Is South Africa really the cheapest country in the world to live in? A recent survey of 112 countries in the world by GOBankingRates.com using data from cost-of-living database Numbeo.com concluded that South Africa is the cheapest country in the world to live in or retire to.
Our position as number one on the list has a lot to do with the fact that the Rand has crashed so everything appears dirt cheap to foreigners.
Additionally, other significant costs which people in most countries don’t incur were not taken into account, such as private security or higher insurance costs as a result of crime.
South Africa has one of the world’s highest GINI coefficients (which is a statistical way of describing our income inequality) so defining the expenses for an “average” South African consumer is an impossible task, but we have to assume that the Numbeo figures are for a mythical middle class South African: the average monthly disposable salary (after tax) is assumed to be R17909, suggesting a before-tax income of about R22 000.
GoBankingRates advises that it ranked countries “by four key affordability metrics”:
1. Local purchasing power index
2. Rent index (compared with New York city)
3. Groceries index (compared with New York city)
4. Consumer price index (compared with New York city) – not be be confused with inflation.
The survey has used rental costs as an indicator for housing expenses, and the cost of buying and owning a property is not taken into account.
Whereas the raw data may seem reasonable, the ranking methodology of GOBankingRates is arbitrary and we hard-pressed South Africans would find it difficult to agree with the conclusion.
Statement issued by
David de Waal (CA(SA))
CEO Steeple – The Low Commission Estate Agents