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South Sudan's money muddle

UNDER BRIGHT yellow umbrellas in a dusty market in south Sudan's capital Juba, men sit with handfuls of up to five currencies, all of which can still pay your way in some parts of this semi-autonomous region.

A north-south accord in 2005 ended Africa's longest war, bringing peace to Sudan's south although a separate conflict continues in western Darfur. But after more than two decades of war, the south's banking and currency systems had fallen apart.

Now with a new currency being introduced, confusion still reigns as counterfeit notes join the mix. The monetary mayhem in one region sparked an impromptu bonfire, as authorities burnt both real and fake notes in a radical bid to curb inflation.

Add to the street chaos the fact that the government has been budgeting in U.S. dollars but paying its workers in local dinars, and it is small wonder many south Sudanese pastoralists prefer to stick with the traditional store of value: the cow.

"I love cows more than money," said David Wani, a member of one of the cattle-keeping tribes of the Juba area. "We Mundari only sell them when you have to sell, or if they are sick. I don't keep money - I just spend it when I have to."

In rebel-controlled areas and border towns during the war, what cash was available at all could be Ugandan and Kenyan shillings, U.S. dollars, or old, locally created, photocopied currencies. South Sudan's Information Minister Samson Kwaje said there had been up to five currencies operating in the south.

The new pound

As part of the peace deal a new national currency - called the pound - was introduced in January, for a six-month transition aimed at integrating the northern and southern areas of the economy.

The pound was to replace the dinar, which since introduction in 1992 had been resented by many in the mostly Christian south, seen as part of the northern government's policy of Arabisation.

"We believe the dinar does not represent the Sudanese people, it was forced on the people of the south," said Anthony Lino Marana, south Sudan's minister for commerce, trade and supply.

But the dinar's predecessor itself had also been called the pound. And the new pound has a different exchange rate from the old pound.

Marana said people's dislike of the dinar meant that even when people wanted to use dinar prices, "they still give the price in pounds, the former currency".

Newcomers to Juba look perplexed and startled when they are asked for a thousand (old) pounds, when in fact a single, new, one-pound note is all that is wanted.

Tricky transition

In Rumbek, a large southern town which was under rebel control during the war, the U.S. dollar and especially the Kenyan shilling are still easier to spend than the new pound, or the dinar - which was absent during the war years.

Bars and shops in Rumbek still give prices in Kenyan shillings.

Awan Guol, acting governor of the state, said people have to put up with the situation for the time being as not enough new currency is available, especially in small denominations.

The old Sudanese pound was only outlawed one month ago by a state decree, said Guol. Confusion followed.

The ragged old pound notes so alarmed resident foreigners they called them 'health hazards'. But, together with some monies handmade in Rumbek, they continued in circulation in the town decades after being replaced in the parts of Sudan controlled by the northern government.

"Rumbek was the only place that had this currency," said Guol. "We made several attempts to get rid of them."

The state-owned Bank of Southern Sudan (BOSS) had said it would only exchange old pounds with visible serial numbers. Meanwhile new fake notes of the old currency began to appear.

It was against this backdrop that the cash bonfire seemed a good idea.

"All the notes were worn out to the extent you could not see the serial number, you just see a little bit of colour, and you know it is legal tender," said Guol.

So in February the authorities set a fire in the centre of town and burnt sackloads of real and counterfeit cash.

"We thought that the pounds were not going to be exchanged. Inflation was coming to the market so we burned them. Real as well as the fake ones," says Guol, adding the state government has no idea how many people lost their money.

"We are now conducting an investigation, receiving people who say their money was burned, we will investigate them to see if they really could have had such money," he said.

The state, he added, is holding the Bank of South Sudan responsible for the lost money: for its part, the bank has since agreed to accept the old notes.

"Many people are affected, even government institutions are affected because this money was legal tender," said Guol.