The Headache of Managing Cash in a Tough Economy

By: Luis Colaco, Director, Sub-Saharan Africa, Consumers – EFG Hermes Research

It has been a tough year for most companies with the shilling losing ground to the dollar, a rise in fuel prices and an increase in the cost of borrowing money – interest rates.

While these have grabbed headlines, one pain which has severely affected industries in Kenya especially manufacturers, is the payment of excise duty on a daily basis.

Excise duty is a tax charged on goods and services manufactured in Kenya.

Following the enactment of the Finance Bill 2023, the payment of the daily excise taxes took effect in August 2023.

The impact from all the above shocks and regulatory measures has seen manufacturers face tough options in managing their cash; and we are likely to see many companies not generating as much cash as was the case in the past.

Manufactures will have to manage their inventories better, hold back on dividend payments, extend their debt repayment and negotiate with their suppliers in order to manage their cash flows better.

An example is listed manufacturer EABL. Cash flows in Kenya are being hit by challenging macro environment and by the daily payment of excise, despite taxes holding in EABL’s half year for 2024 (July to December 2023)

If you are giving money to the government earlier, it means your working capital is declining, impacting your ability to generate cash.

EABL generated Ksh11 billion from cash of operations in the year ended June 2023, a significant drop from the Ksh25.9 billion it generated the previous year.

Our estimates are that it will generate KES4.2bn of free cash flow in the current financial year which ends in June 2024, but we acknowledge that the visibility on earnings is, at this stage, low.

Rising inflation has pushed up the prices of raw materials, forcing manufacturers to pay more for their cost of goods (lower margins) or pay their suppliers in advance (working capital investments).

Manufacturers have, as a cautionary measure, held onto a higher inventory of raw materials to avoid disruption and a hike in prices.  This constrains the manufacturers’ working capital.

A major setback for Kenyan manufacturers, especially those importing raw materials, has been the undervaluation of the shilling to the dollar.

This has made importation of raw materials expensive because manufacturers have to spend more shillings to buy the dollar.

The shilling opened the year at Ksh123 to the dollar, but it has since depreciated to Ksh152, a 23 percent decline.

Furthermore, accessing dollars has been a challenge for the manufactures because of scarcity of the greenback.

Manufacturers are therefore forced to hold onto more dollars so that they have enough currency to bring in imports.

Manufacturers must walk a tight rope to balance inventories, manage their cash reserves and grow sales. This is forcing manufacturers to think about their debts and dividend payments.

Against this backdrop of slower cash generation, currency fluctuation and payments of suppliers, companies are likely to be more cautious in paying their dividends.
This article was first run on Business Daily

Don’t Let These 3 Common Myths Scare You from Investing

Investing is often perceived to be a daunting venture, especially for individuals overwhelmed by the finance world. Some perceive it to be a complex financial venture, while others believe it requires high financial expertise. These common misperceptions often act as a barrier, hindering their aspirations for financial growth. The truth is, when you detach myths from reality, you will uncover a world of financial opportunities. So, without further ado, allow us to debunk 3 common myths to help launch your journey to financial freedom.

#1 Investing is Only for The Wealthy

The notion of investing being exclusively for the elite is predominantly false. In truth, there are numerous options for investors with all kinds of budgets and risk tolerances. Over the past few years, investment platforms have risen to offer individuals a low-cost entry. Applications such as EFG Hermes ONE don’t require a minimum amount in bank accounts to start investing. No matter your investment choice, be it stocks, bonds, or mutual funds, or how much you choose to begin with, what truly matters is taking the first step to benefit from the power of compound interest. This will enable even the smallest investments to grow significantly over time, especially when made consistently.

#2 You Must Constantly Be Glued to Daily Stock Movements

The belief that you must continuously be consumed with daily stock prices and financial news is a popular misconception. As with anything in life, overconsuming anything is not advisable. While staying informed about the companies’ history, current status, and potential growth in the future, along with monitoring your portfolio, is essential, being hyper-vigilant may result in trading impulsivity while also clouding your strategy rationale. Remember, a diversified portfolio and a long-term investment mindset triumph over market fluctuations over time. So, make sure to review your portfolio periodically or when needed and adjust it accordingly to make your money work smarter for you.

