Traders in South Sudan expect a recovery in sales after Juba said it would resume oil exports this month, potentially ending a nine-month dollar crunch.
A shutdown in fuel exports from South Sudan due to a dispute with Sudan over transportation fees had starved the country of hard currency, making it difficult for importers to settle transactions.
“We have finished our discussions with the north and solved all the outstanding issues.
We, therefore, expect oil to start flowing soon, in about two weeks,” South Sudan Ambassador to Kenya Majok Guandong said.
Kenyan firms such as Athi River Mining, Beer maker EABL, edible oils manufacturer Bidco Oil Refineries and paint producer Crown Berger all reported diminished sales in South Sudan following the hard currency crunch.
Some of the manufacturers had been forced to sign currency exchange agreements with commercial banks to mitigate the shortage of dollars.
Mr Guandong said upto 27 per cent of the properties in Juba are owned by Kenyans making the country’s economic performance significant to Kenya.
Bidco Head of Sales Mitul Shah said exports from the Jinja plant in Uganda had gone down 60 per cent.
“At the moment there is nothing going on, but demand is still there. We, therefore, look forward to good business because they contribute significantly to our total revenues,” said Mr Shah.
The US dollar is the currency of choice for external trade in South Sudan while the Sudanese pound is used for domestic transactions.
South Sudan stopped oil production in January after accusing the northern government in Khartoum of pilfering $815 million (Sh69.2 billion) worth of its oil. Sudan said it confiscated the crude to make up for unpaid transportation and processing fees.
Crown Paints managing director Rakesh Rao said the company was going round the currency hitch by signing agreements with importers for upfront payment of a fraction of the value of goods. The balance was being paid over an agreed period.
The dollar shortage also saw Kenyan commercial banks in South Sudan make huge profits through sale of foreign currency.
The devaluation of the Sudanese pound has pushed inflation to 37 per cent, affecting the ability of the country to afford foreign goods. The exchange rate has weakened rom 4.4 pounds to the US dollar to 6.2 pounds to the dollar.
Business Daily
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