MTN cuts jobs, scratchcards to survive South Sudan crisis

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.

Lean, Efficient

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.

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.”

-Bloomberg