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South Sudan: a false start

For all the Government of South Sudan's rhetoric, real investment in the country's future has been slow to begin. Even before independence, there were sufficient resources to truly begin building the nation, resources that were squandered in Juba.

Dr Lam Akol
17 July 2012

Aggrey Tisa Sabuni’s article South Sudan: building the foundations of the world’s newest state, gives the impression that the building of South Sudan started with its independence on the 9th of July last year. Nothing could be further from the truth. Since the beginning of the implementation of the Comprehensive Peace Agreement in July 2005, South Sudan was, for all practical purposes, fully autonomous economically and politically. It ran its own affairs and enjoyed freedom of action. Financially, it had a more than 50% share of the revenue of oil extracted in the South, foreign grants, money from the Multi-Donor Trust Fund and funds voted to it from the national budget. Added to this is the internally generated revenue in South Sudan. It was also free to borrow money from banks, local and foreign. The revenue from oil alone amounted to about 3 billion US dollars annually (including the 2% for the oil-producing Unity and Upper Nile States) for the entire six years interim period preceding the referendum on Self-Determination. These are enormous resources. They were sufficient to set building the foundations of South Sudan on course. The money was squandered in Juba and the population saw nothing of it in terms of basic services and improved security; a missed opportunity.

As is well known, oil as a resource is problematic: not only do its prices fluctuate considerably but it is also non-renewable and exhaustible. Relying on it as the sole resource is the surest way to economic uncertainty. Common sense would dictate that oil resources, while they last, should be used to develop important sectors of the economy that are essential and sustainable for the development of South Sudan, especially agriculture. However, this was exactly the course of action that the SPLM-controlled government in South Sudan eschewed from 2005 up until it shut down oil production last January, six months after independence. South Sudan boasts no industry and no private sector of any kind. What economy are we talking about? If South Sudan had invested oil money in agriculture, both plant and animal, it would have achieved self-sufficiency in food well before 2009 and would have simultaneously started agro-industry, such as sugar and other food industries, tanneries, etc. No country can develop without a viable industry.

It must also be underlined that agriculture in South Sudan is not modernized; it is still traditional and fully rain-fed. A lot needs to be done in order to improve production and increase productivity. What Sabuni presents as “not insubstantial achievements” – the rise in non-oil revenue of 250 per cent since July 2011 – could have been achieved in 2006 or 2007 at the latest. This is an insubstantial chunk of the budget, it is only raising the non-oil revenue to just 5 percent of the budget! How do you cover the remaining 95 percent? It is mind-boggling how with oil revenue unavailable the government in Juba would get the money to run its “austerity programme” without borrowing money. In fact, after closing down oil production, the country has been borrowing money against the oil underground which does not augur well for future generations.

Sabuni is absolutely right when he averred that “Being the world’s newest country affords us one clear advantage in this respect: we can learn from the past mistakes of other countries.” The question is: did they learn anything from those mistakes? Not at all. They slid into the same beaten path most African countries traversed: rocketing inflation, total reliance on imported goods including food, insatiable lust for foreign aid and corruption – a word Sabuni could not dare mention in his article. Today, more than half the population needs food aid and the World Bank has warned of an economic calamity if nothing changes soon. By October, Juba may not be able to pay its employees.

One would expect a newly born state like South Sudan to use its resources judiciously before seeking assistance from others. What we saw and still see is a government on a spending spree. The calls from the opposition since 2010 for a lean government after independence were contemptuously dismissed. Now, South Sudan has a government, apart from the President and Vice President, of 56 ministers and Deputy ministers; six Presidential Advisors; two chambers of Parliament of too many members (one composed of 50 appointed members and the other with 332 members, 49 percent of whom were appointed); 21 Chairpersons of National Commissions and a huge civil service. Sabuni himself was until recently one of two Under Secretaries in one ministry. In the Foreign Service, 91 ambassadors were appointed for a population of less than 9 million souls. Compare this with Kenya’s about 60 and Zimbabwe’s less than 40 ambassadors. These countries have been independent for 50 and 32 years, respectively, and hence would be expected to have established relations with more countries than a newly born state would have.

In terms of pay, a minister in South Sudan, for instance, receives an emolument in excess of 30,000 SSP monthly excluding other services and perks, which is a staggering 100 times (or 10,000 percent) more than what an SPLA soldier gets. Most developing countries are careful that the pay of the highest paid government officials should not be far in excess of the minimum pay.  The huge government in South Sudan is not by accident, it is a reflection of the distribution of patronage and clientelism in the ruling party. No austerity measures will reverse that trend. This also appears to be the biggest obstacle against fighting corruption, rhetoric notwithstanding.

Let us take an example of how the priorities of the Government of South Sudan are totally reversed. According to the 2011 budget figures, health and education all over the country received 3.8 and 5.6 percent of the budget respectively, compared to 3.7 and 5.1 per cent in 2010 (both ministries received less than 10 percent of the whole budget over those two years). In contrast, the Office of the President received 6.6 percent of the budget in 2010 and 4.8 percent in 2011. In other words, the Office of the President has received more than what went for health in the two years considered, and only marginally less than the share of education in 2011.

Another area of concern is the overspending of all ministries over and above their budget allocations. A cursory look at the 2005 and 2006 audit reports, the only two carried out so far, reveals how some ministries have spent in excess of up to almost 2000 per cent of their budgets. These audit reports also contain very worrying revelations such as outright embezzlement and some government institutions refusing to be audited.

The biggest malaise of South Sudan’s economy, all agree, remains what Sabuni chose to ignore: rampant corruption. There can be no way “to continue laying the foundations for long term economic prosperity” – as Sabuni puts it – when corruption in the high echelons of government continue to eat into our meagre resources. In addition to its crippling effect internally, corruption has caused foreign donors to be reluctant in giving more aid money.

Regarding the difficult talks with Khartoum, could it be that “their unwillingness to compromise” is based on the knowledge that South Sudan has little options given its single resource “economy”?

The “South Sudan Development Plan” mentioned by the author, was not heard of before the 9th of July 2012. What it is and for how many years, none other than the government seems to know. A national plan cannot be discussed behind closed doors; it is a matter for the whole nation to debate. It must be discussed by both the Government and the Opposition, and also by the civil society and other stakeholders, if it is meant to last for any reasonable length of time and for it to deserve being termed a plan. How come it was so shrouded in secrecy?

One would agree with Sabuni that “the foundations are the first step in building a strong and resilient nation”. But all the indications are that the foundations of the newly born South Sudan were laid not on rock but on sand. The challenges are not only economic; good governance with its six pillars calls for action. South Sudanese of all hues and colours need to return to the drawing board to get things right. The country’s independence will not be consummated until it enjoys good governance and attains economic self-reliance.

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