By Bida Elly David
South Sudan National Transitional Assembly on Monday passed the Banking and Financial Institution Bill 2012 amended 2023 to its third stage with observations and recommendations.
The Bill committed to the specialized committee for economy and finance for scrutiny, is meant to regulate functions of international and national commercial banks with a focus on monetary utilization.
During deliberation on the bill, lawmakers criticized the lack of public awareness regarding policies on deposits, interest rates, and loan collateral, in the banking system.
Government chief whip, Rebecca Joshua Okwachi argued that citizens have been deprived of knowledge of the banking system.
She said educating citizens on the banking system would encourage them to avoid domestic savings which comes with uncertainties.
“Our people outside there have been complaining much about their relationship with the banks. The challenge could either be the education that is needed to understand banking and different types of banks,’’ she said.
Hon: Rebecca said the Bill is very important in addressing issues of interest rates on bank deposits and discounts against withdrawals by banks.
“There are also concerns about which types of banks coming from outside. As a new Country, we also have banking businesses that will come in. This act will help us to know the types of banks come in and the regulations,’’ she added.
A legislator, Hon. Michael Ayuen Johnson blamed the Central Bank for failure to direct commercial banks in advancing loans to citizens to establish businesses.
Hon: Ayuen said public financial institutions have been overpowered by foreign commercial banks and non-governmental organizations (NGOs) in monetary control.
“On claims that our own bank, the Central Bank of South Sudan is not trustworthy to keep their money. They claim to have experiences where accounts having money have been emptied through overdraft.
Michael said foreign institutions have been the source of black-marketing.
“They take money to the black-market launderers to exchange in order to pay workers,” he said.
The legislator noted that with the bill, there is an urgent need for the institutions to resolve the numerous financial predicaments impacting the nation.
He urged the Central Bank and ministry of fiancé to restore the national agricultural bank to offer loans to farmers.
However, the Central Bank governor, Johnny Ohisa refuted the claims that the institution leads had failed to direct commercial banks to give loans.
He said commercial banks lost trust in giving loans to borrowers over defaulting.
“On the loan issue, commercial banks were giving loans before 2013, however commercial banks lost a lot of money due to the fact that people did not pay back, or people ran or some of them died after the conflict,’’ he said
Ohisa said citizens have also been challenged with the condition of collateral demand by commercial banks, noting that most of those interested in loans don’t have assets to guarantee payments.
He added that South Sudan also still lacks laws regarding what assets to be utilized as collateral security while seeking loans.
The governor further said the central bank was working on financial reforms that will require top decisions that might lead to the closure of some of the banks that are not working.
He promised to reform the banking sector through the bill that is yet to be enacted into law.
Ohisa reiterated his commitment to prioritize 95 percent employment of youth in commercial banks and introduce monetary instruments to combat inflation and the foreign exchange monopoly.
National minister of justice and constitutional affairs, Justice Ruben Madol Arol on the 28th of April 2023, presented the Banking Act 2012 (Amended) Bill, 2023 to the august house requiring review of the act to conform to Articles 4.7.1 and 4.7.1.2 of the R-ARCSS 2018.
However, the commencement date for the third reading of the Banking Act has not been communicated.