The President has announced stringent measures to reduce the spread of a possible pandemic. These measures range from closing down schools, public gatherings, weddings, etc. These measures are going to seriously slow down the economy. We are already seeing the huge economic impact the Corona virus is having on the global economies. Airlines are running bankrupt. Hotels are shutting down. Workers are being laid off. Supply chains have been disrupted. Fear and panic has driven down asset prices across the globe.
These effects are slowly trickling into Uganda. Already we are seeing an appreciation of the dollar. A decline in imports has been recorded. Prices of food stuffs and other materials is likely to go up implying that inflation is going to rise. Tourism receipts have literally been wiped out. Local hotel chains are struggling and beginning to downsize. Small businesses are likely to be hurt as the country is shut down. The economy is going to slow down.
The next 30 to 90 days are going to be critical for survival financially. Brace yourselves for the tough weeks ahead. The following tips may help you through the next 90 days:
- Cut down non-essentials and preserve cash as much as possible. This is not the time to make expensive purchases. There is a lot of uncertainty and you need to have cash. Downgrade your lifestyle and hibernate in this period. Make sure you can survive the next 90 days without additional income.
- Stock up essential commodities before prices escalate. Buy a bag of rice, posho, beans, charcoal, etc. if you can afford it. With the kids at school the maintenance costs are going to escalate. The greatest stockpile you need, however, is CASH!
- Prepay for utilities (water, electricity, gas). You don’t want your power going off when people are in panic mode.
- Liquidate some of your savings. You need physical cash in this period. In case banks shutdown you need to be prepared. Liquid the cash you need for the next month or so. If you have no savings, NOW is the time to seriously reflect on your financial situation.
- In case you lose your job take heart and reflect on what you can do differently. Maybe it is time to start your own business and stop depending entirely on your employer.
- If you are a business owner. Now is the time to prioritize and focus on a few things that matter. Cut overheads and preserve cash. Get a short term facility to cover you for the next 30 days.
- Seize the opportunity. Assets prices are coming down. This is an opportunity for the prudent investor with cash. Distressed individuals and businesses are going to liquidate assets below market value. This is the time to buy when everyone is in panic mode. Start a business supplying key essentials like soap, sanitizers, masks, etc.
- Convert to dollars. The shilling is likely to take a beating in this period. If you can, start saving in dollars to manage the foreign exchange risk.
- If you are in debt, things may get tight. The corona virus coupled with upcoming elections is bad news for you. The interest rates are going to go up. Inflation is going to rise. Better accelerate your loan repayments. Start negotiating with your bank on how to reduce the upcoming burden. Lenders/Creditors are likely to suffer as well. More people are going to default on their obligations as their incomes dwindle.
- Reduced incomes. Businesses and individuals are going to lose money. Prepare yourself for this possibility by significantly saving up the cash left. Explore new business models like remote online working from home. Several opportunities have showed up in the last couple of weeks.
In any case brace yourselves for the economic storm ahead of us. The prudent among us are going to exploit this opportunity to save more, invest more, and start new businesses. I hope you are one of the prudent ones.