aid & development

South Sudan Economy Gets $105 billion Budget Support

Monday, 09 Jan 2017

South Sudan President Salva Kiir has received an offer of $105 billion (Shs378 trillion) for budget and project support from a Luxembourg-based investment fund, three years after donors turned off the aid taps following the outbreak of war in the world's youngest nation.

According to documents seen by The EastAfrican, a sister newspaper to Daily Monitor, this funding package, which could change South Sudan, from a failed state to a healing, politically viable and economically promising unit, was arranged at a meeting in Kampala on October 10, 2016, "between well-wishers for the peace and stability of South Sudan" and the Uganda agent of Suiss Finance Luxembourg AG.

The "well-wishers," who also double as President Salva Kiir's peace and security advisers, were Kalisa Mohammed and Twinomuhwezi Henry Williams, while the Suiss Finance representative was Moses M. Engadu.

According to the December 23 edition of the Indian Ocean Newsletter, Rene A Cortez, the director of Suiss Finance Luxembourg AG wrote a letter on December 6, offering President Kiir's government a "range of financial aid instruments."

Documents on the funding deal reveal that the instruments included safekeeping receipts, foreign exchange and natural resources trading, as well as a line of credit, whose funds are to be deposited in South Sudan to be used as a direct support to the national budget.

Mr Cortez suggests that funds from his company could be used to finance projects through joint ventures in infrastructure, transportation, oil and energy.

Ready funding
It is understood that Mr Cortez, through Suiss Finance, is ready to provide the Juba administration with an initial $10.5 billion -- but this figure could grow tenfold -- through the fund's trust account to be held by the Central Bank of South Sudan.
"Suiss Finance Luxembourg AG offers the Republic of South Sudan initially €10 billion, which can be increased up to €100 billion. After duly executing the agreements and supporting instruments (signed by your minister of finance and endorsed by the Central Bank Governor), and with your co-operation, the 10 billion euros can be created and transferred into a Suiss Finance Luxembourg AG trust account to be held in the Central Bank of South Sudan between 30 and 90 days," Mr Cortez wrote.

He then asked the president to invite Suiss Finance Luxembourg AG to present to him and the Government of South Sudan their proposal and conclude any relevant agreements to enable Suiss Finance to immediately initiate financial activities to release the funding.

Suiss Finance was created in 2009 with a capital of €31,000 ($32,726) by lawyers Wolfram Otto Voegele, Katrin Dukic and Kazimierz Walaszczyk.

President Kiir is reported to have jumped at the opportunity as it offers a lifeline for his broke government. The country became the biggest source of refugees fleeing and leaving behind horrific levels of violence, rape and kidnap.

On December 8, the South Sudan leader responded to Mr Cortez's letter, by inviting the representatives of Suiss Finance Luxembourg AG for Africa and for Uganda, Patrick G Thimba and Moses M Engadu to Juba to meet his advisers, Mr Mohammed and Mr Williams.

If the deal goes through, it would signify a major breakthrough for the Juba government, and significantly thwart the efforts of the US, which in November 2016 pushed the UN Security Council to isolate South Sudan and consider a draft resolution on targeted sanctions against several leaders. Among those targeted is Sudan People's Liberation Army Chief of Staff and President Kiir's righthand man Gen Paul Malong Awan.

The resolution, submitted by US ambassador to the UN Samantha Power, also targeted Information Minister Michael Makuei Lueth and former vice president and Sudan People's Liberation Movement - In Opposition rebel leader Riek Machar for sanctions.

Although the US push for sanctions was vetoed by Russia, the Juba government remains in a precarious situation as it also faces an arms embargo. It is also starved of cash.

Credits: Julius Barigaba/The Monitor