Devaluation is here, tighten your belts

Dust is yet to settle on the 44 percent devaluation of the kwacha the Reserve Bank of Malawi (RBM) implemented on November 9 2023 in a desperate bid to “realign” the kwacha and narrow the gap between the official and parallel aka black market dollar cash rates.

Coming after the kwacha had lost about 13.1 percent of its value against the dollar through foreign exchange auctions between January and October this year and an earlier 25 percent in May 2022, the impact of the decision has been huge. Many are yet to get to terms.

Devaluation is a monetary policy decision where a government, through the monetary policy custodian, in our case RBM, adjusts downwards the value of a currency relative to another currency.

Well, devaluation is a double-edged sword. It is a painful prescription which one has to endure to get better. Perhaps the question would be: Having had this prescription before, why is it that as a country or an economy we do not seem to be responding to the treatment? Did the doctor prescribe wrong medicine or did the “patient” not follow the instructions on how to take the medicines?

Much has been said about devaluation and its impact as well as cushioning measures for the vulnerable households.

Devaluation is here and it has shaken the economy as individuals and corporates alike have been thrown into disarray as their plans have kind of collapsed. For those who made some gains towards recovery, it is a big setback.

But then, life must go on. That is the harsh reality. How one embraces the devaluation and moves forward will be critical to survival. One thing, though, the syndrome of negativity and denial should be avoided at all cost.

In times like these when the economic environment is harsh, it is an opportunity to go back to the drawing board and review one’s lifestyle and expenditures. It is a fact that not everything we spend money on is what we need, we can do without some.

Budgeting, networking, learning and utilising skills and the discipline to invest or save can make a difference towards financial stability post-devaluation.

Self-discipline and sacrifice are critical. This will demand that you spend wisely while investing your money in diverse avenues, including the money market and the stock exchange. Talk to financial and investment advisers such as Bridgepath Capital, Cedar Capital and Nico Asset Managers for guidance.

Prices of goods and services as well as utilities, notably electricity have gone up in the aftermath of devaluation. The water boards are also seeking a 44 percent tariff increase over and above the upward adjustment approved in June this year. However, your income has not increased, this is where the discipline to budget and stick to it comes in. It will also be important to cut down on some items while avoiding wastage on what we have.

When you go shopping, do not be inspired by impulse-buying. Draw your shopping list and stick to it, but also check around the shops for bargains.

During tough times like these when everything except the salary has gone up, borrowing is seen as the escape route. Here I would urge caution as the cost of borrowing will go/has gone up too so it may not be wise to borrow, especially for consumption. Where you are to borrow, it should be for a meaningful investment, not “to drink your sorrows away” or otherwise.

Take time to explore your talents that can make extra income for you. For ladies, it could be hairdressing and offering treatments such as pedicure and manicure or even being make-up artists for brides.

My fellow men you can explore venturing into carwash business with added value such as cleaning the vehicles right at the client’s premises. This can be done with the help of assistants you supervise. These are enterprises one can start by offering the services to a small circle of friends, but with potential to grow big.

Still on talents, moderating events for corporates or making presentations on topics one is familiar with can also help raise extra kwachas.

The starting point would be to network with those already in the business, ask them to give you a slot at one of their next team-building or masterclass sessions. People such as Audrey Mwala of Sycamore Consult, Emmanuel Mulele at Service Touch, Chisomo Mwamadi at T-Vents, Patrick Achitabwino of BYC International and others can come in handy. You may even start on voluntary basis to build yourself.

The going has become tough, the centre seems not to hold, but in all this let us sober up and explore the options to overcome the storm.

Tighten your belts, review your lifestyle and make appropriate changes as it can no longer be business as usual.