Instead, the civil society leader advised that the leading national financial institutions agree to print new notes and render the old ones unusable, push individuals stacking cash in homes to release them and enable new cash flow to the system 

By James Chatim

Civil rights activist Edmund Yakani says plans by the banking regulator, Bank of South Sudan (BoSS) to print more notes to address liquidity crisis is not a sustainable solution to the economy.

According to Yakani, fixing the problem will requirement a consultative approach between the BoSS and the national financial institutions such as the Ministry of Finance, to explore a sustainable approach to the crisis.   

The Executive Director of Community Empowerment for Progress Organization (CEPO) spoke following reports by the Central Bank to print more money to address the liquidity challenges, and pay salaries of civil servants.

Speaking before the Finance and Economic Planning Committee of the Transitional National Legislative Assembly on Monday, the Governor of Central Bank Dr. Addis Ababa Othow said this would be a short term move to meet the current high demand for liquidity.

However, Yakani is of a contrary opinion.

“The idea to print more SSP (South Sudanese Pounds) to inject into the economy to respond to the liquidity challenges is a not a lasting solution to the current economic challenges. We are aware that so much money is kept by people in their homes,” Yakani said.

“Printing more money cannot offer a long-term solution. This can only be done if the Central Bank agrees with other national institutions like the national Ministry of Finance and Planning to come up with a strategic, financial management concept.”

Print new currency, replace the old

According to the activist, due to so many people stacking money in their homes instead of banks, starving the market of the paper cash, the best alternative is to print new notes to replace the old ones; and to embark on proper currency management to safeguard cash stability in the economy.

This, Yakani says, will ensure that those keeping money in their homes will have no option but to release them, and have some cash flow in the market before a new currency is introduced in the market and managed properly by the regulatory bodies.

“So, we need to find a way of encouraging, raising the level of trust and confidence on citizens to embrace banking systems so that the money that is in the hands of the people is taken into the banks to enhance its circulation since the economic system functions like blood flow in the human body.

Using the analogy of blood circulatory system, Yakani said ‘just as the heart pumps blood through the vesels, so should the money move from the hands of the people to the banks and into the market to enhances a consistent flow that will cushion the economy from liquidity crises.

Kenya’s case study

In 2019, the Kenyan government phased out the old currency with a new generation of banknotes. The government stated that the process would be done gradually, with Kenyans urged to return their 1,000 shilling notes to banks within a period of five months.

However, while the Kenyan scenario was to enable the country fight money laundering, counterfeits and corruption Yakani says the South Sudan case would aim at enabling circulation of money.

Promise on prudent currency management

In June this year, BoSS Governor Dr. Addis Ababa Othow, chaired a meeting of top leaders of the bank to device strategies on fixing and managing the country’s currency. The leaders convened to begin work on a new roadmap for currency reform and broader economic stability.

The meeting came just days after the Governor formed a Currency Management Committee, tasked to review the structure of the South Sudanese Pound (SSP), study past efforts, and recommend changes that match the country’s economic needs and regional standards.

During the discussion, the team focused on several key areas, including; improving the current monetary policy, addressing cash flow and liquidity challenges, expanding digital banking, and strengthening the currency’s security features.

The Governor added that the overall goal was to support the Bank of South Sudan’s vision of maintaining price stability and building a strong and credible financial system.