Merchants in South Sudan say they are being denied access to letters of credit (L/Cs) as the country struggles to stabilise its currency.

South Sudan has experienced difficulties over recent months with a scheme meant to make L/Cs more available for merchants. It is allegedly being abused by high ranking politicians and civil servants (DC World News, 15 June 2015).

L/C abuse

The L/C scheme is intended to make essential foodstuffs and other items available at affordable prices.

But the scheme is being abused as a way to make quick profits from those who are able to obtain L/Cs.

Profiteering

The L/Cs can be obtained at the official exchange rate, which is up to five times lower than the Sudanese pound to US dollar exchange rate on the black market.

So the L/Cs are being used to obtain foreign currency that can then be sold on the black market at a huge profit.

Inflation

Largely as a result of the L/C scheme's apparent failure, prices of essential items such as flour, sugar and cooking oil have risen sharply, sometimes by as much as 50 per cent over a six month period.

Merchants such as Jonglei state businessman Majok Kuur Kuer, say the L/C scheme is being widely abused.

Official abuse

"Let's say a government official says he has a company. The company does not have a physical shop front, but the official still receives money through the L/C programme," he told local media.

"The government should be giving L/Cs only to merchants who can prove they have a shop, and the government should verify that the merchant actually buys and sells goods," he concluded.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.