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3 July 2024 (Juba) – The Central Bank of South Sudan is advocating efforts to increase food production and strengthen the resilience of smallholder farmers.
This will be achieved through strengthening the market system, the agency said.
However, over the years, the banking sector has been playing a vital role in ensuring food security, job creation, revenue generation, foreign exchange earnings and linkages with other sectors of the country’s economy.
The bank is working with commercial banks and state governments to prioritize agriculture through financial inclusion programs that encourage local savings and commercial bank lending to support agriculture.
Disruptions to crude oil supplies, which account for 90 percent of the country’s budget, have prompted authorities to explore other avenues, including showing interest in building up long-term resilience and increasing investment in agricultural capacity to boost domestic food production.
Public-private partnerships have also been introduced, which have the potential to revolutionize food security in the country by combining the strengths of both sectors to create sustainable solutions that benefit the entire population.
While authorities are leading the charge to promote financial inclusion, analysts note that economic growth in the country is uneven, with modern factories and hotels in the capital, Juba, states and other urban centres, but expansion and economic growth in rural areas, where most of the population lives, has been slow – even though rural agricultural production is the backbone of South Sudan’s economy.
Others argue that the agricultural sector has been neglected, despite numerous studies showing that five in six people derive at least some of their income from agriculture. The agricultural sector accounts for more than half of the gross domestic product (GDP) and could have been one of the country’s main sources of export revenue if it had been given due attention when the self-government system was established in 2006 following the signing of the 2005 Comprehensive Peace Agreement.
South Sudanese still rely on farmers or small traders to make a living. The rural-urban economic gap is reflected in the financial services sector. Financial institutions and ATMs are ubiquitous in Juba and major towns. International and local commercial banks compete for customers.
Billboards also tout better customer service and a wide range of financial options. Home mortgages, auto loans and other relatively new products targeting the expanding middle class are increasingly available to urban populations.
In contrast, financial services are relatively scarce in rural South Sudan, where people lack information about how financial institutions can help improve their lives.
Many rural areas in South Sudan are far from the nearest financial services provider, which is often just a small, member-owned savings institution with limited operations and products.
Those who want to save money leave it at home, hiding it under mattresses or burying it in gardens. Most feel they have no hope of getting a loan. They have no property to use as collateral, or they find credit options too limited to meet their needs. Financial experts say providing financial services that meet rural needs is essential for economic development in low-income countries like South Sudan. The rural poor cannot escape poverty if they are always just one bad harvest or one illness away from financial disaster. But expanding access does not mean simply opening new bank branches and savings in remote villages.
Governments and donors must work together to ensure that existing services are appropriate for rural markets and affordable to both individuals and businesses, and that the financial institutions that provide them are capable and accountable. Despite agriculture being the main source of income for rural residents and a dominant force in the economy, financial institutions of all types and sizes are reluctant to lend to the sector, believing it is not worth the risk.
As a result, commercial lending and most microfinance activities are largely confined to urban and peri-urban areas. The geographical distribution of financial institutions is also uneven. The high cost of reaching clients in areas without paved roads, electricity and other infrastructure is another major barrier to rural financial access.
In Ayok village, home to the governor of the Central Bank of Northern Bahr el Ghazal state, residents called on the highlands to provide security and water to help focus on food production.
To address this challenge, the Governor of the Bank of South Sudan unveiled a vision and strategy to boost food production by bringing banking and financial services closer to the people.
Addressing a large crowd in Ayok village, west of Aweil town, the administrative capital of Northern Bahr el Ghazal State, the state governor, James Alick Garang, called for local production as one of the strategies to improve living conditions. Garang explained that hard work is the surest way to eradicate poverty and improve living standards.
In Aweil, where he commissioned the opening of the central bank branch, he listed two benefits the central bank will bring to the people. One benefit is job creation, he said, as guards and unclassified staff at the branch site will not come from elsewhere. Another benefit is bringing banking and financial services closer to the people.
His vision and philosophy align with that of the ruling party of South Sudan, the Sudan People’s Liberation Movement (SPLM), which he joined as a young man in 1987, trekking for months on foot to reach the Ethiopian border. The SPLM advocates for building towns into the hands of the people so that they do not move to urban areas and end up living in slums, where most become unproductive citizens.
He explained that this vision can be achieved by mobilizing savings in rural South Sudan and depositing them in recognized financial institutions. Another way to achieve this vision is to demystify the agricultural sector and support it with loans, creating new opportunities for farmers, traders and other rural businessmen to expand their operations and increase their income. Expanding the range of savings and credit products available in rural South Sudan and strengthening the internal operations of small rural financial institutions is another way. The vision advocates the use of technology to expand the coverage of financial services in remote areas.
The opening of the Central Bank of South Sudan branch in Aweil was also welcomed by the people, with many officials in the state legislative assembly praising the decision of President Salva Kiir to appoint him.
Several speakers said that Garang, an economist trained in the United States, was the first banker in the history of the Bank of South Sudan to bring banking financial services to the local people. The bank has opened branches in eight of the ten states in South Sudan and plans to expand these services to some major towns and administrative areas.
Thong Deng Anay, former Minister of Health of Northern Bahr el Ghazal State, hailed the election of Bahail Anay, saying he was one of the first governors with the right and matching skills and knowledge to take the helm of the Central Bank of South Sudan.
(English stone)
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