From Underdeveloped to Middle Income Country: The Role of Non-Oil Sectors in Transforming Economic Growth in South Sudan

From Underdeveloped to Middle Income Country: The Role of South Sudan Non – Oil Sectors in Transforming the Labor Market and Economic Growth in the Next Decade

By David Ayual Mayom, San Francisco, USA

Friday, July 09, 2021 (PW) — On July 9^th, South Sudanese at home and abroad mark and celebrate the 10^th Anniversary of their country’s independence. It is a critical moment of reflection and evaluation. On this day, many questions are bound to be asked:  As a nation, if anything, what has been achieved? If not, what are the causes and how can they be addressed? Where is the country heading in the next decade? By all objective measures, the first decade of South Sudan’s independence is a lost decade. In all Human Development Indicators (HDI), including health (infant mortality, maternal mortality, and life expectancy), education, and socioeconomic advancement, South Sudan ranks at the bottom of the index.

 Rather than dwelling on the missed opportunities, this piece concentrates on what South Sudan could and ought to be in terms of economic development in the next decade. In other words, the article focuses on the potential economic opportunities. The political dynamic and the ongoing implementation of the Revitalized – Agreement on the Resolution of the Conflict in South Sudan (R-ARCSS) are beyond the scope this work.

 To do this, the author looks at how key sectors of the economy can practically transform South Sudan from underdevelopment to the middle-income economy through domestic and foreign investment. From here, one may ask, “Where do the revenues for investment come from?” The revenue and capital for investment into these sectors come from three main sources: oil & minerals revenues, national tax revenues, and foreign capital/aid.

 Now let us examine how domestic and foreign investment in these key sectors can economically transform South Sudan.

I. Agricultural Sector

1.1 Farming Industry

Given that most of South Sudan‘s agricultural zone is virgin arable land, the first order of business is to enact a clear land act and policy. In the present Transitional Constitution, there is a quandary as to whether the government or people own land. In any case, the most important thing to do is to empower the local people that the land indeed belongs to them, such as communal lands. At same time, it is important to recognize the national government jurisdiction over the federal lands – especially those far flung lands not inhabited by the local communities. This is similar to the control the federal government has on natural resources such as oil and minerals.

The objective is to utilize the peripheral lands and some communal areas through partnership with domestic private companies, foreign firms or state-owned enterprises (SOEs), while establishing mutual and legal understanding that common people need to benefit in term of employment, investment opportunities, provision of services. For example, if a firm is interested in an agricultural tract in a remote area of Western Equatoria State and given  permission to lease or buy the land, it should help with the funding of the development projects such as feeder road, school, or health center. As the firm provides electricity and irrigation water for its own use, local farmers in the area would also benefit from this project by using these services with minimal cost.

Nonetheless, the author is sensitive to the risk of land-grabbing issues by some large Multi-National Enterprises (MNEs) and/or foreign governments in collaboration with home government officials. However, in the case of South Sudan, if foreign investment is transparently implemented using the framework of the South Sudan trade and investment act of 2009 and 2012, it could have great potential to be mutually beneficial endeavor. Not only would this lead to increased food production, hence, GDP growth but it can also give rise to vast employment opportunities. For instance, as an MNE firm embarks on agricultural production and agro-processing, most of the workers (including at the senior level) are likely to be local South Sudanese. Besides being employed, these South Sudanese can also benefit from higher wages than they might have obtained had they worked for domestic firms. Alternatively, if available, the same investment can be undertaken by domestic private companies and/or State – Owned Enterprises (SOEs) to achieve the same goals of employment growth, poverty reduction, and economic growth.

