Foreign currency scarcity in Africa’s youngest nation has forced businesses to cut down operations, latest being MTN South Sudan.
MTN South Sudan is not happy with the slow business growth or lack of it in the Africa’s youngest nation, and as such, it is trimming its operations due to currency volatility and economic uncertainty.
MTN South Sudan which is part of Africa’s biggest mobile-phone company announced its plans to cut jobs and cancel expansion plans as the troubled nation battles an economic upheaval.
The firm which invested $170 million in the country over the past two years noted with regret that it did not make any profit.
Speaking to reporters on Tuesday (March 29) Khumbulani Dhlomo, the company’s head of corporate services said the struggles have forced them to trim its workforce to about 80 people from 170.
Moreover, the company will put on hold plans to build 40 communications towers across the country.
The head of corporate services said, “People now have to choose between buying a phone, buying airtime and buying bread.”
When South Sudan gained its independence from the north in 2011, there were hopes that the end of the deep-rooted conflicts would come to an end.
But soon after -two years later- these hopes were washed downhill as the nation succumbed to more conflicts due to leadership disagreement between President Salva Kiir and the ex-vice president Riek Machar.
Although the two leaders signed a peace deal in 2013, the pact did not yield any fruits. In fact, the country whose economy was dependent on its oil continued to lose bearing in the business which dropped by a third.
The global downward trend of oil prices further weakened the country’s currency, forcing the central bank to devalue the South Sudanese pound by 84% against the US dollar last December.
According to Mr Dhlomo, “the biggest challenge is the exchange rate of the U.S. dollars. “It’s either the U.S. dollars are too expensive for the company or not there.” He was quoted by Bloomberg. “If the economy doesn’t change, the dollar keeps on doing what it is doing, then you can’t survive.”
But it’s not just MTN that is experiencing poor business in the country. Last month, SABMiller was forced to shut down the country’s first and only brewery citing scarcity of foreign currency required to purchase raw materials. The main non-oil foreign investor said it failed to turn a profit since setting base in the country in 2009.
MTN’s Dhlomo said the company is trying as much as possible to do what they can so that at the end of the day they don’t find themselves in a position where they have to close down.
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