South Sudan: Traders Abandon “Fluctuating Local Currency” For U.S. Dollar
One of the measures would require that business transactions are conducted in the local currency, according to Makuei.
Business leaders in South Sudan’s capital, Juba, say the government’s new rule ordering all transactions be conducted in South Sudanese pounds rather than U.S. dollars puts their businesses at risk of going under — while others say it’s a good idea.
Last week, Information Minister Michael Makuei told reporters the government adopted 34 measures recommended by a committee appointed by President Salva Kiir a month ago to address the country’s economic crisis. One of the measures would require that business transactions are conducted in the local currency, according to Makuei.
“All the contracts that are made, even rent of houses, rent of cars, everything here in South Sudan is in hard currency. Why should we use hard currency at a time when we have our national currency? All contracts are supposed to be in national currencies, not in dollars,” he said.
Lisok Emmanuel, managing director of the Juba-based Vast Printing Company, said it’s not the first time the government issued a sweeping currency order.
“Four years ago, there was something similar that was announced that every transaction has to be done in SSP, which myself as an individual, I really appreciate that so our currency can pick up so at least the local person can make a life. But now everything is in hard currency. Everything is in dollars, dollars, dollars,” Emmanuel told VOA’s South Sudan in Focus.
While he agrees with the order, Emmanuel noted the change will limit the ability of business owners like himself to import goods because it restricts access to hard currency, something he said is already in short supply in Juba.
If the government does not enact policies to ensure a sufficient supply of dollars, Emmanuel said businesses like his could fail.
The head of the one of the biggest companies involved in South Sudan’s oil sector also embraced the government’s new rule. Robert Mbesa, chief executive officer of Trinity Energy, told South Sudan in Focus that doing business using local currency is a global practice which strengthens a country’s economy, but he also advised the government to enact policies that boost local production.
“Invest in productive capacity, whether it is a factory, a farm, or agro-processing plant, do that and then reduce imports, reduce the pressure on the pounds by producing most of the things in the country and therefore, the pounds which fall over time, will start strengthening.
When other people outside the country start demanding goods from South Sudan, that is when the foreign currency will start falling but the local currency will also start strengthening,” Mbesa told VOA.
Early last week, the value of the South Sudan pound dropped to its lowest level ever against the U.S. dollar. A week ago, the dollar was trading at 450 South Sudanese pounds. Shortly after the government announced plans to introduce a new currency in an attempt to control inflation, the dollar was trading for 700 South Sudanese pounds.
South Sudan’s economic problems require enforcing the rule of law and restoring stability, according to Okumu Bosco, a lecturer of economics at the University of Juba.
“Even if the rule is there, someone is playing on top of that rule so making even what should have been done without serious follow up cannot be done,” Bosco told South Sudan in Focus.
He said security also plays an important role because even if some goods are produced locally, others need to be imported, necessitating well-maintained roads.
Many roads in South Sudan are impassable, especially during the rainy season. In addition, there have been numerous attacks on passenger vehicles and humanitarian convoys traveling across the country.
Bosco urged disciplined and transparent management of South Sudan’s resources to help rescue the country’s economy.
© Voice of America