Nairobi Tumbles 30 Spots in Global Cost of Living as Shilling Weakens
A recent report has shown that Nairobi is one of ten cities where the local currencies have experienced considerable devaluation in the last year.
In the 2023 edition of the Worldwide Cost of Living report by the Economist Intelligence Unit (EIU), Nairobi has fallen significantly in rankings, plunging 33 places from its previous spot at 108 to its current standing at 141.
The ranking in the report, which covered 173 cities globally, was determined by converting prices of essential items in local currencies into the United States dollar, which served as the standardized currency.
Countries that experienced a decline in their currency value against the dollar saw a decrease in their rankings, whereas those whose currencies gained strength saw an improvement in their rankings.
As per the report, Nairobi’s decline was attributed to the devaluation of the Kenyan currency and a sluggish recovery period following the pandemic.
“A weaker currency, slow post-pandemic recovery, and subdued consumer demand have led these cities to fall in the rankings,” read part of the report.
At present, one US dollar exchanges for Ksh153, which implies that the government incurs higher costs for every dollar borrowed.
This sets off a chain reaction in the cost of living, causing an increase in essential expenses like fuel, electricity, and food prices.
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There are worries about President William Ruto’s administration’s capacity to improve the country’s economy amidst the crisis.
Lately, Chris Kiptoo, the Principal Secretary of the National Treasury, clarified that the decline in the value of the Kenyan currency was mainly due to external influences beyond the country’s significant control.
“We have a situation where Commercial Bank reserves of the dollar are higher than what we have in the public coffers,” Kiptoo told the National Assembly’s Public Investments Committee.
“However, we are rolling out measures to create more confidence in the forex market.”
He also expressed the view that the depreciation of the shilling wasn’t entirely negative, suggesting that certain Kenyans involved in the export industry could take advantage of it by increasing investments in foreign exchange-generating sectors like tourism.
Nairobi Tumbles 30 Spots in Global Cost of Living as Shilling Weakens