By Chuol R. Kompuok, PhD
Brief background Economy of South Sudan
May 26, 2015(Nyamilepedia) — South Sudan is a region in sub Sahara Africa that is endowed with abundant natural resources where 90% of the land is arable and capable of producing cash crops and staples; the country has immense surface and underground natural resources where oil is the major provider of the basic livelihood contributing 98% to the national revenue and non-oil revenue account for 2%. Unfortunately the country is at a very low state of development; this is because the area has been a source of minor and major conflicts coupled with weak institutions. As a result South Sudan faced human suffering of substantial magnitude.
Infrastructures constructed during colonial era or after the 1972 Addis Ababa Peace Agreement were neglected, destroyed and some are beyond repair. The limited human resources that could have contributed to economic growth in the region had out-migrated en masse. Agriculture–both large scale and small-scale individual holding remained at the subsistence level and the oil dependency curse theory became the reality. Different studies show that the absolute poverty in South Sudan is estimated at 90% most of whom are rural dwellers and only about 10% live above the poverty line of less than a dollar a day and of whom are urban dwellers controlling state machineries.
In 2005, a Comprehensive Peace Agreement (CPA) between the leadership of South Sudan and the Central Government was signed. The semi-autonomous region of Southern Sudan government was established with little or no functional institutions. Since 2005 the region became a beneficiary of a large inflow of revenue in terms of hard currency.
The revenue due to the government included 50% of oil revenue share as well as multi donor capital inflow. In 2005, oil revenues that were due to the government of South Sudan were estimated to be 750 million dollars; for the same period international assistance was estimated to amount to 200 million dollars. By 2006 the total amount of capital inflow was estimated to be two billion US dollars. In general since 2006 the annual capital inflow to the region is estimated to be more than two billion dollars per year. Assuming that total population of South Sudan is 15 million, the per capita revenue inflow to the region is estimated to be 130 US dollars per annum-a substantial amount by African standards.
- Resources and development
A resource is a source or supply from which benefit is produced. Typically resources are goods and services that are transformed to produce benefit and in the process may be consumed or made unavailable. The concept of resources has been applied in diverse realms, including with respect to economics, management and human resources, and is linked to the concept of competition, sustainability, and stewardship. Resources have three main characteristics: utility, limited availability, and potential for depletion or consumption. In economics a resource is defined as a service or other asset used to produce goods and services that meet human needs and wants. Economics itself has been defined as the study of how society manages its scarce resources. Classical economics recognizes three categories of resources, also referred to as factors of production: land, labor, and capital.
In view of the above explanation, one would want to shed lights on development as an economic term. Therefore, economic development is the sustained, concerted actions of policy makers and community that promotes the standard of living and economic health of a specific area. Economic development can also be referred to as quantitative and qualitative changes in the economy. Such actions can involve multiple areas including development of human capital, critical infrastructure, regional/state competitiveness, social inclusion, health, safety, literacy and other initiatives. Economic development differs from economic growth. Whereas economic development is a policy intervention endeavor with aims of economic and social wellbeing of people, economic growth is a phenomenon of market productivity and rise in GDP. Consequently, as economist Amartya Sen (1983) points out, “economic growth is one aspect of the process of economic development.”
The relationship between resources and development pivots around, which the present workshop resolves. Focusing on the process of resource creation and utilization emphasizes the need of equitable development integrating local needs, resources, people and functions. The resource exploitation and their utilization are two independent economic activities influenced by different algorithms and usually manifested in core-periphery relationship. Resource utilization is the total amount of resources actually consumed, compared against the amount of resources planned for a specific process. It is normally measured as a percentage (%). All the resources are very scarce and states/countries are forced to plan ahead of execution of project per se.
For the last ten years or so South Sudan has had enough resources to carry out developmental project, some of which are now blamed on war and austerity measures put in place as a result of the oil shutdown in April 2012. However, the SPLM-led government adamantly shelved the policy of taking the town to the villages as late Dr. John Garang de Mabior stipulated before his demise as one of the policy agendas. Due attention was given to the culture of rent seeking behaviors that stand out tall in the nascent state of South Sudan, a culture that ripped off the people of South Sudan their rights of having primary healthcare provisions and education at all levels. It is to be noted here that the leadership of the SPLM failed the people and the country, and the only option left was to loot the country forgetting the ideology of intergenerational equity without any proper discounting factor considered in their calculation. A glance of South Sudan budget for seven years is in order.
