South Sudan: Transform our Banking Systems – Transform our Economy!
8 min readBy Kuir Mayen Kuir, Nairobi, Kenya
Wednesday, October 10, 2018 (PW) — At a time, it is very healthy to emulate some positive transformation. In the contrast this aspect of transformation does not just come when it has never been sought for. It takes people’s competence and integrity to land on this vital aspect of life. I think this is the time that the central bank of South Sudan should seek systemic transformation in order to find our way out of this economic mess.
It may not be easy but it begs for attention by the concern stakeholders in the economic departments in south Sudan. Why do I say this? We all know that our economy is nearing to hit its final breath and soon it shall be nowhere in the economic pathways of the world. To whom shall the blame settled on? Someone at the ministerial seat of the central bank of South Sudan, however it can as well be thwarted from further escalation. It is just a matter of resolving to better policies that can enhance economic growth instead of just watching it happen without intervention.
Anyway, from the biblical allusion, we all understand that there is no situation that is permanent; I believe we are just competence and seriousness away from the right point. In faith and trust, our situation will soon be an example of situations that changed for better but it will not just end without the correct intervention. Something worthwhile has to be done because bad times come and pass. Whatever that is happening in south Sudan now, had worst levels in Weimar German between 1918 and 1924, when the country was hit by a skyrocketed inflation (hyperinflation) as a result of instantaneous orders by the Versailles treaty demanding war reparations within a short period of time.
After the world war 1, German was accused of having been the cause of the ww 1 and therefore the country was convicted to be responsible for the larger percentage of the damages that were incurred. This put the country into an intensive tension because they were conditioned to have the payment made as per the treaty provisions. No extension of deadline was to be considered.When the term agreed was nearing to an end and the pressure kept accumulating, the central bank resorted itself to printing presses. The order to print more money within the economy own the day in struggle to pay their heavy debts. This led to a very terrible situation in German.
The purchasing power of their currency was reduced to almost more than half. The exchange rates of the Papermark depreciated by 84% against the US dollar. The study conducted by the Mashable.com shows that by November 1923.The US dollar was worth 4,210,500,000000 German marks. This was a complete demise of the country‘s currency. All prices of goods escalated to trillions of their money. Even a mere loaf of bread cost about 32 trillion marks. One cannot even imagine how these citizens were surviving within this testing times in their history.
This hyperinflation has been among the worst of the world economic crisis ever since its occurrence but the most important aspect here is that the same people invented very healthy and helpful solutions to their economic problems.There was a creation of a new bank,retenbank which introduced a new currency into the system called retenmark.New policies were made available such as liberalization of the market hence attracting a good number of American investors to the country introducing dollars into circulation. The American companies that were set up here paid taxes to the government besides employing local citizens in their companies. From all these policies the country was able to meet its war reparation debts after accepting other countries and individuals to invest in the country.
In relation to our economic destabilization currently, I must say that the crisis is still at stage where it can be managed! It has not yet gone to levels that are strange. The very reason why our economic crisis looks very huge today is by the fact that there is high dependency ratio compare to those who are independent. The little they get from those they depend on is exaggerated by the prices when they go to the market and come back home with nearly nothing substantial in their hands. People are both jobless and deficient of technical skills. The country was caught red-handed prematurely by the useless war of interests before it could put to work all her civil population.
As such, the central bank should concoct new policies or strengthen the already existing if indeed they were available before the onset of the economic trial. Banking system should be encouraged by creating a mass awareness on the importance of keeping our money in the bank. We should all understand our people before we wrongly conclude that they are ignorant. They should be told freshly the kinds of benefits that come with the banking system. They should be made to know that when one keeps 1000ssp in the bank, it will grow to about 1350ssp by the end of the year.
Furthermore, make them know where the added 350ssp has emerged within the period. This way, even an old grandmother residing in paliau and diingwaai (my birth place) will struggle to keep the little money she gets from her son/daughter who reside in abroad in the bank hence a mutualism kind of relationship will emanate between the bank and its customers. Keeping your monies somewhere and at the end of the day you get something on top of it without having worked for it cannot be taken for granted .I am sure it can be appreciated in our society and many people can be attracted.
What people are lacking as we speak is the information and trust which can be artificially installed at no big cost. The central bank of South Sudan should therefore fasten the belts of development and change their words to actions now. Let other commercial banks be accountable to you for the huge bundle of money that gets lost due to collapse of those banks with millions of individual savings.
The central bank can even increase the reserve ratio on the commercial banks for the compensation of all clients who face massive losses in case banks collapse due to mismanagement or rather bankruptcy. This is another window that makes business people and any other persons earning bury their monies in coffins like human beings and pretend that nothing is happening. The customers cannot be blamed here so much but the blame solely settles on who should give directions and he/she has failed. Let our people feel your presence as the governor of the central bank in South Sudan. I am not pricking blames on the central bank or its management but in the real essence of duties, the central bank of south Sudan should be what its title means.
It should be central as the term suggest. There should be a strong law that should control banking system in the land. Not anybody who feels like opening a bank today should be given a go ahead rather there should be a certain amount of money that an individual must have in his/her account in order to gain his access to the certificate of operation. This ransom in the account should be the securities to clients’ money and the solid assurance of their intentions to deliver banking services to the people, not coning them their money. When these so call investors con away people with their money that was supposed to be safely kept in the bank, It discourages people from trusting banks with their monies and they seek better options for themselves and by themselves.
This is the very point where they either bury their money underground or piling it between mattresses under their beds at home. When this happens there will be no enough money in the bank because the money printed to circulate in the economy for sometimes is held hostage by few people hence the central bank will be forced to print more money into circulation. The same people because they own big businesses get hold of the printed money again and roll them under their beds (in a bid to save their money) creating another insufficiency of the money in circulation hence another money is printed by the central bank. The central bank slowly without their knowledge and bad intentions sponsor inflation.
This is exactly what happens when there are no policies to regulate monetization or the policies exist only in books as souvenirs for what you learned in school. When there is much money in circulation the currency begins to depreciate like the case of Weimar in German. The same businessmen and women who keep their monies in coffins and under their beds, account for the currency devaluation. This is because when the same bourgeoisies feel that they have enough of their currency, they begin to lust for dollars which squarely cause the total demise of the country’s currency. They stage themselves in stalls in places where they know people can’t access the bank and bid for dollars (emergence of black market). Because they have enough money, they keep increasing rates of pounds to dollars hence attracting many locals to bring dollars to them.
Usually their rates are quarterly or half more than the rates at the central bank hence stripping the central bank and other warranted commercial banks of their regular customers since the customers would want to have more money for a single dollar which is in their custody and of course they know not the repercussions of what they are doing. This again increases money in circulation and because of this phenomenon, an immanent inflation surge. Although it can be controlled, the preliminary impacts are massive and painful. This rounded situation is not very far from what is happening in our capital Juba at the moment.
It is therefore incumbent upon the entire leadership to find a way of discarding this behavior as soon as possible and free the country from this economic altruism and obsession. Allow some economic improvements, even if it means bits of economic titivation and we will remember you later in life. Make our currency strong again and you will celebrate the positive results with us.
PREVENTION IS BETTER THAN CURE!
The author, Kuir Mayen Kuir, is a student of Economics and Statistics at the University of Nairobi, Kenya. He can be reached via his email: Mayen Kuir <mayenkuir@gmail.com>
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