This week, on Tuesday, September 3, 2024, Paul Baba Ezibon, a member of parliament, expressed deep concern regarding the continuous depreciation of the South Sudanese pound and the rampant inflation in the market.

An alleged excess of the South Sudanese pound in the market prompts Baba’s concerns, leading him to question its source.

“Who’s responsible for printing the new pound that is saturating the market?”

Besides the central bank, are there any other entities involved? Asked Baba.

In essence, Baba wanted to know whether the central bank was printing the excess SSP in the market, and if yes, why had civil servants and organized forces gone for ten months without salaries?

According to the latest UNOCHA quarterly report, the pound experienced a significant decline in value from January to July of this year, reaching a staggering 70%.

But what caught my attention was when Hon. Baba called for a complete change of the South Sudanese pound to another currency to salvage the situation. That statement prompted me to reflect deeply and critically.

Therefore, this article will delve into five practical strategies that could rescue SSP from further depreciation. Other jurisdictions have implemented these strategies, and South Sudan is no exception. Here are the five strategies.

Withdrawal of 1,000 Banknotes: It is likely that many individuals with excess SSP are hoarding the 1,000 SSP banknotes in their homes. Therefore, the Bank of South Sudan could withdraw the 1,000 SSP banknotes from circulation, replacing them with lower denominations or new banknotes with enhanced security features. This would limit the ability of individuals to hoard large sums of money in cash. For instance, in Kenya, the withdrawal of the old 1,000-shilling notes in 2019 aimed to combat corruption and money laundering. A similar approach in South Sudan could help reduce the amount of cash held outside the banking system. Another classic example is India, where they removed large denomination bills from circulation and limited them to 50 rupees. This resulted in a decrease in cases of corruption and bribery, leading to a preference for digital payments.

Encouraging Digital Transactions: Promoting digital banking and mobile money services can reduce reliance on cash. Already, the central bank is implementing this particular strategy. However, I can still suggest that banks could partner with telecommunications companies to enhance mobile payment systems, making it easier for citizens to conduct transactions electronically. For example, Kenya has successfully implemented mobile money services (e.g., M-Pesa) that have transformed the economy by providing a secure and convenient alternative to cash.

Redenomination of Currency: The bank could consider redenominating the currency by removing zeros from the SSP. For instance, they could eliminate the zeros from 1,000 banknotes. This would simplify transactions and make it harder for individuals to hoard large amounts of cash in high-denomination notes. For instance, in 2007, Ghana implemented currency redenomination, removing four zeros from the cedi. South Sudan could adopt a similar strategy to bolster confidence in the currency and decrease the amount of cash in circulation.

Strengthening Regulatory Frameworks: The bank should enhance regulations around banking and financial transactions to monitor and control large cash withdrawals and deposits. This could include stricter Know Your Customer (KYC) requirements and transaction limits. For example, in Nigeria, the Central Bank has implemented policies to monitor large cash transactions to combat money laundering and illicit financial flows.

Public awareness campaigns: Educating the public about the risks associated with hoarding cash and the benefits of using formal banking channels can encourage more people to deposit their money in banks. For instance, campaigns in various countries have successfully raised awareness about the importance of financial inclusion and the dangers of cash hoarding.

In short, withdrawing the 1,000 banknotes from circulation could be a viable solution for South Sudan to combat inflation and the hoarding of cash. By implementing a combination of these strategies, the Central Bank of South Sudan can work towards stabilizing the economy, enhancing financial inclusion, and reducing the impact of money laundering and corruption. Each of these measures would necessitate careful planning and public engagement to ensure a smooth transition and build trust in the financial system.

Author’s note: This article expresses the author’s viewpoints. The author is a PhD student in strategic management at the University of Nairobi; he is also a certified public accountant, holds an MBA in Business Administration, and has a wide understanding of macroeconomics theories. He can be reached at Obur.stephen2036@gmail.com.