Why Capital Markets Matter in Africa

Why Capital Markets Matter in Africa

"Markets come and go. Good businesses don’t."
Fred Wilson, co-founder of Union Square Ventures

Let’s face it, Zimbabwe’s economy is crazy right now. There are no words to fully describe the struggles we’re having locally. Cash is tight. And there are domino effects in every aspect of doing business here. Even daily life is hard.

One recent domino we’ve been experiencing involves the lack of power. Power cuts are common here. But when you don’t have power for days straight, team communication begins to collapse.

"Let’s all meet on Friday morning to go over next week’s projects." Then Thursday evening comes around and everyone’s phones are dead. No one knows for sure where we’re meeting or the time—who’s in charge of what, because we haven’t been able to communicate for 2 days.

It all goes back to face-to-face. And even that’s tough in a business environment where payrolls aren’t on time—so how can your team get to work without cash for fuel or fare?

The constant that I see, even with the turmoil economically, is that when a business produces cash flow and you can finance your business, the changes in tie capital markets globally are not likely to affect you as much.

Now, if your business consumes capital and needs more of it, then changes in the capital markets can affect you—and heavily in Africa.

This is why it’s critical to get your company to break even and producing cash flow as soon as you can.

Even when cash flows are slim, if you’re able to finance your company directly, then it’s uncomfortable, but not crippling.

Bootstrap until you cash flow, then continue that lean mentality in difficult economic times. It will save your company and keep your lights on (when there’s power).

Here’s to business growth and better times ahead—despite what the capital markets are doing.

(photo via alberto carrasco-casado)