South Sudan introduces 1,000 pound banknote

South Sudan's Central Bank made a significant move on Tuesday by introducing a £1,000 banknote aimed at easing transactions within the country. This development comes in the wake of the country's decision in November 2020 to tighten its monetary policy to address the rapid depreciation of the South Sudanese pound against the US dollar. To shed more light on this pivotal decision, Akol Dok, an economic analyst, joined CNBC Africa for an in-depth discussion. The economic landscape in South Sudan is showing signs of improvement, largely attributed to the country's heavy reliance on crude oil exports for government revenue and hard currency reserves in the central bank. The recent uptick in crude oil prices has provided a much-needed boost to government revenue, enabling the financing of various projects. The national government is currently under the leadership of the transitional government of national unity, a critical agreement signed between the president and a former rebel leader. As the final stages unfold to appoint the national legislative assembly, state ministers, county commissioners, and officials at the local level, there is optimism that local economic activity will be revitalized. One of the primary challenges facing the government is the lack of diversification in the economy. Efforts have been underway to prioritize diversification by engaging in extensive consultations with key stakeholders to explore opportunities in sectors such as mining, agriculture, livestock, fisheries, and tourism. However, the successful implementation of these diversification plans hinges on the full execution of the peace agreement and the creation of a conducive environment for productivity and economic growth. The delayed formation of state and local governments remains a focal point in South Sudan's current state of affairs. While initially set to be completed by a specified date, consultations are ongoing to ensure a balanced and inclusive appointment process for state ministers, advisors, county commissioners, and council members across the country's 10 states. The intricate ratio split among different political parties underscores the complexity of the ongoing consultations towards finalizing these appointments. The decision to introduce the new 1,000-pound banknote stems from several key considerations. The high cost of printing lower denominations, coupled with hyperinflation challenges, has prompted the Central Bank to opt for higher-value banknotes. In a landscape where $100 equals 60,000 South Sudanese pounds, the introduction of a 1,000-pound note is seen as a practical solution to streamline transactions and enhance convenience for consumers. The move is also strategic in aligning with the prevailing economic realities, where lower denominations have diminished purchasing power. While some may question whether the introduction of the 1,000-pound banknote will impede progress towards digital payment solutions, analysts believe that South Sudan's current post-conflict status prioritizes stability, security, and community reconciliation. The focus on e-payments may not be hindered as the country navigates its unique economic challenges. Addressing concerns about potential impacts on currency depreciation and inflation, experts stress the importance of prudent policy implementation. By carefully managing the circulation of new banknotes and potentially phasing out lower denominations, the Central Bank aims to prevent market saturation, currency devaluation, and hyperinflation. A gradual injection of the 1,000-pound notes into the economy is being planned to maintain public confidence in the currency. As South Sudan prepares to embark on this significant monetary policy adjustment, the details regarding the exact timing of the banknote's circulation remain forthcoming. The Central Bank is reportedly formulating a strategic approach to gradually introduce the 1,000-pound notes, ensuring a smooth transition that safeguards economic stability and public trust in the financial system.