The volatile nature of both foreign and the official currency in South Sudan’s business environment is telling negatively on Kenyan companies operating subsidiaries in South Sudan. The whimsical nature of the young country’s business environment has seen South African multinational beer maker contemplates shutting down its factory.
East African Breweries Limited (EABL), during its full-year results announcement last week, reported that its South Sudan business is currently operating at two-thirds below capacity due to limited access to US dollars, the predominant international trading currency.
Equity Bank, which also has operations in South Sudan, last Tuesday said it would write off bad debts incurred in the country as it reported a dip in the subsidiary's contribution to its group half-year revenue.
"Loan loss provision increased because we are writing off the (bad) loans in South Sudan," said Equity Group CEO James Mwangi.
Allan Gray Africa, a fund manager with interests in CfC Stanbic, recently told its investors that its negative return for the quarter to June was partly due to the bank's business in South Sudan "basically shutting down".
"CfC Stanbic has a sizeable business in South Sudan, which has been basically shut down by the escalating violence in the county," the fund said in its quarterly report to investors.
Years of civil war between political factions has resulted in a near economic collapse in the landlocked country, a crisis that is highlighted by fuel shortages and a dearth of foreign currency.
The delicate relationship between its neighbour to the north and warring parties internally has sparked deadly fighting which, coupled with the recent drop in global oil prices, - South Sudan's main revenue generator- has left its economy bruised.
Locals and business now are feeling the pinch as prices of food and fuel skyrocket.
Charles Ireland, EABL managing director, last Friday announced that the beer maker's business in South Sudan is currently operating at one third of its capacity due to the limited access to foreign exchange.
