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S. Sudan indefinitely suspends registration of forex bureaus

May 16, 2011 (JUBA) - South Sudan’s government has indefinitely suspended the registration of forex bureaus intending to operate in the region, less than two months before the country’s independence declaration.

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Traders jostle to change money in South Sudan (Reuters)

In a strongly worded notice sent to the Bank of South Sudan (BoSS), all licensed advocates and the general public, the ministry instructs all stakeholders to strictly adhere to the ministerial order, until further notice. No reason was, however, given for halting the registration exercise.

“..We hereby inform all the stakeholders, public that the registration of forex bureaus is suspended as per the said ministerial order until further notice,” party reads the 13 May notice signed by the ministry’s chief registrar, Peter Gatkouth Kor.

Abraham Ajak, a local money changer operating in Juba, the South Sudan capital, lauded the ministry’s decision to suspend the registration of forex entities, saying his business had failed to prosper due to their existence.

Currently, there are about 25 legally registered forex bureaus in fully operational in Juba, with many of them trading in the local Sudanese pounds. The southern bank, according to a Sudan Tribune survey, strictly limits transfer of large money sums outside the region through these forex bureaus.

“We are not allowed to do transactions involving money that exceeds $100 [SDG 350]. It’s a new directive from the Bank of Southern Sudan and we have to comply,” said Mohamed Ali, an employee in one of the leading forex bureaus.

He added, “Any of our clients who intend to transfer more than $100 will have to seek written permission from southern bank before we can make such transactions possible. It’s a new policy here.”

In July last year, the bank closed down nine forex bureaus operating in Juba, the South Sudan capital, citing what it called "illegal" operations contrary to the policies of the country’s central bank.

Some bank workers in South Sudan, who wish to remain anonymous, alledge that the closure of these forex bureaus, mainly operated by Somali nationals, is a response to the increased terror risks, in the wake of the July 11 bomb attacks in Uganda’s capital, Kampala. Over 70 people were killed in the incident, which was reportedly carried out by Al-Shabab militants.

Al-Shabab is a terrorist organisation opposed to the activities of aid organisations and the current government in Somalia. It is reported to have declared war against the UN and Western NGOs.

Formed in 2005 after South Sudan gained a high degree of autonomy in the Comprehensive Peace Agreement (CPA), BoSS licenses financial institutions operating in the region. It also regulates commercial banks in accordance with the rules and policies of the Central Bank of Sudan.

The south runs a western style banking system as opposed the Islamic banking system that operates in the north. As part of the CPA, the South voted to become independent in January and will secede in July, making BOSS a national central bank.

Islamic banking does not allow for profit to be made by lending or borrowing money, but only in trading.

(ST)