JUBA - 16 Jan 2016

South Sudan Beverages Ltd. to shut down in March

South Sudan Beverages Limited, one of South Sudan's largest private for-profit employers, is expected to shut down operations in March this year due to lack of dollars to run the business, the company's parent organization said.

SSBL, owned by South African drinks company SABMiller, has existed since before independence producing White Bull and Nile Special beers as well as Coca-Cola and other soft drinks.

SABMiller spokesperson Richard Farnsworth said in an email to Radio Tamazuj from London that due to shortages of access to hard currency in South Sudan, they are unable to purchase imported raw materials from Uganda necessary to continue production.

"There is currently an acute shortage of access to foreign exchange in South Sudan which means our business there, South Sudan Beverages Limited (SSBL), has been unable to buy raw materials," Farnsworth said. "As a result, SSBL has had to take the difficult decision to start preparing to wind down production operations once its existing inventory of ingredients runs out."

Unless the situation significantly improves, the expect to bottle the last batch of drinks for sale in March before converting the property into a depot for distributing imported beverages from Uganda.

"This scaling back of our operations will directly impact the vast majority of SSBL’s 237 employees and indirectly affect thousands of other individuals and businesses across the value chain," Farnsworth said. "We are monitoring the situation intensively and our priority is to work with affected employees to help them as far as possible but we regret to say that this appears the most likely outcome in the current circumstances.”

Devaluation bites

SSBL had laid off staff and reduced production in August 2014 because the company could not get enough dollars to buy imports, but managing director Carlos Gomes said the latest decision to eventually close the brewery came after the devaluation of the South Sudanese Pound by over 80% one month ago.

"We had large South Sudan Pound deposits in the bank at the time the devaluation was announced," Gomes told Bloomberg news service. "The end result is that we incurred a loss of tens of millions of dollars, placing SSBL in an even worse position than it was."

Before devaluation, only a few close associates and relatives of the president had access to dollars at a cheap rate of around 3 SSP to the dollar from the Central Bank, while most other businesses were forced to buy dollars on the street for around 18 SSP per dollar.

While devaluation has now equalized the playing field, there has been a sharp rise in commodity prices including of fuel which jumped from 6 SSP to 22 SSP per liter. Government salaries have not yet been raised to adjust to these price rises.