From Managing Rising Prices to Building Financial Capacity: What Can Citizens Do?

Noman Yousif Mohammed
Former banker and institutional development consultant
In the previous article, we discussed a question that concerns most Sudanese families today: How can citizens cope with rising prices and inflation while preserving their purchasing power?
But there is a more important question worth asking today:
What if the objective were no longer merely to survive in the face of rising prices, but to build financial capacity that makes the family more resilient in the face of future crises?
There is a significant difference between trying each month to keep pace with rising prices and rebuilding how we manage income, expenditure, savings, and work.
Citizens cannot defeat inflation alone
Let us be realistic. Citizens are not responsible for inflation, nor can they single-handedly remedy exchange-rate distortions, weak production, rising transport and energy costs, or market instability. These issues require economic, productive, fiscal, and monetary policies at the state level.
However, the fact that citizens cannot resolve the overall problem does not mean that they are entirely powerless in the face of its effects. There remains a sphere within which they can act:
How do they earn their income?
How do they spend it?
How do they protect part of it?
How do they save?
And how can they convert part of their resources into an asset or activity that generates income?
This is where the idea of financial capacity begins.
From increasing income to diversifying income
We often say that the solution is to increase income. That is true, but the more important question is: Is it enough for a family to rely on a single source of income, regardless of how large that income may be?
In a highly volatile economic environment, dependence on a single source of income is itself a risk. For some families, therefore, the more realistic solution may be to build multiple sources of income, even if they begin with only a small additional source.
An employee with a particular skill may provide services after working hours. A housewife may turn her ability in cooking, sewing or food processing into an income-generating activity. A young person may learn a digital or vocational skill and transform it into a source of income. A family may engage in a small productive activity instead of allowing all its income to be absorbed by consumption.
The idea is not that every citizen should become an entrepreneur. Rather, part of a family’s time, skills and resources should be transformed into productive capacity.
Small savings are not insignificant savings
In times of rising prices, saving may seem like a luxury. Some may ask: “How can I save when I can barely cover my expenses?”
This is an understandable question. But saving does not necessarily begin with a large sum. It may begin with a small but regular amount. The problem is not always the size of the amount; often, it is the absence of a saving habit.
A family that can save a modest sum regularly develops, over time, a different kind of financial behaviour.
Saving is not merely a way to accumulate money. It is also a way to build a margin of safety, so the family is not forced to sell an asset or borrow money at the first emergency.
But saving alone is not enough
This brings us to an important point. In an inflationary environment, keeping all one’s resources in cash for long periods may mean losing part of their real value. Savings should therefore be regarded as a first stage, rather than the end of the journey.
The ultimate objective is for part of those savings—when circumstances, financial capacity and the level of risk permit—to be converted into:
a productive asset;
a store of value;
a small business or income-generating activity; or
an investment in a skill that increases earning capacity.
Here, we move from saving for its own sake to saving to build capacity.
Do not allow all your income to be absorbed by consumption
We are not suggesting that families should deprive themselves of their essential needs. But there is a difference between necessary expenditure and expenditure that can be postponed. There is also a difference between spending that merely consumes income and spending that helps generate new income.
Before purchasing anything non-essential, a useful question might be:
Will this expenditure merely consume my financial capacity, or could it help me increase my income or reduce my expenses in the future?
The answer may differ from one family to another, but asking the question can change how we think.
Investing in people may be the best investment
During times of crisis, people tend to think only about money. Yet one of the most important assets in which a family can invest is the individual:
Learning a trade. Developing a skill. Learning to use technology. Improving marketing ability. Acquiring financial knowledge. Developing a professional skill that can be sold in the local market or remotely.
Such investments do not necessarily lose their value when prices change. A skill that increases a person’s ability to earn may, in some circumstances, be more valuable than a small sum of money kept unused.
Technology is an opportunity, not a luxury
Digital transformation does not simply mean using a mobile phone to communicate. The mobile phone has become a tool for work, marketing, money transfers, payments, reaching customers and even managing a business.
For this reason, the shift from cash to digital savings and payment methods can help families build a better financial record, organise their resources, and reduce some of the risks associated with cash transactions.
More importantly, digitalisation can bring financial services closer to citizens, particularly those with low incomes and those engaged in micro-enterprises.
Co-operation can reduce the cost of living
Some things are difficult for an individual to achieve alone but become possible when a group of families or producers work together:
collective purchasing;
collective production;
joint marketing;
shared transport;
co-operative associations;
savings funds; and
joint ventures.
These are not new ideas, but they may become even more important during times of crisis. A citizen who cannot achieve economies of scale alone may sometimes achieve them through co-operation with others.
From “coping with rising prices” to “building financial resilience”
We may not be able to prevent prices from rising tomorrow, but we can ask ourselves:
Do we have more than one source of income?
Do we have a habit of saving?
Do we have an emergency fund?
Do we have a skill we can convert into income?
Do we own a productive asset?
Are we using technology well?
Do we know where our income goes?
Can we reduce some expenses without harming our basic needs?
Can we co-operate with others to reduce costs or increase income?
These simple questions may be the beginning of a major transformation.
A final word
The Sudanese citizen today does not need idealistic advice such as “spend less and save more”, because reality is more difficult than that. What is needed is a new way of thinking:
Protect your income. Diversify its sources. Save, even if only a little. Invest in your ability to earn. Convert part of your resources into productive assets. Use technology. And co-operate with others.
The state is required to reform the economy, increase production, stabilise the currency and provide a suitable environment for investment and employment. But until major reforms are achieved, citizens can begin by improving what lies within their own sphere of influence.
The real response to inflation is not to chase rising prices every day. It is to build a more diversified income, more conscious spending habits, more regular saving and greater productive capacity.
Citizens cannot defeat inflation on their own—but they can reduce inflation’s ability to defeat them.

Shortlink: https://sudanhorizon.com/?p=17340