South Sudan’s ‘M-Pesa’ and harmonising payment systems with EAC

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A financial revolution is coming to South Sudan following the launch of its first mobile money platform and the coming development and harmonisation of its payment systems.

The harmonisation is in line with that of the five-member countries of the East African Community (EAC).

To make this a success, the African Development Bank (AfDB) Board in July 2019 approved USD6.6 million funding to finance South Sudan’s payment and settlement systems integration project.

The project is part of the Bank’s updated country strategy paper which concentrates on state-building through capacity and infrastructure development.

Maintaining economic infrastructure

The harmonisation project is also aligned with South Sudan’s National Development Strategy 2018-2021.

It confirms the need to restore and maintain economic infrastructure.

The objective of the project is to modernise the payment systems in South Sudan in order to improve the country’s financial systems and promote regional integration.

Through the harmonisation, there will be the facilitation of progress towards a monetary union in the EAC and increasing trade and economic activities within the region.

For South Sudan, the development of real-time gross settlement (RTGS) and the other components of the project will improve the efficiency of financial intermediation, enhance the management of systemic risks, and promote liquidity management, monetary policy implementation and strengthen the financial sector.

The newly approved project complements the ongoing EAC payment and settlement systems integration project (EAC-PSSIP) and support to South Sudan.

It is closely aligned with the 4th EAC development strategy (2011/12 – 2015/16) and the EAC common market protocol, which emphasises trade facilitation, a single market in financial services, an EAC monetary union, and infrastructure connectivity into regional development initiatives.

Implementation of the new project will commence during the 2019/2020 financial year, and the EAC secretariat will coordinate project implementation, in close collaboration with the Central Bank of South Sudan.

Transferring funds through the (EAPS) platform

Once completed, the project will have produced a modernised payment system for South Sudan.

It will also create a Central Bank with greater capacity to provide oversight, policies and regulations to support payments and settlements.

These achievements will put South Sudan in a position to interconnect better with other East African countries to ease transfers of funds through the East African Payment System (EAPS) platform.

The Bank’s country manager for South Sudan, Benedict Kanu, noted, “The modernisation of payment systems to bolster the financial system’s performance will not only increase the formal financial sector but also encourage regional integration.”

He added that the established linkages between financial inclusion and inclusive growth will benefit the people of South Sudan by assisting them to invest more in their economy.

Kanu noted that the activities of the proposed project will not only promote better governance in the financial sector but also improve access to much-needed credit, thereby enabling businesses, especially SMEs, to expand, creating jobs and reinvigorating growth.

Commercial banks in South Sudan

South Sudan’s economy currently functions mainly on a cash basis, with very low usage of commercial bank cheques.

Banks are the main providers of payment services in the country.

29 commercial banks are licensed to operate in South Sudan, six of which are foreign-owned.

The indigenous banks are mainly one-branch operations, whose main business is foreign exchange trading.

Appropriate regulations have been drafted and it is envisaged that mobile payment and banking services will be launched by several banks as soon as the regulatory framework is ratified.

Since 2012, AfDB has contributed more than USD160.55 million in development aid across various sectors for South Sudan.

The Bank’s support has focused on capacity building, and infrastructure development, with particular emphasis on creating conditions for promoting peace, stability and state-building, in line with South Sudan’s and the Bank’s strategic priorities.

South Sudan launches the first mobile money service

The first mobile money service in South Sudan was launched in July in a joint partnership between Trinity Technologies and Zain.

Dubbed M-Gurush (M for mobile, and Gurush for money in Arabic), the service targets to serve the 13 million South Sudanese in the country.

“The platform provides consumers with a robust offering of products that cut across service payments, airtime top-up and money transfer services,” said Trinity Technologies Vice President, Joseph Arinaitwe.

While M-Gurush comes decades after the mobile money revolution in neighbouring Kenya, it is a welcome platform in the country has been waiting for such a service for a long time.

South Sudan’s mobile phone penetration stands at about 33 per cent. This translates to approximately 4 million people across the 32-state country.

According to the World Bank, more than 51 per cent of the South Sudanese population lives below the poverty line.

Banking services are also limited in the country with Kenya’s Kenya Commercial Bank (KCB) and Equity Bank leading the financial sector.

In lieu of mobile money, South Sudanese have been exchanging airtime for money where traders cash out airtime at a discount of about 10-20 per cent.

As South Sudan opens up its digital space, the sector is expected to grow rapidly since the need has barely been met.

Already, Liquid Telecom has committed to connecting South Sudan to the “One Africa” broadband network which is approaching 70,000km across 13 African countries and to the rest of the world.

Read: Why Africans can now shop internationally but pay locally, Digital opportunities for East African countries in 2019

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