- South Sudan fiscal year budget 2008-2014
Below are some figures for South Sudan budget including pre-independence and post independence period for about seven (7) years from 2008-2014 estimated in billion South Sudanese pounds. Let us be mindful that the composition of the annual budget is oil and non-oil revenues accounting for 98% and 2%, respectively.
2008 fiscal year budget 3.5 billion South Sudanese Pounds (SSPs)
2009 fiscal year budget 3.6 billion South Sudanese Pounds (SSPs)
2010 fiscal year budget 4.3 billion South Sudanese Pounds (SSPs)
2011 fiscal year budget 5.5 billion South Sudanese Pounds (SSPs)
2012 fiscal year budget 6.4 billion South Sudanese Pounds (SSPs)
2013 fiscal year budget 17.33 billion South Sudanese Pounds (SSPs)
2014 fiscal year budget 11.279 billion South Sudanese Pounds (SSPs)
The above fiscal year budget from 2008—2014 amounted to 51.909 billion South Sudanese Pounds, a substantial amount by any international standards that could have put South Sudan where western world stands now and forget about the suffering of its people either because of hunger or conflict. Many believe South Sudan would have been categorized as welfare state in the region and beyond. More so, regional/state disparities in term of resources allocation stand out to be one of the critical challenges facing the nascent state of South Sudan.
This is because from the early year of the autonomous region where Southern region was part of the greater Sudan during the CPA period, less of about 2% was allocated to the oil producing states in the South, mostly Unity State and Upper Nile State, but development was far from being reached. After the birth of the Republic of South Sudan in July 9, 2011, and as a result of the historic referendum, the figure increased from 2% to 5%, a significant amount of dollars that could have been used to put in place the state infrastructures as inclusive. But only thing, if at all, that exist is the pain and suffering of the respective communities of the states in question was the one granted. Unfortunately, the two oil producing states, Unity state and Upper Nile state are the most backward states in term of infrastructures compared to the non-producing states, but the state authorities used the resources negatively against the people.
Even though, the current war ravaged the greater Upper Nile Region, the developmental index shows that there was nothing in place prior to the war. This in a sense should not be blamed on President Salva Kiir alone but also on the two governors who are the Nuer by ethnicity and bored the brand of key policy actors at the level of two states. Thus, it remains to be the task of the SPLM-IO to identify the best model of resources allocation with the fair distribution of national resources from the center to the Buma level without any discrepancies intended to satisfy the basic needs of every citizen with the optimal choice of resources use.
- Challenges of resources utilization
Ostensibly, poor utilization of resources, underdevelopment, and lack of democratization plunged South Sudan into senseless war that has bearing consequences on the lives of all South Sudanese. The scarcity of the resources and inefficient resources utilization coupled with bad practices in managing the state affairs has negative consequences on South Sudan economy. Some challenges of resources utilization in South Sudan are highlighted below:
- Weak institutions: institutions at all levels remain weak, under-staffed and under-resourced, resulting in an inability to provide basic social services making the country more susceptible to corruption, a culture that ruin the unique values of all South Sudanese. In reality, what plays in very much is the arts of “technical know—who,” but not “technical know—how”. This alone has created a lot of damage into the economy because of mismatched of the right jobs to the wrong person (s) and those who are qualified for the jobs are not selected based on their qualifications. Thus, marginal value of labor productivity is not equal to the wage paid; in effect people are paid high with the job one not eligible to take up, and those who are qualified for the jobs are paid less or either overqualified. State authorities weaken democratization process at all levels serving as a recipe for more violent transcending under utilization of resources;
- Law and order remain weak: there has been a prevalence of violence with proliferation of small arms and light weapons that exacerbates the impact of disputes. Due to weak maintenance of laws and orders, the police in uniform become the main actors in maiming and killing people in the capital Juba in a broad daylight and the government remains muted without stemming out such practices. The recruitment processes of police force is very complicated one, and this was coupled with nepotism, which also in turn affected the security apparatus of which only the sons and daughters of Very Important Person (s) (VIPs) are selected without proper vetting individual background that would have allowed the members to be selected into the organ. Subsequently, the quality of the new recruits is put to test in away very much compromising the integrity of the regime and nonpartisan of security personnel which was violated; protecting only the regime but not the state. So far, the laying of landmines has affected economic or agricultural productivity and road use, as well as having long-term humanitarian impact deepening the acute food insecurity;
- Political unrest: affect employment, food distributions and standard of living that, in turn, affect utilization of resources. Politics has become the main means of earnings in South Sudan that derailed the culture of academics professionalisms.
