Wednesday December 13, 2017

Foreign Banks in South Sudan and the Act of Exploitation of South Sudanese

Kenyan Commercial Bank (KCB) logo

JUBA –  South Sudan is refers to as virgin land to conquer by foreign investors. Foreign banks in South Sudan have dominated the banking industry.

The leading foreign banks in South Sudan include Kenya Commercial bank (KCB), Equity Bank and many other Somalis’ Banks like Dahabshill and Amal Express. How these banks operate is casting doubt on their sincerity with regard to business ethics and investment policies.

Banks like KCB have dominated South Sudan, however, the government, the Bank of South Sudan (BOSS) and the general public has not scrutinized the conduct of business of these Banks.

Government made a mistake of forcing all the institutions like the SPLA to open accounts with foreign banks such as KCB and Equity. What gains does the government get other than stamp duty charges? These banks repatriate the profits back to their home countries wholesomely without being taxed or investing. They have taken advantage of the naivety of the officials in the ministry of finance and some big fish in the government who are shareholders. These banks are controlled in their home countries, KCB is the right example in which all the transaction in South Sudan are monitored and controlled in Nairobi including authorization of some huge transactions.

Let me unearth all the evils they are doing in South Sudan. These banks have become the conduits of money laundering. People are depositing huge sums of money day by day without investigating where they work. Furthermore, remittances to East African countries are not limited to certain level. This practice has escalated the soaring exchange rates of US dollars against South Sudanese Pounds, which has led to subsequent hike in prices of the basic commodities. In nutshell, they have become lucrative avenues for corruptions. Government must axe some of these banks to make a corruption free South Sudan.

These banks also charge high commissions against both local and cross borders remittances. For instant a poor citizen sending 100.00 South Sudan Pounds (SSP) from Bentiu to a brother in Malakal is charged 42.00 South Sudan Pounds (SSP). That means the poor citizen would only end up sending 58SSP to his brother. 

What good is such a bank doing to the poor citizens of South Sudan?

In the last three months KCB disclosed a profit of Kenya shillings 581 millions generated in South Sudan which put South Sudan far much ahead of KCB Uganda, Tanzania and Rwanda. The factor behind these enormous profits is not fair and honest business but merciless exploitation of the poor nation. This overpriced charges rewards a lot of rates and meager salaries given to national staff. Imagine a scenario where two expatriates receive salaries equal to combine salaries of ten nationals. Imagine withdrawal fee in Kenya is 20 Kenya Shilling, which is less than a pound whereas withdrawal in South Sudan is four pounds that is an equivalent of 120 Kenya Shilling (KES). Where is that justice and genuine service? 

This is pure exploitation.

The most unfathomable and formidable scenario is that these banks have no permanent assets in South Sudan such as buildings. Assume the bank collapse today; is that amount in the reserve ration going to compensate public money? These aren’t remote possibilities or uncertainties; they are realities and can take place in shortest time like the blink of an eye. These banks may fall in to the same abyss like the defunct Nile Commercial beyond solvency.

The fallacy of free economy should not mislead us. Free economy can be equated to exploitation in an environment where there is no stiff competition like the one in South Sudan where the national banks are too weak to withstand the foreign banks competitions. Most of these foreign banks are far much advanced in technology.

The government must protect the infant national banks from these vultures by ordering public institutions to bank with them and raise the reserve ratios for the foreign banks and tax their profits highly. If we want to stand on our feed we must value and develop our own institutions, as the saying goes ”a bird in hand is worth two in the bush”. Monopoly has rendered the forces of demand and supply useless in South Sudan. 

The Upper Nile Times

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