Africa-Press – South-Sudan. Economist Ahmed Morgan attributes the ongoing local currency shortages in banks to hoarding, driven by uncertainty caused by an unfavorable political environment and public mistrust in the country’s financial system.
Mr. Morgan, a lecturer in Economics at the University of Juba, said these two factors have likely discouraged businesses and individuals from depositing money in banks, further straining liquidity across the financial sector.
“I know people have locked up their money. They’re holding their money somewhere, and that’s why the money is not going into the banks, resulting in very little money in circulation.
“And once there’s little money circulation, it negatively affects business activities. There is a level of mistrust in the banking system. Besides that, people sometimes act out of fear. They fear locking up their money in the bank.
“For those who have South Sudanese pounds, I think they have been hoarding their money somewhere, fearing any unwanted event that might happen.
“In South Sudan, the business environment is always determined by the political environment. So, once people have that fear, they will not keep their money in the bank.”
In recent weeks, members of the public have raised concerns about being unable to withdraw cash from banks and mobile money outlets. Many report being told they cannot receive the full amounts requested due to liquidity shortages.
Citing the decline in economic activity, Morgan said that for the Central Bank to function effectively, there should be a sound business environment where the banking sector can operate freely.
He also stressed that improving the overall business environment will boost economic activity and increase public confidence, leading to more transactions through the banking system.
“Economically, for the Central Bank to function swiftly and effectively, there should be a sound business environment where banking operations can freely operate,” he added. “Once there are factors beyond the banking sector’s control, banks are not working according to the norm given the environment they’re operating in.
“So, the Central Bank will find it difficult to implement its policies or regulate banks properly.”
Meanwhile, he said banks should offer incentives to encourage customers to deposit and save their money.
Source: Eye Radio
For More News And Analysis About South-Sudan Follow Africa-Press
