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You are on your own, CS Henry Rotich tells Kenyan businessmen in South Sudan

NAIROBI
By Alphonce Shiundu | October 27th 2015
Cabinet Secretary Treasurer Henry Rotich

NAIROBI: The Kenyan Cabinet Secretary in charge of the National Treasury Henry Rotich has said the cash difficulties facing Kenyan businessmen in South Sudan will persist until the war-torn country agrees to float its currency in the market.

Rotich said unless the South Sudan government stops fixing its exchange rate on the South Sudanese Pound, and allows it to be traded on the market; it was going to be difficult for Kenyan businessmen to repatriate their profits back home.

"This has not worked today, because we don't know the right value of their currency. We don't think the official exchange rate reflects the true market value, we will have a problem if we take the currency," said the Cabinet Secretary at a meeting with the National Assembly's Finance, Planning and Trade committees.

Kenyan businessmen have complained to the committee that the government had abandoned them and their millions of shillings in profits were stuck in South Sudan because Kenya and South Sudan have no way of converting their currencies. They have also complained that the dollars in South Sudan are "rationed" and therefore it takes a long time for them to get a meaningful amount out of their accounts to expand their businesses.

"Those businessmen were wooed by the government to go to South Sudan to do business... most people took loans here to raise capital to go and do business, now their properties are being auctioned here because they can't access the money in South Sudan," said Benson Mutura (Makadara).

The chairman of the committee Benjamin Langat (Ainamoi) said the Cabinet Secretary had to issue a sort of 'doing business advisory' as a caution to Kenyans that it is very risky for them to do business in South Sudan.

"You just confirmed that Kenyans should be wary about business in South Sudan. It should come out clearly that 'please trading with South Sudan has its challenges'. Otherwise you will put more Kenyans into problems. Many people rush there thinking they will make money, only to realize they were going to make money only to realize they are making money but they can't bring it home," said Langat.

Rotich told the MPs that they had to understand that all businesses have their risks, and the political climate in South Sudan was fraught with so many risks, so "due diligence" would have made the businessmen aware of what they were getting into.

"When we say due diligence, you have to know there are risks," said Rotich. "The Central Bank has been working on this, but there are challenges."

He said the government will not do much to help the businessmen other than liaising with the South Sudan government to stop fixing the exchange rates.

"It all depends of the government of South Sudan to undertake this tough reform. I don't want to say that we have closed the door right now. There's still hope," said the Cabinet Secretary.

He said that while other businessmen got paid in dollars, the problem was there was not enough of dollars to go around.

"Unfortunately, the issue is the Kenyan banks operating in South Sudan getting sufficient allocation, because the country is rationing the foreign exchange. The banks tell you, 'this is what we get from the Reserve Bank of South Sudan and that is what we have to operate from'," said Rotich.

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