By Garang Malak

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South Sudan is encouraging civil servants to take their pay electronically, testing a new move that could also challenge the country’s available infrastructure for a cashless economy.

The proposal had been mooted two months ago, but officials this week formally released a circular asking that transactions such as salaries for civil servants and payments into departmental vote heads be done cashless.

The idea is to cut out red tape and potential avenues for corruption, allowing authorities to monitor the flow of money. But that has also raised the question on whether all civil servants can join in and whether there are systems to ensure the new structure supports the transactions.

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South Sudan’s Ministry of Finance and the Central Bank said in the circular that they were encouraging the public and all relevant actors to promote a “cashless economy” by leveraging commercial banks, online platforms, and mobile money transfers.

This shift followed a rapid appreciation of the South Sudanese Pound (SSP) against the US Dollar, where the exchange rate improved from SSP 5,000 per dollar a week ago to SSP 3,100. Despite this gain, many South Sudanese citizens remain frustrated, as market prices have not adjusted to reflect the currency's strengthening.

The country is a net importer of basic commodities, part of the legacy of civil war both before and after independence in 2011 that frustrated investments in crucial sectors of the economy.

But there is something else. Most South Sudanese neither live near a bank branch nor have a bank account. A World Bank bulletin says commercial bank penetration rates in South Sudan stood at 1.45 commercial bank branches per 100,000 adults in 2020, and less than 10 percent of the population have access to formal financial services. Cash is the most predominant mode of payment.

Mobile phone penetration, which could aid access to mobile money, is also low, at just 22 percent—or 2.3 million people. The World Bank had earlier assessed that mobile money could be a better alternative in South Sudan because banking is still developing and may take longer to be widespread. In South Sudan, formal banking is also a problem because of illiteracy, with just about 28 percent of the population being able to read and write.

On Tuesday, Central Bank Governor James Alic urged commercial banks to simplify the process of opening accounts, especially for individuals traditionally excluded from the banking sector.

“The public is encouraged to adopt electronic payment platforms, including mobile money transfers, and credit and debit cards, which offer low transaction fees, convenience, and the opportunity to establish a personal credit history,” Alic stated.

He further called on mobile money providers and commercial banks to collaborate, ensuring interoperability between bank and mobile money accounts for seamless fund transfers.

Finance Minister Marial Dongrin Ater outlined the objectives behind these measures, emphasising the need to improve tax revenue mobilisation, enhance crude oil exports, secure financial backing, promote digitalisation, and foster food security.

“To boost revenue mobilisation, the Ministry of Finance and Planning is working closely with the South Sudan Revenue Authority to streamline revenue collection and ensure tax compliance.

“We are actively engaging bilateral and multilateral partners to secure concessional loans and grants to address the country’s pressing economic challenges. These funds are earmarked to support key sectors and stimulate economic growth,” Ater explained.

And moving forward, Ater said, Juba has decided to pay salaries and operational costs for ministries, departments, and agencies (MDAs) through bank accounts, aiming to improve financial efficiency, reduce risks associated with excessive cash circulation, and enhance transparency.

“The banking sector should simplify electronic transaction processes, while telecom operators would intensify public awareness campaigns about mobile banking services.

“To address food shortages and stabilise prices, the Ministry of Trade and Industry has initiated measures to ensure a steady and accessible supply of essential goods,” Ater added.

However, these initiatives have sparked mixed reactions among South Sudanese citizens. Many voiced concerns about the feasibility of a cashless economy in a country with limited banking infrastructure, especially in rural areas, while others welcomed the move, citing potential benefits such as reducing ghost names in civil servant payment systems.

“Many individuals, particularly in rural or underserved areas, may not have bank accounts due to various reasons such as lack of banking infrastructure, limited financial literacy, or personal circumstances,” said Deng Goch Deng, a resident in Juba.

“To ensure inclusivity, the government should consider measures to make banking more accessible, such as mobile banking solutions, simplified account opening processes, and outreach programmes. Without addressing these issues, the policy could unintentionally exclude a significant portion of the population from accessing their rightful wages.”

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Ayuen John, a teaching assistant at Dr John Garang Memorial University, praised the initiative, particularly for its potential to tackle the issue of ghost names in the civil service payroll system.

“Paying civil servants’ salaries via bank accounts will eliminate ghost names, ensuring that only active employees receive their payments. It will also improve accountability, as each civil servant will have direct access to their wages through their own bank account. Additionally, this system will help prevent impersonation, where one individual might collect salaries for multiple inactive employees,” Ayuen noted.

“Those with low salaries will not be negatively affected, as transfer fees from institutional accounts to personal accounts are covered by the employer, meaning withdrawals will be free for the individual.”

In July, the Ministry of Finance and Planning released one month’s salary for civil servants and members of the disciplined forces, following nearly 10 months of salary delays. According to Education International, an NGO, teacher compensation in South Sudan remains alarmingly low, with primary school teachers earning as little as $9 per month and experienced educators receiving up to $90 per month. Private soldiers are reported to earn between $5 and $10 per month.

In recent months, South Sudan has faced escalating unrest as workers, including teachers and university lecturers, have gone on strike, demanding salary arrears.

Civil society activists attribute the government’s inability to pay salaries to poor management of non-oil revenues and a decline in oil production. Compounding these challenges, the ongoing conflict in neighbouring Sudan has caused a sharp drop in oil revenues, raising concern that South Sudan's economy could collapse.