Uganda is still grapples with the deadly Coronavirus that brought COVID-19 where by many people are suffering and the economy bouncing.
The economic experts said that it’s just the beginning, because the worst is yet to come and the biting recession will be felt long after the COVID-19 pandemic has passed.
However, as individuals and companies struggle to stay afloat amidst the COVID-19 pandemic that has ravaged lives and economies world over, Kampala mogul Dr Sudhir Ruparelia, of the Ruparelia Group of Companies, has come up with expert advice on how to survive the looming economic recession.
According to Dr Sudhir, who is an accomplished businessman, entrepreneur and hotelier, everyone, both individuals and companies, can emerge out of the COVID-19 economic recession stronger than ever, because this is not the end of the world, no matter how difficult the situation is.
Suffice it to note that we are currently entering into recession period globally and the exception is likely to be India and China with approximately 2% GDP growth in 2020, which is way below the 5% – 8% seen in the past several years.
What will change during the Economic Recession:
According to Dr Sudhir, like the economic recession of the 1930s and the credit crunch of 2008, the COVID-19 economic recession is bound to bring about lots of changes in the patterns of consumption and purchasing power.
For instance, spending on luxury goods will come down drastically; Long-term / Capital expenditure such as construction, technology, will be almost cut to nil.
Lifestyle expenditure such as salary, rent, infrastructure, entertainment, will be minimised;
Working capital will be under tremendous pressure. Businesses will go out of business especially those who are riding on borrowed working capital, whereas new innovative business models, with potential to attract funding from investors, will evolve and thrive.
What will NOT change during the Recession:
Despite the economic pressures brought about by the COVID-19 economic lockdown, there patterns that will not change and these include;
People’s consumption on essentials will continue. A rise in investment on ideas/technology solutions that will improve efficiency will be witnessed. Short-term trading businesses with healthy cash flow practices will thrive.
There will also be a rise in investment on spiritual/self-learning practices, which are not drastically affected by unforeseen calamities like COVID-19 or climatic changes.
Besides all the above, Value for money products / services/intellectual property will shine.
What You Ought To Do As An Individual To Overcome the Situation:
Hold back any luxury / high-risk investments where visibility of returns is difficult to predict;Minimise expenditure on the routine stuff – keep a watch on your lifestyle spends – ask the yourself question, is it really necessary?
Develop yourself on improving competency and developing skills to become sharper and efficient;Share the financial situation with your family members and educate them on the family financial position and the plans to improve;Invest – yes invest in the right things. History repeats itself. Take risks based on thorough research. This is not the time to follow tips.
How To Survive the Recession As An Entrepreneur:
Take care of your employees – communicate more than ever. Be reasonable and transparent with them;Use the slowdown to improve your processes / people;Invest in technology / systems that will accelerate your reach in adding value to your customers;Be frugal in working capital decisions and operating expenditure so as to scale down on costs of operation.
Capital expenditure to be on hold unless there is clear visibility on the associated returns;Let us get smarter by helping ourselves and the economy to bounce back stronger.