JUBA - The number of commercial banks operating in South Sudan has grown to 14, according to the chairman of the South Sudan Bankers Association, Malueth Chol.
“Before independence, there were eight players in the sector. Now the number has grown to 14 and there are more applications coming in,” he said.
The Government last month signed a memorandum of understanding with Kenya to open a Cooperative Bank.
According to Malueth, the increase in the number of banks has provided South Sudanese with a range of banking options.
“A number of the banks offer credit facilities to clients who have proper collateral, with interest rates ranging from 1% to 10%,” Malueth said.
He said the loans are mainly short term for periods ranging from four to six months and mainly to support local trade, agro-business projects and imports.
When financing agro-business projects the local banks seek to promote local production of vegetables.
However, some of the new banks do not offer credit facilities yet, such as International Commercial Bank (ICB).
“For the current financial scenario in South Sudan, we are offering savings accounts, current accounts and corporate accounts for business people,” said the bank’s Managing Director Siraj Pardesi.
Opening savings accounts is free in most commercial banks, but a new client has to deposit some money to make the account active. Also some banks have no set minimum balance.
“As this country is new, for a savings account you can do with zero balance. But to activate it, you put SSP50 onto the account,” Malueth said.
One of the challenges the commercial banks are facing is scarcity of dollars, created by the shutdown of oil production.
This threatens the financial viability of some of the banks, which have only limited amounts of dollars available.
The Bank of South Sudan reduced the dollar allocations to commercial banks from $5m per week to a dismal $1m per week. Prior to the oil shutdown the Banks were receiving $10m per week.
“We are trying to help our customers by getting dollars from the Central Bank and from some of our customers, especially the NGO’s who are banking with us,” Siraj said.
The dollars allocated by the Bank of South Sudan are specifically meant for food, fuel and medicines.
The stringent measures have forced the commercial banks to also tighten their rules on how clients access the few dollars, with most of them demanding a series of documents to justify their need for the dollars.
Malueth said the shortage of the dollar has made it difficult for the banks to extend credit facilities to customers.
“People should know that the banks do not have money. These are customer deposits. They should have that in mind when they borrow,” Malueth said.
Whereas the entry of the big banks into the business arena is a threat to the local banks, it is also seen as a boost to investor confidence.
“Big players are joining the banking sector. This will increase investor confidence in the safety of their deposits,” the undersecretary for investment, Elizabeth Majok, said.
Kenya Commercial Bank (KCB)
International Commercial Bank (ICB)
South Sudan Commercial Bank
Bank of Khartoum
Qatar National Bank
Buffallo Commercial Bank
Agricultural Bank of South Sudan
Ethiopian Commercial Bank
Nile Commercial Bank
Cooperative Bank of Kenya
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Friday, 7 September 2012