Archive for the ‘Garang Atem’ Category


By Garang Atem Ayiik, Nairobi, Kenya

Fighting in South Sudan

Fighting in South Sudan

October 8, 2017 (SSB) — “Why Nations Fail” provides a very useful insight to understand the ongoing political intrigues in the east African region and what it may mean for the future of the region. The authors, Daron Acemoglu of MIT, and political scientist and economist James Robinson of Harvard University adopted a historical and comparative analysis approach to explaining why countries have different levels of wealth. In their analysis of data across countries and continents for over four hundred years, they found “institutions” as the main cause for inequalities across countries and continents.

In Kenya, the annulled presidential results of 8 August 2017 election put back to the campaign trail the main contenders for the Presidency. While the incumbent, President Uhuru is on a full-blown nationwide campaign, his main challenger, Raila Odinga is on a periodic two-day weekly protest in search for a reform within the electoral body. Evidence of unstable electoral institution.

In Rwanda, a constitutional provision for a presidential term limit has been removed potentially to give way for continuity of President Paul Kagame’s rule. In Uganda, members of parliament allied to the ruling party (National Resistance Movement) are processing an amendment to remove presidential age limit requirement. This is assumed to give room for President Museveni’s life rule who might not contest in accordance with the constitution if no amendment is made. Institutions correlate with rulers, they are not for society’s prosperity but for leader’s prosperity.

(more…)

Advertisements

By Garang Atem Ayiik (Gatem), Nairobi, Kenya

This slideshow requires JavaScript.

January 18, 2017 (SSB) — This week, H.E President Salva Kiir issued a decree relieving top officials in central bank of South Sudan and appointing a new governor and his deputy. As expected, the President is concerned about hyper-inflation that is causing misery to citizens.

Author of this article believe that strong institutions, manned by strong people, play complementary role in meeting an institutional goals.

Without significant changes to central bank’s operation; so long as a central bank remain as an ATM of executive, so long technical staffs’ capacities are not enhanced, recent changes in central bank can be analogized to “changing monkeys on trees, but leaving the forest intact.”

On central bank governance, economists agreed that a good central bank is built on three pillars – independence, accountability and transparency. Any form of governance adopted by a central bank, has an impact on achieving its main objective of macroeconomic stability.

(more…)


By Gabriel Garang Atem, Juba, South Sudan

BoSS1

May 10, 2016 (SSB)  —  Within the EAC, central bank governors in Uganda, Kenya, and Tanzania hold PhDs in economics with impressive academic and professional experiences in managing economic systems. The academic and professional details of central bank governors of Congo and South Sudan were not available on their banks’ websites.

The governor for National Bank of Rwanda has an MBA. He oversaw the elaboration and implementation of Rwanda’s 1st Economic Development and Poverty Reduction Strategy (EDPRS I) under which Rwanda was able to reduce poverty by 12% in 5 years (2006-2011). This exceptional contribution justifies his current role as governor.

South Sudan recently joined the EAC, a process that has left the country divided – on whether it was right or wrong. The proponents for joining the EAC argued that capacity building and learning by seeing were some of the benefits that will accrue to South Sudan.

(more…)


By Garang Atem Ayiik, Juba, South Sudan

Governor Agwer Panyang

The newly appointed governor of Jonglei state, Col. Philip Agwer Panyang, with Defense Minister Gen. Kuol Manyang Juuk and Information Minister Michael Makwei Lueth in Bor, Jonglei state

Introduction 

January 4, 2015 (SSB) — On the eve of Christmas day 25, December 2015, the President of the Republic of South Sudan issued an order that appointed new Governors of 28 states. The creation of 28 states has divided citizens of South Sudan.

With many looking at it as ethnic federalism bulldozed without due diligence on its economic and unity of the people; while others thought this creation should have been subjected to consultative processes and while majority believed it is a fulfillment of Dr. John Garang’s idea of taking towns to the people.

Criteria to create states would have been defined first; states with defined borders proposed and subjected to citizens’ discussions; and finally to legislative approvals.

