Safer Paths Out of our Wartime Economy (Part 5)
5 min readSouth Sudan: Looking beyond crude oil dependency
By Mayen D.M.A Ayarbior, Juba, South Sudan
December 10, 2015 (SSB) — As one of the oil dependent countries, South Sudan has been negatively affected by the drastic fall in its oil revenue. While civil wars and strife will always have disastrous implications on the economic and sociopolitical development prospects of nations, ours came at the wrong juncture in our relatively short history as a sovereign state. This is not to say that there is any right time for a civil war.
The war started at a time when oil price levels at the international market plummeted to about $40 per barrel (pb). This unfortunate coincidence have made the effect of such price fall hit the country hardest than it did in other African oil producing states such as Nigeria, Angola, and Chad. Moreover, South Sudan needed the windfall of oil dollars more than the rest, given its high level of underdevelopment.
Now that OPEC (Organization of Oil Producing Countries) decided not to cut down their combined outputs, meaning that oil supply will continue to outstrip demand by hundreds of thousands of barrels, the price is projected to go even bellow $30 pb. That sounds like disaster for those who do not want to appreciate that South Sudan has more other unexploited mineral and natural resource which could generate ten times what oil brought to its coffers.
One can guess why our citizens may feel down about the fall in oil prices. For sure, the lost opportunity of the last ten years, which include two miserable years of wanton destruction of life and infrastructure, will continue to haunt the country for some time to come. Good news is that such miserable memories are quickly forgotten when people see inter-state roads and railways crisscrossing our country and connecting our people. But that depends on how long citizens should wait to see it happening.
Ironically, not getting ‘enough’ direct cash from oil might even mean a good thing for African countries. The fall in the price of crude oil may now force African countries, including our own, to appreciate the true value of oil, which goes far beyond its crude form.
While countries like China and the United States have gone as far as fighting wars for control over foreign oil resources, they have not done so just to obtain crude oil for its own sake. They have not done so just to provide fuel for their cars, ships, jets and factories, but because they appreciate the fact that oil is a major stimulus of industrial outputs. Petroleum byproducts contribute much benefits to economic growth and development beyond mere fuels.
One vital oil byproduct is asphalt. In many ways, getting enough asphalt for constructing the highways connecting urban and rural centers could be one of the main reasons why America maintained bases in the Gulf and China is investing heavily in Africa’s petroleum sector.
For South Sudan, estimating that each barrel of crude oil produces about four liters of asphalt, the country’s export of 350,000 bpd (barrel per day) of crude oil could be translated into exporting more than a million liters of asphalt per day out of the country. Let’s imagine what a million liters of asphalt produced EVERY SINGLE DAY could do to road construction in South Sudan.
The only way of benefiting from locally produced petroleum byproducts is through refining oil locally, instead of exporting everything in its crude form. Building a refinery will make it possible for the country to export different types of fuels as well as finished plastic products to the African markets, starting from our own backyards.
Given the almost uncountable number of gravelly mountain chains in Eastern Equatoria, producing asphalt and mixing it with aggregates will allow us enter into business ventures (public-private partnerships) with international stone crashing and road construction firms. Such extremely attractive ventures would make road construction in South Sudan among the cheapest and most cost effective in the world, considering local abundance of asphalt covered aggregates.
The Ministry of Defense could even be thrown into the mix of such business ventures in order for demobilized soldiers to be employees of locally owned road construction firms. Most countries create profitable business firms to be operated by their armed forces as a means of internal budget support for their members. This, in addition to mechanized agriculture, would go a long way into rewarding the young and now old men who spent their entire adulthood fighting for the country’s liberation, only to be disillusioned later.
In conclusion, losing oil revenue should be taken as an opportunity to reevaluate the new, yet more profitable role, crude oil could play in South Sudan’s economic growth. We could borrow a leaf from former President of Botswana, Festus Mogae, on how his country’s insistence on value addition in the local production of diamond allowed it to be one of the fastest growing economies in Africa. After all, he is now one of us and his legacy after three years will be measured in economic terms.
Mayen Ayarbior, BA Econ Poli. Science (Kampala Int’l Univ.), MA Int’l Security (JKSIS- Univ. of Denver), LLB (Univ. of London). mayen.ayarbior@gmail.com.
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