Can the Oil Rent Buy Peace for South Sudan?
5 min readBy Paul Logali, Logali House, Juba
November 18, 2016 (SSB) — In my attempt to answer this question, I went through the marketing report 2014-2015 of the Ministry of Petroleum for clues. Indeed, there’s a lot of positive things in it, including their recommendation for economic diversification away from oil dependency, ostensibly, current wells are estimated to run dry in 2035 unless further explorations are done and Jonglei blocs begin to lactate.
To understand what is at stake here, picture the case of a child who is seriously sick and admitted at the high dependency unit. The medical attendant will only allow the parents to be by the bed side – by right, the siblings will wait outside until the patient is out of danger. It’s the parent’s responsibility to make sure that the best doctors are in attendance, prescriptions are brought and administered on time until their child has recuperated and is discharged with a clean bill of health.
With the same measure, the issue of economic diversification away from oil dependency needs to be handled as an urgent imperative by the highest office in the land to avert fatalities and this office has the responsibility to consider establishing an economic diversification council to oversee the implementation of this program and equip such body with a non-compromised budget and competent technocrats recruited without bias considerations to do the job.
Good enough, in 2009 the Ministry of Commerce, Industry and Investment jointly with the World bank co-funded a project dubbed as FICSS (fostering innovation and competitiveness in South Sudan) whose objective was to provide the leadership and investors with the best courses of action to pursue to achieve rapid economic transformation in the country. After 18 months of wider public and private sectors consultations all over the previous 10 states, the FICSS report was validated by all its stakeholders and the following key sectors were prioritized: grains and cereals, livestock, high value fruits and vegetables, fisheries and tropical wood for the reasons below:
- Can be achieved in the short term (2-4) years
- Skills already exist that only requires upgrading
- Spreads out across the breadth and width of the land giving all citizens from all the four corners the opportunity to become productive
- Less capital intensive
- Provides food security
- Offers value addition and value chain opportunities
- Brings forex through export
FICSS didn’t only stop at that, it also considered the higher forms of capital, (human, culture and knowledge) and provided the road map, the stakeholders, the investments required for specialized institutions, and infrastructure and all the possible partnerships. It only lost momentum when the oil was shut down in 2012 and came to a complete halt with the crisis of December 2013.
Unfortunately, the oil rent is limited to serve many masters at the same time- a real quagmire situation. It’s understood that the government is making progress to increase oil production from the current 168,000 Mbbl/d to about 200,000 Mbbl/d next year and even more, since the potential is there, with the hope that when the oil prices go up above the $ 65 mark per bbl, as anticipated, there will be enough to silence the cramps in people’s stomachs which will lead to peace.
But as we’re waiting for that to happen, there’s need to address the issue of the big elephant in the living room of the oil industry. For easy interpretation, let’s visualize the oil as a cow. A cow will give us milk so long as it healthy and producing calves; but we can receive more milk if we choose to feed it well. We can still get even more milk from the same cow if we cross breed with Holstein. More milk will translate to good health, good relations and enough to share with others in need.
But if we choose to over rely on one cow and be complacent, then, the yield will diminish as the cow grows old, there will not be enough milk to share, the children will begin to grumble, and conflict will ensue even after the cow is dead.
I know it’s easy to assume that increased oil rent can bring peace but the truth is, if we don’t diversify the oil rent to run the engines of the other sectors of the economy and build specialized infrastructure and institutions, we will live with the Dutch disease all our lives. If we don’t save some of the oil rent for posterity, we will not be like the tigers of the Far East until thy kingdom come.
If we don’t invest in education of your young ones, we will trail the five other EAC members as they march towards middle income status, like a tail which never catches up with the head. If we don’t change our mindsets on dependency and around ownership of resources and sharing, we will be in perpetual conflict and stagnation as predetermined by the paradox of the Sub Saharan African countries with the greatest natural assets.
According to Simon Bolivar, good judgment comes from experience, and experience comes from poor judgment. Therefore, if we accept to learn from our mistakes, and choose to do things differently, we can become proud of our oil the same way Botswana cherishes their diamonds or Rwanda their success in investments made in building their human & knowledge resource capital.
All we are asking is for our leaders to own up to their responsibilities towards the citizens and show determination and resolve to iron out their differences and help us get back on the bandwagon of progress and high achievements.
You can reach the author, Paul Logali of Logali House, via his email: paullogali9@gmail.com
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