South Sudan continues to face persistent liquidity shortages, high transaction costs, and an overreliance on the United States dollar for regional trade.
These challenges have constrained commerce, increased the cost of doing business, and limited the availability of cash within the economy.
As the country seeks practical solutions to stimulate economic recovery and strengthen regional integration, the regulated use of the Ugandan and Kenyan shillings in commercial transactions deserves serious policy consideration.
Position Paper on the Adoption of the Ugandan and Kenyan Shillings to Enhance Liquidity and Regional Trade in South Sudan
South Sudan imports a substantial share of its essential goods including food, fuel, construction materials, pharmaceuticals, and manufactured products from Uganda and Kenya.
Despite this close trading relationship, most transactions continue to rely on the United States dollar as the intermediary currency.
This dependence increases foreign exchange costs, places additional pressure on the country’s limited hard currency reserves, and exposes businesses to exchange-rate fluctuations.
Allowing businesses to conduct transactions directly in Ugandan and Kenyan shillings would provide a practical and cost-effective alternative.
It would reduce the need for multiple currency conversions, lower transaction costs, and make cross-border trade more efficient. Such a policy would also improve the movement of goods and services between South Sudan and its two largest regional trading partners.
The wider circulation of these regional currencies would help ease the country’s recurring cash shortages. Traders, transporters, wholesalers, retailers, and consumers would have greater access to reliable means of payment, reducing delays in commercial transactions and improving market activity.
Increased liquidity would support business operations, particularly in border towns and commercial centres where trade with Uganda and Kenya is most active.
The proposal would also strengthen South Sudan’s economic integration within the East African Community (EAC).
Using the currencies of neighbouring member states for regional trade would encourage investment, facilitate faster cross-border payments, and enhance confidence among regional businesses seeking to expand into the South Sudanese market.
Stronger commercial ties would contribute to a more integrated regional economy while supporting long-term economic growth.
In addition, lower transaction costs and improved payment systems would encourage a greater volume of formal cross-border trade.
As more trade moves through official channels, the government would benefit from increased customs revenue, improved tax collection, and stronger oversight of commercial activities.
These developments would support private-sector growth, create employment opportunities, and contribute to broader economic stability.
However, adopting the Ugandan and Kenyan shillings should not be interpreted as abandoning the South Sudanese pound.
The national currency must remain the country’s sole legal tender and symbol of monetary sovereignty.
Instead, the policy should allow the regulated use of regional currencies specifically for cross-border trade and commercial transactions where they offer clear economic advantages.
The Bank of South Sudan should establish a comprehensive regulatory framework to govern the use of foreign currencies, safeguard financial stability, and prevent abuse.
At the same time, the government must continue implementing reforms aimed at strengthening domestic production, diversifying exports, improving fiscal discipline, stabilising inflation, and restoring confidence in the South Sudanese pound.
Ultimately, improving liquidity requires both short-term and long-term solutions. While structural economic reforms remain essential, allowing the controlled use of the Ugandan and Kenyan shillings can provide immediate relief to businesses and consumers by facilitating trade and easing cash shortages.
South Sudan’s economic future depends not only on protecting its national currency but also on adopting practical policies that reflect the realities of its regional economy.
Carefully regulated use of neighbouring currencies for trade offers a pragmatic approach to improving liquidity, reducing transaction costs, strengthening regional commerce, and accelerating economic recovery while preserving the country’s monetary independence.
The views expressed in this article are solely those of the author Hon. Mogga Charles Guya
Secretary for Foreign Affairs, South Sudan National Movement for Change (SSNMC)
Juba, South Sudan and do not necessarily represent the views or editorial policy of SZN.ss.
