(JUBA) – The involvement of elites in the South Sudan’s financial sector, particularly speculation in the parallel currency market by the well-connected, is responsible for the currency depreciation and inflation in the country, a new report said.
- Women sell food at Konyo Konyo market in South Sudan (Reuters)
The 16-page report, entitled “The Nexus of Corruption and Conflict in South Sudan”, was released on Monday by The Sentry, an initiative of the Enough Project, together with its supporting partners C4ADS and Not On Our Watch (NOOW).
It mainly identifies four major sectors in which the country’s wealth and revenues are said to be diverted towards the personal and institutional interests of elites: The areas mentioned in the report include the extractives sector, the military, state spending and the money laundering hub.
“The emerging financial sector in South Sudan has been exploited by elites who use it as a laundering and revenue-generating vehicle,” says report obtained by Sudan Tribune.
According to the report, the International Monetary Fund (IMF) warned in December 2014 that South Sudan’s reserves amounted to less than three weeks of imports, a situation which saw the Central Bank resort to borrowing and printing money, leading to inflation.
“The diversion of dollars into the parallel currency market is increasing pressure on the Central Bank’s foreign exchange reserves,” it adds.
The South Sudan’s economy, it said, is currently facing a major financial squeeze with oil revenues drying up and conflict and corruption minimising the effectiveness of foreign investments and humanitarian donations.
“South Sudan’s elites have built a kleptocratic regime that controls all sectors of the economy, and have squandered a historic chance for the development of a functional state. Predatory economic networks play a central role in the current civil war, because much of the conflict is driven by elites attempting to re-negotiate their share of the power balance through violence,” said John Prendergast, co-founder of The Sentry.
“Any effort to end the war in South Sudan requires much greater financial pressure on those elites and the networks that fund violence,” he added.
Meanwhile the report recommends that financial drivers of the conflict and motivations of the major players be understood as essential in the ongoing peace negotiations.
It further urges the international community and regional actors to pursue a more deliberate strategy to diminish the incentives and resources that are funding and fueling the current conflict.
“This strategy includes: promoting budget and beneficial ownership transparency, conditioning aid and assistance on measurable improvements in procurement and contracts oversight, building sanctions enforcement capacity, and pushing for targeted financial enforcement measures to freeze and recover assets of those who have skimmed profits from the ongoing conflict,” stressed The Sentry’s newly released report.