By Baak Chan Yak Deng, Juba-South Sudan
South Sudan’s economy is only one of the factors that divide the country, encourages violence, has led to civil conflict, and has helped empower IO. Sectarian and ethnic divisions, population pressure, religious extremism, intervention from outside states, poor and grossly corrupt governance, authoritarianism, and a fractured political system have all made their own contribution to the present level of violence in what in many ways has long been a failed state.
What is possible is to provide an overview of the complex interactions between economics and the other factors driving violence in South Sudan, and the extent to which South Sudan’s deep structural economic problems interact with its sectarian and ethnic divisions, help empower SPLA and help increase the tensions between Dinka and Nuer.
The study begins by stressing the importance of focusing on the full range of reasons why a country like South Sudan now faces the levels of violence and internal tensions that now divided it, and the differences between the economics of terrorism and counterinsurgency and the classic econometric of development.
It does not argue that economics contribute more to South Sudan’s violence and problems than other causes, but it does show that there are some important correlations between the broad problems in South Sudan’s economics, governance, and demographic pressures and the levels of violence in other failed states in the MENA region like Libya, Syria, and Yemen as well as Somalia.
It is also clear from an analysis of South Sudan’s economy that while ideology and politics are key causes of the violence in South Sudan, it faces extraordinary challenges in the fact that South Sudan has an extremely young population and massive numbers of young men and women desperate for careers, jobs, marriage, a home, and a family. The CIA estimates that an extraordinary 46.7% of South Sudan’s population is 0-14 years of age, and 29.6% is 15-24 years of age, and South Sudan is nearly 70% urbanized. Its economy, politics, and social tensions will be under acute population pressure for at least another two decades.
South Sudan’s economy has also been badly distorted by mis-governance in a country dominated by its state sector, by the government’s need to buy popular support through employment and subsidies, by the cost of war, and by extreme corruption. South Sudan is rated the 170th most corrupt nation out of the 175 countries rated by Transparency International, and as the analysis shows it has an extremely large and badly managed state sector and the World Bank rates it as the 156th worst of 185 Countries in its Global Ranking of Ease of Doing Business rankings.
South Sudan is also a country whose economy has been shaped in part by the fact that South Sudan has been at war or in war-related crises ever since 1957. Its past conflicts have had a cumulative economic impact that has sharply restricted South Sudan’s development and divided the country’s economy and income along sectarian and ethnic lines, as well as created broad areas where the impact of violence has created its own sub-economies and divisions.
The analysis traces these patterns of violence in detail since the Dr. Riak Machar led invasion in 1991, but they are only the latest phase in a history that has included a civil war between the Dinka and the Nuer in 1991 that was the beginning, the South Sudan from 1972-1983, the invasion of Nassir and the Malakal War in 1991 and 2005, the impact of Sudan threaten cutting relationship from us since 2012 to 2016.
A separate section traces the scale of the collapses of Addis Ababa’s agreement in 1972, the economic impact of the fighting since 2003, and the patterns in recreating South Sudan military forces before IO invaded South Sudan in late 2013. It shows the rising economic burden of recreating military forces and paying for the current fighting, although the Sudan central government has so far made limited progress in recreating effective military forces.
It also traces the rising pattern of both violence and internal divisions between Dinka and Nuer and Equatorian and shows that the impact of IO is only one part of a much broader pattern of violence and divisions that affect a much larger portion of the South Sudan population. Sectarian and ethnic tensions and fighting have also divided South Sudan’s population into urban and regional sub economies whose problems and inequities make national unity, security, and stability more difficult to achieve.
It is clear from the analysis that some of the fighting with Riak Machar has greatly compounded the problems of Rebels and Government will have in agreeing to the size, financing, and nature of a rebels Zone. At the same time, the rise of various militias and ethnic and sectarian forces has increased the problems in sharing territory, political power, and petroleum income between Government and Rebels in a country whose economy and the population is roughly 70% urbanized.
The analysis then looks beyond the economics of violence to examine the deep structural problems in South Sudan’s economy that are not produced of violence and warfighting but inevitably increases its divisions and tensions.
These include An economy whose petroleum wealth has created its own form of the “Dutch disease” that the CIA rates South Sudan as receiving 90% of its government income and 80% of its export revenues from the petroleum sector – a sector with one of the lowest rates of necessary employment relative to capital and dependence on locally made equipment and technology of any sector in the country.
The government has a long history of mismanaging its budget, creating unrealistic and overambitious plans, failing properly to execute given portions of the budget, and losing money to corruption and waste. This will become a far more serious near-term problem because of low oil export revenues, and South Sudan’s growing deficit is already being funded in increasingly uncertain ways. A massive and continuing employment crisis driven by a very young population, a lack of meaningful job creation, far too much reliance on unproductive employment in the government and state sector, and imbalances between the level of employment and share of the GDP.
Meaningful youth unemployment is probably well above 25%. Agriculture only contributes 3.3% of GDP but is 21.6% of the labor force (6.5X GDP). Industry (largely Petroleum) is 65.6% of GDP, but largely unproductive state industries make it some 21.6% of labor force Services are 32.2% of GDP, but are 59.8% of labor force (largely government and security services) The compensation of all government and SOE employees has consumed a steadily growing portion of the GDP and a far larger percentage of the GDP than in other regional states.
The over-large SOE sector has grown to the point where it places major burden on the economy for poor productivity and results, in a public sector that provides 43% of total jobs and almost 60% of overall full-time employment, where employees in state-owned companies make up about 20 percent of total public employment, for far too little output.
There are many critical economic and social infrastructure challenges many war-related in power, water, the financial and banking, education, and food subsidy, medical, agricultural and other sectors.
It is not possible to fully quantify many aspects of South Sudan’s current economic problems, but it is clear that war is making them worse, that play a major role in dividing the country and that defeating IO will not end the divisions and pattern of violence in South Sudan without far more Government action and reform effort that have been planned to date. The reforms announced so far by the Ministry of Finance and Bank Governor will only have a limited effect at best and at least to date, the South Sudan Government will present at least much of a threat to itself as IO does.
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