- Written by Dr Lam Akol
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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 had 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 ans 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 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.
About the Author
Dr Lam Akol is the Chairman of the SPLM-DC, the official Opposition party in South Sudan. He was previously a Lecturer at the University of Khartoum (1980-1986) before he joined the SPLM/A. The last position he held was as Sudan's Minister of Foreign Affairs (2005-2007).
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South Sudan: building the foundations of the world's newest nation
Aggrey Tisa Sabuni , 9 July 2012
Aggrey Tisa Sabuni, economic advisor to the President of the Republic of South Sudan, looks back on a tumultous year and reflects on the political challenges of statehood, and the choice before the international community.
One year ago today my country became the world's newest nation.
Our first year has been a tumultuous one. We have had to deal with a resurgence of open hostilities in our border regions, insecurity from cattle raiding, rising domestic prices for basic commodities and a limited ability to provide basic services. But just as we are determined to be free and independent, we are also determined to build long long-term prosperity.
Along with many countries in Europe, South Sudan is currently facing a period of austerity. This follows our Government's decision in January to shut down oil production – depriving us of what was 98 per cent of our revenue. But unlike our friends in Europe, this period of austerity has come at a time when we are still building the basic foundations of statehood.
It is important to be clear on the circumstances that led to the decision to shut down oil production. In November last year the Government of Sudan began blocking shipments of oil leaving Port Sudan. Sudan then demanded extortionate fees for the transport of our oil – fees more than 30 times the standard international rate. Finally, in early January this year, the Government of Sudan began to divert oil pumped in the South for their own purposes.
In shutting down oil production, we chose to forgo revenue in the short term to ensure our country's natural resources are protected for future generations.
We did not take this decision lightly and we are under no illusions as to the challenge it poses to our young country. But despite the challenge, the Government of South Sudan is determined to continue laying the foundations for long term economic prosperity. As with building a house, the foundations are the first step in building a strong and resilient nation. We must get this right before we move on to building the rest of the house. And we cannot give in to simplistic and shaky solutions in the rush to have a roof over our heads.
Being the world's newest country affords us one clear advantage in this respect: we can learn from the past mistakes of other countries. We will not risk an explosion of inflation by printing money or by borrowing excessively from the Bank of South Sudan. Nor will we risk miring future generations in unpayable debt by borrowing more than we can afford from international markets.
Instead, we are focussing on establishing a sound economic policy and building better ways of managing our public finances, in order to achieve more with less. In this regard, we have already begun to see the fruits of our labour in many important activities. A new currency was successfully introduced under extremely challenging circumstances, but with minimal disruption to the South Sudanese. Reforms to our taxation and revenue collection systems have led to a rise in non-oil revenue of 250 per cent since July 2011.
These are not insubstantial achievements. They are a direct reflection of a country determined to ensure that its people benefit from improved security and economic prospects. They have all been achieved under the framework of the South Sudan Development Plan - our first ever national plan - which holds the key to our country's development progress and charts a course for our partners in the international community to work with us for the benefit of South Sudan.
Building on these important achievements, our Minister of Finance recently submitted an austerity budget to the National Assembly. This will see sharp reductions in non-essential expenditure across the whole of government on items such as travel, vehicles and supplies. At the same time the drive to improve our payroll procedures and improve accountability will continue, ensuring only workers who are working get paid. While painful, these spending cuts are crucial to ensure that we have sufficient funds to maintain security and provide basic services during the period in which we are without oil revenues.
Over the medium term we will focus on improving the productivity of our agricultural sector, which currently provides a livelihood to 80 per cent of the population. This holds enormous potential – currently, just 5 per cent of our land is being cultivated; but an estimated 50 per cent is considered prime agricultural real estate. By promoting agricultural production and trade, we will begin to see the benefits of a thriving economy that is less reliant on oil.
These initiatives will go some way to contributing to a solid foundation for South Sudan. Nevertheless, managing the challenges we face is not a simple task. We are a nation rich in potential but hampered by circumstance. Until the political challenges with Sudan are resolved, we will continue to be held back in our efforts to build a solid foundation for our nation. Ultimately, the complex nature of our negotiations with the Government of Sudan disguises their unwillingness to compromise. As such, this is the precise moment where we need our friends in the international community to stand up, to acknowledge our successes and help us to overcome our failings.
About the author
Aggrey Tisa Sabuni is from Kajo Keji County, South Sudan. Prior to becoming an economic advisor to the President of South Sudan, Tisa was the Under Secretary of Economic Planning in the Ministry of Finance and Economic Planning.
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