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Dashed hopes as Kenyans’ rush for South Sudan bounty backfires

By Patrick Alushula | March 26th 2017
This photo taken on May 11, 2016 shows internally displaced people (IDPs) in Wau, South Sudan, due to armed clashes in surrounding villages, waiting to be registered by the International Organization for Migration (IOM) and the World Food Programme (WFP) on May 11, 2016. [PHOTO: AFP]

She has oil. That has been enough selling point for South Sudan, the world’s youngest nation. Then came independence and Kenyans saw a window of opportunities.

In Juba, the country’s capital city, they saw business, adventure and possibility of a second home too. But hardly seven years after independence, the rush for this cake is causing Kenyans goosebumps.

Civil war, famine, drought, hyperinflation and weakening South Sudanese Pound (SSP) have conspired against Kenyan companies that had set businesses there as well as individuals who had secured jobs. The regrets could not be captured any better than those of relatives of four Kenyans who went to search for luck in South Sudan and got jobs at Click Technologies Ltd, a local retail company that supplied electronic equipment and stationery.

The four, their relatives say, were unfairly sentenced to life imprisonment over corruption allegations. They only have one request to President Uhuru Kenyatta: “Help our relatives return home.”

A similar appeal was made by seven construction workers living in confinement in a rebel-held region after a fallout with a Kenyan contractor. And making a call to narrate this messy affair has become expensive thanks to hyperinflation. February data shows communication has seen the highest rise in price (557.5 per cent) in Juba. This means the cost of communication has more than quadrupled in just a year.

But even for those not facing insecurity, this hyperinflation, an occurrence of high and accelerating rates of inflation has rocked their lives, denying them the hope for a fortune. “Even in the posher restaurants in Juba, the menus are printed on cheap paper. It is not worth having more expensive ones when they have to be updated every few weeks,” The Economist, a London-based news outlet reported this week.

Too bad is the situation that taxi drivers, prominent source of black-market currency, tie up bricks of pre-counted banknotes with elastic bands to save people from having to count them out themselves, the outlet observed.

As at end of December, inflation had accelerated to 476 per cent from just 56 per cent in 2015. The impact is that for a basket of goods that was worth say Sh1,000 in 2015, Kenyans living and working in South Sudan are now getting it at least Sh4,760. The rate is the highest in the region putting it in the league of some of the countries in the world where hyperinflation is a challenge. In October, the rate touched a high of 837.5 per cent. Currently, inflation is 9.04 per cent in Kenya, 12.9 per cent in Burundi, 13.4 per cent in Rwanda, 6.7 per cent in Uganda and just 5.5 per cent in Tanzania. In Sudan from which South Sudan was founded, inflation was 32.86 per cent in January, making it the second most expensive country in the region year-on-year.


For a Kenyan who went to South Sudan in 2012 when inflation was 45.3 per cent, managing a 476 per cent inflation is a nightmare. Without an increase in salaries and wages, workers have become poorer.

According to data released by The Republic of South Sudan National Bureau of Statistics in February, Food and non-alcoholic beverages increased by 478 per cent from February 2016 to February 2017. At the same time, prices for health services increased by 223.7 per cent as restaurants and hotels increased prices by 265.3 per cent.

“The high prices of food and non-alcoholic beverage were mainly driven by higher price of bread and cereals,” noted the statistics office. And jobs have also become hard to come by. This is especially after price of oil, a 99.8 per cent export revenue earner in South Sudan, embarked on free fall. This has left the economy depleted, and purchasing power at its lowest.

The hyperinflation, added to the devaluation of SSP, has complicated the environment for businesses. SAB Miller Plc, the only beer factory in the world’s youngest country, opted to shut its brewery in March last year ending home 176 workers. The firm was faced with a foreign-currency shortage which curtailed its ability to import raw materials.

Another direct impact of the closure has been that a basket of alcoholic beverages and tobacco goods have seen a 521 per cent rise in prices, making it an expensive affair to pay for leisure. For Kenyan companies operating in this region, the walk has not been easy. Kenya Commercial Bank, the largest bank in the region, suffered a Sh3.4 billion net monetary loss from this market.

The group ended up with the slowest growth in net profit in seven years even as its balance sheet shrunk by 7.3 per cent to Sh504.8 billion. In addition, it had to more than triple its South Sudan employee’s salaries to shield them from hyperinflation. According to Group Chairman Ngeny Biwott, the firm is making calculated moves to avoid over-exposure.

“We will have to make some fairly significant decisions on how to contain that risk. There is nothing predictable in that country but we will take care of each day at a time,” he said during investor briefing.

Co-operative Bank, another lender with operations in South Sudan suffered a Sh498.3 million net monetary loss. CIC Group also burnt fingers in this market. The Group pointed out that the 83.4 percent drop in net profit to Sh188.1 million as it took a Sh297.5 million hit as result of the devaluation of SSP.

For Equity Group, the going was the same. It suffered a loss before tax of Sh500 million, a decline of 238 per cent even as assets shrunk.

While in 2015 assets in South Sudan made up 4.4 per cent of the total group’s assets, last year, that shrunk to just 2.3 per cent of total assets. As companies and individual Kenyans take each day at a time, regrets, deep thoughts and anxiety are rising.

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