1. Executive Summary:
South Sudan is undergoing an unprecedented macroeconomic deadlock, and one of the key facets of this deadlock is a sustained liquidity crisis. Large quantities of South Sudan Pounds (SSP) exist outside the banking system, predominantly in individual hoards and within the unofficial sector. This trend has miserably incapacitated the ability of the Central Bank of South Sudan (CBSS) to implement monetary policy, curb price stability, and to ensure day-to-day transactions of the South Sudanese economy.
Therefore, this policy document advocates for the switch of currency, a deliberate process that involves the redesign and introduction of new high-denomination South Sudanese Pounds (SSP) banknotes.
But the undertaking of a currency swap is risky; a failed undertaking can lead to widespread market hysteria, hyperinflation, and economic disenfranchisement. As such, this policy demands a coherent multi-agency mechanism that coordinates the execution, monitoring, and assessment of the switch. The Central Bank of South Sudan (CBSS) will thus have to coordinate with the Financial Crime Unit (FCU), Financial Intelligence Unit (FIU), and the Economic Security Unit (ESU) to address market uncertainties.
2. Placing the South Sudanese Liquidity Crisis in its proper context.
The liquidity crisis in South Sudan is largely caused by a severe erosion of public trust in the commercial banking sector, coupled with inflation and a pervasive shadow economy. Currently, most cash transactions take place outside the reach of the Central Bank of South Sudan (CBSS), with no related security implications.
If cash is withheld rather than deposited in banks, lending cannot occur, the government is unable to quantify the size of the money supply, and the Central Bank is left with little alternative but to issue additional notes at times to meet public sector salaries and public service costs – thus fanning inflationary pressures further.
In order to break the cycle, the Central Bank of South Sudan (CBSS) needs to compel those who are unbanked, together with those in the informal sector, to redeposit all hoarded physical cash back into the banking system. An unconditional legal currency swap is the most decisive policy lever to achieve this.
3. The Policy Recommendation: Targeted currency swap.
As recommended and drawing from examples elsewhere; that the government, through the Central Bank of South Sudan (CBSS), replaces the highest SSP denomination notes (e.g., 500, 1500, 2000, 2500SSP notes) with differently coloured bills, while completely withdrawing old currency denominations from circulation, with a stringent and phased deadline for exchange.
Selected Precedents Africa and Asia:
- Nigeria (2022-23): redesign of the Naira by the Central Bank of Nigeria (CBN) aimed at removing cash from the system and discouraging payment of ransoms. While effective in removing liquidity, the short exchange period led to severe liquidity shortages. (lesson to be learnt for South Sudan).
- India (2016): demonetisation aimed at curbing “black money.” Increased digital payment use and tax revenues. Led to temporary disruptions in the informal economy.
- Kenya (2019): successful replacement of 1000 Shilling notes with newly designed bills aimed at curbing illicit finance, a process which was successfully undertaken over four months. South Sudan must follow Kenya’s well-communicated and phased approach.
By imposing an expiry date on existing denominations, the Central Bank of South Sudan (CBSS) pressures every individual and institution holding cash to deposit it into a bank, in exchange for new notes. This act immediately recapitalizes the banking system, which requires sufficient liquidity to engage in lending.
4. Inter-agency cooperation: Implementation, monitoring, and evaluation.
Currency swap is not merely a financial transaction; it’s a matter of national security. A flood of previously hoarded, perhaps illicit cash flowing into the formal economy would need an ironclad regulatory and security structure in place to curb this outflow and its inherent risks. The Central Bank of South Sudan (CBSS) cannot do this alone; the security-related unit should work in tandem.
A. The Central Bank of South Sudan (CBSS)
- Role: Lead agency. Responsible for the printing, secure logistics, and distribution of the new currency notes. The Central Bank of South Sudan (CBSS) will set the monetary policy, exchange limits, withholding, withdrawal, and also monitor economic indicators throughout the swap period.
- Actionable Step: The Central Bank of South Sudan (CBSS) needs to set up a decentralized network of distribution to ensure rural banks, Microfinance Institutions (MFIs), if applicable, receive the new notes at the same time as urban centres in Juba and all other major cities/ towns.
B. The Financial Intelligence Unit (FIU)
- Role: The operational brain box of the swap operation.
- Actionable Step: As citizens deposit old cash, the transaction size will be monitored by the Financial Intelligence Unit (FIU). The policy would need to mandate that large amounts exceeding 50,000,000 SSP, for example, require ‘know your customer’ and source of funds to be verified. This information can then be collated by the Financial Intelligence Unit (FIU) to identify money launderers who have been hoarding cash.
C. The Financial Crime Unit (FCU)
- Role: Law enforcement agency to provide support in the prosecution of individuals involved in laundering funds.
- Actionable Step: The financial crime unit (FCU), based on intelligence from the financial Intelligence Unit (FIU), would be required to arrest and investigate people who attempt to convert dirty money, be it from corruption or smuggling, through what is commonly known as “smurfing”. Smurfing is an act where a launderer breaks up large chunks of dirty cash into many small transactions, which are then channelled through several different individuals and accounts, thus remaining outside the regulatory scanner of the Financial Intelligence Unit (FIU).
D. Economic Security Unit (ESU)
- Role: Physical security and market stability provider.
- Actionable Step: The economic security unit (ESU) would need to ensure the secure transit of the new notes to avoid hijacking along the routes and that it reaches all centres of distribution securely. They will also need to secure exchange points like Konyo Konyo, Juba, Customs, Jebel market, to mention a few, to avoid exploitation of citizens and introduction of counterfeit older notes into the circulation and markets before the final deadline.
