LOCKDOWN AFRICA

LOCKDOWN AFRICA

By Aldous Mangadza

The Economics of Survival

When someone is surviving on a hand to mouth principle it means there is a very thin separation between capital, expenses and profit.Capital and expenses are so close to each other such that a small mistake in calculating the expenses result in what I call capital trespass.This is a situation when one fails to calculate or project the operating costs such that you end up using the set capital to cover the expenses.This does not just eat up the capital but lead to growth stagnation.Another factual challenge is failure to separate between sales and profit.In a hand to mouth situation sales and profit are so tightly glued together such that in most cases they are often deliberately misconstrued.

What Happens in Lockdown period?
One sad scenario predominant during lockdown is when at the beginning of 21 days national lockdown one went home with let's say $200 capital.The $200 was kept as a reserve capital to be used to restock after lockdown.Is this going to be possible for someone surviving on hand to mouth? I do not think so. Hand to mouth situation for someone buying and selling products means everyday he or she has to hustle and work not to earn a profit but to put food on the table.
This implies that for a hand to mouth business in just a day of lockdown the 200 dollars put aside for restocking after lock down would start being consumed.

This means even after lockdown the hand to mouth trader will be at zero capital and virtually out of business.The business will suffer what I would call cutworm syndrome where it will be cut down before it can even realise any fruits.

Unfortunately majority of the businesses in Zimbabwe are at this stage where they are still on Hand to Mouth level.This translates to imminent after lock down shocks that may be catastrophic