A recent report by Numbeo has shed light on the African countries with the highest cost of living in 2025. According to the data, Ethiopia has taken the top spot, surpassing Mozambique, which held the position last year. The cost of living index is a critical factor in determining a country's global perception, and high indexes can have far-reaching consequences on tourism, expatriate communities, and the overall quality of life.

The cost of living index is a reflection of the affordability of essential goods and services, including housing, food, transportation, healthcare, and education. In countries with high indexes, the average person often struggles to maintain a respectable quality of life, leading to limited disposable incomes, reduced savings, and increased poverty. Furthermore, the rich elite may be better equipped to adjust to growing expenditures, while low- and middle-income households bear the brunt of the burden, exacerbating economic inequality and potentially sparking social unrest.

Businesses, particularly small and medium-sized enterprises (SMEs), which form the backbone of African economies, may struggle to thrive in environments with high operational costs. Rising utility, rent, and payroll bills can lead to increased wage expectations, contributing to inflationary pressures. On the other hand, failing to raise salaries may result in a brain drain as talented individuals seek better opportunities overseas or in adjacent countries with lower living expenses. Foreign investors may also be deterred by high living costs, perceiving them as eroding profitability.

However, countries that manage to strike a balance by ensuring high productivity or robust infrastructure may be less severely impacted. The top 10 African countries with the highest cost of living in 2025, as per Numbeo's data, are: Ethiopia (43.2), Botswana (39.5), Mozambique (38.9), Ivory Coast (38.8), Somalia (38.7), Cameroon (36.2), Mauritius (35.6), Zimbabwe (34.7), Rwanda (34.6), and Zambia (33.8). Notably, new additions to the list this year include Botswana, Somalia, and Rwanda, replacing South Africa, Senegal, and Uganda from last year's list.

On average, the cost of living index for most countries on the top 10 list declined compared to last year's data. For instance, Ivory Coast, Mauritius, Cameroon, Zambia, and Zimbabwe had respective cost of living indexes of 44.7, 41.1, 39.6, 39.8, and 36.8 in 2024, compared to 38.8, 35.6, 36.2, 33.8, and 34.7 in 2025. This decline may indicate a slight improvement in the affordability of essential goods and services in these countries.

The report's findings have significant implications for policymakers, businesses, and individuals alike. As African countries strive to attract tourists, expatriates, and foreign investment, they must carefully consider the impact of high living costs on their economies and take steps to mitigate its effects. By doing so, they can create a more conducive environment for growth, innovation, and prosperity.