VZCZCXRO2605
RR RUEHROV
DE RUEHKH #0321/01 0411134
ZNR UUUUU ZZH
R 101134Z FEB 06
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC 1374
INFO RUCNIAD/IGAD COLLECTIVE

UNCLAS SECTION 01 OF 02 KHARTOUM 000321 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EFIN ECON SU
SUBJECT: Southern Sudan:  Overview of Southern Banking 
Sector 
 
REF: Khartoum 00276 
 
¶1. (SBU) SUMMARY:  On February 8, officials at CG Juba 
met with the Governor of the Bank of Southern Sudan 
(BOSS) Elijah Malok Aleng Mayen, who is also Deputy 
Governor of the Bank of Sudan (BOS).  Aleng explained 
that the BOSS, which began full operations on February 1, 
is a semi-autonomous department of the BOS (reftel). 
Overall monetary policy will continue to be set 
nationwide by the BOS Board of Governors, of which Aleng 
is a member, but the BOSS will manage and disburse 
independently all money transferred to the Government of 
Southern Sudan (GoSS).  The BOSS will also license and 
regulate banks operating in the south using regulations 
set by the BOS for traditional (non-Islamic) banking. 
 
¶2. (SBU) To manage the GoSS money, the BOSS plans on 
establishing three overseas accounts with commercial 
banks in the Middle East, Europe, and a third location 
(NOTE:  Sanctions prevent an account in the U.S.  End 
note.)  Aleng said that he knew the exact amount of 
transfers from the Government of National Unity (GNU) to 
the GoSS but refused to divulge it, saying it was 
privileged information.  End Summary. 
 
--------------------------- 
Distributing Responsibility 
--------------------------- 
 
¶3. (SBU) General monetary policy, such as money supply, 
reserves, and interest rates, will continue to be defined 
by the nine-member BOS Board of Governors in Khartoum. 
Aleng is one of three southern members of this board. 
The central bank will also continue to establish the 
requirements for licensing and regulating the banking 
industry.  However, within the south, the BOSS will 
directly license, regulate, and inspect banks.  The BOSS 
currently has 45 economists, 17 from the old BOS 
operations in the south and 28 from the SPLM.  They plan 
to employ 89 economists to conduct inspections, review 
licensing applications, collect economic statistics, and 
issue reports.  According to Aleng's Deputy, Thom Rago 
Ajak, all BOSS economists have a college degree in 
finance. 
 
¶4. (U) The locally-owned Nile Commercial Bank was the 
first bank established in the south with a BOSS issued 
license (reftel).  The Kenya Commercial Bank has now been 
granted a license as the first foreign bank and will 
start operations soon.  Licensing requirements for 
foreign banks are stricter, including a requirement of 
USD 25 million base capital, twice the requirement for 
local banks. 
 
¶5. (U) The other major area of BOSS responsibility is the 
managing of GoSS funds.  The central BOS collects all 
government revenues for Sudan and then disburses money to 
the BOSS on orders from the GNU Ministry of Finance and 
National Economy.  The BOSS then manages this money and 
disburses it under the direction of the GoSS Ministry of 
Finance and Economic Planning.  Aleng said that the BOSS 
would be establishing three interest-bearing accounts at 
commercial banks in the Middle East, Europe, and a third 
location to be determined. 
 
¶6. (U) CG Juba officials asked if the BOSS would be able 
to issue its own bonds.  Aleng said that he believes the 
GoSS Ministry of Finance and Economic Planning will, 
although this has not been officially decided.  When 
asked how much the BOS has disbursed to the BOSS, Aleng 
explained that he was not allowed to divulge that 
information for political reasons.  Aleng said that the 
Governor of the BOSS is intended to be free of political 
influence; however, he acknowledged that the president of 
the GOSS could fire him at any time and appoint whomever 
he wanted. 
 
--------- 
New Money 
--------- 
 
¶7. (U) The BOSS is preparing for the southern launch of 
the new Sudanese Pound, projected to start on July 1. 
Printing has commenced on the new pound, which will be 
phased in gradually.  All previous Sudanese currencies 
will remain legal tender and be pulled from circulation 
over time.  The new pound will worth 100 Sudanese Dinars 
(or 1000 old Sudanese Pounds).  Aleng said the new 
currency is necessary because the GoSS is unable to 
control its money supply, and southern areas are still 
 
KHARTOUM 00000321  002 OF 002 
 
 
using whatever money they used at the time of the CPA 
signing -- Dinars in garrison towns, old Sudanese Pounds 
in most SPLA controlled areas, Ugandan shillings in 
Equatoria, Ethiopian Birr along that border, Kenyan 
shillings in the southeast, and others.  He said 
southerners have been unwilling to adopt the Dinar, 
because it is "Arab money." 
 
---------------------- 
Comment and Conclusion 
---------------------- 
 
¶8. (SBU) Aleng claimed that he was just an "accountant" 
and needed to be free of political influence.  However, 
the fact that he serves at the pleasure of the President 
of the GoSS shows safeguards against corruption are not 
completely in place.  He acknowledged the danger of the 
central bank becoming the private account of powerful 
individuals, and vowed to prevent that from taking place 
to protect the institution. 
 
¶9. (SBU) CG Juba officials had earlier spoken with the 
president of a private international bank that had looked 
into opening an office in the South, but expressed 
concerns over transparency and accountability.  In 
addition to the high base capital requirement, the bank 
president had concerns about consistent enforcement of 
regulations, a requirement to take a local partner (Note: 
Aleng made no mention of this requirement.  End note.), 
and the fear of being pressured to give loans to friends 
and/or relatives of powerful politicians.  During the 
February 8 meeting, Aleng acknowledged these concerns and 
promised to prevent them, but offered little details as 
to how he could accomplish this and reassure investors. 
 
-------- 
Bio Data 
-------- 
 
¶10. (SBU) Aleng was educated at Louvanium University in 
Kinshasa and in Khartoum in the 1960s; he served as SPLM 
Ambassador to Zaire and Central Africa in the 1980s.  His 
credentials are unclear, and he admits that he stopped 
being an economist a long time ago and is now a 
politician.  Aleng seemed uncomfortable discussing 
technical accounting details.  A Dinka Bor, Aleng was 
originally appointed by John Garang, his nephew. 
 
¶11. (SBU) Aleng's Deputy, Bank Manager Thom Rago, 
graduated with a degree in finance from the University of 
Khartoum and has worked for the BOS since 1981.  His 
previous position was manager of the BOS External Debt 
Department.  Ajak is a Shilluk from south of Malakal. 
 
HUME