Stop Escape-Goating Hon. Salvatore Garang Mabior for Systemic Failures in South Sudan
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By Abit Kuir Abit, Kabarak, Kenya
Sunday, August 30, 2020 (PW) — The current economic stagnation has been a concern of many critics across the country and from abroad. Some called for the dismissal of either the finance minister or central bank’s governor which in some other perspectives can’t help revive the economy.
The failure of our economy is attributed to many factors which one may not deny the poor economic set up by the finance ministry and the central bank managers but the notion is that, their failure is never a major issue! Many economies have been weakened, shrunk and collapsed with well-defined diversified strategies and proper fiscal and monetary policies in place.
People would ask “Why”? The answer is the positive correlation that exists between the political instability and economic growth in a particular country.
South Sudan gains its independence on 9th July 2011 proceeding the signing of CPA that ended the longest civil war in Africa. In the hope of reaping the fruits of struggle, South Sudan shortly fail short of harmony, tranquility and trust amongst the political figures though some of the major assumptions centers around lust for leadership and power.
Understanding the Macroeconomic factors of economic growth
Economy work best when the key macroeconomic factors are favorable. In underdeveloped countries, South Sudan being one, the key macroeconomic determinants of economic growth include foreign aid, foreign direct investment, fiscal policy, investment, trade, Human-capital development, demographics, monetary policy, natural resources, reforms and geographic, regional, political and financial factors.
With all the above factors, once the political environment is fragile as it is in the republic of South Sudan, the country’s economy suffers a downswing.
The conflict and economic downturn
The conflict that erupted in 2013 contributed majorly the poor performance of our newest and fragile economy. This is simply because as the insecurity increases, the investors found that it was risky for their investments making them withdrew their portfolios in South Sudan’s economy, some withheld their investments, majority of labor force displaced and job cut emanated leading to increase in unemployment rate.
Moreover, poor health services and education facilities within the country making majority of wealth owners sought better health and education abroad (causing a huge unaccounted cash outflows from the economy), local farmers abandoned their subsistence food production and migrated to more urban areas raising the demographic ratios in towns hence high demand for the basic needs (demands determine the prices of the commodities), this in turn caused the rapid inflation in the market.
Moreover, the country has since experienced lower exports compare to what it ships in (outflow higher than the inflows). As a result, the balance of payment has always been at deficit (negative). To save the country’s economy from this situation, it has to borrow to carter for the deficit hence creating debt.
In real sense, South Sudan’s economy has climbed a ladder in areas of human development index, per capita and nominal GDP in the last three years most of which are very promising. (A great achievement)
South Sudan major export affected.
South Sudan pumped 350,000 barrels a day before war broke out in 2013. This level of production has drastically dropped by more than 50 % (approx. 51.4290%) due to the prevailing political situations in the country. Did Central bank governor and finance minister trigger any war? They shouldn’t be blame. The problem is opposition party (SPLM/IO)
Sanctions
According to a study by Neuenkirc and Neumeier (2015) the US and UN economic sanctions had a statistically significant impact on the target country’s economy by reducing GDP growth by more than 2 percent a year. Imposing sanctions on an opponent also affects the economy of the imposing country to some degree. South Sudan’s sanction attributes most to political corruption which is an environment that minister and governor can hardly control. Should we blame them on this? Certainly not
Managerial failures as I have stated earlier, there could be some managerial failures which are supplements to the above key factors that failed our economy. These may include poor structure of the tax base system of the country, lack of oversight over government expenditures, ministerial embezzlement of public money and speculations and arbitration by the commercial banks. It’s not a question of fiscal and monetary policy since both don’t work best at a fragile political situation.
Recommendations
Therefore, a call for Salvatore’s resignation is very idiosyncratic and eccentric, I would advise our able president to bring to the table parties that are still sabotaging the peace, keeping alive the stability and for this matter, the economists, finance strategist and other economic decision makers and stakeholders will bound to help uplift the country’s economy.
In addition, a proper tax base system should be developed to help reduce annual deficit budget and finance ministry to work hand in hand with the auditor general to bring to account corrupt leaders, Revise shareholdings of foreign companies to avoid them pulling cash to their home based countries etc.
Abit Kuir Abit Biar is a fourth year student at Kabarak University School of Business and Economic studies pursuing bachelor’s degree of commerce (BCOM-Finance), he can be reached via the following email addresses: akuir@kabarak.ac.ke or abitkuir@gmail.com
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