South Sudan devalues its currency by 50 percent

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Written by Linda Hohnholz

South Sudan’s Central Bank has finally faced reality when they devalued the currency from the unsustainable rate of 2.96 SSP (South Sudan Pounds) versus one US Dollar to the prevailing black market

South Sudan’s Central Bank has finally faced reality when they devalued the currency from the unsustainable rate of 2.96 SSP (South Sudan Pounds) versus one US Dollar to the prevailing black market rate of 4.50, effective immediately. It was also learned that the Central Bank has now attached agents to each licensed foreign exchange bureau to ensure that all currency transactions are properly recorded and the foreign currency turned into the Central Bank coffers.

South Sudan, Africa’s youngest nation, is rich in natural resources such as oil, but has not been unable to make use of the full potential of such resources for many reasons. First came a sustained dispute with Khartoum Sudan, which demanded extortionate rates to pump the oil through the only pipeline connecting the fields in South Sudan to Port Sudan at the Red Sea. After accusing the Khartoum regime severally of even stealing oil, the South then stopped exports, denying the country revenues which according to data at hand financed up to 95 percent of the state budget. When an agreement was eventually reached after a prolonged halt to oil exports, and before the pumps had reached full capacity again, on December 15 of the last year conflict erupted and many of the oilfields are now under control of the SPLA in Opposition, former allies of regime leader Salva Kiir whom he ruthlessly purged before civil war erupted. That too led to little revenue coming into the coffers of the Central Bank in Juba, leading to a rapid decline in currency value.

South Sudan is also potentially rich in tourism resources, but a fledgling sector was hit hard by the civil war, when in the early stages some of the few tented camps in the parks were raided and looted by combatants. Regulatory measures too did not help the sector in the past, when issues erupted over camera permits, problems with obtaining visas and the requirement for additional registration of visitors – a relic from the occupation days by the Khartoum regime, all thought to have a negative impact on fulfilling the country’s tourism potential.

A great migration of very large herds of game, coming from as far as the Sudd and the Boma National Park along the border with Ethiopia migrate every year to the River Nile, rivaling the Serengeti-Masai Mara migration, but few tourists have seen the spectacle. One of the country’s few surviving safari companies, Bahr-el-Jebel Safaris, has indicated that they might resume their expeditions in early 2015 but this is at present very tentative considering that the armed conflict has not yet ended and political differences between the regime and many of its former members remain unresolved.

The subsequent lack of foreign exchange earnings, something tourism can generate with relative ease, has therefore also contributed to the loss of value of the local currency and after the announcement the black market rate has swiftly restored a differential, albeit not as large as prior to the devaluation.

Said a Nairobi based source when asked to comment: ‘Trying to expel thousands of Kenyans, and Ugandans too, was a very poor move by the Kiir regime. They shot themselves in the foot trying to pull a fast one on their closest allies in the region. They want to join the EAC they say but with currency controls and such huge problems they have no chance to succeed. First they have to undergo structural reforms to bring their economy, their laws and regulations in line with the rest of the EAC before their request can be discussed further. East Africa’s economies prosper because there is a free flow of money in and out of the country. How can anyone invest when you are not sure you can repay your foreign loans when the bank tells you sorry, there is no foreign exchange? Or pay dividends for instance. Now about tourism, they got to bring that war to an end and find a political solution because otherwise, no travel insurance might cover tourists wanting to go into what is broadly considered to be a war zone. So there you have it, a basket of measures is required for them to resume oil exports and attract tourists, and to succeed in the latter, they also should drop all those silly regulations like camera permits and registrations and give Visa on arrival without much ado’.

A hard truth, told as it is. South Sudan indeed has many wildlife based attractions but broad reforms are required to bring it to life, attract foreign investment, see expeditions and safaris being offered in neighboring countries as add-on or extension trips and then begin to create jobs and earn the country easy money from tourists coming to see the migration, explore the world’s largest swamp system, the Sudd and experience the rich and diverse culture of South Sudan’s tribes.

About the author

Avatar of Linda Hohnholz

Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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