulting in some eyebrow-raising prices for everything, from the mundane to the extravagant.
With a large amount of Angolans living on less than $2 a day, rich expats forking out $10 for a single bottle of Coca-Cola points to great levels of wealth disparity. The only hope is that the proceeds Angola receives from its oil boom – and its side effect of rich Westerners importing exorbitantly priced goods – are able to provide the funds that the country requires to rebuild its damaged infrastructure and production capacity.
