Economist: Capital flight costing South Sudan economy

Leading economist and former diplomat says focus must shift beyond short-term stabilization toward comprehensive economic recovery.

By Emmanuel Mandella

President Salva Kiir Mayardit has directing newly appointed Bank of South Sudan (BoSS) officials to take immediate and decisive measures to stabilize the country’s soaring inflation and persistent cash shortages; challenges that continue to strain households and businesses across the country.

The President spoke at the swearing in ceremony of Tong Akech Deng, the First Deputy Governor for Policy and Banking, Weituy Luony Baboth, Second Deputy Governor for Administration and Finance and Peter Dau Akol, Counsel General in the Ministry of Justice and Constitutional Affairs.

The appointments come at a critical time when the South Sudanese Pound remains under pressure, market prices continue to surge, and access to cash in commercial banks remains limited.

President Kiir underscored the Central Bank’s pivotal role in steering the country’s economic direction, urging the new officials to implement “robust and consistent monetary policies” capable of taming inflation and restoring public confidence in the banking system.

“The Central Bank plays a critical role in managing our economy. You must take immediate measures to address inflation and stabilize our financial system. The people of South Sudan are looking to you for solutions,” President Kiir said during the swearing-in ceremony.

The newly appointed deputies pledged to work closely with the Bank’s Governor and the broader financial leadership to enhance monetary discipline and stabilize economic growth.

“We are committed to working in tandem with the Governor and all stakeholders to strengthen monetary policy and restore confidence in the banking sector,” one of the new deputies assured.

Spiking economic bottlenecks

South Sudan’s economy has been grappling with rising inflation, currency depreciation, and liquidity constraints. Basic commodities have become increasingly expensive, while citizens continue to face difficulties accessing cash through formal banking institutions.

Economic analysts say the Central Bank’s leadership reshuffle signals government recognition of the urgency of the crisis. However, they caution that monetary policy adjustments alone may not be sufficient without deeper structural reforms.

Ambassador Adil Sandrai, an economist and respected diplomat, argues that the country’s economic instability is rooted in a structural imbalance heavy dependence on imports and limited domestic production.

“South Sudan’s economy cannot be sustained without strong local production of affordable goods and services. As long as we depend heavily on imports, the money generated within our borders will continue to flow outward,” Ambassador Sandrai said in an interview.

Huge Capital flight

Finance and Planning Minister Dr. Barnaba Bak (second left) and National Assembly Speaker, Rt. Hon. Nunu Kumba hold the draft 2025/26 Budget at the Assembly premises. [Photo: Courtesy]

According to Ambassador Sandrai, South Sudan is experiencing what economists describe as capital flight, which denotes to the large-scale movement of money out of the country.

“As long as profits made here are sent back to the countries where investors came from, that money does not circulate within our economy, when you have a consumer economy that depends on imports, meaningful cash flow inside the country does not exist,” he explained.

In productive economies, money moves in a continuous cycle from employers to workers, from workers to businesses, and back into the financial system. That cycle generates resilience, employment, and long-term growth. But in South Sudan’s case, much of the revenue earned domestically is spent on imported goods, meaning profits leave the country almost immediately.

“This is not a scientific economy, it is an emergency predatory economy one where money does not remain in the country,” Ambassador Sandrai said bluntly.

With new leadership now in place at the Central Bank, economists say the focus must shift beyond short-term stabilization toward comprehensive economic recovery.

“The only way forward is to put together a serious economic recovery plan,” Ambassador Sandrai stressed.

He argues that such a plan must prioritize investment in agriculture, local manufacturing, small and medium enterprises, and critical infrastructure such as roads, electricity, storage facilities, and financial systems.

Among key recommendations, he says the Central Bank and fiscal authorities must, strengthen foreign exchange management to stabilize the national currency, expand access to affordable credit for local producers, promote value addition within South Sudan, and reduce reliance on imports and restore confidence in the banking sector.

Without structural reform, he warns, inflationary pressure and currency instability will persist.

Beyond macroeconomic policy, Ambassador Sandrai points to the everyday struggles of ordinary citizens as a central factor in economic recovery.

“The common person depends entirely on the amount of revenue that comes into his or her hands,” he said.

When salaries are delayed or unpaid as has frequently occurred purchasing power collapses. Without disposable income, consumer spending declines. When spending declines, businesses suffer, and job creation slows.

“If people are not paid their salaries, how would they get extra income to spend? There is nothing, the majority of the people in South Sudan must be paid. They must have income so they can spend within the economy. That is how the economy is sustained,” he said.

President Kiir’s directive to the new Central Bank deputies signals a decisive moment for South Sudan’s economic leadership. The challenge ahead is formidable stabilizing inflation, restoring confidence, and transforming a consumer-driven system into a production-based economy.

Experts agree that without domestic production and consistent monetary discipline, capital will continue to flow outward, weakening the national currency and undermining growth.

But with coordinated reforms, investment in local industries, and restored public confidence, South Sudan could transition from economic emergency toward sustainable development.

The opportunity, economists say, is as significant as the challenge itself.

Utilities

“The only way forward is to put together a serious economic recovery plan,” leading economist and former diplomat, Amb. Adil Sandrai, said.