South Sudanese currency devaluation is a mere fraud, not a brilliant solution
By Deng Akoi Agoot, Juba, South Sudan
February 27, 2016 (SSB) — Firstly, I congratulate the most known peacemaker, exemplary leader, SPLM chairman, and commander in chief of SPLA, H.E president Gen: Salva Kiir Mayardit for a tremendous development aspects since the creations the days of Adam and Eve. I am too humbled to express my emotional attitude for your success as president of our beloved nation, may you keep climbing new heights of success ever, forever, and after. Your dedication, passion, and perseverance has contributed to the integrity congratulation.
I would also pass my gratitude to fellow south Sudanese for stand firm and have heart of our country despite the fact that we are being treated like an imbecile second class citizens in our own country, do not surrender whatsoever thou Life is brought into a pot of hot potato by brothers and sisters who assumed ambition and leadership for their benefit. God has a plan for us and shall not be in vain. “maburuukat el lekum” for voted wisely during the referendum which lead to independent.
Fellow readers, I opted to jot down this piece of an article because treasurers and thugs are maneuvering funds in the name of improving ailing economy through currency devaluation, which was not the real motive but the main objective is clean and clear strategy to fraud liquid rather than devolution.
However, the idea of currency devaluation wasn’t bad, traditionally it is a tool use by a desperate government with poor economic police to rescue the country from collapsing. Hence, people keep saying, currency devaluation will impact on economy when they are not very much aware of methodologies and prosperous principles to be used. On my view, the following questions could have been asked.
1-How does the devaluation of currency affect the economy of the country?
2-How does it affect import and export?
3-What are the impacts on the common men in the country?
But unexpectedly, Hon Deng Thorbei, and Hon Koryom Mayiik who are the most gamblers of economy refrained from asking such a vital questions. Here is the general overview of effective devaluation, the primary purpose of currency devaluation is to devalue exchange rate to make export more competitive and cheaper to the foreigners, this will increase demand for export and therefore if export increase then the import will decrease drastically because it will not be competitive.
Meaning, the gross domestic products (GDP) are much cheaper than imported products, this will simply boost the chronic poor economy. Inflation occur when import is higher than export in the sense that the assumption demand (AD) increase, this cause competition over a products which resulted into a higher prices. With export becoming cheaper the manufacturers may have less incentives to cut costs and become more efficient. Therefore, overtime cost may increase this will also increase the benefits of employees. And as the result, an ordinary man can earn living.
This is the logic and motive behind currency devaluation. But the question is, does south Sudan have domestic products? In order to abolish culture of importing foreign products from East Africa which is the main cause of inflation. Do we also have sufficient foreign exchange reserves known as dollars to be able to purchase all offers of currency to level market force?
If not? Then it’s meaninglessness to devalue our currency. And anyone could be right to say, currency devaluation is a mere conning strategy rather than devolution. Look at China, Germany, and Argentina devalued their currency and they are still leading a very successful economy. Why? Because they have adopted and used right principles of money devaluation without goonism.
It’s unhealthy to devalue currency up to almost 80% and expect changes out of flagging economy. Take example of South Africa and China devalued their currencies only by 2% compare to 80% of south Sudan. This is totally a joke which brought this national economic turmoil. The last misleading resort claimed by central bank in conjunction with ministry of finance to devalue currency in order to attract investors has despicable disadvantages the publics whether in diaspora or within the country as many more students who are pursuing their studies outside have deferred class sessions because of fees payment and these are tomorrow leaders.
The opinion of an officially lowering exchange rate value of south Sudanese pounds (SSP) does not, cannot, and will never bear fruit at all, as you can experience from the current approximately rate of 3,700 ssp against 100 dollars in black market compare to previous exchange rate of 1800 ssp against 100 dollars in black market before devaluation. Nature and common sense can dictate idea of currency devaluation. Leave alone the vulnerable south Sudanese who are traumatized and disabled by economic crisis.
Remember, he who think is leading and has no one following him is just taking a walk. I was overwhelmed when I read the circular articulating that money has been devalued and dollar will be more accessible to beneficiaries, which doesn’t happening but it turned to the other side of the coin leaving ordinary citizens more vulnerable than usual.
I asked myself why should it happened that way. When millions of dollars is being allocated weekly to citizens through commercial banks. Anyone can concluded that one of the following entities might be lying, either central bank or commercial banks. Look, commercial banks give out zero dollar to Beneficiaries in the watch of central bank. Why? Because birds of the same feathers flock together, the deal is always kept sealed and by the time the fools learned the game, the players dispersed.
There is always a hidden deal between central bank and commercial banks, based on allocation. As allocations are given to whom you know but not to who you don’t know. This define (BOSS) as a bank of sectarianism.
The bank of south Sudan is not trustworthy to subsidize dollar because they are also indulging in black marketing and it’s evidenced.
But a monetary authority like central bank is always an institution that manage money supply and interest rate, also usually oversee the commercial bank operational system and posse a monopoly on increasing monetary base in the state. It should also act as the lender of last resort to the banking sectors during the time of bank insolvency of which they failed.
Moreover, they have a supervisory powers intended to prevent bank runs and to reduce the risks that commercial banks and other financial institutions in reckless or fraudulent behavior. This is what every central bank does in the world but surprisingly, BOSS as a national entity without fear, shamelessly involved in black marketing and approving bidding to the wrong banks of their choices on condition of getting a profit share.
Thus, it is a disease that need to be treated by specialist like late Hon Elijah Malok Aleng. May your soul rest in peace uncle things fall apart in your absent. You were a legendary mentor leader who distance himself from corruptions and misuse of public funds, well known for integrity.
Your economics back ground from Fribourg catholic university Swaziland, and Cambridge University in the United Kingdom assisted in installing bank of southern Sudan (BOSS) system congratulation.
The technical measures that could have been use by the government to control uncontrolled inflation as they said is to demonetize the currency of higher denomination, this monetary measure reduce abundance black money. With the help of fiscal measure to control government expenditure, personal consumption expenditure, private and public expenditure. The government should also reduce unnecessary expenditures on non-developmental activities e.g V.I.P bonus, and random accommodations in order to curb inflation.
These can also put a check on private expenditure which is dependent upon a government demand for goods and services. A deferred payment should be introduced, where a saver get his/her money back after some years. For this purpose the government should float a public loans carrying high rates of interest, start saving schemes with prize money or lottery for long period. It should also introduce compulsory provident fund. Therefore, it essential to include measures such us increase taxes, surplus budgets, rational wage policy, and prices control. This is how a healthy government should normalize inflation and benefited from its resources not only to dwell on oil productions. What about countries who excelled in development without natural resources.
As from the above various monetary, fiscal, and other measures I illustrated, it become clear that to control inflation the government should adopt all measures simultaneously. Eventually, Inflation is like a hydra headed monster which should be fought by using all the weapons at the command of the government.
The Writer is a commerce student at the university of Nairobi, and accessible through bongteng 11 @gmail.com
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