Home | News    Saturday 9 February 2008

South Sudan bank stops dollar payments to fight black market trade

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February 8, 2008 (JUBA) — The southern branch of Sudan’s central bank has said it will no longer provide commercial banks with U.S. dollars, seeking to reduce black market trade and avoid potential shortages.

The central bank was trying to stop landlords, businesses and non-governmental organizations from using dollars and to end black market trade in the greenback, Othom Rago Ajak, the bank’s foreign exchange director, said late on Thursday.

Customers including foreign businesses and international non-governmental organisations will only be able to transfer out and withdraw dollars if they are travelling abroad, he said. Otherwise all customers could only be paid in Sudanese pounds.

Sudan dollars, Ugandan and Kenyan shillings and Ethiopian Biir were all widely used in the south, now semi-autonomous under a 2005 peace deal, during a two-decade long civil war with the north.

"Now we have one currency circulated all over the Sudan. There is no reason to use dollars which can run out, that we are unable to supply," Ajak said.

The timing of the order was partly due to a growing shortage of dollars after Khartoum’s decision last year to change dollar reserves to euro because of strengthened American sanctions over the continuing Darfur crisis, he said.

With little capital or foreign trade, southerners will be little affected but foreign business, used to accessing dollars in the south, may become more complicated, Managing Director of the south’s Ivory Bank, Ernest Woderif Marbaga, said.

But southern officials have little control of the economy and the order was unlikely to stop illegal dollar trading, he said.

"It will reduce the black market (but) the dollar will still operate, but at a higher rate," he said.

Kenya Commercial Bank branch manager John Ndungo said because of large foreign influence the dollar is the main currency in the south but his bank has often faced shortages and has had to increase prices on the currency.

"That should stabilize because only people who are leaving will be asking for them," he said. "It will make the currency more stable and increase the demand for pounds, eventually," Ndungo said.

He said customers will now have to show air tickets or other proof of travel to be able to take out dollars.

South Sudan is exempt from the U.S. dollar ban in Sudan but southern central bank Deputy Kornelio Koriom said many foreign institutions still refuse to accept dollar transfers out of the south, seeing only that the payment is from Sudan.

He said the south could lose money on deals already agreed in dollars, including large development projects, if contractors refuse to accept euros and the government is forced to exchange large sums.

Around 2 million people died in the north-south conflict and a further 4 million were displaced. The peace deal allows for wealth and power sharing between the two sides and for a southern referendum on independence in 2011.

(Reuters)

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  • 9 February 2008 04:03, by Mr Famous Big_Logic_Boy

    If because of blackmarket i consider but if its because of the decision last year to change dollar reserves to euro because of strengthened American sanctions over the continuing Darfur crisis i strong disagree as USA dollars are the worldwide major companies and providers of AIDS and if so it mean Sudan is Aganise foreingners to come in as well we knew that most of the people are travelling with USA dollar for the fact that they international currency,South should allow USA $ unless other currency

    repondre message

    • 9 February 2008 13:35, by Lat Dak Nyaroah

      Mr. Koriom, I would like to inform you that the so called Beshir has a plan to block development of South Sudan. Bravo for not accepting the idea of changing US dollars into Euro. Can’t you see that many companies including NGOs operating in South do their contracts and transactions in dollars? If you want to stop dollar to fight black market, than I seconded Mr. Famous’ comment.

      The semi-autonomous we have mean a lot to me and I see we can be able to exercise our rights and remain firm.

      More improvements in building this nation(South Sudan) is highly needed.

      Continue for your good work.

      Lat Dak Nyaroah

      Kenya Methodist University

      View online : South Sudan bank stops dollar payments to fight black market trade

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  • 9 February 2008 18:31, by James James

    To begin with, why did Sudan change dollars to euros ? who knows euros in this world. I am really frustrated to see government of Sudan being negative to America without apparent reason, I don’t know what good have Euopeans done to Sudan than Americans ? all I know is that British colonized Sudan, is it good thing for Sudan to give europe credit regarding that ?

    In other hand, American actually did a lot of positive stuff to the people of sudan and the world in general include middle east, for instant, America poured a lot of money to Sudan development projects, and humantarian service for years, Americans are always there in term of any disaster, Americans are one who help Iran and Pakistan when earthquake hit them years ago, and they are the one(Americans) who freed mistreated women in Iraq and Afghanistan, Americans gave alot of money to Palestinians , Iraqis, Somalis refugees, Is there somebody else who did to people in need more than America ? why Sudan don’t recognize all these ?

    For real,government of Sudan need to clean their credentials towards America.

    God bless.

    repondre message

    • 11 February 2008 00:22, by Martin

      Lat and James,

      Your arguments are called "free ideas" but you did not suggest some ideas that can reflect economics’ view of Southern Sudan. Disregarding your political practice, a stabled country can never pay its workers in foreign currency. I assumed you have confused doing businesses in dollars and paying in dollars.

      Doing businesses in foreign currency is indicated by the Northern Sudan for changing from dollars to euros in order to have least effect of the US economics sanctions on Sudan. It is not because the North Sudan likes the Europeans but to reduce the US sanctions. Also, economics sanction in the Northern Sudan is a bad news to the South Sudan though the South is exempted from the US sanctions. We are all considered Sudanese when doing businesses internationally.

      It was not good when Southern Sudan was operating in ganster’s styles by using the US dollars, Ethiopian Biir, Kenyan and Ugandan shillings in its businesses and paying its workers at the post civil war. I think that was because the old Sudanese pounds and Diner were running contrary between the North and the South.

      After the unifying currency (New Sudanese pounds) of the Sudan as a whole was implemented and printed, what the heck we need to be paid in foreign currencies in our own country?? Foreign currencies are allowed in the exchange markets and in the banking systems.

      I appreciate that the Southern Sudan is going forwards on controlling its banking systems and monetary policy.

      Yo folks, leave economics policy to economists.

      repondre message

      • 23 May 2009 11:35, by Kenyi John Joseph

        where is the eye of our government(GOSS) i am seeing individuals playing with our currency every where in the town of Juba, i am sorry to mention that our government is allowing the above individuals to abuse our currency.

        could the GOSS find a solution to stop these currency abuse.
        long leave government of southern Sudan.

        kenyi

        repondre message

      • 23 May 2009 11:38, by Kenyi John Joseph

        That is the way of controlling our economy.

        repondre message

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