1.2 Animal Husbandry and Related Industries

South Sudan has the highest number of livestock per capita in the world according to the UN Food and Agricultural Organization (FAO). In other words, if one adds up all the cattle, sheep, and goats and divide this by the population of the people in the country there is nearly three livestock per an individual. This is an incredible amount of wealth if some livestock resources were invested into commercial activities. The idea is not to suddenly change the traditional way of life for all the pastoralists, but rather to encourage and help those who are willing to commercialize their wealth into modern beef and dairy industry. This could lead to a breed of new entrepreneurs to start from their own wealth – that is available heads of livestock. Additionally, aspiring entrepreneurs can seek partnership with domestic or foreign investors to start businesses such as ranches, slaughterhouse, canneries, tanneries and dairy product firms. Local entrepreneurs can seek Foreign Direct Investment (FDI) partnership to bring in significant capital investment, expertise, and technical know – how. The government can create an agency, such as, the South Sudan Meat and Dairy Product Commission (SSMDC) to oversee, regulate, and promote the development of beef, dairy, and related products regionally and globally. This development can create remarkable number of jobs and GDP growth

II. Fisheries

Fishery is another vital primary industry for South Sudan, which is currently under-utilized. This is in a stark contrast with other countries in the Great Lakes Region, such as Rwanda, which is restocking lakes and rivers after depletion from overfishing. Not surprisingly, in South Sudan, fishes die of old age. Meanwhile, a significant number of catches are spoiled before they reach the market due to lack of proper roads network and preservation facilities near the fishermen’s zones.

To optimize the production cost of the fishery industry, it is essential to pave feeder roads from the nearest main towns to the fishing sites. Further, investment in efficient delivery means, such as motor boats, can alleviate transportation issues. This would enable fishermen to quickly transport their catches to the market place while still fresh. At the same time, excess catches require processing and preservation facilities. These facilities include freezing, canning, and salting facilities near the fishing sites. The investment on the facilities could be taken up by local companies, foreign firms or SOEs. Consequently, the fishing industry could produce sufficient food for not only domestic consumption but also for regional and international exports. FAO affirms that if “fully developed, fishing could give 80, 000 South Sudanese employment and enough food to eat. In all, fisheries could make South Sudan an estimated half a billion USD a year.”

III. Tourism

In terms of wildlife population, South Sudan rivals the famous Sergenti ecosystem at the border of Kenya and Tanzania. The Wildlife Conservation Society (WCS) admits, “South Sudan boasts some of the most spectacular and important wildlife populations in Africa and supports the world’s second-largest terrestrial wildlife migration of some 1.3 million white-eared kob, tiang antelope, Mongalla gazelle, and reedbuck.” Like Kenya and Tanzania, both of which have tourism as one of their main industries, South Sudan can develop this sector into a formidable one. The initial strategy is to identify suitable tourist attraction sites all over the country, such as, the Buma National Park, varied wildlife refuge areas in Jonglei, among others. In addition, the environmental wonders such as Fulla Water Falls and Sudd areas. Finally, cultural displays and shows, like the beautiful dance of the Acholi tribe is another tourist attraction.

The key role of the government here is to put in place security and infrastructure, including, roads and communication networks, designated national parks, and other necessary services. The government can then encourage the private sector to invest in hospitality businesses around these areas. To attract private capital to this industry, the government can provide lower taxes and subsidies where necessary. In sum, the tourism industry could be an important sector for growth, employment for the South Sudanese nationals, and source of revenue for the central government.

IV. Transportation

The case for investing in transportation as one of the major industries rests with the geographical location of the country. South Sudan is a land-locked nation surrounded by six countries. The countries – Ethiopia, DRC, Kenya, Uganda, Sudan, and CAR – are among the biggest population centers on the continent. The total population of the bordering countries is well over a quarter billion. Therefore, in South Sudan’s case, being landlocked is not a development trap but rather a comparative advantage. South Sudan can tap into this massive population and develop a strong transportation and trade industry around it.