#3 All Forms of Investment are Too Risky

The bottom line is that not all investments are equally risky. While some investments are riskier than others, low-risk investments are available to meet your risk tolerance and financial goals. Additionally, it is essential to recognize that risk can be managed through diversification. Diversifying your investments across various industries and asset classes reduces the chances of your portfolio underperforming.

Furthermore, short-term market volatility has contributed to the risky reputation of investing. Although markets can experience fluctuations over a short period of time, history has proven that investments tend to recover and provide positive returns over long periods of time. Take Warren Buffet’s strategic approach; for instance, the successful investor has long benefited by investing in companies during times of distress. His tactic has progressed as market conditions began to change over the years, eventually resulting in Apple constituting over 45% of the Berkshire Hathway portfolio. This shows that adopting the long-term perspective is crucial for successful investing.

In conclusion, understanding the truth and explanation behind each myth enables you to make smarter investment decisions. Don’t let fear and myths hamper you from moving forward. Do your due diligence, conduct thorough research, and remember that fear and misinformation are some of the most significant setbacks for growth and prosperity.

A Quick Guide to Personal Security

In today’s digital age, overlooking security is no longer an option. Technology is pervasive as it transcends all ages, cultures, and socioeconomic groups. Its widespread presence creates more opportunities for cyber threats to become increasingly prevalent, which is why individuals need to be well-educated and adhere to safety precautions to shield themselves against the emotional and financial alarms caused by cyberattacks. So, in honor of Cybersecurity Awareness Month, here are four different methods hackers can use to access your account and ways to ensure you are fortifying your digital presence and logging in with confidence.

  1. Protect Your Password at All Costs

Your password is the gateway to your identity, as it serves as the initial defense barrier against hackers and their ability to access unauthorized personal data. Here are the most prominent risks that come from leaving your password unprotected and how to avoid them:

a. Cybercriminals will purposely keep your password unchanged when they hack your account to avoid drawing your attention.

Change your password at least twice a year and always use 2-factor authentication to enhance security in digital interactions.

b. Hackers are aware of our forgetful nature and inability to recall our passwords. Hence, we stick to the same password across all accounts.

Always have a minimum of 2 passwords to prevent a domino effect if one of your passwords is violated.

c. Hackers may try to steal your password, sometimes even by asking you directly and posting as a trusted individual or entity.

You should never give your passwords, PIN codes, or OTPs to anyone, no matter who they claim to be.

  1. Shield Yourself from Identity Theft:

Your identity is intrinsically tied to your data and privileges, making it a prime target for hackers to steal. Understanding and learning how to combat these critical risks is pivotal to protecting yourself. Here are some common methods used by hackers to steal your identity.

a. “Phishing,” is a type of cyber-attack that occurs through email by manipulating you into believing you have received a shipment or a money transfer. These deceptive tactics can often trick you into revealing sensitive information, such as usernames, passwords, credit card details, and personal identification numbers (PINs)

Always ensure that your emails are being sent from legitimate sources and that the link leads to your actual service provider domain.

b. “Smishing” attacks through mobile messages (SMS) by convincing you that your bank account is suspended and asking for your password.

Financial and government institutions will never ask you for your credentials, so don’t fall for the trick or click on any of the links included in these messages.

c. “Vishing” is a form of cyber-attack that stands for “voice phishing.” It involves cybercriminals using phone calls to trick you into believing your details need to be updated.

Financial and government institutions update data only in their branches and never through the phone, so do not respond to such requests and immediately hang up respectfully.

  1. Don’t Fall for the Bait:

Hackers and cybercriminals may often try to manipulate you using “social engineering” methods into disclosing confidential information to grant them unauthorized access to your account. Unlike traditional hacking methods that exploit technical vulnerabilities, social engineering exploits human psychology and behavior, as listed below.

a. “Rumors” that salary increases have been put on hold or that one employee’s salary is higher than others.

