South Sudan academic questions gov’t decision to introduce new currency

JUBA – A South Sudan academic has questioned decision by the government to introduce new currency, days after information minister Michael Makuei said the decision was reached during a Friday cabinet meeting chaired by President Salva Kiir, potentially to force hoarders return money to banks.

In an opinion article he published on the Kenyan Nation today, Jok Madut Jok, co-founder of the Juba-based Sudd Institute and Professor of Anthropology at the Maxwell School of Citizenship and Public Affairs at Syracuse University, said the country is broke as result of corruption.

“Essentially, South Sudan is broke. Its economy continues to be nearly 100 per cent import-oriented and has depleted its foreign currency reserves, all of which have accelerated the depreciation of the South Sudan Pound, sky high commodity prices and ordinary people have just about reached the end of the road with regards to survival,” Jok wrote.

He said one of the main reason for the current economic downtrend in the world’s youngest country is the civil war, which lasted after almost seven years, coupled with corruption from senior government officials and inside the country’s financial institutions.

“What set this avalanche of economic collapse in motion is the civil war that is raging since 2013 and it is yet to be settled. It is also caused by fiscal irresponsibility and a monetary policy that has run out of ideas. Theft of public resources, which is mainly known as corruption, as a way to blur the gravity of it, is also a big factor.

Other practices, including the siphoning off of foreign exchange from oil proceeds to foreign countries, where the families of the most politically established reside, the bleeding of revenue collected from non-oil sources and lack of controls on movement of capital out of the country, are all to blame for the country’s bankruptcy. Covid-19 has also weighed in significantly.”

Madut questioned “How then is a new currency going to be the panacea for these problems? Or is it that the government is merely deflecting from the real issues by making a big deal out of a non-starter? Or perhaps South Sudan is emulating Kenya’s decision to change its currency over fears of money laundering, mistakenly thinking it would also rescue South Sudan’s dying economy? Will it work for South Sudan?

“Well, there is a big difference between Kenya and South Sudan, which is that the hoarding of cash in Kenya was mainly because of corrupt practices by very wealthy people, and so this intervention was designed to smoke them out of their hiding, where billions of Kenya Shillings had been stashed away in some peoples’ safes and out of circulation.

“….the change of currency was meant to prevent these corrupt individuals from laundering these amounts. It worked for Kenya because the reasons for it were clear and precise. Kenya was cracking down on embezzlement and to tackle a wave of counterfeit 1,000 shilling notes. It was not a policy to address issues of foreign reserve, unemployment, commodity prices and inflation. Instead, it was an anti-crime tool. Whereas in South Sudan, the hoarding is done by ordinary people because the commercial banks often refuse to pay depositors on account that there is no fluidity.

“Therefore, changing the currency in this case is not going to stop people from keeping their monies at home if the commercial banks are allowed to maintain their current systems that do not serve the depositors well. The people will just hide the new notes.”