Presidential Decree needed for control of Foreign Exchange Market in the country

BY: Mabor Maguen, UGANDA, MAR/02/2016, SSN;

South Sudan economy is in a coma. Are there specialists? In deed our government needs to do something about over relying on the devaluation which has become a curse rather than a cure or be ready to face the demise of the economy soon. There are controllable causes apart from war, internal causes are contributing to the fluctuation of our dear local currency.

If our government really cares for its people and history since history are stories of great people who live at one time then there will be no people to tell those stories, if the very people die of hunger or cannot go to school to write books onf history.

The time is now to act while waiting for outside help which might come or not. It is too sad that our currency is becoming useless and useless every minute which is pinching harsh on common man who does not know about the Central bank to borrow at gun point.

I did mention before and we all know that that war has prevented direct foreign investment into our country and caused a stoppage of grants from well wishes to come until situation normalized which has affected both formal and informal production causing this biting inflation.

In fact our government is working day and night to restore security and reset the economy but my fear is that it will be beyond salvation at the time when peace is really restored.

While waiting for peace, government needs to tackle this economic war with diligence. The backfires which are derailing the efforts of the sitting government is not caused by the ‘enemy’ but by presumed friends.

For instance, when the government devalued the local currency which was a great move in order to rescue the economy, however, the ‘die-hard’ supporters of the very government watered it down, by adjusting the exchange rate through their market, the ‘black market.’

The intention was and still is a good one in that if the idea is to mop the excess money in circulation then the government should be given credit for that but my great surprise was when I learnt that the government wanted to increase wages of public servants, printing more money and still allowing bare-footed money changers in the economy.

I come to question the idea behind devaluation, is it to save the economy or send the common man quickly to the grave who is earning 5 SSP a day. These are common overlooked factors which are worsening the economic condition of the country.

I understand the government is between a hard ground and a rock in meeting the gap in the budget but increasing wages and printing more money as claimed is economic suicide.

The government cannot address inflation on the hand and trying to please on others, economic operations are delicate and are done with care otherwise you risk cutting the main vein which is fatal. They need economic surgeons who are in the persons of central bank governor and minister of finance not anybody with know –who does the job but ‘know-how.’

Alleviate the ailing economy should be through removing the causative agents not treating the impacts which are internal in our case in South Sudan.

These internal causes like increasing wages of public servants who make up 75% of people who spend on the economy, printing more money and allowing bare footed changers to determine exchange rate of which are deadly options. Why?

Economists argue that there is direct relationship between money velocity, price and production where money velocity is how many times money is supplied into the economy will affect price either positively or negatively depending on the level of production.

In a stable country the amount of money supplied is matched with the level of output from production, in this case prices will remain relatively stable hence productivity is sped up leading to economic growth.

In case of our country, almost all productions are halted while there is constant velocity of money through the increase of wages of civil servants, promotions, printing of more in case it is true are main reasons of this runaway or galloping inflation.

We understand that inflation is a result when too much money is chasing too few goods and in this case production is minimal while spending is high leading to inflation.

I understand our government is operating with a deficit budget and ill planned economic policies in that the best way to keep soldiers in their trenches is increase their salaries which is total misconception.

What is the point of devaluing the local currency at the first place? It was done to rob the common person’s her/his hard earned peanut. It is not the quantity of money that matters but the purchasing power.

While doing window shopping in Kampala today, I noticed that our local currency is nearly dead, for instance, two years, 1 SSP was 700 UGX (Uganda shillings) and today 1 SSP was 50 UGX.

Should we say we have hit the dead end or still there is a chance to turn around, I leave that to the current surgeons who in persons of Finance minister, Deng, and Bank of South Sudan governor, Koriom, to dissect well.

Instead of printing more money to finance the deficit, there still much money at private hands. During my ordeals in Juba looking for dollars to come back for studies of which I managed to fail, I visited every forex bank including commercial banks which is not the case in organized societies.

In one of the KCB branches, I encountered a very absurd episode while ‘begging’ the manager to sell to me some few notes of dollars, we saw two gentlemen struggling with a sack, real sack, I thought there is a store for food items like cassava or potatoes behind the counter but to our bewilderment, these two guys went straight to the counter and brought out real money of 100 SSP notes and heaped them on the counter.

