MTN Cuts Jobs, Scratchcards to Survive South Sudan Crisisby
Company cuts back as inflation soars, currency plunges
Unit of Africa’s largest mobile provider has never made profit
MTN South Sudan said cutting 54 jobs and making changes to the way it sells airtime will help it survive an economic crisis in the oil-producing nation caused by more than two years of civil war.
The unit of Africa’s biggest mobile-phone company by sales says the reduction of the workforce to 82 people and a decision to limit the distribution of scratchcards in favor of electronic airtime top-ups may help counter operational difficulties exacerbated by the collapse of South Sudan’s currency and surging inflation.
“We have made losses since we started operating in 2011,” Khumbulani Dhlomo, the unit’s head of corporate affairs, said Monday in an interview in the capital, Juba. “We have scaled down the staff and I think the organization will function now.”
The International Monetary Fund projected last year that South Sudan’s economy would contract 5.3 percent. The landlocked country, where conflict erupted in December 2013, has sub-Saharan Africa’s third-largest crude reserves, yet is pumping as little as 120,000 barrels a day, about half its output just before the war began. Angola, in contrast, pumps about 1.75 million barrels per day.
Inflation has surged to 266 percent, the highest official rate in the world, and the currency has collapsed to 33 per dollar from 2.95 a year ago, according to data compiled by Bloomberg. SABMiller Plc, South Sudan’s main non-oil foreign investor, shut its brewing operations this year as a shortage of foreign exchange curtailed its ability to import raw materials.
The country’s warring parties formed a transitional administration in April that seeks to improve economic management and stamp out human-rights abuses before elections within 30 months. The IMF has urged the government to curb spending in the fiscal year beginning July or risk widening its budget shortfall to $1.1 billion, or a quarter of its gross domestic product.
MTN South Sudan said in March it had invested as much as $170 million over the past two years. The company, which has about 1.1 million subscribers, is now encouraging local traders to purchase their airtime from MTN via bank transfers and sell to customers electronically, eliminating the need to import, and then distribute scratchcards, Dhlomo said.
“We are trying to manage what we have and make sure we continue operating,” the company’s chief executive officer, Philip Besiimire, said in the same interview. “We have now positioned ourselves to be lean and efficient until the situation changes.”