(more…)


Welcome 2016 economy to South Sudan with your placards of 28 states, peace and devaluation of pound

By Garang Atem Ayiik, Juba, South Sudan

salary

salary

Introduction

December 31, 2015 (SSB) — War started in December 2013, it last for 2 years caused by power struggle within the ruling party SPLM between His Excellency, President Salva Kiir, the chairman of the party and his deputy in SPLM Dr. Riek. IGAD mediated peace was signed late in 2015 and expected to be implemented in 2016.

Ministry of Finance and Economic Planning and Central Bank of South Sudan devalued pound from 3.16 to about 16.5 SSP per a dollar, a huge loss of pound’s value.

In Christmas eve, the President appointed governors to rule 28 states that he has created from10 states with objection from his peace’s partners and other citizens who sees a bad link with the economy. The authors of this article falls in the latter group.

(more…)


By Garang Atem Ayiik, Juba, South Sudan

salary

salary

Introduction

July 5, 2015 (SSB)  —  In democratic societies, budget has become a very important tool through which the government identify macroeconomic risks, identify priorities and suggest how to address identified macroeconomic and budget risks.

Budget can be define as process in which private and public entities estimates their resources envelops, and identify activities to be financed in accordance with defined objectives and developed oversight functions to reduce revenue leakages or unnecessary expenditures.

To ensure comparability, budget is done annually to allow year-on- year comparison, for South Sudan budget cycle is July-June; in most countries budget is a people-centered exercise, in South Sudan, budget was presented on 1st July 2015 which theoretically, is the effective date leaving no room for public participation either by legislative function and public.

(more…)


Garang Atem Ayiik, Juba, South Sudan

Your need food, seriously?

Your need food, seriously?

June 26, 2015 (SSB) — There are risks between the seller and buyer; if an importer pays before delivery of goods or services, there is an exposure of non-delivery by exporter, and if exporter delivers before payment, there is an exposure of non-payment by the buyer/importer.

In respond to this exposure, the International Chamber of Commerce in 1933 developed rules; and issuance of letter of credits under the International Chamber of Commerce Uniform Customs and Practice for Documentary Credits. These rules have been updated and standardized as time goes and utilized by bankers and commercial parties many countries around the world.

(more…)


By Garang Atem Ayiik, Juba, South Sudan

Can South Sudan export its currency to other nations?

Can South Sudan export its currency to other nations as said by Vice President Wani Igga?

Introduction

April 27, 2015 (SSB)  —-    In November 2013, Central Bank of South Sudan devalued pound from 3.16 to 4.5 SSP per a dollar. An action that was described by the governor as meant to unite the black and official rates. Immediately, prices reacted immediately by increasing prices or other hoarded goods mostly fuel.

There was outcry from the public in reaction to devaluation. The governor of Central Bank and his team was mobbed-justice and immediately asked to rescind devaluation policy. Two lessons were immediately visible; one, that an outright devaluation is likely to cause readjustment prices – goods and black market rate upward; and second, by encroaching on Central Bank independent policy decision, despite the intention, role of Central Bank as per Bank Central Bank Act 2012 was comprised by parliament.

Immediately after independent, South Sudan adopted fixed exchange rate. Around August 2011, the Bank tried to auctioned dollars to banks and bureaus, this action caused gap between black and official rate to narrow. The author believe this was a good initiative to introduce some competitive element into exchange rate risk free business.

Toward the end of 2011, Central Bank adopted an equal allocation mechanism of dollars to banks and bureaus. This mechanism has two inequity issues to financial agents; it ignore the clients base serviced by each bank or bureau, a bank with for instance 2500 customers is given the same allocation with a bank with 5000 customers; and provide incentives for growth of shallow financial institutions – banks and bureaus.

To the public, fixed rate has three short comings; increase rent seeking through allocation and licensing, distributives injustices in term of access at official rate; and finally provide an obligation to Central Bank to maintain fixed exchange rate disregarding inflows of dollars as the case now with South Sudan. Black market has increased from 3.16 to about 9.5 SSP at end of Q1, 2015

South Sudan Exchange Rate Fundamentals and Policy Option

Exchange rate policy has two main objectives; international competitive and macroeconomic stability. Devaluation of November 2013 in part was expected to increase exports in accordance with textbook economic prescriptions.

This argument to increase South Sudan export ignores structural challenges facing South Sudan like insecurity, infrastructures, technology, capital, entrepreneurship, institutions and attitude weakness.

