Why does it cost so much to live in Gabon?

Why does it cost so much to live in Gabon?

Why does it cost so much to live in Gabon?

Answers to your questions about the news.
Jan. 16 2003 6:38 PM

Why Does It Cost So Much To Live in Gabon?

A new report from the Economist Intelligence Unit (EIU) lists Libreville, Gabon, as the world's fourth most expensive city, tied with Hong Kong and ahead of Paris, London, and New York. How did a Third World capital get so pricey?

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The EIU surveymeasures the cost of living for an expatriate or foreigner moving into a country—not the native population. (It's designed to assist corporations in budgeting for overseas travel.) So in the case of Libreville, the high "price" is a result of the short supply of goods and accommodations that would be acceptable to foreigners. For example, unless an expat wishes to live in a Libreville neighborhood where electricity and clean water aren't a sure thing, he or she is forced to huddle in the city's Western-style hotels or villas—and pay a king's ransom for the privilege. Luxuries such as whiskey, tobacco, and grooming products are also tossed into the EIU's equation—luxuries that are primarily purchased by Libreville's foreign-born residents, and for which they are charged a steep out-of-towner's premium.

The expats shrug off the price-gouging because Gabon is sub-Saharan Africa's third-leading oil producer behind Nigeria and Angola. Eighty percent of the nation's exports consist of crude oil, with the United States alone buying $1.6 billion worth of petroleum. The vast majority of visitors to Gabon, then, are employees of energy companies like Shell and Amoco; of the 120,000 foreigners who set foot in Gabon last year, only about 1 percent were tourists. Traveling oilmen, of course, come equipped with healthy expense accounts, and thus don't blanch when served a $15 basket of fries.

The price-gouging isn't totally predatory, especially when it comes to food. The Gabonese government's infatuation with oil production has left the nation's agricultural sector woefully underdeveloped. Only 1 percent of Gabon is under cultivation, and many of those farms are of the subsistence variety. So snagging a meal in Libreville can be a wallet-draining experience—perhaps not on par with a Kobe beef supper in Tokyo, the EIU survey's most expensive city, but close enough to scare away scraggly backpackers. That's terrible news for Gabon's Ministry of Tourism, which is trying to sell the country as an eco-tourism paradise. "Beautiful Forests at Hong Kong Prices" just isn't going to cut it as a marketing slogan. (Click here to view a map of Gabon.)

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Explainer thanks Peter D. Packer and John Wada of Runzheimer International.