Pay If You Go
Luanda, Tokyo and Geneva are very different places, but they have one thing in common. They are damn expensive.
Bring suitcases stuffed with kwanzas when visiting Angola ’s biggest city, Luanda. It’s the world’s most expensive metropolis for ex-patriots, according to a recent global survey conducted by Mercer, a leading international consulting firm. The high prices are jarring when juxtaposed with Angola ’s poverty. Over 30 percent of Luanda ’s five million residents live below the poverty line.
Luanda is not alone on the continent for high prices and low standard of living. Chad is among the world’s poorest nations according to the United Nations with 80 percent of its people impoverished, yet its capital N’djamena ranks third most expensive globally for foreigners by Mercer. Gabon ’s biggest city, Libreville, long an oasis for oil rich local bureaucrats and ex-patriot petroleum execs, makes the Mercer list at No. 7. Conversely no African city ranks in Mercer’s top ten for quality of life. Mauritius (82) and Cape Town (86) are the only African cities to crack the top 100. Poor air quality and lack of modern infrastructure keeps Africa off the top quality list but why such sky-high prices?
A combination of civil wars, economic globalization, corrupt governments, environmental factors, combined with recent oil wealth, has driven up the price of just about everything in the last ten years, and the situation is not likely to change anytime soon.
$80 Buffets, $22 Movie Tickets
In Luanda both luxuries and basics are dear. A kilo of tomatoes is $20, a liter of milk sells for well over $3, and a room service hamburger at a mediocre hotel will run you over $30. Go down to the buffet at Luanda ’s Los Presidente Hotel and it will set you back $80. If you want a cheaper hotel try the fleabag miles from the city center. It includes bedside cockroaches and charges $400 a sleepless night. If you want to escape that room, a movie ticket runs $22 at Luanda ’s multiplex. Hold the popcorn please.
The common denominator for the big prices linking Luanda, N’djamena and Libreville is oil. It creates two cultures; a small affluent group that feeds off the oil wealth and everyone else who wants their piece of the petroleum pie, but isn’t well connected or educated enough to cash in directly. Luandans with services to offer, charge and arm and a leg because they are in demand as electricians, dock workers, drivers and guides. The new wealth from oil and diamond mining has not been passed along by the government in the form of social services, so workers have no choice than to demand higher wages.
Meanwhile the much larger Angolan populace struggles to make it in the rural fields as farmers and herders or in the urban underground off-the-books economy selling what they can in makeshift street stalls.
Oil dominates the three countries economies accounting for half their gross domestic product. Oil exploration and extraction has sent a small army of oil workers from China, the U.S. and Europe into these poor places, and these well paid employees want the life style standards they are accustomed to back home. When the supply/demand equation gets out of whack, prices do too.
Comfy condos and four star meals are in short supply in N’djamena and Luanda and when foreign workers demand them they better be ready to pay the price or else try to live like locals in small apartments and homes. If you want an apartment where everything works (i.e. air conditioning, computer etc.) be prepared to pay between $6000 and $10,000 per month in Luanda. Running a computer and getting high speed Internet connectivity is another luxury and will easily cost north of $100 per month.
To get a sense of why things are so expensive in Luanda, glance out to the harbor and see the cargo ships docked in the ocean waiting to unload in the crammed port. The port of Luanda is under pressure and is so backlogged, vessels average five days waiting to unload, and can spend ten days or more anchored at sea before they can come ashore with their cargo’s of imported food and construction materials.
If shipping costs are inflated by infuriating delays caused by too little port infrastructure and too many unionized port employees, guess what that does to the cost of the cargo? In a post-war growing economy that can’t feed itself, imports are essential but they are costly.
The biggest reason Angola can’t feed itself stems from the 27-year-old civil war that ended in 2002. Before 1975 Angola was an agricultural success only needing to import wheat, but those once arable lands remain planted in land mines. It’s estimated that over 25 percent of the country’s land is still seeded with the deadly produce of war. A report in Britain’s Mail & Guardian estimates it could take as long as another decade to demine the fields, despite ongoing work to restore the fields by non-governmental organizations. Many battles were fought in rural areas and an exodus forced farmers to the big cities where they toil in the underground street economy. Prior to independence, the former Portuguese colony had many land baron farmers, who, at independence, took their food growing expertise back to Lisbon.
With the Portuguese gone, Angola’s government embraced the Chinese, but it came with a high price. Unlike its deals with other foreign companies who were sensitive to hiring locals, the Chinese brought their own workers to Angola to develop the $8.5 billion in infrastructure loans it made to Angola. The invasion of 70,000 Chinese workers has not been received well by Luandans. Crimes against Chinese workers have skyrocketed and soured the Chinese on Angola. Escalating crime always increases prices as security costs are passed along to the consumer.
Chad’s Pipeline to Prosperity or Poverty?
To see the impact of oil development, go to the satellite photos of the Chadian countryside where the 1,100-kilometer Chad-Cameroon oil pipeline has been carved. Huge swaths of countryside have been taken to build the World Bank financed $3.7 billion pipeline that brings oil from landlocked Chad to Cameroon ’s Atlantic port.
The Chadian government will derive $2 billion in revenues from it, with nothing left for the people except higher prices. Thousands of farming and herding families in southern Chad have been displaced by the project, which cuts into the nation’s food production. More imports mean higher prices, especially in a land-locked nation like Chad. When the oil leaked into the sea in Cameroon, the fishery was polluted, hurting that protein source. A decade’s-long drought and the environmental damage caused by Darfur refugees along the Chad-Sudan border have further hammered the once productive agricultural fields.
Infrastructure hurdles always inflate the cost of living. In town, security is an issue. Libreville ’s small captive market of ex-patriots lives in relative comfort but they have to protect what they have. Hiring an armed doorman to protect your pad will cost you dearly, but that’s the price you pay as an ex-patriot living in Africa’s emerging oil cities.
So what’s an ex-patriot to do? The same as we do in the West. Suck it up and ask your boss for a raise. Or, just be grateful you have a job.