What has Become of our Economic Liberation (Part 2)
8 min readWhat has Become of our Economic Liberation: Onto the Root Causes of our Economic Tribulation in South Sudan (Part 2)
By PaanLuel Wel (Washington DC, USA)
September 20, 2010 (SSB) — In Part One of this article, I argued that the prospects of our economic transformation, as imagined and hoped by most South Sudanese in the immediate aftermath of the 2005 groundbreaking peace accord and into our glorious independence, were, and are continually being, hampered by numerous hurdles. Among these impediments are intra-tribal clashes and political rebellions, weak public schools and poor health care systems, government’s failures to enforce the rule of law, and most importantly, low rates of savings and investments. I ended Part One with a rhetorical question, that, given all the formidable obstacles hindering us in our march toward economic prosperity: “what is the panacea?”
While there is no definitive panacea to our endemic economic crisis, I will, nonetheless, offer some sound economic proposals to the ministry of economic planning and development, the development partners, the business community and the general public of the South Sudan. There are time-tested economic policies that the government should have implemented to inaugurate, promote and maintain continued economic growth. To increase economic growth rates, to realize higher standard of livings among Junubeen, and thus, to fulfill its manifest destiny of total socio-economic liberation of the marginalized people, the government should consider to put into effect economically informed programs that would enhance the property right and the rule of law, improve health and elevate the quality of education, subsidize research and development in centers of higher learning, provide incentives for savings and investments, and most significantly, take advantage of and participate in regional and global economy.
In South Sudan, the rule of law and property rights is particularly undermined by both corruption and political instability. There are certainly tremendous dividends and justifiable call for government involvement in a very immature market economy such as there is in our infant nation. One particular benefit of the government intervention in market economy would be strict enforcement of the rule of law that would aggrandize the protection of the property rights. The principle of property right—privileges individuals or firms have to the exclusive use of their property—as enshrined in the interim constitution of South Sudan is doomed if not uphold sternly. As an essential doctrine of all successful economies in the world, continued absence of strict observance of the rule of law across the country mean that neither the entrepreneurs would be willing to risk their own hard-earned funds to expand or start new business enterprises, and nor would the investors be enthusiastic to invest in new business start-ups.
Corruption in form of bribes surreptitiously taken by government officials before issuing permits for businesses is not uncommon in Juba and so is unwarranted taxation that either scares away or unnecessarily victimizes upcoming firms. Worse still, these taxes end up in the pockets of government officials and their surrogates rather than being utilized to build and extend public infrastructures like the much-needed road network systems that would bolster agro-economic activities in the countryside. The rule of law and the protection of the property rights is further severely undermine by increased political instability—civil strife by tribal bandits, and armed rebellions spearheaded by aggrieved politicians—that has rendered large parts of South Sudan Somalia-like. In those areas it is hard to imagine flourishing economic activities going on under frenzied civil war. The government must prioritize the tackling of rampant corruptions and reinforce political stability in order to secure and boost property rights and the rule of law—the pivotal of economic development.
Having established and institutionalized the rule of law by eliminating corruption and curbing political instability, the government should then embark on providing upgraded basic education and improved health care for the population. For success to be attained, educational reforms in the elementary, primary, secondary and, above all, in higher education, must be urgently carried out. This will goes all the way to combating ignorance by eliminating illiteracy and to promote technological innovations by encouraging rigorous study of STEM—sciences, technological, engineering and mathematical courses. For that feat to materialize though, new schools should be built, more teachers trained, comprehensive new national curriculum instituted, textbooks published and distributed and teachers remunerated well and on time. Furthermore, peace and security must be created and maintained in many volatile regions so as to provide conducive environment for learning to take place.
Moreover, brain drain—situation whereby highly educated and successful Junubeen leave for, or decided to remain in, high-income countries due to unfavorable conditions in South Sudan—should be combated by a combine force of halting corruption, nepotism and favoritism usually based on tribes and/or connections rather than on one’s skill and educational qualifications. There are many viable incentives for our valuable sons and daughters who might be, out of no alternatives or just oblivious of the vice, advancing brain drain process. This could be accomplished by providing adequate secure environment, both for working and living in South Sudan, and to a great degree, by improving the economic prospect in the domestic economy. Anyone who can easily make not only a decent living but also a great name for him- or herself within his/her native country has no further motivations to seek green pastures in foreign lands which are often unwelcoming to funny-looking aliens (as they think of Junubeen).