- Loss of life and assets: the conflict has taken tremendous toll on people’s lives causing mortality rate to increase steadily. Atrocities committed during the war, which are still continuing up to now including destruction of property, is profoundly impacted on South Sudan economy and perpetuate the poor use of resources
- Population displacement: approximately on average about 3 million have been internally and externally displaced from South Sudan which caused negative consequences on the fertility and increased the crude death rate for children below age 5 and elderly people above age 65, a pattern that affect productivity across all age groups.
- Food insecurity: the majority of the displaced persons have limited access to land and of those that may have land, many have not been able to till their lands because of insecurity and have been dependent on external food supplies for their survival. The result of food insecurity is high level of chronic and acute malnutrition impacting negatively on use of resources.
- Poverty: South Sudan remains one of the world’s poorest countries, lagging behind on all socio-economic indicators, ….the resources are very much concentrate in the hand of few powerful elites, who wheel the country to the best of thy interest, an unfortunate circumstances South Sudan gets itself into.
- Disruption of basic social services delivery: the conflict in its totality has resulted in displacement leading to the loss of access to healthcare services and education. An entire generation of South Sudanese children has grown up without adequate formal education, the effect of which is only just being felt in South Sudan. The country is currently at a very confused state of affairs of which curriculum to follow either the Republic of Sudan or East Africa type of curriculum, a situation that led to the arrest of two MPs from Warrap state after voicing out their concerns over the nature of the curriculum the country South Sudan is following.
South Sudan economy though rudimentary in nature has attracted multi billion donor agencies all around the globe and people of goodwill to pour in the resources for building the nation deprived from civilization for a very long time by the colonial masters including the neocolonial masters of the northern regime of Khartoum. The euphoria was high with the hope that all the resources from the international community, other world bodies plus the domestic contribution will be put to use for the intended purpose of uplifting the livelihood of the poor South Sudanese who suffered most but the SPLM-led government under Gen.
Salva Kiir Mayardit badly mismanaged the resources, a blame that discriminates no single leadership from the SPLM party top echelon from the time Comprehensive Peace Agreement (CPA) was signed in 2005. The SPLM-led government tried very hard to convince the public that it was Khartoum that halted the oil proceeds and paralyzed the development efforts in the Southern Sudan. But they were proven wrong by president Omer Bashir with the receipt of millions of dollars wired to the Central Bank of Sudan (CBoS) Juba branch manned by Kornilo Koriom, a village boy hails from Warrap state after late Elijah Malok Aleng from Jonglei state got fired for unspecified reasons, a shame that was not reversed until now.
Kornilo Koriom, the current governor of the Bank of South Sudan has a long history of corrupt practices in the government of Sudan, which also repeats itself in Juba after the man had established more than ten forex bureau and Commercial Banks, whom allocates on weekly basis billion of dollars, which in turn got their ways out in the parallel markets for his own gains. The governor is very happy overseeing the economy stagnating and very much collapsing while earning abnormal profits through his underground economic activities.
It is to be noted that development and resources are interrelated and cannot be treated in isolation. Therefore, the scarce economic resources require effective utilization to the fullest capacity wasting none in order for a country to achieve minimum development goals. This is achieved through the effective use of all the factors of production that would bring about sound economic development. But, the challenges facing the nascent state of South Sudan are many, some of which are heighted. Remedial measures of challenges through democratization and stem out corruption, fosters the development given the full utilization of resources with the far-reaching positive implications.
To that effect, benefits of resource utilization may include increased wealth, meeting of needs or wants, proper functioning of a system, or enhanced living standards of people. Therefore, reviewing the persistent problems of economic development in perspective of exploitation of natural resources, with the objective to provide some clues for occurrence and persistence of regional/state disparities, and for suggesting a development model synchronize both the resource management and environmental protection to create a sense of order.
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