Most expensive place to do business

As the US representative of a relocations services group covering Africa, one of the most consistent questions I am asked is, "why are your prices so high in Angola?". After explaining a little, I normally cut a paste a few links to web sites that consistently rate Luanda, Angola as the most expensive place in the world to do business. It may slip to second depending on currency fluctuations and what is included in the 'basket of goods and services' used to make comparisons, but, by and large, Luanda is right up there, which tends to surprise many people.

There are many reasons for this situation, some purely capitalist and some communist.

Angola is rich in oil deposits and has attracted major exploration and exploitation efforts over the years. With an estimated 9.5 billion barrels in oil reserves, the country depends largely on oil company investment. In the rush to gain control of exploration rights, money was no object and accommodations, of all types, were standard practice.

Then, in 1975, Cuba sent armed forces to support a leftist movement and counteract South African support of their rightist opponents on the eve of Angolan independence. The force numbered over 25,000 troops at the height of Cuban intervention, which lasted until the peace agreement of 1991. Cuban influence on the Angolan government was intense; doctors, engineers and teachers came from Cuba in droves and many Angolan's were sent to Cuba to study. (This short period in Angolan history is worth examining in more detail and several good publications on the topic, including Edward George's "The Cuban Intervention in Angola".)

The combination of oil company largesse and communist influence has created a cost structure and culture that has driven rental costs per month into five figures for a modest house.  The cost of importing and exporting, even duty exempt household effects, is pushed upward by the 'facilitations' required to process necessary paperwork. (I will cover this topic, which is a challenge in many African countries,  in more detail in a future post.)

The end result is a country where ex-patriate costs are among the highest in the world.

TW

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