South Sudan finds itself in a severe economic meltdown, after it devalued its currency last December in an effort to stabilise the prices of food commodities.
Joice Yiki, who sells beans at Juba’s Konyokonyo main market, has considered closing down her business due to the high dollar exchange rates.
Raising sufficient hard currency to buy imports from Uganda remains a big challenge for her.
“If I exhaust my current stock, I will go home and rest because I have no choice, since I purchase the beans from Kampala, Uganda,” she said.
Most of the goods sold in the South Sudan capital are imported from neighbouring Uganda, Kenya and Sudan.
A 12kg bag of beans currently costs SSP450, compared with SSP70 before the local currency took a beating.
A 50kg of flour now goes for SSP800, compared with SSP75 previously.
The official exchange rate stood at $100 for SSP295, at the Central Bank and $100 for SSP360 at the commercial banks. The black market sold $100 for SSP400, the rate Ms Yiki said was preferred by ordinary citizens like herself.
“Imagine! What is the rate of the dollar against the pound today?
“It is very worrying and hurting to exchange $100 for SSP3,200 at the Central Bank and SSP3,600-4,000 per $100 on the black market,” she said.
According to Catholic Bishop Santo Laku Pio, prices of good started rising steeply when the government decided to use billions of its reserves to buy arms, especially from China.
Bishop Pio said the government’s move was a “great sin”.
“The problem is the cost of living caused by this erratic exchange rate. Everything is going up daily.
“If the dollar goes up today, you are forced to raise your prices and the cost of food goes up,” he explained.
According to a 2014 UNDP report, the socio-political and economic situation in South Sudan took a severe knock with the eruption of violence in December 2013.
The report said the turn of events had reversed the significant gains in peace and security achieved since independence in 2011.
The economy, the UNDP report explained, deteriorated with inflationary pressure, commodity price swings, exchange rate volatility and increasing domestic debt.
Foreign exchange reserves were reportedly largely depleted and the budget ran large deficits owing, among other things, to heavy spending on the security sector.
According to the report, the conflict in South Sudan had caused significant declines in domestic and oil revenues, limiting the budget allocation to human development initiatives.
The government was reportedly facing budgetary constraints, forcing it to resort to printing money after it devalued its currency last year.
Last week, Community Empowerment for Progress Organisation Executive Director Edmund Yakani said the decision to devalue the South Sudanese pound could be defended but its timing was realistic.
Mr Yakani explained that the current state of the South Sudan economy offered nothing to the local market that could justify the devaluation.
“This idea has been tried in other parts of the world, but with limited success. The manner we executed our devaluation cannot give us any success,” he said.