Global Village: Sri Lanka Economic Crisis is closer than you think …

More than ever, we are living in a globalised World. Whatever happens in one part of the globe overtime, seems to have an impact on other parts. We’ve clearly seen that with recent events and today I wanted us to look at one of them: The Sri Lanka Economic Crisis.

How would it affect me you could wonder right? Let me tell you how.

• The Situation in Sri Lanka…

First, let me first say that what is currently happening in Sri Lanka is very sad, not only because of one of my local Sri Lankan friend I became close to when I started taking some swimming classes but because when you look the situation, you can’t help thinking about the fact that these are clearly the premises of what many other people are enduring and will endure in the months and years to come. For people to properly understand, Sri Lanka is not a poor country. When you adjust purchasing power per capita GDP in this nation of 22 million people, it is higher than in South Africa, Peru or Egypt. However the country now faces a political crisis  powered by severe shortages of food, fuel, electricity, and medicine. The currency is collapsing, and the government can’t afford imports or to make its debt payments. I could still see these images of the crowd storming the presidential palace and some even taking a dive into the pool.

When you look at the succession of events that we’ve had so far, it looks like the perfect storm: Covid-19, the Ukraine-Russia War and now inflation. In Sri Lanka, according to Sri Lanka government sources, it has jumped to 54% between Jan and Jun 2022. This is staggering!! So think about what you are going through as a family when feeling the pinch and then think again about what families in Sri Lanka would see then in comparison?

• How did I get affected?

On a more personal and professional note, I have also bene affected! How would you say? Well at the beginning of the year, we were in discussion with a big, large company which was looking to work with us to gain more market share in West Africa and at the time, we made good progress and were looking forward to hitting the ground. We then had to apply some brakes, due to the fact that the World Bank and IMF at the time reviewed down borrowing capabilities ratings of certain countries. As you could imagine, this poured some cold water into their ambitions. They were forced to review their strategy and they then subsequently explained to us that due to Covid-19, and the fact that they are anticipating a recession, they could foresee that those countries with high borrowing costs would struggle to meet their commitments and with the warning from World Bank, they could only withdraw. They were comforted by their decision by the crisis unfolding for months in Sri Lanka. They had invested lots of money in this country and were dealing with the consequences of the current situation. As a big multinational, they could take the blow, this would nevertheless urge them to be more cautious when looking at their expansion plan.

So yes, something happening in South-East Asia was now having a direct impact on my work. Some of you may be in the same situation than me so what would I recommend then is the attitude to move forward?

·        First of all, clearly having a good understanding of the global picture is helpful to figuring out what is the right way to approach the situation.

·        Secondly, where possible I would advise to anticipate and develop a solid and crowded deal flow. Yes, most of your deals will not materialise but surely some will still go ahead.

·        Thirdly and most important as far I’m concerned, keep your calm and keep your focus. Maintain this ability to think through things clearly and make swift decisions.

What is your reading of the current situation in Sri Lanka and based on my advice to you, which one speak to you the most?

Tony Tiyou is the founder and CEO of Renewables in Africa (RiA) is a Clean Energy Company raising Awareness about Renewable Energy in Africa and across the globe. Interested in our Awareness Program? Click HERE to find out more or talk with us on Clubhouse.