Dr. Addis Ababa Othow Akongdit, Director of Operations for Equity Bank South Sudan, talks about the differences and opportunities of operating in South Sudan compared to neighboring countries, as well as the impact of sanctions against Sudan on banking in South Sudan.
How involved is Equity Bank in the energy business in South Sudan?
South Sudan is a unique environment, because most foreign banks that have entered specialize in specific sectors. QNB and Stanbic specialize in the oil and gas sector, for example. Equity Bank started as a retail bank, but we have progressed to corporate lending and we are continuously recruiting corporate customers.
Last year we introduced a liquidity management system that will help us manage corporate customers even better. That was started when we brought the United Nations’ agencies on board. We are the first subsidiary within the Equity group to be awarded a contract to bank for UN agencies. Because they need corporate services, these new packages were introduced last year based on that need. We have managed to bring on customers such as the World Food Programme and we hope as time goes by that we will be able to get more customers, including from the oil and gas sector.
What is different about working with energy companies in South Sudan compared to working with such companies in neighbouring countries?
One of the differences with the oil companies here, especially with the type and level of business done here, is that the customers are very reliable. In this business, we look for that, because it means they are reliable when it comes to payments and they adhere to the terms and conditions of the contract. The risk of a default is almost zero. In other countries, it might be different, but in South Sudan the oil companies — from the upstream consortia to the downstream companies — are a business that every bank would want to have.
Have you faced any challenges transferring funds as a result of US sanctions on Sudan?
We are a regional bank, so this makes it easier for us to move funds swiftly through other countries. We are not dealing directly with Sudan because of the US sanctions, and when it comes to transfers, we have a system that can trace anything to do with Sudan. We introduced it to avoid any non-compliance with international policies. We are keen not to go against any sanctions imposed by the West or the United States, and they are also monitoring those transactions to see that we are not violating those policies and that we are in full compliance.
Do local banks have to operate under the same restrictions with regard to sanctions on Sudan?
It depends on their capabilities to deal with international banks. The technical capability and infrastructure of national banks is lagging behind. They have tried to use regional banks to move their funds outside the country, but because of the compliance requirements they were forced to terminate those arrangements. There are strict policies here from the regulator, the Central Bank of South Sudan.
What can banks do to better support the private sector in the energy business in South Sudan?
Our mission is to transform the lives of the people of Africa, particularly the people of South Sudan. For example, we worked with the International Finance Corporation to ensure that women in business are empowered through training for loan applications. The challenge we have in South Sudan is lack of knowledge, so we are working with the IFC to train SMEs and micro-agro business owners, because this is an area that needs a lot of attention and a lot of finance to attract the attention of foreign investors.
On the other side, we are working with the Central Bank of South Sudan to put in place the infrastructure that is lacking in terms of legal frameworks. Currently, there is no credit reference bureau so that we can see the credit history of customers. There is no legal framework to address issues such as how to handle a default and recover funds. We are working with the regulator to ensure that those legal frameworks are put in place.
There is also close cooperation between the regulator, the banking sector and the concerned ministries, such as the ministries of justice and commerce, to ensure that the private sector leads in terms of development and empowering the nationals. Equity Bank is contributing to this mission by empowering nationals through financing their projects. Even before independence the main issue here was access to finance.
What message would you give to potential investors in South Sudan?
South Sudan has a lot of resources. Our investment promotion outlook is very encouraging and should entice foreign investors to invest in all the sectors. Opportunities are huge and all the laws are in the interest of foreign investors. After independence, we were seen as one of the fastest growing investment destinations. That potential is still there because of the unexploited opportunities that exist here. I would encourage investors to come and see for themselves because mostly they have been discouraged by security concerns up to now.