The Paradoxical Reality of South Sudan Economy
By Kuir Mayen Kuir, Nairobi, Kenya
Thursday, September 17, 2020 (PW) — South Sudan and her citizens have been contemplating whether what they have been hearing as peace will soon be substantiated. It has definitely been a long time since the signatures were put on papers as a gesture to give peace a chance but there is no different yet. However, the trail which it has soon adopted is still unfathomable. The enigmatic smiles that were registered on the faces of our resilient citizens are now weathering away gradually.
The bleakness is resurfacing with the economy dipping into a coma and some part of the country being submerged into a sea of floods. The gross happiness index (GHI) is on a dwindle. It is still not yet clear when tranquility will resume in the country. In a nutshell More challenges are manifesting in the country with some of them linked to natural causes while others are being artificially promulgated and sponsored by the looting brigands. The recent one is fiscally oriented.
The dollar rate is constantly increasing against pounds with an outstanding rate $100 for 47000SSPs recorded just two days ago. This is so scary for the nation and the central bank should be seen playing central at these critical moments of our time. However, this skyrocketing rate of dollar against pound is not really adding up, especially after the former minister of finance publicly pronounced the government inability to pay civil servants their five (5) month-salaries.
This leaves people wondering about what could be the central trigger of the high dollar demand that is outrageously escalating the strength of pound away yet many people are not getting incomes which is essentially a determinant of demand. Who is this demanding dollar this much? Could there be avenues of money printing in the country which increase money in people’s hands (liquidity ratio)?
Ideally, the natural forces of demand and supply are supposed to automatically correct any anomalies in the market. This is simply to say, increase in the aggregate demand leads to an increase in the prices of commodities and the vice versa is true. The same thing is reflected when it comes to supply but most importantly we need to focus on the demand aspect.
There are no salaries for the workers in the country. Thismeans the aggregate government expenditure has relatively decreased leading to a decrease in the aggregate demand. This in normal circumstances should create a reluctance in the public demand for dollar in the economy. Anybody trying to connect these dots using my personal understanding should find a ridge that disconnects the joints at some point.
Therefore, the paradox in our reality today is the continued appreciation of dollar against pounds regardless of the absence of these important determinants or rather triggers. This dollarization that is currently dominating the market is something that should be felt when the government’s expenditure is high and there is a scarcity of the hard currency at the same time.
In order to avoid be accused of ignorance, it is true there are factors that should currently instigate dollarization of the market such as low productivity in the economy, scarcity of dollar, remittances which act as rentals abroad and inflation but the thing is, they are not enough to detail out the reason for the dollar dominance in the economy.
Something more of a money laundering must be behind this instantaneous dollar rise. It should be investigated in the black market. Theother day, a revelation came out concerning the three parallel rates of dollar against pound in South Sudan. The black market was leading exceedingly with a dollar ($) going at 400SSP.
The government must coordinate with the central bank in order to stop this unethical behavior of the black market especially by reconsidering the current security features and the general quality of our pounds. Otherwise, the current economic doom may engulf everlastingly.
The author, Kuir Mayen Kuir is a student of economic and Statistics at the University of Nairobi. He is reachable via his email address: mayenkuir@gmail.com
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