Similarly, health issues should be met head on since there is an unequivocal correlation between health and economic growth rate. Our sickened, malnourished workforce should be replaced with strong, tall, healthy workers that would be the vanguards of our economic transformation. For South Sudan to achieve that, new technological-equipped health centers should be built, more doctors and nurses trained, better drugs and medicines made available in hospitals, food and nutrition increased, access to clean water and sanitation improved, and children immunization expanded. Budget constraints might present a considerable headache but if corruptions and general mismanagements are done away with, funding from development partners could be secured to smoothen out the budget constraints. Increased learning in schools and improved health conditions would produce a healthy and an efficient labor force that would ultimately ensure increased return to human capital to pull us out of this extreme poverty.
But increasing human capital has diminishing return. Therefore, GoSS policies should, through subsidization of national education, facilitate access to crucial technology. Research and development should be financed through government’s funding as a form of investment. This is how many rich, developed countries such as the EU, the US, Israel, Japan, and lately China, incubated and nursed their technological innovations over the years. The National Science Foundation in the US, for instance, was purposely established and continually being funded with a clear goal of supporting university researchers. Israel, a tiny resource-less, desert country surrounded by countless adversaries, is today a global technological powerhouse owing to its government’s consistent funding of scientific research and development that cut across all aspect of the societal life ranging from the superb military to spectacular business innovations. For the sake of an efficient and productive workforce, basic education and research and development should be encouraged through subsidization by the government using petro-dollars. The subsidization of education will undoubtedly play an essential role in the promotion of economic growth that South Sudan badly need.
In addition to a committed government funding, South Sudan can easily access technology, just like the Asian Tigers—China, South Korea, Taiwan, Singapore etc.—through foreign direct investment. This can be realized by allowing firms from developed, rich countries to build new factories or to acquire struggling domestic firms, if any, in South Sudan. Through direct foreign investment, India, a country that had, until recently, been as poor as many African countries, has been able to gain enviable access to the software technology of giant multinational corporations such as Microsoft, Dell and Apple among others. For South Sudan to achieve any remarkable break from the present day grinding poverty, government’s policies should aid the growth of technology by subsidizing research and development and through tax breaks to those firms interested in or are already undertaking research and development to facilitate technological change.
Of all the available policies geared toward economic growth, none is more important than those that increase the incentive to savings and investments among the population. In order to break the vicious cycle of abject poverty, government should pioneer strategies that would encourage both individual and business savings and investments that could result in the increase of loanable funds for entrepreneurial ventures. Tax reductions should be carried out on individuals so that their disposal income would be enough to cover both present expenditures and future consumptions—saving for future use. These funds should then be placed in a scheme—say individual retirement accounts—where the savings could get compounded over the years before retirement and where businesses can make use of them to finance their investments. Firms too can be cajoled to save through investment tax credits which would allow firms to reduce the portion of their taxable profit provided they are committed to invest the extra cash in business investments. These incentives, if successfully facilitated by the government on individuals and firms to save and invest, would greatly promote the prospect of economic growth and prosperity in South Sudan.
For much of our living history, South Sudan has been wallowing in despicable poverty. The civil war only exacerbated the already dire economic situations. Today, more than ever before, we have within our firm grips the prerequisite means to change the pathetic living standards of our country men and women if only we are prepared to give little resolve to do so. The key to better economic prospects lie in nothing more than establishing the rule of law by curbing corruption and political instability, provision of basic education and healthcare systems to the people, subsidization and funding research and development in the universities to further the cause of technological change, provision of incentives for firms and individuals to save and invest, and for the most part, participation in regionalized and globalized international trade to attract foreign direct investment and gain access to technology of multinational corporations.
For South Sudan, the road is wide open, the direction is obviously clear and the potentials dividends, not to mention the opportunity cost of inactions, are enormous. Something has to be done and now is the time! That something is the fulfillment of our long promised economic liberation according to the SPLM/A’s Manifesto. Is this asking too much from the government of the liberators?
Mr. PaanLuel Wel, a concerned Sudanese student studying in the United States, can be reached at paanluel2011@gmail.com or through his blog: http://paanluel2011.blogspot.com
About Post Author
