Why a ‘weakling’ SSP spells doom for common citizen
South Sudan should brace for tougher economic times ahead, as the dollar continues to be stronger not just against South Sudanese Pounds but even stronger international currencies.
Inflation in the country, occasioned by, among other things, the Russo-Ukraine war, has seen the prices of essential commodities in South Sudan and across the world skyrocket, putting pressure on people whose income is fixed regardless of soaring prices.
It is a beehive of activity at the Konyokonyo market. Various goods are available for sale in the various stalls, shops and in the open.
Traders like Mohamed Idris have seen the prices of goods increase over time. But as a trader, he says his hands are tied, as his selling price can only be determined by the price at which they buy the goods.
“It is a mix of a weaker SSP against a strong US dollar, multiple taxations and operation costs which has forced us to increase the prices of these commodities,” says Idris.
A dollar sold between SSP450 and SSP470 a few days ago is now trading at SSP600 about a 30 per cent increase within less than a week, plunging South Sudan back to the state it was more than eight months back.
A 50 kg of maize flour which was sold between SSP17,000 and SSP18,000 less than two weeks ago, is now sold at SSP24,000. Over the same period, 10 kg of sugar jumped to SSP6500 up from SSP4500. 10 kg of rice which used to be sold at SSP2500, became SSP3500, a bucket of onion jumped from SSP550 to SSP700, and 5 litres of cooking oil jumped from SSP5000 to SSP 6500.
The Vice-Chancellor of Dr John Garang University, Professor Abraham Matoc says the South Sudan situation has been further compounded by the fact that there is no sufficient manufacturing or large-scale agricultural productivity that could create the much-needed balance in the form of foreign exchange earned through exports (most likely in dollars).
“The issue of the dollar rising is not in South Sudan alone. It has become an international problem that the prices are getting up very high,” Prof. Matoc said.
Though the current global economic situation would continue to affect the country’s economy, according to Prof. Matoc, the Bank of South Sudan (BoSS) should continue auctioning USD to forex bureaus and commercial banks to starve the market of SSP and thus stabilise the dollar exchange rate.
“Auctioning has been the option for the last few years as a tool to stabilise the dollar rate in our economy and it has worked to some extent to bring the dollar rate down up to 40 sometimes,” said Prof. Matoc.
In June, BoSS announced the start auctioning of $8 million to commercial banks and forex bureaus, a continuation of earlier efforts by the bank which harmonized black market dollar prices and official bank rates.
But it remains unknown whether such a tool, emphasized by Prof, Matoc, was still on hand to mitigate the current SSP devaluation against the dollar, which resulted in sharp skyrocketing prices.
In the East African region, Kenya, Uganda, and Tanzania, among others, have also witnessed high exchange rates, but South Sudan’s high dollar rate and commodities process remain the worst due to its lack of productivity, according to Prof. Matoc.
“So, it will continue to escalate and prices will go up.” So, it is that variable that the least thing I can advise is to let South Sudan’s economy be productive. “Let investors invest in productive sectors of the economy,” he says.
Market price increments in two weeks
50 kg of maize flour –Price shot by SSP7,000
10 kg of sugar –price jumped by SSP2,000
10 kg of rice –price shot to SSP1,000
Bucket of onion- price shot by SSP200
5 liters of cooking- jumped by jumped by SSP1,500