Usually, the threat actors use this provocative misinformation to push people towards collecting information from them; hence, it is always recommended to never overreact to rumors in order to ensure your safety.

b. “Over-Friendliness” through asking for personal details, such as birthdays, birthplace, family details,

Many individuals include personal details in their passwords. This makes passwords predictable and susceptible to being cracked. Be very careful with whom you share data with and opt for robust, unique passwords not associated with readily available information about you.

c. “Personal Overtelling” involves someone pretending to have an intimate or close relationship with you to persuade you into sharing personal information.

Threat actors will give you fake intimate data about themselves to push you to do the same; never feel obliged to reveal your personal life, no matter how trustworthy they are.

  1. Guard your Social Media Privacy:

When hackers and threat actors target individuals, they regularly follow a process that begins with information gathering about their target. This phase is essential to them as it allows them to understand their targets’ vulnerabilities, habits, and routines before trying to attack. Here are some examples of how the information-gathering process may occur:

a. Through public personal profile details, usually referring to information that is intentionally made available to the public, including your name, profile picture, location, etc.

Hackers and threat actors may try to guess your password based on your personal details. Therefore, never leave your personal details public or include them in your password.

b. Fake recruiters: Threat actors may masquerade as recruiters/talent acquisition to get your CV, which contains personal details.

Always make sure the recruiter’s email is not a public domain email (,, etc.), and always visit the website in the email domain to ensure this is a real company.

c. Location and travel sharing: Usually, threat actors are interested in knowing your location to approach you with social engineering techniques.

Keep your live location private and share your experience after the travel but never during it.

In conclusion, personal security is a dynamic and ever-changing process that requires continuous proactive measures. By embracing an unceasingly educational, vigilant and adaptable culture, individuals can confidently navigate the digital world while safeguarding themselves from personal threats.

Keeping your financial anxiety in check

While money can be a source of security, it can also be the emblem of stress. With the world’s dynamic environment and hyperinflation, it’s hardly a surprise that many of us feel the added financial pressure on our shoulders. The burden of new responsibilities and dilemmas can often make one feel anchored in the same position —a universally unwelcome feeling, right?

Regardless of how complex the emotion may be, it is essential to realize that financial stress is ever-present and that there are actionable steps you can take to help regain control of your well-being. Here are some tips to help lessen the burden.

Face your financial reality

Though it may be easier said than done, dedicating some time to identify the source of your financial worries is an important step in creating a plan to tackle those concerns. Such challenges may include difficulty meeting payment deadlines, keeping up with monthly installments, facing upcoming expenses, worrying about future financial security, or fear of missing out on social events (FOMO), etc. Pinpointing the leading cause of your worries can enable you to proactively plan and make positive changes.

Know you’re not alone

Carrying financial weight is one thing, but feeling completely alone is a different challenge.

Amidst the global challenges, it is important to remember that you’re not alone on this journey. Whether it’s paying your bills, saving for the future, or simply making ends meet, nearly everyone has endured being financially overwhelmed; these are shared experiences. Seeking support and venting can be cathartic and helpful in finding solutions and working towards financial stability. So please reach out to family members, friends, colleagues, a therapist, or simply journaling; there are many resources and people out there to support you!

Don’t overexpose yourself to financial news

While it may be difficult to escape, reducing your daily screen time is extremely important, as constantly being exposed to distressing updates in today’s world can cause a state of information overload, igniting a feeling of uncertainty. Therefore, it is important to find the right balance to help you fill that void and ensure that the information you are consuming is reliable and beneficial rather than emotionally overwhelming.

Take time out

Sometimes, taking a break from your 9-to-5 and slipping out of your daily routine can be the best way to cope with stress and reset. Leveraging your time off work by revisiting your old hobbies, trying new experiences, or reaching out to an old friend/family member can help distract you from the everyday noise and awaken new sensations and perspectives.


In conclusion, we all wish there was an off button for our worries and distress. Amidst life’s challenges, it is important to acknowledge the full spectrum of your feelings and remember that they are only temporary. Focus on the silver lining of everyday life and dedicate time to care for your mind and self. Trust us on this one; it’s a cycle worth repeating.