South Sudan export sector cannot be induced with exchange rate incentives but instead with local production for consumption supported by fiscal policies is preferable – import substitution policies, this will gradually reduce demand for imports and by extension for dollars.

It is author believes only macroeconomic stability can be achieved with exchange rate policy. Currently fix exchange rate is better than float rate. But again, as it is, it is not sustainable. Can government supply demanded dollars to the market at 3.16 SSP? It is a No and hence author believe a trade-off between macroeconomic stability and sustainable is required.

Stability means government supply dollars required by the market, if this happens, inflation will be low as South Sudan is an import country which easily affected by exchange rate induced inflation. Sustainability means government supplying enough dollars to the market to keep exchange rate at 3.16 SSP without fail.

Author believe Central Bank needs correct data on dollars demand and supply. Scan of 2011 – 2015 supply to the market does not follow any trend but ad hoc behavior that seems to depend on availability of dollars within the Bank. To make economic decision without data is like to walk in a dark room.

Auctioning dollars is sure policy option. First, this will allow shallow financial institutions to wither slowly otherwise these are future financial disaster, second, will allow pound to depreciate gradually allowing economic agents to adjust; and thirdly, provide window to Central Bank to manage sustainability by supply dollars it can afford and difference will be reflected in depreciating pound, fourth, auctioning will introduce a competition between financial bureaus and banks and this will reduce gap between official and black market rate.

In this proposal, banks and bureaus will always compete for available dollars, Central Bank will always give previous trading rate average and band at which these agents will bid. This will ensure depreciating difference goes to the government instead to individuals.

Overall, an option that will introduce some competition at official rate window where dollars are access but with some band on the rate at which dollars can be sold to the public by banks and bureaus, this will ensure stability.

Finally, the fact that Central Bank can always supply dollars that it can afford and any difference can be reflected in pound value ensures sustainability. But again, with stability as key exchange rate policy objective, when possible the Bank can always provide more to ensure a strong pound.

Despite all above proposal, import substitution production must be pursued vigorously and fiscal policies can be used to support this policy path. Again, coordination between policy makers is require within the framework of national plan.

Can South Sudan Export Pound

With current fix rate, interruption of production in Unity and Tharjath and diving oil price in the World market, Central Bank has come under pressure to supply dollars demanded by the market to keep the rate at 3.16 SSP. This demonstrates that fix rate is not sustainable.

The exchange rate in the black market has deteriorated in the black market to reflect probably insufficient dollars supply by the Bank and maybe risk-mitigation behaviors by economic agents by stocking dollars in anticipation of working pound. If things continue the way they are, government might surrender to protect the pound, this the sustainability we are talking about.

Desperate times calls for desperate actions. Recently, the government has increase policing the markets. Some suggestion includes calling Uganda, Kenya, Ethiopia and other neighboring countries to start using pound to reduce demand for dollars.

Whether it is ignorant or public relation exercise, this latest approach is not going to work. Today in South Sudan, if you go to a bank and you want to send money to Uganda or Kenya, you can’t use pounds, you got to get dollars. This means even within South Sudan borders, pound is not a legal entity.

Economic agents acting rationally know that pound has been over-valued and for illustration purposes, assume, Machok has $100 to send to Uganda, if Kenya Commercial Bank allows Machok to send 316 SSP being the value of pound, KCB will not use the same amount to get the same amount but less and that is why it can’t accept to sell its asset below it market value.

Economically speaking, calls to ask Kenya, Uganda, Ethiopia and other countries are misplace and laughable as this is not supported by any economic reasoning. Countries’ currencies become convertible on two counts: one, both currencies must be fairly valued. If anyis not correctly value, market correct this through arbitrage; and second, both must be trading with each other, this means exports and imports exist between both countries.

In case of South Sudan, pound is artificially keep over-valued through a fix rate; and South Sudan does not export anything to its neighbors whether Kenya, Uganda, Ethiopia or any of its neighbors and hence these countries don’t need South Sudan pound.

So how will the proposed push for pound utilization in neighboring countries work? Assuming the policy makers of these countries act rationally in the interest of their countries which authors believe they will.

