The Deceptive Affordability of Lagos and Abuja
The recent 2024 Mercer cost of living survey has ranked Lagos and Abuja as the cheapest cities in the world for international workers. At first glance, this might seem like positive news, potentially attracting foreign investment and expatriates. However, a deeper analysis of the affordability of Lagos and Abuja reveals a more complex and concerning reality for Nigeria’s economy and its citizens.
- Currency Devaluation: A Double-Edged Sword
The survey attributes the low cost of living to the significant depreciation of the Naira following President Bola Tinubu’s economic reforms. While this makes Nigeria appear more affordable for foreign workers, it’s a pyrrhic victory at best. The weakened currency has led to skyrocketing inflation, currently at a staggering 33.95%, with food inflation surpassing 40%. This means that while expatriates might find Nigeria cheap, ordinary Nigerians are grappling with rapidly increasing living costs.
- Misleading Affordability
The survey’s focus on expatriate living costs fails to capture the economic reality for the majority of Nigerians. Lagos dropping 173 spots to 225th position and Abuja falling to 226th out of 226 cities doesn’t reflect improved living conditions for locals. Instead, it highlights the widening gap between the expatriate experience and the daily struggles of Nigerian citizens.
- Economic Implications
While lower costs might attract some foreign investment, the underlying economic instability that caused this “affordability” could deter long-term, sustainable investment. Potential investors might question the stability of an economy where the main cities have plummeted so dramatically in global cost rankings.
- Quality of Life Concerns
Cost of living is just one factor in a city’s attractiveness. The survey doesn’t address quality of life issues such as infrastructure, security, and access to quality healthcare and education. These factors remain significant challenges in both Lagos and Abuja, regardless of their newfound “affordability.”
- Brain Drain Risk
The disparity between local wages and the purchasing power of foreign currencies could exacerbate Nigeria’s brain drain problem. Skilled Nigerians might be even more tempted to seek opportunities abroad where their earnings would have significantly more value back home.
- Policy Implications
While the Tinubu administration’s reforms aim to stabilize the economy in the long run, the short-term impacts are severe. The government must balance attracting foreign investment with protecting the welfare of its citizens. Policies that only make Nigeria attractive to expatriates without improving conditions for locals are unsustainable.
Conclusion:
The Mercer survey’s ranking of Lagos and Abuja as the world’s cheapest cities for expatriates is a double-edged sword. While it might boost Nigeria’s appeal to some foreign workers and investors, it masks deeply concerning economic trends. True progress should be measured by improved living standards for all Nigerians, not just increased affordability for foreign workers.
As Nigeria navigates these economic challenges, policymakers must focus on stabilizing the currency, controlling inflation, and implementing reforms that benefit both foreign investors and local citizens. Only then can Nigeria’s major cities aspire to rankings that reflect genuine economic health and quality of life improvements for all residents, not just deceptive affordability for the few.
Reference
Naira depreciation makes Lagos, Abuja cheapest global cities for expatriates —Report published in Vanguard