South Sudan businessmen setting up private bank
August 26, 2007 (JUBA, Sudan) — A group of businessman in southern Sudan has bought a licence to open a new indigenous bank, the first to be founded since the peace agreement of 2005, the operations manager of the bank said on Sunday.
The Buffalo Commercial Bank will have an initial capital of $20 million, contributed by a group of six southern businessmen from their private funds, operations manager Edwin Baba told Reuters in an interview.
Baba said the bank would be operational in about two months and would introduce technologies, such as internet banking, which passed southern Sudan by during more than two decades of war between the northern government and southern rebels.
It will be competing with a handful of older local banks, branches of Khartoum-based banks and with Kenya Commercial Bank
The future of the northern banks is uncertain because the Khartoum government favours Islamic banking without interest, while the autonomous government of the south has said it will not allow Islamic banks to operate in its area.
Baba said Buffalo Commercial bank would try to win southern government business by offering solutions to the payroll management problems of the ministries.
Aid donors and politicians have criticised the state of the southern bureaucracy, saying the civil service payrolls include many “ghost workers” and people in double or even triple pay.
“We’re seeing our bank as giving a solution. We’ll have software and the systems,” said Baba. “We’ve been talking to government departments and encouraging them to open accounts so we can run them for them.”
Buffalo Commercial Bank has paid $6 million for its licence from the Bank of Southern Sudan, the region’s central bank, and will receive it once it installs more security cameras and fire extinguishers on its premises, Baba said.
Banking in southern Sudan is complicated by U.S. sanctions, which require special U.S. clearances for many transfers made in U.S. dollars in or out of Sudan.
Some banks operating in the south have avoided the hassle by dealing only in euros, but Baba said Buffalo Commercial said this was not feasible for his bank because the southern government and expatriate humanitarian workers mostly receive their revenues and incomes in dollars.
(Reuters)