To achieve a middle-income status, the government needs to invest in an interconnected local and regional air, river, road, and railway transportation system that connects all neighboring countries and cements South Sudan as the indispensable transportation-hub of the region. This can generate an incredible amount of revenues from customs, warehouse storage facilities, overall trade activities, and travel. Most importantly, it creates many jobs: airport workers, storage facilities’ workers, custom, and port officials. This is precisely what the land-locked country of Botswana did in her quest for development. After investing in its transportation network, Botswana is now the transportation hub of Southern Africa countries.

For South Sudan, there are blueprints and ongoing regional projects. It is very important the regional governments fulfil promises and complete these existing projects as well as expand into other modes of transport. In particular, if the Northern Corridor Integration Projects (Rwanda, Kenya, South Sudan, and Uganda), LAPSETT, and Tali International Airport are completed, this could effectively revolutionize and optimize regional trade.

V. Education

South Sudan’s education system is in dismal state. From the enrolment of school-age children to the quality of education require major restructuring and substantial improvement. According to the UNICEF, South Sudan had the highest (72%) share of children out of school due to conflict, cultural practices, and other challenges in 2018. Three years later, this number has not changed much. At the secondary and tertiary level, the enrolment is also low, and there is shortage of schools and educational resources, especially in science and technology areas. To put it in perspective, the entire country has only six public universities. In these universities as well as in public secondary schools across the country, science labs, libraries, and computer labs are rare.

New reforms and stipulations in the education system are required if the nation is to prosper. Mandates such as universal primary education for every child, and a pathway for either a traditional secondary school or vocational/technical school are required. This can be implemented by building many permanent primary, secondary, vocational/technical schools across the country to accommodate the increase in student population. At the university level, there is a necessity for special focus on Science, Technology, Engineering, and Mathematics (STEM) education. As many students equipped with technical skills graduate from universities and vocational/technical schools, it creates synergy in the labor. In particular, expanding and improving education system can boost overall national employment, while furnishing the labor market with hard skills and encouraging the inflow of FDI.

VI. Other Oil and Mineral Related Industries

The objective of this paper is to examine the key non-oil and mineral sectors, where South Sudan has a comparative advantage, as potential sources of growth and employment. However, the oil and minerals sector itself is also a potential source of economic diversification and jobs creation. Starting with the oil and minerals sector, there is a necessity for investment on further exploration and geological surveys across the country to confirm the “proven oil reserves” and minerals available for long term planning. Once the oil reserves are proven, a variety of other industries can be developed around the oil sector. These include refineries, petrochemical firms, lube blending, retail outlets, and fertilizer plants. Likewise, for the minerals sector, there are other industries that can be developed around them.

VII. Caveats

Economists use the term ceteris paribus to assume that only variable(s) under consideration change whereas others remain constant. In this case, the author assumes an ideal governing situation where peace, a business – friendly environment, property right regulations, and other factors necessary for domestic and foreign investment emerge in the country. Meanwhile, the only changing variable is the investment and funding in the aforementioned sectors. As stated earlier in the beginning of this piece, the analysis and impact of the country political dynamic are beyond the scope of this work. The writer only intends to recap the economic potential of the country under an ideal political and governance system and institutions.

VIII. Conclusion

As the first decade of independence comes to an end, South Sudanese mark the milestone with little hope but full of pride of having a nation that in future could be turned around for the well-being and prosperity of all citizens. The paper examines the key non-oil and mineral sectors that could practically transform South Sudan from an idle, underdeveloped country to middle-income economy. These sectors are agriculture, fisheries, tourism, transportation, and education. Through a meticulous plan of government funding, private and foreign investment in these sectors, the nation could realize unprecedented employment and economic growth, and certainly transform forever.

The author, David Ayual Mayom, holds a Master of Science in International and Development Economics. He is currently the managing director of an NGO, South Sudan STEM (science, technology, engineering, and mathematics) Initiative. He is a former lecturer of economics at Upper Nile University, Juba, and a former World Bank Research Consultant, and can be reached via his email: dvdmayom@gmail.com

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