Central Bank’s SSP 10 million cash withdrawal limit sparks mix reactions

A move by the Central Bank to drive South Sudan towards embracing a cashless society and a 10 million South Sudanese Pounds maximum withdrawal limit by individuals and entities from banks has sparked mixed reactions from economic experts.

Addressing a press conference on Tuesday afternoon at the Bank of South Sudan (BoSS) headquarters in Juba, Governor James Alic Garang said they intend to discourage people from carrying large amounts of cash and instead move towards a cashless society and mobile banking.  

“The maximum limit for cash withdrawal across all channels by public sector institutions, government spending agencies, corporates, and individuals is SSP10 million,” he stated. “The public is urged to join the banking system by opening bank accounts to facilitate their receipts and payments or promote digitalization of financial services.”

He encouraged commercial banks to make the account opening process easier for all customers, especially those traditionally excluded by the banking sector, and also encouraged citizens to embrace electronic payment platforms, including mobile money, and credit and debit cards, which incur low charges on transactions, while offering convenience, and establishing individual credit history. 

“This new policy direction underscores the importance of digitalization and deploying related fintech applications. The proposed financial instruments and the necessary steps to ensure their effective adoption will reduce the risks associated with carrying cash,” Governor Alic said. “It will also ensure convenience and speed, while allowing the Bank to exercise greater control over the cash in circulation, thereby improving the conduct of monetary policy.”

Reacting to the new development, Dr. Abraham Maliet Mamer, a Juba-based economic analyst, said digital banking at this stage is yet to be realized as an alternative and that the Central Bank needs to establish who is our the economic players with money are and educate them.

“Our economy is not formal and the informal economy has 80 percent of our people, they are doing their business outside of the formal economy. Therefore, doing digital banking will not change anything yet because the small business people will still use cash as a medium of transaction,” he explained. “So, I do not think it is the right time to do this as we speak because you need to educate people first, increase the education so that we understand what the meaning of mobile banking is, and then also you reform the banking sector itself.”

Dr. Maliet added: “We need to educate ourselves first to know what it means to have your money in a mobile format or the mobile banking system because we believe in keeping our money in cash because people feel that banks are not safe compared to their backyard.”

He also said that the SSP 10 million maximum cash withdrawal will not have any impact in the economy as most of the currency in circulation is not in the banking system.

“What you should do before is put some measures which will compel people to bring their money back into the banking system, and then after you know exactly how much money has come to your circulation, that is when you can put measures such as limited withdrawal,” the expert stated. “Banking transactions and limits will come when you know exactly how much is back to your banking circulation. But as we know, there is too much money outside there. I wish they could have asked for advice because the best thing to do if they want to do that is to change the currency first, then everybody will run to the bank.”

According to Dr. Maliet, when you change the currency, you then put a condition that people have to deposit their money in the banking system after which a cap on withdrawals can be implemented.

For his part, Prof. Abraham Matoch, an economic expert and former Vice Chancellor of the Dr. John Garang University of Science and Technology, welcomed the move by the Central Bank for a cashless society, saying it will improve on the telecommunication infrastructure.  

“This has been delayed for no reason, it is important to implement it, and that will also speed up the Ministry of Telecommunications and ministries and institutions concerned with connectivity in terms of mobile connectivity to expand and at least cover the whole country because there should be no part of the country left behind. Telecommunication is very important for everybody, so, it is a good decision at the right time,” he said. “It is another way of speeding up the infrastructure electronically, the institutions that are involved in the network like MTN and others have to at least have the infrastructure in all places. The world is going ahead and we cannot remain behind. Banks should also be spread out all over the country so that the communities, especially the rural ones, benefit from small loans.”

Meanwhile, Francis Matseketsa, the MTN South Sudan Fintech CEO, welcomed the move by the Central Bank, saying it will make their work easy.

“This is the greatest news of all time for South Sudan because we have been finding it difficult to get particularly merchants to adopt digital payments. Now that the government and monetary authorities have taken this move, it makes our job easier,” he stated. “We are super excited to run with this work to ensure that we digitalize payments. We have the tools, the distribution, and the weaponry to make sure that the millions of customers who are holding phones have mobile money wallet accounts. We accept a wide variety of customers to bring them to drive financial inclusion in digitizing payments.”