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In many African countries, political seasons bring more than just campaign rallies and policy debates—they often disrupt business activities, creating uncertainty for investors. Unlike a few stable democracies where economic activities remain largely unaffected, many African economies experience fluctuations that can either open new opportunities or force businesses to shut down. This reality leaves investors, especially new ones, questioning how to navigate such unpredictable conditions while protecting their capital and ensuring sustainability.
Last week, I had an insightful discussion with a group of entrepreneurs about how businesses can stay afloat despite political influences. The conversation revealed some powerful strategies that every investor should consider when operating in unstable environments. Here are the key takeaways:
1. Be Strategic When Dealing with Banks
Financial institutions are often among the first to feel the effects of political and economic instability. Governments may influence banking policies, leading to tightened regulations, restricted access to credit, or even temporary freezes on accounts. For investors, this means being cautious when taking loans, securing funding, or conducting major transactions. Here’s how to safeguard your financial position:
- If you rely on bank loans, negotiate flexible repayment terms to accommodate potential economic downturns.
- Diversify your financial assets—consider holding funds in multiple institutions or even different currencies to hedge against inflation or liquidity crises.
- Always maintain an emergency cash reserve to avoid disruptions if bank transactions become difficult.
2. Don’t Invest All Your Capital at Once
A common mistake new investors make is committing all their funds upfront in the hope of quick returns. However, in an unpredictable business environment, a phased investment approach is far safer and more sustainable.
- Start small and gradually inject capital based on market performance and stability.
- Observe economic trends before making major financial commitments.
- Keep part of your capital liquid so you can pivot or reinvest in emerging opportunities as situations change.
3. Focus on High-Liquidity Investments
During uncertain times, the ability to recover your investment quickly is crucial. Certain businesses, especially those that require large upfront costs with long-term payback periods, can be risky when the environment is unstable. Instead, consider investments that offer faster returns and allow easy cash flow management. Some good examples include:
- Trading fast-moving consumer goods (FMCGs) since demand for essentials remains steady.
- Short-term asset leasing where you can earn regularly while maintaining asset ownership.
- Digital and e-commerce ventures that require minimal physical infrastructure and can adapt to changing circumstances.
Final Thoughts
While political and economic instability can be challenging for businesses, it also presents opportunities for strategic investors who know how to navigate uncertainty. By being smart with banking decisions, phasing investments, and focusing on high-liquidity ventures, investors can not only survive tough times but also position themselves for long-term success.
In business, adaptability is key—those who plan ahead and remain flexible will always find a way to thrive, no matter the circumstances.
About the author
Dr. Jjuuko Derrick, is a pharmacist with a keen business acumen. Having dedicated much of his career to engaging with business owners and employees, he brings a unique blend of pharmaceutical expertise and business insight to the table. As an entrepreneur himself, he is passionately committed to leveraging his technical skills and entrepreneurial experience to foster the growth and development of multiple businesses. Driven by a mission to make a meaningful contribution to the business landscape, he stands ready to empower entrepreneurs with the knowledge and tools they need to thrive.
