Leadership changes often come with both advantages and disadvantages. The recent executive orders by US President Donald Trump, including the freezing of US aid have raised concerns and potential impacts on a number of countries and organisations that heavily rely on this funding. For Malawi, where foreign aid plays a significant role in supporting key sectors like healthcare, education, and NGOs, these changes might have far-reaching effects.
President Trump ordered a 90-day break in what is termed an Executive Order on reevaluating and realigning United States Foreign Aid.
While the current stop order is temporary, it is important to prepare for any potential long-term impacts. The most immediate impact will be job losses. Employees of the affected organisations may lose their jobs, resulting in an immediate loss of income. This would obviously disrupt their financial stability, making it difficult to afford necessities such as food, healthcare, and education for their children and themselves, especially those pursuing further education or career advancement.
Another imminent impact is increased stress. The uncertainty and financial strain can take a significant psychological toll on individuals and their families, negatively affecting their overall quality of life and contributing to a rise in mental health challenges.
Those who recently accepted job offers and are in the process of transitioning roles may find themselves in a difficult situation that could lead to unemployment. For the organisations, this may result in legal battles if not handled well.
The other impact is the loss of benefits. Many organizations offer critical benefits such as medical insurance, funeral cover, training opportunities, and retirement contributions. Losing these benefits can have long-term effects on employees’ well-being and financial security. Additionally, this could impact pension administrators, as job losses may lead to a reduction in retirement contributions.
At Old Mutual Malawi, we understand the importance of financial resilience during uncertain times. Here are some tips to help you stay prepared:
- Prioritize needs over wants: Focus on essentials like food, rent, utilities, and school fees for dependents. Temporarily reduce spending on entertainment, dining out, and luxury items. Furthermore, track expenses by using a simple budget tracker to monitor how expenditure and identify areas to cut back.
- Start saving whatever you can to cover basic expenses in case of job loss or income delay due to the freezing of the aid which at the moment is temporary. It is advisable to automate the transfer of savings into an instrument that brings growth to the invested money. At Old mutual we have the investment option through our Unit trust.
- Think of what you might start doing to generate additional income, for example, small businesses in case the situation turns negative. You may also seek temporary work or permanent work in sectors less affected by the freeze. Diversifying your income streams can provide additional financial security during uncertain times.
- If you have financial commitments such as loans, consider negotiating with lenders for more flexible repayment terms or lower interest rates. If you’re renting, look for more affordable housing options to reduce your expenses, allowing you to save more for emergencies.
- Financial challenges can affect the entire household. Have an open conversation with your family about the situation and explore ways everyone can contribute to cutting costs. Encourage children and dependents to understand the importance of cutting costs during tough times.
Above all things, stay positive by focusing on what you can control and remain hopeful for new opportunities. These challenging times require careful planning and resilience. With the right approach, you can reduce the impact and prepare for a more stable future.
For personalized financial advice and solutions, visit Old Mutual Malawi or contact one of our financial advisors today or send your request to: bchiluzi@oldmutual.co.mw .
