It is not a secret that Zambia is now officially in a recession. A recession is simply defined as two consecutive quarters of negative economic growth.
Though we may not have official confirmation, it’s no rocket science to note that Zambia has recorded two or more consecutive quarters of negative growth or economic contraction.
This recession is not unique to Zambia. Most countries are struggling and the situation has been exacerbated by the Covid pandemic. Frankly speaking, for Zambia, the steep depreciation of the Kwacha by over 60% over a one year period is what has really made the situation worse as the country imports most of its consumer and industrial goods.
Of course, Zambia’s economic challenges started even before the the onset of the Covid pandemic mostly through the failure to manage the macro economic variables. For us at ZBT, the failure to manage the exchange rate is one area that needs urgent attention.
If the exchange rate was actively managed, the pain of the Covid pandemic would have been lessened and ameliorated. Forget about the free market economy text books, serious economic management involves some level of planning and management of the local currency.
What are the signs you can look out for, to confirm that there is a recession? There are some tell tell signs all around such as businesses barely surviving and not making any profits, high inflation rate and escalating food prices, companies shedding jobs and people losing their jobs, people finding it hard and difficult to find jobs and make ends meet.
Despite all this gloom around, there are indeed some individuals and companies that will surprisingly make more money during a recession, but the majority will struggle. So, how can you be among those that will thrive? How can you avoid being a part of the group that will feel the brunt of a recession?.
In this recession, you will see some families children having to change schools to cut down on fees. Some of these challenges have even been made worse by the Covid pandemic, we have also seen an increase in domestic violence, in gender based violence and general despair among some of our citizens.
So, now that Zambia is experiencing an economic recession, what can you do at both individual and household level to not only survive the current period, but use it to thrive immediately when the economy returns to its growth trajectory?
1. Live within you means – if you are used to free spending, a recession calls for being frugal, making budgets and only spending according to plan. Live it’s projected, no one can tell when Covid will end, nor when the economy will bounce back.
2. Identify ways to cut back on spending – look at your monthly expenses, do you need the full bouquet for DSTV, can you review your entertainment spend and see what can be rationalized?
3. Grow your savings – this looks counter intuitive, but whatever you can save for a particular month will go a long way to lengthen your period which you can live without a job or income. Make sure you save at every opportunity.
4. Pay down your debts – were you have high interest debt, those debts called Kaloba should be paid down at every opportunity. Failure to pay them down can lead to financial ruin.
5. Improve your education and skills – sometimes, we think of education and skills as enrolling at a university or college, but skills improvement can be focused on gaining skills that will give you efficiency. The skills you get will help you thrive immediately when the recession ends.
6. Supplement your income – you may have abilities that can help you open up another income stream, relying on one income stream can be dangerous as companies are closing suddenly. Imagine people in the hotels that relied on international travel? If you can start a new business or partnership, this may just be the right time.
Since you are now living in the times a recession, don’t despair, the sun will rise. When an economy goes down, when the vaccines that have been rolled out can not cure the different corona virus variants that are emerging, look to longer time horizons.
The fact that this is not the first nor will it be the last recession or pandemic that the country will experience, should tell you that life battles are won over the long term. Think long term. Always remember that times of recession are a test in resilience. BE RESILIENT.
