Appearing before the defunct legislative assembly on Thursday, South Sudan Minister of Trade and Industry, Hon. Kuol Athian, told the lawmakers that the economy is collapsing and there is nothing they can do about it.
“Currently, we are not able now to control the market. We are completely powerless. We cannot regulate the market to solve this problem,” Kuol Athian told the parliamentarians on Thursday.
To shed a little hope on the situation, Hon. Athian said his leadership is encouraging corporate companies and foreign governments to buy local products such as honey although the government is not harvesting or funding local farmers to produce it.
Hon. Athian believes if the local producers of honey increased honey production and sales, the country may regain some hard currencies.
“We want to encourage corporate societies to control the black market, we want to encourage them to buy local products because there are so many local products in South Sudan needed in other countries,” Hon. Athian suggested.
“The Japanese ambassador came to us and said they need a big quantity of honey. There is another company in Juba producing honey. We want to encourage them to buy big quantities of honey. If this corona stops, the business people will come and buy honey. Honey will bring hard currency which will come through the central bank,” Hon Athian continued.
The minister of trade and industry regrets there is nothing the government can do to stop the currency from depreciating or to stop prices from rising.
South Sudan’s currency is on a free-falling trend, losing its value as the black market and commercial banks are taking over the powerless central bank.
The second deputy governor of the Bank of South Sudan, Daniel Kech Pouch, declared last month that the bank has ran out of hard currency and therefore South Sudan government controls no foreign reserves.
Root causes of economic collapse;
Apart from the civil war that is among the main root causes of economic failure, there have been allegations of corruption in the central bank for years.
Dating to pre-dependence, senior politicians, generals, and members of the central bank have been accused of setting up a parallel (black) market where their young nephews would sell hard currencies the politicians would acquire from the central bank at a much cheaper rate.
This went on for years and the government did very little about it.
Last week, the Central Bank was selling $1 US at 16 SSP but the black market was offering 43 SSP for $1 US meaning those who had access to Central Bank, mostly politicians, could make between 170% to 200% in profit.
As of Friday, 1 US dollar was being traded at 510 SSP and by next week, the pound could lose its value even further.
In addition to the parallel market, South Sudan is in debt crises of almost $100 million US that it owes to Commercial banks. So far the Central Bank has failed to back it back.
Last week the minister of trade and industry revealed that the government has lost control of regulating commercial banks because whenever its attempts to regulate the commercial banks, which are mostly Kenyan banks, the banks threaten to drag the central bank to court.
In addition, commercial banks claim that they have lost trust in the government for failing to regulate the black market.
In addition to local crises, South Sudan is also suffering from the fall in oil prices at the internal market.
It is not clear if the ongoing flood in the region has also affected oil production in Sudan’s; however, it could only make a worse situation worst.
South Sudan is trying to diversify her economy that depends on 98% on oil revenues to other local products, taxes, and customs revenues; however, rampant corruption in all these sectors is making it nearly impossible for South Sudan to raise enough money from non-oil revenues.