By Macharia Kamau

Kenya: Thousands of traders fleeing South Sudan are in a fix, having come with millions of South Sudanese pounds, a currency that local foreign exchange dealers will not touch.

Many of them clung to the money, some through adverse times and in many instances the only thing they salvaged when the chaos in South Sudan broke out, but are now unsure of what to do with the currency that local foreign exchange dealers are not ready to accept.

While a number of Kenyans — individuals and institutions — have been enthusiastic about business opportunities in the young African state, financial institutions are yet to embrace its currency and do not indeed trade in the South Sudanese pound.

And now, local banks and foreign exchange bureaus are wary of taking the pound, afraid that they might buy the currency and end up with a dead stock that nobody else wants to buy.

Among the few alternatives they now have include shipping the money back to the country they just fled for changing into other currencies that will be acceptable back home.

“The South Sudanese currency is just like any other currency. As an intermediary, I would buy it if I will be able to sell it,” said Habil Olaka, chief executive, Kenya Bankers Association.

He added that the traders who have returned from South Sudan might only be left with the alternative of shipping the currency back to South Sudan.

“If there is no demand, then just like in other business there is no point of stocking it. The alternative would be to ship it back to the country… it is a risk that they will have to bear,” he said.

A dealer with a local bank noted that most local banks do not deal with the South Sudanese currency and most forex transactions are carried out in Sudan.

Business sense

The foreign exchange bureaus say they are open to changing the South Sudanese pound into shillings, but also add that they will only do so if it makes business sense.

“I would never refuse to do business that makes sense unless it is in contravention of a legal framework or there is a directive from trading in the currency and we are not aware of such a directive,” said Joe Muriuki, chief executive, Kenya Forex Bureaus Association.

Individual traders, all holding thousands of South Sudanese pounds, last week said local foreign exchange dealers have been turning them away, many arguing that they do not handle the currency.

The pound has been changing at about Sh29, which means the thousands of pounds held by individual traders could translate to hundreds of thousands of shillings, some of them millions, per trader.

The breaking away of South Sudan from Sudan through a 2010 referendum has been a pull factor for many Kenyan businesses — both large and small — as the country embarks on building from scratch.

Many Kenyans have crossed over but not all of them were registered by Kenya’s embassy in South Sudan.

At the moment the Foreign Affairs ministry can account for about 30,000, but cannot put a finger on the number of Kenyans that have been living and working in South Sudan.

While many have opted to return home, a number of Kenyans have remained in South Sudan, mostly those that have made heavy investments and believe that a solution to the power struggle between the country’s President Salva Kiir and his former Vice President Riek Machar will be resolved before it escalates further.

Kenya’s Ambassador to South Sudan Cleland Leshore over the weekend said the embassy in Juba had 12,000 Kenyans on its register. Yet, when the fighting began, an estimated 20, 000 of them fled by bus, 3,000 were evacuated by air and 7,000 “insisted that they want to stay to protect business opportunities”.

Direct peace talks

Two warring factions from South Sudan held direct peace talks on Sunday for the first time since conflict began roiling the country last month, sending hundreds of thousands of people fleeing for safety.

The direct talks, focused on a possible cease-fire and the release of political prisoners, put representatives of President Kiir and Machar together in Ethiopia.

South Sudan has experienced violence for three weeks and fighting still continues in parts of the country.