With such context, it is key and critical that we adjust and adapt our livelihoods and lifestyles with practical precautionary measures to prepare against such adverse impacts on our current local reality.
Below are some practical advice tips to consider as we go through this sensitive and critical cycle:
The economic threats will become visible in the coming months and involve:
- Supply shortages for oil-related products, metals, wheat, maize, and related import costs are expected to increase (ie buying price, financing costs, freight, warehousing, as examples). Seeking replacements and alternatives preferably locally could serve well as a business stability strategy
- Borrowing is also becoming more expensive as the government increased reference interest rates to encourage savings and reduce families’ consumption. In parallel, buying stock on credit will become more difficult and expensive as a reflection of rising borrowing costs
- Distribution and Transportation costs will also increase as oil and petrol prices are rise hence the stock delivery costs will likely rise too.
- Currency is also likely to be impacted and devaluate as the country will need more foreign currency to import the same amount of oil.
It is therefore advisable to take precautionary and preventative measures in our households to create saving buffers and reduce non-essential expenses:
- Take extra care when investing or in non-essential expenses – saving cash should be a priority
- Family and business budgets should be strict and realistic, non-essential expenses should be cut, and essential expenses should align with withheld income.
- Where possible generate regular savings even if in small amounts, investing in fixed deposit accounts as small, accumulated steps can take you a long way in the long run.
- Avoid borrowing or capital-intensive new ventures, excessive or unnecessary business risk
- Trade carefully on ‘a day at a time’ basis to manage your cash. Decrease stock and increase product rotation where possible to better manage business risk and generate returns
- Prioritize holding some cash to manage unexpected cost rises and to be able to purchase a stock that has faster rotation for better returns.
As always, changes can be scary specially when seen so abruptly and so quickly but with resilience, preparation, and thoughtful planning we will be better placed to face the future.
For more information, please contact the Economic Matters team – [email protected] or [email protected]
