Amy Copley,The Brookings Institution
Inflationary pressures follow devaluation in South Sudan
Prices of food and commodities in South Sudan (almost all of which are imported), have shot up following the effective devaluation of the country’s currency last month. On December 15, the government of South Sudan decided to float the South Sudanese pound (SSP) in response to the slump in global crude oil prices (which account for about 95 percent of the country’s foreign currency revenues). Following the announcement, the SSP fell to its market rate of 18.50 SSP to the dollar compared to its previously pegged rate of 2.96 SSP to the dollar. This devaluation of over 84 percent has set in place hyperinflation of 109.9 percent according to a recent report by the country’s national bureau of statistics.
The resulting impact of skyrocketing import prices is not just faced by consumers, but also by businesses. For instance, the country’s first beverage company, the Juba-based South Sudan Beverages, a subsidiary of the U.K.-based giant SABMiller, announced last week that that it would stop production by mid-March because the devaluation has led to an acute shortage of the foreign currency necessary to buy its essential imported raw materials.
However, reports suggest these economic pressures have aided the recent decision to reopen the border with Sudan, which is expected to allow flows of cheaper goods into the country. The border was closed in 2011 when relations between the two nations deteriorated after South Sudan declared independence. In the meantime, Finance Minister David Deng Athorbe reassured the public that the government is taking necessary steps to curb inflation—including a reducing custom taxes on imported food items and increasing of domestic food production.
For more information on the implications of South Sudan’s move to a floating currency, refer to Amadou Sy’s blog here.
Kenyan Central Bank denies charges of $1 billion eurobond theft
This week the Kenyan Central Bank defended itself against claims leveled by Raila Odinga, leader of the opposition party, that the institution stole nearly $1 billion of the $2.82 billion raised in Kenya’s first eurobond sale in 2014.The funds were meant to be raised in order to pay off a syndicated loan and finance a number of electricity generation and infrastructure projects. Odinga alleges, though, that $999 million of the funds were never transferred from U.S. financial institutions to Kenya’s public funds account. Finance Minister Henry Rotich, on the other hand, argues that all funds have been accounted for, although, since eurobond proceeds were distributed directly to different ministries to use on a variety of projects, the specifics of exactly what funds were disbursed to each project remains unclear without a thorough audit. Still, some Kenyans are calling on U.S. Attorney General Loretta Lynchthrough a White House petition to assist in determining exactly where the money went since U.S. financial institutions JP Morgan Chase and the New York Federal Reserve facilitated the eurobond transactions.
Meanwhile, President Uhuru Kenyatta has ramped up efforts to root out corruption in recent months, declaring “zero tolerance” on graft and firing cabinet members charged in corruption scandals. Still, Kenya ranks 139th out of 168 countries in Transparency International’s 2015 Corruption Perceptions Index, which was released earlier this week, for the country’s ineffective anti-corruption agencies, impunity for corrupt individuals, and inability to recover stolen assets.
Childhood obesity is rising in Africa
This week, the World Health Organization (WHO) Commission on Ending Childhood Obesity (ECHO) launched a new report that finds that the prevalence of infant, childhood, and teenage obesity is rising throughout the world. Global childhood obesity increased from 31 million in 1990 to 41 million in 2014—a 32 percent rise. As the world saw a significant increase in childhood obesity, Africa also saw its number of obese children nearly double between 1990 and 2014, from 5.4 million to 10.3 million. The report also highlights the high prevalence of under-five obesity in the continent; 25 percent of all obese children below the age of five live in Africa.
The increase in childhood obesity has been linked to two key factors according to the report: globalization and urbanization. The effects of urbanization on obesity are notably acute in Africa where the recent migration towards the city was accompanied with a change in diets and an increased adoption of the sedentary lifestyle. With globalization came the increased availability of unhealthy food in low-income countries. The report thus called for governments to implement an “effective tax on sugar-sweetened beverages.”
The increase in childhood obesity is actually coupled with high rates of malnutrition and stunting as children are consuming less nutritious food and more fattening food and beverages. As stated in the report, addressing the issue of childhood obesity in cultural settings such as ones present in Africa is challenging, as an overweight child in often perceived as healthy and well-fed.
U.S. Commerce Secretary Penny Pritzker speaks on foreign exchange controls in Nigeria and leadership transitions in Rwanda
In other news, U.S. Commerce Secretary Penny Pritzker traveled to Nigeria and Rwanda this week with other members of President Barack Obama’s Advisory Council on Doing Business in Africa. During her trip, she discussed the detrimental effects of foreign exchange controlson U.S. investment in Nigeria, while in Rwanda she reiterated the U.S.’s position on Rwandan President Kagame’s third term bid, stating, “One lesson I have learned during 27 years in the private sector is that senior executives need to foster an environment that encourages ideas and creativity, as well as to plan for leadership transitions that ensure that success is not based on a single leader.”
Project Coordinator and Research Assistant, Africa Growth Initiative