South Sudan Central Bank champions promotion of food production
July 3, 2024 (JUBA) – South Sudan’s central bank is championing the promotion of efforts to enhance food production and build resilience of smallholder farmers.
This, the institution said, will be achieved through strengthening market systems.
Over the years, however, the banking sector has traditionally been playing a crucial role in ensuring food security, job creation, income generation, foreign exchange earnings, and linkages with other sectors of the country’s economy.
The bank is collaborating with commercial banks and state governments to prioritize farming, through a financial inclusion program that encourages local savings and for commercial banks to lend money to support farming.
Disruption in the flow of crude oil, which generates revenues forming 90% of the budget has persuaded authorities to explore other ways, including showing interest in strengthening longer-term resilience and increasing agricultural capacity investments to boost domestic food production.
Also introduced are public-private partnerships which have the potential to revolutionize food security in the country by combining the strengths of both sectors to create sustainable solutions that benefit the entire population.
While the authorities are leading advocacy efforts to promote financial inclusion, analysts point out the country’s economic expansion has been uneven, citing the presence of modern factories and hotels in the capital, Juba, and in states as well as in other urban centers, expansion, and economic growth has been slow to arrive in rural areas, where most of the population lives — even though rural agricultural production is the backbone of south Sudan’s economy.
Others have argued the neglect of the sector, despite numerous research findings showing that five out of six people earn at least part of their income from agriculture. The sector accounts for more than half of the Gross Domestic Product (GDP) and could have been one of most of the country’s export earnings if it was given the attention it deserved when the self-governing system in 2006 was established following the signing of the 2005 comprehensive peace agreement.
South Sudan still struggles to survive as subsistence farmers or small-scale traders. This urban and rural economic disparity is reflected in the financial services sector Financial institutions in Juba and major towns and automated teller machines are commonplace. International and local commercial banks compete for clients.
Also, billboards advertise better customer service and a wide range of financial options. Home mortgages, car loans, and other relatively new products aimed at the expanding middle class are increasingly available to the urban population.
By contrast, financial services are relatively scarce in rural South Sudan, where people lack information on how financial institutions can help improve their lives.
Many rural South Sudan live far from the nearest financial services provider, which often is a small, member-owned savings with limited operations and products.
Those who try to save keep their money at home, hiding it in mattresses or burying it in their gardens. Most feel they have no hope of qualifying for a loan. They do not own property that can be used as collateral or they find the credit options too limited for their needs. Financial experts have argued that providing access to financial services that meet rural needs is vital to economic development in low-income countries such as South Sudan. The rural poor cannot hope to lift themselves out of poverty if they are always one failed crop or an illness away from financial disaster. But expanding access does not mean simply opening new bank branches and Saving in remote villages.
Governments and donors must work together to ensure that available services are appropriate and affordable for the rural market, both for individuals and enterprises, and that the financial institutions offering them are capable and accountable. Although agriculture is the primary source of income for rural residents and a dominant force in the economy, financial institutions of all types and sizes are reluctant to lend to the sector, believing it to be not worth the risk.
As a result, commercial lending and most microfinance activities have been confined largely to urban and peri-urban areas. The geographic distribution of financial institutions also is uneven. The high cost of reaching customers in areas withou t paved roads, electricity, and other basic infrastructure is another major barrier to rural financial access.
In Ajok village where the Central Bank governor hails from in Northern Bahr el Ghazal state, the local population appealed for safety and water in the highland areas to help concentrate on food production.
To address this challenge, the governor of Bank of South Sudan has unveiled a vision and strategy to promote food production by bringing banking and financial services closer to the local people.
Governor James Alic Garang while addressing a mammoth crowd at his birthplace in Ajok village, located west of Aweil town, the administrative capital of Northern Bahr el Ghazal urged for local production as one of the strategies to improve living conditions. Garang explained hard work was the surest way to fight poverty and improve the standard of living.
In Aweil, where he commissioned the branch of the central bank, he cited two benefits that the central bank would bring to the people. One benefit was the creation of employment, saying guards and unclassified staff would not be from elsewhere in the state where the branch has been opened. Another benefit was taking banking and financial services closer to the people.
His vision and ideas align with the vision of South Sudan’s ruling Sudan People’s Liberation Movement (SPLM) which he joined at a young age in 1987, trekking months before reaching the border of Ethiopia. The SPLM advocates taking towns to the people so that they avoid moving to urban areas where they end up living in slums, with the majority becoming unproductive citizens.
This vision, he explained, could be achieved through mobilizing rural South Sudan to save money and deposit it in recognized financial institutions. Another way it could be achieved is by demystifying and supporting lending to the agricultural sector to create new opportunities for farmers, traders, and other rural businesspeople to expand their operations and increase their incomes. Expanding the range of savings and credit products available to rural South Sudan and strengthening the internal operations of small rural financial institutions is another approach. The vision advocates Using technology to expand the outreach of financial services in remote areas.
The opening of a branch of the Central Bank of South Sudan in Aweil was also received with happiness, with many officials in the state legislative assembly commending the decision of President Salva Kiir to appoint him.
Several speakers, each after the other recognized Garang, a US-trained economist as the first in the history of the Bank of South Sudan to take banking financial services close to local people by opening branches of the bank in eight of the 10 states and with more plans to extend these services to some main towns and administrative areas.
Tong Deng Anei, former minister of health in northern Bahr el Ghazal, commended his appointment, saying he was one of the first governors of the bank with correct and matching skills and knowledge to be at the helm of the Central Bank of South Sudan.
(ST)