If South Sudan Central Bank give them pounds in exchange for their currencies, they know South Sudan pound is over-valued, why will they accept? I mean they cannot convert those pounds to other assets like dollars without losing value of their money and they have nothing to buy from South Sudan to use those pounds.

Worst the citizens in these countries will not go to their Central Bank to buy South Sudan because they too know about the valuation problem. For instance, a Kenya citizen will instead convert his Kenya Shillings into dollars and come to South Sudan with dollars. He/she then sell dollars at higher rate in the black market than buying over-valued pound in Kenya with his Kenya shillings.

The proposal does not consider arbitrage, rationality behavior, and simple demand and supply. It is basically unworkable and waste of time to pursue unless South Sudan believes policy makers are going to behave irrationally disregarding economic fundamentals which the author doubt.

Conclusion

South Sudan cannot export pound. The more South Sudan wants to pursue this option, the more it looks vague and empty without rigor. South Sudan exchange problem require long term surgical operation, no economic pain-killers will want.

In short run, peace to restore oil production in Tharjath and Unity which will increase inflows of dollars to easy pressure on pound is key otherwise, without peace exchange rate induced inflation will continue to surge beyond imagination.

In the long run, structural economic correction required. Basically increasing local production and improve social services with an aim to reduce demand for dollars for imports. South Sudan needs to concentrate on imports substitutions supported by fiscal policies and this has to do be done within national economic plan framework.

Garang Atem Ayiik is an independent economic commentator. He can be reached at garangatemayiik@gmail.com

The opinion expressed here is solely the view of the writer. The veracity of any claim made are the responsibility of the author, not PaanLuel Wël: South Sudanese Bloggers (SSB) website. If you want to submit an opinion article or news analysis, please email it to paanluel2011@gmail.com. SSB do reserve the right to edit material before publication. Please include your full name, email address and the country you are writing from.

By Garang Atem Ayiik, Juba, South Sudan

Garang Atem Ayiik: Looking into, trying to figuring out, the economic future of South Sudan?

Garang Atem Ayiik: Looking into, trying to figuring out, the economic future of South Sudan

Introduction

April 13, 2015 (SSB)  —  Since 15 December 2013, guns have been unleashed terminating and threatening lives of many. Unarmed enemy which is economic has been too unleashed, but the sound and impact has been hidden.

But economic indicators have now reared its bad head to the citizens, government, private sector or/and even armed opposition. Whether in town or in the bush, economic challenges are real bullet that majority will feel.

In urban centers, dollar is now selling about 160% above the official rate; exchange rate driven inflation rate has surged as South Sudan is an import nation; business has slowed down; firms are laying off staffs and no new jobs opening; government coffers are drying, forcing government to run around with a begging bowl or/and loan request forms.

In rural areas, pictures of women harvesting water lilies for food is already in circulation. UN agencies have announced imminent hunger as war has interrupted subsistence farming in rural areas.

It seems to me every economic actor is expose, with nowhere to hide. This is like great depression of 1929, though South Sudan case is man-induced depression and can be resolved by man. If no actions is taken, the consequences might be very ugly.

South Sudan deteriorating economic environment has been magnify by undiversified economy that relies on oil, whose price has dived by half since late last year in the world market; second, inefficient public resources mobilization and allocation; and third, war that broke out in December 2013 that led to stoppage of production in Tharjath and Unity oilfields reducing production volume and revenue by nearly half.

In this article, I tried to identify key economic challenges; impact on various economic agents; and finally I tried to explore possible policy options for the government.

Economic actors, challenges and possible options

In discussing challenges facing South Sudan economy, the question was no longer about how did South Sudan got itself into an economic pit but what challenges South Sudan economic actors are likely to face in navigating this economic down turn; and what policy options and lessons can South Sudan learn from these challenges.

I think there are three possible policy options from an economic perspective that the government can pursue in living within current economic realities.

One, find ways to compensate loss revenue due to shutdown of production in Unity and Tharjath, and due dive in oil prices in the world market. Second, pursue cost reduction strategies; and finally institutional reforms to minimize leakages and wastage in the public sector.

Increasing revenue is the most preferable option. There are many approaches that government can adopt in pursuing this option.

