The world turbulent is characterised by conflict, disorder, or confusion, instability or a lack of calmness.
Dictionaries describe turbulence as “a situation in which there is a lot of sudden change and confusion”.
It would be fair to use any of these words to describe the emotions of the average Namibian over the last three years, with each year seemingly worse than the previous one.
We are still emerging from the economic fallout of Covid 19, followed by the Russia/Ukraine conflict, which have led to relentless increases in the prices of commodities, cost of production and currency fluctuations, which have all significantly increased inflation.
On top of this, Namibians and South Africans continue to experience sharp increases in the repo rate.
Times are tough, inflationary pressures are real. However, there are some tools which can help us tighten our belts.
THE DEBT TRAP
I will never forget the look on the faces of some West African friends during their first visit to Namibia.
“Wow, Namibians you’re doing really well… look at these properties and you all drive new cars.”
But are we? Are we really doing well?
Do we have money? Or are we simply paying ‘rent’ for the homes we claim to own and the vehicles we drive?
As much as I understand and recognise the concept of ‘good debt’, the reality is many people are ‘debt trapped’.
A prominent bank recently released astonishing figures that revealed that middle income earners spend up to 80% of their monthly salary within five days.
One may well ask “where does the money go?”
Most of the 80% goes on credit obligations: Mortgages, vehicles, loan repayments and food purchases.
This suggests that the average middle-income consumer, earning between R180 000 and R500 000 a year, survives on 20% of their monthly salary for more than 20 days a month.
In addition, salaried middle-income consumers with secured and unsecured credit spend, on average, 30% of their income on unsecured credit and 35% on secured credit. (News24, 2022.)
To say we are overstretching ourselves with debt facilities is an understatement. Unfortunately, we have a financial system that enables us to acquire just about anything on credit.
This has blinded us to considering alternatives – buying without using credit!
So, before you plan for your next big purchase, consider saving towards that particular purchase and buying cash, which is a common practice in West Africa.
I’m an avid coffee lover. I simply can’t function without my morning Cafe Negra. I need another one around midday and probably a third towards the end of the day. I will not compromise on the quality of my coffee.
One day, I sat down and calculated how many coffees I drink in a week, weekends included, and let’s just say I wasn’t impressed with myself.
We all have those one or two, or even more, little ‘splurges’ we just can’t seem to do without.
You know, they make our days seem to go so much more smoothly.
For some, it’s a favourite food, or a small addiction to shopping for new clothes; for others it may be a glass of expensive wine or whiskey at the end of the day
Do you need to have your drink at a bar? Or could you buy your drink of choice more cheaply at a store and enjoy it in the comfort of your home?
Indeed, introspection might reveal that we do not need all the new clothes, shoes and other items we frequently and recklessly splash out on.
Peer pressure is common among particularly young people.
One would think it was something we leave behind at school. But no, for many it continues through their 20s, 30s, 40s and beyond!
Unlike the peer pressures of youth, adult peer pressure involves serious life decisions, the kind that lands all too many people in debt.
The constant need to show friends and family you are doing well, that you are at their level of success, or doing better than them, results in people living beyond their means.
The cars we drive, where we live, what we wear and the schools we send our children to are just some of the common pressures.
Trips to the coast, the need to travel every long weekend or the endless weddings, baby showers, bridal showers, birthday parties and countless other social events we never seem to decline attending.
Surely we would be able to stretch our income if we could learn to simply say “no” to some of these events.
- Inyemba Kamwi is a business and economics lecturer with the International University of Management. She is also the founder of Alketas.