I left embarrassed because these guys are younger than me but in possession of such huge amount of money but bitter because there are people who are taking a lion’s share while we come from the same motherland, no equity in the vocabulary of Sudanese.

Other questions pondering my head were/are why carrying such huge money in a sack? Money is usually carried in wallet if it is small amount or in a case for huge money like this a case.

Therefore, it is apparently clear to me that our government has a lot to do; these people are the ones who have access to the central bank and commercial banks buying dollar in large quantities in the name of importing goods from outside, reaching outside they go and set up blank market.

When will there be a white or a green market? Why black is associated with bad thing yet we are blacks? The government instead of printing more money to make-up for gap, should identify them and force them lend money to the common control by selling treasury bills or bonds whose expiry dates are renewable in order avoid excess money.

The barefooted brothers do not know the determinants of the exchange rate and that why is we have a central bank. Since there is correlation between the government and barefooted money changers which distort the efforts of central bank and the ministry of finance, government needs money dearly to bridge the gap.

The alternative income is to register the table money changers by paying fees for licenses since there no business done in a state without a license, moreover, selling government property like money.

Our government argues again and again that SSP is a legal tender for all transactions, where is the legality when it is left in the hands of thieves. I have never seen them selling their cows along the road as they do to our currency. If they value cow then SSP is a symbol of our economic strength which should not be destroyed like that.

Tell them to go home and starting selling their cows along the road instead of SSP. Here, I am calling upon Mr. President to lead with his usual tactics of ‘presidential decrees’ and by doing so, the level of rampant cheating in the foreign exchange market is stemmed out, also killing the vary rate is controlled.

Floating exchange rate does not mean anybody comes with his or her rate but it is by following the purchasing power of currency, balance of payment among others to determine the exchange rate of the day.

I am also calling on Jieng Council of Elder (JCE) to do their work of guiding the Jieng community not only politics but too on these pressing issues if you really stand for what your name tells us, theft is not a Dinka culture and not condoned in any culture.

These crude money changers have turned Juba town, Nimule, Kaya and Nadapal into evil breeding grounds, with their dirty money of which they are contracting diseases from whores entering South Sudan killing themselves and their families at home.

Is there benefit of doing such a business? Indeed most faces doing this business are either from Central bank governor’s or minister of finance’s places of origin, if need be, it is right time to sacrifice them for the sake of millions of lives of who go to bed without food or good stories to tell.

I never like your decrees but this time, you need to speak out and tell them either to conform or go home, they are doing disservice to the state.

Last but not least, as I mentioned before, it is not the quantity of money but the purchasing power of the currency that determines the exchange rate, you, Mr. President, hinted during in your speech to the 28 governors for the 28 states that the government activities should not come to standstill while waiting for peace implementation and hence the following suggestions might help alleviate the suffering of people.

Dr. Garang made promises of which one of them is taking towns to people which is being fulfilled either for some individuals’ gains or really that vision, history will judge us but he also said that with CPA there will be no more crying of children and wailing of women instead of giggling of children and ululating of women which is no more and therefore;

• Government should resort to forceful borrowing through identifying these ‘big fishes’ either within the government or private sector in order to make up for the gap.
• If it is true that government is printing more as claimed then it is should stop because it is not healthy for the economy in a coma like ours, nowhere on earth that floods are stopped using water.
• All money changers need to be licensed and taxed on regular basis; hence increasing tax base and it helps to track those hiking the official rate of the day.
• The excess money collected by central bank need to be put into productive use like security through strengthening police, agriculture, roads rather than increasing wages by 300%.
• The town mayor of Juba should wake up if that person is existing in order to see all activities of the town, if not there, there is need to get one or replace the current one who allows theft in broad day light.
• The interest rate needs to be increased in order to discourage borrowing from the commercial banks who are really distorting the economy.

‘One people one nation’ we desire but with equality. Thank you very much

Mabor Maguen is a finalist undergraduate student doing Economics with Education, at the University of Kisubi (UniK) formerly a constituent college of Uganda Martyrs University…Entebbe. Can be reached on +256775447691 or mabormaguen@gmail.com.

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