Africa’s biggest mobile-phone company, MTN is set to shut down its South Sudan unit. The company is planning to layoff jobs and cancel expansion plans as the war-torn nation battles an economic crisis that is synonymous with oil producing countries.
Accoring to Bloomberg, the workforce will be reduced to just over 80 people from 170, while plans to build 40 communication towers have been halted, said Khumbulani Dhlomo, the company’s head of corporate services.
MTN has invested almost USD $170 million in the country over the past two years, without any hope of seeing profit, he told reporters in the capital, Juba.
“We have seen a decrease in our customer base,” he said. “People now have to choose between buying a phone, buying airtime and buying bread.” MTN has slightly more than 1 million subscribers in South Sudan, according to Dhlomo.
Oil-producing South Sudan has seen its currency collapse and inflation surge since conflict erupted in December 2013 and curbed crude output. The International Monetary Fund projected the economy would contract 5.3 percent last year. The landlocked country has sub-Saharan Africa’s third-largest crude reserves and currently pumps about 160,000 barrels a day.
“The biggest challenge is the exchange rate of the U.S. dollars,” Dhlomo said. “It’s either the U.S. dollars are too expensive for the company or not there.”
In another development, SABMiller Plc, South Sudan’s main non-oil foreign investor, is also planning to shut its brewing operations in the first quarter of this year due to shortage of foreign currency which had curtailed its ability to import raw materials. South Sudan Breweries Ltd. said it has failed to turn a profit since setting up the nation’s first brewery in 2009.
“We are trying as much as possible to do what we can so that at the end of the day we don’t find ourselves in a position where we have to close the company,” Dhlomo said.
“Obviously if the economy doesn’t change, the dollar keeps on doing what it is doing, then you can’t survive and there is a possibility to close down,” he said.
Sub-Saharan South Sudan gained independence from the north (Sudan) in 2011, after ending one of Africa’s most protracted conflicts. Any glimmer off hope that came with the independence has been overshadowed by divisions within the new country’s political leadership, which has led to a civil war with thousands dead. A peace deal struck last August between Salva Kiir Mayardit, the country’s president, and rebels loyal to ex-vice president Riek Machar ushered in an uneasy truce.
The civil war decimated the country’s oil-dependent economy, cutting production by a third. Equally, falling crude oil price in global markets has collapsed the value of the country’s currency, forcing the central bank to devalue the South Sudanese pound by 84% against the US dollar last December.
