Mon, June 24, 2024

'It’s impossible to not talk about politics when we talk about economy or business'

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On my mind

The recent surge in IPO declarations to me seems a little off the mark. I question its purpose and the due diligence that has gone into the prior processes including questions on a company’s earnings and sustainability. I am no financial expert but common sense tells me that not all IPOs are equal. With the IPO frenzy in its heat, investors must remember to ask some basic questions: Who is selling? Who are the Board of Directors? How much of the holding is being sold? Who is the broker? How much of the IPO is being underwritten? Why is the IPO happening - for growth capital, as a retention tool for staff, to pay back debt, or simply because the IPO window is open and they can. When is it happening - is it when business is scarce and what are the consequences of that? What price are you paying and why is it priced the way it is? Have you taken the company’s performance into account? What are the risks?

While inflation is still high and the road to normalcy is long and uncertain, it is important to know that at its best, the government can only soften the blow but not shield its citizens. From pandemic disruptions to government interventions, from Russia-Ukraine war to national political instability, consumers have been burdened with increasing prices on everything. Hiring has slowed down, layoffs have happened, small businesses have closed, and salaries have stagnated with no clear solution in sight. The monetary policy is a tool to control inflation but the NRB approach does not seem to be working. While prudent measures have been adopted to maintain some form of stability, it has hit the private sector hard which in turn hits the poorest people the most as they have the lowest resilience to economic shocks.   

It’s impossible to not talk about politics when we talk about the economy or about business. With an inconsistent parliament and frequent change of ministers, the economy takes a backseat over power struggle. Added to that is the unfolding drama of corruption cases seeing the light of the day with some of the country’s most respectable names mixed up in the deed. Severing the symbiotic connection between business and political elite is complicated and even cases that see the light of day often dissolve into pending files and legal inaction. Combating corruption then remaining a feel-good slogan.

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MAY 2024

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