Economist: Civil servants salaries through bank accounts, a commendable step

Prof. Abraham Kuol Nyuon, the Dean of School of Social Science and Economic Studies, in an exckusive interview with this publication, backs up move to formalize transfer of public servants salaries through banks

By Chuol Chanyong

Governnents move to explore sustainable avenues such as through banks to transfer civil servants salaries is a good step. The move has been backed up by Prof. Abraham Kuol Nyuon, the Dean of School of Social Science and Economic Studies, in a exclusive interview with The City Review.

“The government is looking for avenues that would make life easier, convenient and sustainable when paying salaries. If everyone receives their money through banks, the possibilities are high that whether there is liquidity or not, there will be a solution. Thus, there will be cooperation between the Central Bank, which is the regulatory authority, and commercial banks,” Prof. Nyuon said. 

This move comes as part of the government’s efforts to streamline salary disbursement processes and ensure efficient delivery to beneficiaries.  

He, however, warned that commercial banks might exploit this step to impose multiple fees on employees, such as withdrawal charges  and account maintenance fees, which could burdening low-income employees.  

“There is a major issue here: private banks may exploit citizens. Even if there are fees on the money deposited into their accounts, there will also be withdrawal fees and account maintenance fees. All these costs will fall on citizens with limited resources especially those having meager incomes that barely cover their needs. As a result, this could become another means for commercial banks to exploit public sector employees who already suffering from low incomes. Thus, we may face another problem,” he explained.  

The economist continued, “Perhaps there is another benefit we could gain, as commercial banks will profit more from public employees’ salaries, which are already negligible amounts. Yet, fees will be deducted from them. You deduct the transfer cost from the incoming salary and also impose withdrawal fees on them something they wouldn’t lose if their salaries were paid in cash.”

He emphasized the necessity for the government to negotiate with commercial banks to reduce withdrawal fees for public employees, warning of potential tensions between commercial banks and public sector workers.  

“If the government is truly serious about this matter, this can be explored as a first start. But it must also negotiate with commercial banks to reduce withdrawal fees for public employees. This could create a crisis between commercial banks and public employees or uniformed personnel.”  

The professor advised that the Central Bank should monitor and address liquidity management in these commercial banks.  

Regarding financial inclusion, Prof. Nyuon mentioned that the concept enables people to access credit. Therefore, if the Central Bank can oblige commercial banks to provide advances to employees who have salary accounts with a percentage later deducted from their salaries, this could solve the problem. It would also help individuals who rely on their salaries to support their families while waiting for their dues to be disbursed.  

Concerning the country’s banking infrastructure, the professor suggested that the government should encourage commercial banks to expand to the state level and to the Counties. This would make the government’s policy more feasible.  

It is worth noting that the central bank held a meeting with several commercial banks to discuss mechanisms for transferring government employees’ salaries through bank accounts. This step is part of the government’s efforts to simplify salary disbursement processes and ensure efficient delivery to beneficiaries.  

This move is expected to enhance financial inclusion, stimulate the banking sector, increase liquidity in banks, and support economic activity. It could also improve financial transparency and reduce manipulation in salary payments.

“The government is looking for avenues that would make life easier, convenient and sustainable when paying salaries,” Prof. Abraham Kuol Nyuon, the Dean of School of Social Science and Economic Studies at the University of Juba.