Shortly I am from Tanzania an East African country, my last intro post was a couple of years ago in this post.
How I made $264,998 at 26 y.o in 2021 living in a 3rd World African Country
We have been scaling significantly since the last time I posted, expecting to hit at least $2M in revenue this year. We import items anywhere from $50,000 - $100,000 each month and 98% of all our payments for imports are done by US Dollars.
In the beginning, things were easy, take your invoice to the bank, convert your local currency from your account to USD automatically, and make the wire transfer. Easy
From the beginning of 2023, the local currency (Tanzanian Shilling) began taking a nose dive, and exchange rates in commercial banks against the dollar began to sharply rise, Worst of all the US Dollar became unavailable - the banks didn't have any dollars to sell so invoices began pilling up and late deliveries, out of stock inventories increased.
The largest commercial bank in Tanzania even limited the amount of Dollars one can purchase per day to $500 only. That means you have to open a USD account, show up to the bank every day and all you can get is the $500 which is deposited to your USD account, which you accumulate and hopefully after some days pay for an order. As a business, this has knee-capped us greatly, this means for for a $100,000 payment, at this rate you have to wait 200 (working) days!! for one invoice. and on top of that the rates keep rising daily. They have risen more than 15% since January cutting deeply into our margins as we sell by local currency.
We have contracts with major institutions ranging from 1 to 3 years to supply these items at a given price - so simply raising the price is not a viable option for pre-existing contracts.
Methods that work:
1. Card payments still work (VISA, Mastercard, Paypal, etc) and can purchase by debit/credit card on most platforms such as Alibaba, Payment processors like Stripe, etc, but most of our suppliers do not have these available and only limited to a few thousand dollars before the 3% card fees become significant. The challenge here is that most our manufacturers do not accept/cannot receive online payments. Also in Tanzania, you can only send payments via processors like Paypal/Stripe BUT CANNOT RECEIVE PAYMENTS
2. US Dollar payments from the few services we do :- regulatory consulting including pharmaceuticals and medical device registration. Companies that want their products in Tanzania regulated markets do pay us in US Dollars, but the payments are not significant and few in number to cover our needs
Any ideas on how to navigate this? Has anyone here faced these challenges before? I am open to try any suggestions you put forth.
Thanks
How I made $264,998 at 26 y.o in 2021 living in a 3rd World African Country
We have been scaling significantly since the last time I posted, expecting to hit at least $2M in revenue this year. We import items anywhere from $50,000 - $100,000 each month and 98% of all our payments for imports are done by US Dollars.
In the beginning, things were easy, take your invoice to the bank, convert your local currency from your account to USD automatically, and make the wire transfer. Easy
From the beginning of 2023, the local currency (Tanzanian Shilling) began taking a nose dive, and exchange rates in commercial banks against the dollar began to sharply rise, Worst of all the US Dollar became unavailable - the banks didn't have any dollars to sell so invoices began pilling up and late deliveries, out of stock inventories increased.
The largest commercial bank in Tanzania even limited the amount of Dollars one can purchase per day to $500 only. That means you have to open a USD account, show up to the bank every day and all you can get is the $500 which is deposited to your USD account, which you accumulate and hopefully after some days pay for an order. As a business, this has knee-capped us greatly, this means for for a $100,000 payment, at this rate you have to wait 200 (working) days!! for one invoice. and on top of that the rates keep rising daily. They have risen more than 15% since January cutting deeply into our margins as we sell by local currency.
We have contracts with major institutions ranging from 1 to 3 years to supply these items at a given price - so simply raising the price is not a viable option for pre-existing contracts.
Methods that work:
1. Card payments still work (VISA, Mastercard, Paypal, etc) and can purchase by debit/credit card on most platforms such as Alibaba, Payment processors like Stripe, etc, but most of our suppliers do not have these available and only limited to a few thousand dollars before the 3% card fees become significant. The challenge here is that most our manufacturers do not accept/cannot receive online payments. Also in Tanzania, you can only send payments via processors like Paypal/Stripe BUT CANNOT RECEIVE PAYMENTS
2. US Dollar payments from the few services we do :- regulatory consulting including pharmaceuticals and medical device registration. Companies that want their products in Tanzania regulated markets do pay us in US Dollars, but the payments are not significant and few in number to cover our needs
Any ideas on how to navigate this? Has anyone here faced these challenges before? I am open to try any suggestions you put forth.
Thanks
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