Tighten belts as ‘Canaan’ is still out of sight
If you are able to read this, then you have made it into 2023. I wish you a belated happy New Year and may God be praised for the gift of life.
We are five days into the New Year, but if economic growth projections are anything to go by, we have all the reason to get worried as it appears there will be no end in sight to the hardships faced in 2022.
In fact, International Monetary Fund (IMF) managing director Kristalina Georgieva has bluntly stated that “this is going to be a tough year for most of the world economy, tougher than the year we’re leaving”.
If the stunted economic growth comes to pass, this should be a fatal blow for many Malawians who are barely surviving as the cost of living continues to go up.
Life has become so unbearable that a 50 kilogramme bag of maize, the staple grain, now fetches K26 000 from around K10 000 a year ago in a country where the minimum wage is at K50 000 and K38 000 for domestic workers.
In such circumstances, it is a far-fetched dream to expect an average Malawian to have three meals a day, kudya katatu pa tsiku as the Tonse Alliance promised during the campaign for the court-sanctioned Fresh Presidential Election held on June 23 2020. The biblical ‘Promised Land’ of Canaan flowing with milk and honey has turned into one flowing tears.
While at that, the Centre for Social Concern estimated its Basic Needs Basket, a minimum required for a family of at least six to survive, at K307 000 as of September 2022. On the other hand, United Nations agency, the World Food Programme’s Minimum Expenditure Basket pegs bare survival at K92 000 per month. From the estimates and the minimum wage, many Malawians cannot even breath as not many take home K100 000 a month.
Multiple international news source quotes Georgieva as having indicated that slowing economic growth in the world’s three big economies, namely the United States of America, the European Union and China will have a knock on effect on the entire global economy, including Malawi.
It is projected that one third of the global economy will be in recession, a period of significant decline in economic activity in a country characterised by slowdown in employment, industrial production, dwindling incomes and no visible economic growth.
As if that is not enough, new Covid-19 infections in China and travel restrictions imposed for travellers in some jurisdictions also threaten to worsen the situation.
In all this, you and me will not be spared as the situation means that businesses will struggle to source capital for expansion as the cost of money, interest rates, will likely go up. It calls for real austerity measures, further tightening of belts to survive. Where one has some assets, it is advisable to take a wait-and-see approach by clinging to them instead of disposing them off in desperation.
For Malawi, it also means the foreign exchange situation will not improve and the acute shortages experienced in the past year will prevail. Tough.
The IMF has forecast global economic growth to drop to 2.7 percent or even less in 2023. This is in sharp contrast to six percent in 2021 and 3.2 percent in 2022. To achieve meaningful growth, economists contend that an economy should grow by at least six percent consistently, but Malawi has averaged a paltry two percent growth in recent years.
In such desperate times, everyone wishes to make quick bucks through investment. My advice remains that every investment is risky, but minimise the risk of loss by being on guard against conmen masquerading as investment fund managers.
Be resilient as American attorney Elizabeth Edwards said: “Resilience is accepting your new reality, even if it is less good than the one you had before. You can fight it, you can do nothing but scream about what you’ve lost, or you can accept that and try to put together something that’s good.”
