A South Sudanese economist is calling for banking reforms and accountability to improve the country’s wavering economy.
“People don’t trust banks anymore. When people lose trust in a bank, then the business will no longer be there,” said Prof. Abraham Matoc, the Vice-Chancellor of Dr. John Garang University of Sciences and Technology. “There should be a law and if any bank doesn’t go according to the regulations, the Central Bank should withdraw their license and shut them down.”
As South Sudan continues to suffer high inflation rates and economic instability, experts say the government needs to focus on rebuilding trust in banking institutions by rooting out corruption, relying on economic experts, and following through on implemented policies.
Two weeks ago, the Bank of South Sudan (BOSS) announced it would increase its interest rate to 15 percent as one of the measures taken to address runaway inflation – a move experts have said won’t make a difference due to the informal nature of South Sudan’s economy.
“All banks should be controlled and we should have a general reform,” said Matoc, who is also a professor of Development Economics and an author of books on the South Sudanese economy. “When banks are also involved in the black market that is why the hard currency exchange rate keeps on going higher.”
Three months ago, the former governor of the Central Bank, Jamal Wani, told the press that the top bank did not have enough foreign reserves as it used to due to low revenue collections and conditions created by the Coronavirus pandemic.
Matoc said the Central Bank must strengthen its national banks and reduce reliance on foreign banks.
Edmund Yakani, the Executive Director for the Community Empowerment Organization CEPO told Radio Tamazuj in a separate interview that he doesn’t believe the current Minister of Finance will build a transparent ministry if he doesn’t clear some of those directors in the Ministry of Finance.
“If you bring Jesus Christ, the savior, the Son of God, and appoint him as the Minister of Finance in South Sudan with those corrupt directorates, believe me, Jesus will never work cleanly with the Holy Spirit. Jesus will be accused of being corrupt, simply because there are directors and inspectors in the ministry of finance that is more corrupt and they have hijacked the Ministry of Finance to become their property,” Yakani said.
The activist urged the government to immediately put in place a proper financial system that will clear these corrupt officials, saying they have negatively affected the markets in the country.
“There is a need to investigate the civil servants working in all government revenue collecting entities from the ministry of finance – migration, customs, traffic – and to everywhere where everybody has the mandate to collect revenue, they must be investigated before the reshuffle,” Yakani said. “If you reshuffle them, you will move Zacchaeus from the ministry of finance to migration and move maybe Judas Iscariot's from migration to customs. They can communicate and will remain.”
Activist Yakani said the current economic crisis needs technical expertise and not political appointees. He recommended to the president to constitute committees composed of academia, such as university economists, to investigate the employees that are working in the revenue collecting entities.
“If you are moving with goods from Juba to Wau you will face over 15 roadblocks and these blocks all of them have taxes,” he said. “Some of them are called removing the robe fees, fire brigade’s fees, wildlife fees, and even including the defense, they are also collecting revenues.”
Yakani also suggested that there is a need for the government to encourage the South Sudanese pounds SSP by making it the currency of trading in South Sudan.
“When you go to a hotel you will get the invoice in dollars not in SSP and the government is not contributing to empowering the SSP to become the currency to be used in the market. Even an electric power in Juba is selling tokens to the citizens in dollars. Look at these corrupt practices,” he said.
The economist Matoc said commercial banks are partly to blame for the low use of SSP, saying they should ensure that customers can access their money when they need it.
“I am looking at it as a joint blame among the government, banks and citizens as well,” Matoc said. “Our economy is not productive because our money is kept at home and we all depend on dollars. That is why the money is not being circulated. Our people don't know about business, that is what is making our economy weak.”
“But when a citizen goes to a bank and there is no cash available, this will make them withdraw their trust in that bank,” he added.
Matoc said one of the worst contributors to the economic downfall is related to foreigners controlling much of the market. He said that makes it more difficult for the government to impose policies that bolster the local economy.
“Foreigners are here to make money and when they earn they take it outside the country. They take money from here and go to Uganda, Kenya, and other places to build houses there,” Matoc noted.
He said even South Sudanese business people don’t always feel encouraged to invest within South Sudan.
Yakani further called on the parties in government to commit themselves to the implementation of the peace agreement as the only option and long-term strategy in correcting the situation.
Currently, in South Sudan, it takes nearly 180 SSP to buy one US dollar with the Central Bank’s rate. At the beginning of 2016, it only cost 17 SSP for one US dollar.
The currency has been losing value for years. On the black market, it now costs between 500 and 600 SSP for one dollar while in 2013 and 2014 the rate was steady at around 4 SSP to a dollar.
To stabilize the economy, experts say banks need to ensure they have enough funds for people to withdraw regularly. That requires the responsibility of all sectors – including the citizens.
Matoc said for things to improve, people need to invest in South Sudan.
“If you don’t invest your cash, there is no benefit in your money. You don’t have to treat cash and keep them in the house as cows or goats. No, it is different,” he advised.