Managing finance during the Covid-19 pandemic
By Mwanahiba Mzee ~ Experienced Banker on 22 Apr 2020Finance
As the world and indeed Tanzania is battling Covid 19 Virus, many people have been asking about the best actions in terms of finances and investments while assuring themselves of good health and protection against the virus. I have decided to write and share few things that need to be observed during these times, drawing from personal experience and learnings from various sources:
To spend Vs to save
This is the time of saving whatever you have. People need to spend wisely as employers are looking at reducing costs due to slow down of businesses, retrenchments and lay offs are unavoidable. Save, save, save. Spend only on necessities. Whatever is not necessary can wait.
To invest Vs to save
If you have fewer sources of funds, please save more and refrain from investment. Keep your funds in savings account that have no restriction on withdrawal as you never know when you will need them.
If you have more than enough funds, keep some in a savings account, and keep some of it in short term fixed deposits as liquidity is more important at these times than profits. You also need to have the funds ready to be able to take up any opportunity in assets acquisition as most people who will be struggling with liquidity will opt to offload non cash generating assets, possibly below the market value of those assets.
For Individuals, engage your bank to renew your credit card or overdraft facilities and request for postponement of loans instalments. Some of you have already experienced the effect of this pandemic heads on, you have experienced reduction in sales for your businesses, requests for reduction of rents for premises owners or have already lost jobs. It is important to engage your lenders and request for up to 3 months instalments postponement immediately.
If you have a fixed deposit which is not encumbered, it is advisable to engage your bank and request for standby overdraft facility for emergency. For those who have Treasury Bills or Treasury Bonds, you can request for overdraft from your bank and put the T-bills or T-bonds as collateral.
Businesses should ensure their credit lines are valid and available in need as cash outflows might exceed the inflows. Review the business ability to pay loans, where necessary engage the lenders now for and rescheduling / restructuring of loans and moratoriums.
Micro, Small and Medium Enterprises
Review your business and adopt quickly to the current opportunities. Quickly establish ways for your businesses to provide the goods and services currently required. Soaps, Sanitizers, Disinfectants, masks, protecting gowns, etc. Educationists should quickly organize themselves and come up with online syllabuses and find ways to ensure they are credible in the eyes of examination authorities. Hotels, Hostels, Schools, Colleges and the likes can start engaging the government now to be on standby when the need arises to support the government on quarantine facilities. Some of these premises can be converted into temporary hospitals or health centers in need.
Ensure your family and employees / workers are protected by providing all essentials as recommended by Government Health Officials, remember their health is your health. Split your employees into shifts to avoid all of them being at risk at the same time. For those who can complete their work from home, ask them to stay home and equip them to work efficiently. Where practical, ask some of them to proceed on leave to create renewed back up for those who will be working. Support your employees beyond workplace as much as you can so as the entire Team survive this period in the best ways possible.
Stay at home, Stay Safe and comply to Government Directive
By Mwanahiba Mzee ~ Experienced Banker
Disclaimer: The content of this article is drawn from experience and personal judgement
and is not by any way reflecting the position or opinion of the writer’s employer.