Management BYTES #1

As part of the monthly Vista Views newsletter, we have been wanting to start a series of short articles focusing on relevant business issues. Here is the first one in this series — a very short master class we hope you’ll enjoy reading.

Importance of Managing Inventory and Collections—Especially in an African Context

Consider working capital like the sugar in your body: too little, and it leaves you weak and struggling; too much, and if left uncontrolled (like diabetes), it becomes energy-sapping and works like cancer, requiring urgent attention.

Africa is a high-cost lending environment, with borrowing rates ranging between 20% and 30% in most cases. Let’s take a midpoint of around 24%, which equates to 2% per month. This means that any excess inventory or overdue debtors above the agreed norm cost the company an average of approximately 2% per month, eroding the value of this capital.

On top of this, consider the risk of exchange rate devaluation, which we have all experienced between 2023 and mid-2025. The value of outstanding or excess capital erodes very quickly. We call this wasted capital–capital that was not required and is not built into business plans.

In a business environment where margins are already thin, a company’s success depends not only on profitability but even more on how tightly it manages its working capital–particularly inventory and debtors.

Businesses that allow ‘cash’ to sit in warehouses or in customers’ pockets are effectively financing their operations with expensive bank debt. Every delayed payment or slow-moving/excess inventory can trigger costly overdrafts or loans. In Africa, where credit is scarce and interest rates are steep, this inefficiency can be fatal.

On the other hand, companies that master working capital do not just survive, they dominate. In Africa’s financial landscape, control of overdue market outstandings and inventory is not just good practice—it is a survival strategy.