The urgent solutions to the economic crisis in South Sudan
By Bullen Chol (Mony-Awut), Juba, South Sudan
June 24, 2016 (SSB) —- We, Economists, advise the government of the day. It is usually up to the government to either take an advice and salvage its reputation or ignore it and later say that we wish we have implemented the previous advice that we received. First and foremost, politics and economy move together, that is why there is what is called political economy which is the combination of politic and economy. Worldwide these days, the role of both is very profound.
In Africa here , the Late Gadhafi was cherished by his people because he focused on economy , before he died , Libya was almost like West, because the oil money was well managed , there was free university education in Libya , free apartment for newly wedded couples , free health care , tarmacked roads and so much more . It was because of those good things that he ruled Libya from 1969 to 2011.
Another example is from our neighbor Rwanda, after 1994 genocide, Paul Kagame focuses very seriously on Rwandan Economy and as I write this article, Rwanda’s economic development is a role model in the whole of East Africa if not Africa as a whole. This explains why he was voted in several times, because what matters to the citizens is not who should rule them but who address their economic needs. The above examples give you a clue of how important focusing on the economy is to every citizen worldwide.
Back to the above topic, I have not taken interest to pick up my computer and write ever since peace was signed, and government of national unity formed. The reason is that I wanted to see how the government would address matters of our Economy, after a lengthy period of time without any action seen. I have been compelled to write this opinion article because I have seen the direction where things are heading to is not right.
Every one of you who is reading this article will concur with me that , there are economic problems facing us , from high inflation , lack of payment for public servants’ salaries , lack of government investment in what are called government parastatals, lack of good road with exception of Nimule road which is now said to be wearing out, lack of proper education and health care that explains why millions of dollars are sent to neighbouring and abroad for education and health purposes respectively, last but not least high cost of living in Juba and various cities simply because of high inflation rate, absence of lending to general public by commercial banks which emanated from failure of central bank to implement credit creation through its bank rate, high government expenditures evidence by lack of funds in our treasury .
Because of economic mess, our nation is being threatened now by the donors, Sudan tribune has it that, donors want 28 states to be dropped if they are to donate some money to the government that cannot be the case if government really get serious in exploring possible ways of getting the money to revive economic recovery. Yeah, where will the money for funding government of national unity come from? This is one of the most frequently asked questions, however with a serious plan backed up by actions but not words (lips’ service), a permanent solution can be found , otherwise, 28 states are now being criticize basing on their economic viability but not on political grounds.
Otherwise, if they were criticized on political grounds, we would have heard citizens demonstrating as a means of exhibiting their dislike for the creation of more states , in contrast , we are seeing most of them celebrating for example in my new state, every celebrated creation of new state. It should be noted that our government problem is coming from low government revenue, with oil prices falling almost daily, with no additional export for the republic of South Sudan, the government is bound to run out money as it is now.
Government expenditure must be matched with revenue otherwise, if its expenditure is higher than revenue generated, the government may enter into debts. If it spends less than it generates, an economic recession would occur. For our case in south Sudan, our government is spending more than it gets given that our single export (Oil) has got its prices falling hence it is generating low revenue
The followings are the suggestions if when they are implemented all, we shall see south Sudan getting back to its feet:
- Focusing on refinery with the intension of exporting its output to the neighboring countries and for local consumption. If the government leaves everything and focus its investment on refinery, it would be a matter of time for us to have a strong economy, because upon finishing construction of refinery, the output of our refinery would be exported to Uganda, Kenya, Tanzania, Congo, Burundi, Ethiopia, and Sudan among many other neighbouring countries that would be in need of our oil. As the construction of the refinery would be going on, the government could choose from the following options to sustain our economy temporarily, that is, it would use expansionary monetary policy by using fiat money. Or it could borrow some money from international lending institutions. I prefer the former to the latter because addressing the former could be easy i.e. through contractionary monetary policies such selling of treasury bills to general public. Therefore, refinery should be number priority for the current government.
- The ministry of Health though medical commission can evaluate the type of diseases that takes our people outside for treatment and the corresponding countries that treat those diseases. If the data is found, the ministry would urge those countries through their embassies here to establish their branches in Juba so that hard currencies are not used for medical reasons abroad, as a result, the few hard currencies we have could be saved and channel to other ventures. The similar approach can be applied to education section as well.
- Cutting down government expenditures and reviewing other means of generating revenue. The government should after 2018 elections focus on reducing its expenditures by reducing the size of the army through demobilization and integration, reducing the size of its ministries, reducing its embassies to only those that are of high importance to us., reducing foreign travels for its senior staffs, and more importantly , fight corruption in action than in words. The government should also avoid by all cost purchase of luxurious vehicles for its senior staffs, vehicles like V8 are very expensive in buying and maintenance. By doing so, enormous revenue could remain in our treasury necessary for meeting other expenditures.
- Adapting stringent system that ensures accountability and favors transparency. All ministries should have financial systems and approved budgets, in that regards, expenditures should only be as per the approved budget lines. It should be noted that systems are implemented by people , as such , the likes of current bank governor and minister of finance should be removed and replace with people who would stick to financial regulations but not those who would be busy looting and depleting government treasury .
- Exploring other sources of revenues other than oil. our government should embark on exploring other means of generating revenue such as extraction of gold in Eastern Equatoria , exporting of teak that is in Western Equatoria , exporting meat from our castles to countries that do not have enough of it , establishing agricultural schemes that uses irrigation and that are funded and owned by government as government parastatals , reviving major government projects such Simsim factory at Eastern Lakes state , Nzara cotton farm among many other ventures. All that the government has to do is to prioritize and then achieve the results.
In conclusion , it should be noted that there is no permanent friend nor enemy in politics, the same applies to common man , citizens do not mine who is ruling them regardless of the time he/she spend in power , all that they care are matters that affects their daily economic activities . For example, Gadhafi became president of Libya in 1969 and ruled up to 2011 when he was ousted by Western powers on economic grounds.
I, therefore, call upon the presidency to wake up and listen to voices of its people, the tendency of relying on politicians for economic solutions is misleading and ought to be stopped if good relations with citizens are to be maintained. As I said above, we economists do advice and it is usually upon the government of the day to either consider that advice and succeed or ignore it and later regrets (we wish we have heeded the advice).
The writer is South Sudanese Economist who lives in Juba and can be reached via: Bullen Bol <bullenbolm@gmail.com>
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