South Sudan's English Daily Newspaper
"We Dare where others fear"
By Awan Achiek
The Vice Chancellor of Dr. John Garang Memorial University of Science and Technology, prof. Abraham Matoc on Wednesday suggested to the government to contemplate the idea of ditching the South Sudanese Pounds (SSP) for a new currency amid the worsening economy.
“The immediate solution if we are thinking in terms of reducing the exchange rate, we have to do one of the things, which is more aggressive and it is of high cost, we have to change the currency,” Matoc told Dawn in an interview in Juba.
Matoc said that the high-value notes of 1,000 should be reduced to 100 notes.
“The 1,000 notes can be reduced to 100 notes and let 100 notes be the highest note in our currency,” he said.
His remarks come in the wake of SSP depreciating to it’s lowest value against the U.S dollar since independence. The SSP is currently exchanging at 3000 SSP with dollar from the previous 30 SSP in 2012.
The 1,000 pound notes were introduced in February 2021 to mitigate runaway inflation, and a perpetual depreciation of the local currency.
Matoc called on the government to re-introduce the use of small coins.
He said the government needs to intervene in the market to stabilize the prices and the exchange rate.
“We need to monitor prices in the market; we can’t allow and assume that we are a free market economy when we are a developing economy,” Matoc said.
He said the factors causing the South Sudan Pound to depreciate against the dollar include low levels of productivity and over reliance on imports, adding that the high prices of goods in the market are reflect the high costs of production.
“The economy is not producing anything, we are not productive, so there is not enough supply for goods and services,” Matoc said.
“The economy is dependent on imports that require hard currency and because of hard currency; the exchange rate has gone up because people are trading with dollars and the South Sudanese Pound,” he disclosed.
He said the dollar has become a commodity rather than a medium of exchange.
“The circulation of money in the economy is not there and the investors whether small, and medium, are not investing. Our money is going to neighboring countries, either through the rate of houses in those places or in buildings or those going for medical care,” Matoc said.
He said the outflow of the local currency is also too high, thus contributing to the prevailing economic hardship.
“Unless our economy becomes productive to create surplus of goods in the market, this is where the cost of living will come down because there will be goods and demand will be better.”
In October 2020, the cabinet announced plans to change the currency following continuous depreciation of the SSP against the dollar.
The decision came after the cabinet realized that most of the population hoards the South Sudan Pound in their homes instead of banks.
South Sudan is the major oil producer in the East African region, but its near-total dependency on oil has made the resource a curse.
The 2013 civil war, along with graft and mismanagement of funds, led to an economic crisis in the oil-producing nation.