(AfDB) - The African Development Bank Board on 17th July 2019 approved $6.6 million funding to finance South Sudan’s payment and settlement systems integration project. The project is consistent with the Bank’s updated country strategy paper which concentrates on state building through capacity and infrastructure development. The project is also aligned with South Sudan’s National Development Strategy 2018-2021; the latter 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. To this end, the project will assist South Sudan to develop and harmonise its payment systems in line with those of five member countries of the East African Community (EAC), thereby facilitating progress towards the 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, which 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.
Once completed, the project will have produced a modernised payment system for South Sudan, a Central Bank with greater capacity to provide oversight, and 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 that “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. Moreover, 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”.
He added 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.
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, the Bank has contributed more than $160.55 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.