5. Countering Adverse Economic effects and Market behaviour.
While carrying out policy implementation, the government has to seriously understand that a currency swap causes a market shock. The South Sudan economy is overwhelmingly cash-based. This system of trade has to be disrupted in some ways, with the right measures, of course, to avoid the market turning against the government.
A. Impact I: panic buying and hoarding of essentials.
The Threat: Fears by citizens that their old currency would become useless overnight may lead business people to stop taking it before the final date, pushing citizens to panic buy goods, especially non-perishable ones or dollars, leading to shortages.
The Mitigation: The CBSS must make acceptance of the old currency by law compulsory until the final deadline. ESU should monitor markets, especially at the wholesale level, to curb stockpiling of essential commodities like grain and fuel, if any signs are detected.
B. Impact II: disenfranchisement of the rural and unbanked populace.
The Threat: The majority of South Sudan’s population lives in the countryside and may not have access to banks or money transfer agents. Short notice and a limited window may leave them with worthless paper and the economic plight of the people.
The Mitigation: The Central Bank of South Sudan (CBSS) must set up mobile cash and swap units in the rural areas under protection from the security units to help cash exchange at the remote parts or enable local traders with cash to deliver the currency to a larger centre under escort from security for exchange. A tiered deadline may also be useful; a primary deadline in urban centres, extended grace period in remote rural areas.
C. Impact III: hyperinflation through dollarization of the economy.
The Threat: If people are wary about placing funds with banks, they could flood the black market with old notes, trying to acquire dollars for what they would normally receive. This could push the value of the South Sudan Pounds (SSP) further downwards compared to the dollar.
The Mitigation: the Central Bank of South Sudan (CBSS) should temporarily suspend foreign exchange controls for the period of the swap, to ease market pressure from excessive dollarization and the financial Crime Unit (FCU) and Economic Security Unit (ESU) should work closely together to suppress informal dollars street vendors and traders at the market, to enable for Central Bank of South Sudan (BOSS) take over regulation of market dollar market in what is locally referred to as the ‘black market’.
D. Impact IV: Cash squeeze.
The Threat: Similar to the earlier case in Nigeria, an insufficient printing and circulation of the new notes would paralyze economic activities, as legitimate businesses lack the required medium of transaction.
The Mitigation: The CBSS has to maintain a 1:1 distribution readiness. For every piece of old currency pulled out, there has to be new money secured and warehoused at the distribution points prior to its withdrawal from circulation.
6. M&E Framework.
The inter-agency task force will need to employ a robust monitoring and evaluation framework, using real-time data, in order to assess whether or not the policy is successful. This means that the related security units need to be appropriately trained in the management of cash, with professionals from an educational background in financial and economic fields, for managing this task, given the real data availability.
- Key Performance Indicator (KPI) 1: Currency Returned. Weekly report must be provided on a percentage basis by the Central Bank of South Sudan (CBSS) along with security units on the percentage of intended out-of-bank currency. Return rate of at least 80% is expected for the designated denominations.
- Key Performance Indicator (KPI) 2: Liquidity of Banks. The main objective is to ease the liquidity crisis; there must be close supervision over the liquidity ratios of commercial banks. Post-swap, the amount of new loans extended by commercial banks to Small and Medium Enterprises (SMEs) needs to be monitored closely.
- Key Performance Indicator (KPI) 3: SARs Handled. The percentage of SARs, investigated by the Financial Crime Unit (FCU), as well as the value of illicit assets recovered during the swap window, should be closely monitored by the Financial Intelligence Unit (FIU).
- Key Performance Indicator (KPI) 4: Inflation & Exchange Rate Stability. CPI and parallel market exchange rates must be closely monitored on a weekly basis to quickly intervene with the appropriate monetary tools in case of inflation spikes.
7. Conclusion to Policy.
South Sudan is currently in a crisis on the macroeconomic level. Due to huge sums of cash held outside the banking system, the central bank is not in a position to influence or manage economic resources, the availability of credit is minimized, and poverty levels are at their highest.
Swap is not an option for the Central Bank of South Sudan (CBSS), but an urgent need to get control over monetary policy, make money hoarded outside the banking sector ineffective, get liquidity into the formal banking system to encourage banks to start giving credits, and thus push the economy ahead.
However, the successful implementation of this policy depends only on how carefully this operation is carried out, and there would be a disaster if approach is fragmented, the only way the success of this huge task depends on the rapid formation of a Joint Task Force between the Central Bank of South Sudan (CBSS), FIU, FCU, and Economic Security Unit (ESU), which will also have responsibility to safeguard illicit financial transactions and ensure no one out of the rural areas of the country are financially discriminated.
Only with such a careful, phased, and close approach policy, countries like South Sudan, as mentioned in this policy document, may overcome currency swap complications and revive their economy.
With HOPE, forward together-faithful to the past, faithful in the present, and faithful for the future.
The writer, Daniel Athior Atem Manyuon, CDFA, CFA(A), PMP, is MINDS Africa Alumni, Mandela Scholar and financial Economist; Frankfurt Young Economists Winner (2026); A member of Young Economic forum (Frankfurt 2026); He’s also World Bank Blog4Dev2019 winner for South Sudan; A Member of the World Bank Youth Transforming Scholars, and an opinion writer on issues relate to social-finance-economics, education, youth-in-sports, governance, and corruption. He can be reached at atemathior@gmail.com.
The views expressed in ‘opinion’ articles published by Radio Tamazuj are solely those of the writer. The veracity of any claims made is the responsibility of the author, not Radio Tamazuj.
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