Festus Mogae: South Sudan Should not Expect Economic Revival by Outsiders
4 min readBy Malith Alier, Juba, South Sudan
March 11, 2016 (SSB) — A lot of things are happening faster than we thought. Last week specifically on the 2nd of March South Sudan got long awaited admission in to East African Community (EAC). On the 7th the rebel forces attacked Nasir, a major violation of the ceasefire and Compromise Peace Agreement as a whole. 2 days after the Joint Monitoring and Evaluation Commission Chair, Festus Mogae told South Sudanese not to expect too much economic assistance from outside the country.
It is clear back, centre and front that the economy is sick and needs urgent attention. Two things are at play, recession and hyperinflation. It might be too much to talk of recession but hyperinflation is with us every day of the week.
A cup of milk tea which was selling at five pounds in December is now selling at SSP 20. A 500ml bottle of honey now sells at SSP 100 up from only SSP 15 last time. The rest of commodities are beyond reach of the common man.
“Formation of Transitional Government of National Unity (TNoGNU) alone is not enough to help the economy” said Mogae. Many people placed a lot of hope on TGoNU as a panacea for economic malaise afflicting the country. This needs to be corrected by somebody like the JMEC Chairperson.
There is no single bullet to kick-start an upward trajectory of the declining economy but it requires a combination of things towards achieving that target. The term economic reforms was adopted by the peace agreement in order to help transition from war economy to peace time one. An economy is one of the first casualties of a war. South Sudan economy was no exception.
Too much attention or pressure has been placed on the US Dollar. The Dollar is not a true measure of the economic performance of any country save that of the USA and few other nations that have adopted the Dollar as legal tender.
Our economy is traumatised by the Dollar. Why is the economy bad… Dollar. People have not seriously determined why the economy goes from bad to worse. This is simply so because there is no meaningful production in the country. This is the root cause of our current problems in addition to the war and oil price plunge in the international market.
The economy of this country is dominated by foreigners and this is something we should worry about. All the neighbouring nations are major stakeholders in our economy leaving nationals mainly in the government service. We are just spenders not savers of money. Our incomes go directly to foreign businessmen who are not willing to save our economy in one way or another. Government regulatory approach never works. Orders to decrease the prices of water or food never work.
Informal dollarization of the economy is to blame for our woes. However, we’re importing things we really don’t need to. We have too many cattle in the country and therefore, we have no excuse to import from Uganda and Kenya. This is where government intervention could straighten things out. Sort out goods we don’t produce from those we produce and place embargo on those we produce to maximise utilisation of the little foreign reserves the country has.
The devaluation of SSP though met with scepticism by public has done more good than harm. Many people who had erstwhile been hoarding goods and services came out to sell in the open market. The public transport owners are now on the streets more than before devaluation. People in the rural areas are bringing goods to towns and cities in increased numbers. Someone who used to playing dominoes is now out to produce something for survival. And above all our currency trades freely and easily with the East African Community member countries like never before.
Joining EAC now gives the country more opportunities to reform liberalise financial sector in line with EAC members. Majority of EAC countries uses the Shilling. Perhaps South Sudan should resort to Shilling prior to expected monetary union down the line.
The economy is in bad shape and needs urgent action by the government. The starting point is formation of Transitional Government of National Unity followed immediately by proposed economic reforms in the agreement. Outside help might come after this but this may not be enough on its own. The whole country should embark on production as a long term measure. It is good news that government distributed tractors to all states to bolster crop production. However, in the absence of peace this may not do much.
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