By Bida Elly David
South Sudan’s hyperinflation puts the country’s local currency at a diminishing stage as continuous cash outflow due to cross-border trade coupled with import driven economy weakens the South Sudanese pounds against the US dollars in foreign exchange market.
Abraham Matoch, an economic expert told this paper in an exclusive interview, that the Central Bank policy of controlling speculation of currency in the market is bearing no fruits since the Country’s economy is monopolized by foreigners.
Abraham, stated that the Central Bank is mandated to ensure that the Country’s currency strive in the foreign exchange market.
He further noted that devaluation of a Country’s currency constitutes into automatic market inflation saying unless government intervenes with concrete monetary policies the economy will continue to weaken.
The economist underscored that South Sudanese exporting money for educating their children, buying houses in foreign Countries, partaking on recreation have highly contributed to the current economic crisis in the Country.
He suggested that government ought to centralize the use of South Sudanese pounds in the country and make it compulsory for traders and buyers stressing that any trade transaction must be carried through the bank.
“The foreign traders investing in South Sudan must in fact use South Sudanese currency to avoid money outflow from South Sudan (to) other countries. People are now using very much dollars through black marketing making the outflow of currency to be too high,” he said.
Abraham also pointed out that failure to fix a constant exchange rate as well as leaving the few market speculators to operate black-market will bring no economic reforms.
“An economy that relies on its own currency can easily progress and move further. If the currency circulates inside the Country, our small businesses will be vibrant. Central Bank has to promote the monetary policy of strengthening the currency,”
He cited that the economy of Kenya, Uganda and Ethiopia has improved because of the resources being challenged there for development.
“The impact of the cash outflow leaves South Sudan with nothing to circulate and that is why our economy is not growing. We need to emphasize on the face that any foreign investor coming to South Sudan must use our local currency,”
As 100$ clocks to 91,000 SSP while commodity prices increase, Abraham urged financial institutions to wake up from sleep and rescue the Country from recess.
“There is only exception for trade and it must be done through the bank. If the investor wants some equipment from abroad, this is when the exchange could be done officially through the official channel so that it is also taxed,” Abraham noted
Meanwhile, a foreign trader venturing in suit business in Juba’s Libya market who chose anonymity admitted the fact that he does not have any cash transaction with any bank in South Sudan saying that he does not trust the policy.
He stated that the rate of random taxes at the border as well as security charges in the market has generated doubling of prices on their goods.
Reacting on the dominion of businesses by foreign merchants, the trader said running business depends on the interest of the person but not government making it compulsory.
“We did not take businesses from local trader or refuse to cash Cheques with banks but the taxation policies on us are hectic. Revenue authority at the border, security in markets charges us highly. We also use dollars as our means of currency because it is the only one used in international trade so we can’t be blamed,” he said
The businessman said unless government reforms its weak policies on taxation South Sudan currency will continue to weaken and the market will be under foreign monopoly since the locals refuse to venture into business.
Recently, the governor of Central bank had promised to impose serious measures against any foreigner who shall be traced leaving the Country with lump sum cash out of the amount specified by the government.
He also said that they were going to beef off black market speculators but since then nothing has changed.
The Central Bank is yet to comment on the non-compliance of business clients to adhere to its directive of using local pounds as the sole legal tender for the payment of goods and services in the country