Firstly, the government can explore local revenue mobilization options. This entails possible increase in taxes – personal and corporate taxes, this is an attractive option as South Sudan tax rates are below East Africa Countries’ rates and hence easily justifiable to increase tax rates, fees, customs, tariffs and other government’s revenue streams.

However, this option become untenable on three accounts: namely non-oil revenue contribution to government coffers is insignificant and any effort to increase revenue is not a game change with regards to revenue increase; second, firms and individuals are already facing grave economic challenges resulting from exchange rate driven inflation.

To increase taxes is to add salt to firms and households injuries’; and finally, with a lot of inefficiencies in public revenues collection, overall, this might not lead to huge financial impact to government but maybe to few rogue public officers. But again will increase misery to the masses.

The other easy option is to take loans from private sector mostly from oil companies and banks as soft target. But again, the oil companies are hit hard by diving oil prices, and shutdown of Unity and Tharjath oilfields.

The government has not honored payments of loans it took from banks in local market in previous years. Maybe, now the government is not in good books of the banks. From these accounts it is difficult to get local loans from oil companies and banks and hence this is not an easy option.

In pursuing revenue increase, government can continue with its public debt push in international markets. This option is likely to complicate future economic management. It is like selling oil underground very cheaply. Considering despair, rigor around their acquisitions and cost of servicing them. But only viable in short run but a true mortgaging of the future.

It is importance to note that East Africa Community has ceiling of public debt as percentage of GDP. With ongoing acquisition of loans, government got to monitor it as this might affect South Sudan’s admission into the community. EAC might not continue to turn a blind eye to underlying risks in admitting South Sudan into the community.

Another possible source of increasing revenues are from NGOs, development partners and friendly nations though development and humanitarian budget but it seem their assistance are peg on attaining peace, again this sound like black-mailing South Sudan but again what better option does South Sudan has?

With withering revenues, government needs to create a working relationship with NGOs and development partners with an eye on supporting the misery masses in the camps, IDPs and rural areas. There is no time for chest-thumping and imaginary unsustainable African man-hood, economic challenges will be dehorning, and South Sudan better know this early.

In very desperate time, government can print money. This is the highest level of economic management bankruptcy. Because printing money means putting a lot of money in circulation that is not supported by any assets. With already exchange rate induced-inflation, if government print money, inflation rate will surge to level beyond imagination, it is not a path responsible government can contemplate.

The second policy option is to reduce cost. This can be achieved by tirelessly and faithfully pursuing peace option. Even before war, government has always allocated huge budget to security sector and this increased with rebellion in December 2013. If peace is achieved, the security budget can come down, but this is not absolute due to expected increase of army from rebel numbers. But the sure thing is that government can put back oil in pipelines in shutdown oilfields hence increasing its revenues if peace is signed.

Other ways government can reduce its cost is implementing austerity measures. This must consider priority and necessity. This is an area where government can save money by reducing ministries, allowances for constitutional office holders, other expenses like business trips and even at high level, including executives taking pay cut.

Though this make sense economically, it might not be politically correct and only courageous government can choose this path.

Jump-starting the economy of South Sudan?

Jump-starting the economy of South Sudan?

Again, if peace is achieved, those agencies, countries and individuals that peg their assistance on peace will be willing to help South Sudan. It is importance to stress that government as the care-taker of the people and regulator of private sector has constitutional mandate for thriving and cohesive nation. This is why government actions must and should differ with those of the rebels in pursuing peace.

Finally, the last option for the government is to reform its institutions to reduce wastage and linkages. Taking into consideration the fact that these institutions are taking long to improve, it is a wishful thinking to believe these institutions can be reform within short time to help in public revenue generation and management to curb already threatening economic collapse.

The President in his recent Speech on SPLM public rally, called for improvement in local revenues generation. Though the President didn’t mentioned any specific reforms, he further caution the public that fixing the economic will not happen overnight. Probably a confirmation of long walk in reforming public sector and the reason why this is not the easy fix option for the current crisis.

From the foregoing analysis, first, revenue increase is not attainable, except when peace is signed, and oil is put back in the pipelines in Unity and Tharjath; second, cost reduction can only happen when peace is signed but this is not absolute as rebels are expected to come with huge army but again, there are gains that can offset this cost.

Signing peace restore oil production and goodwill of development partners and international community, a benefit that might offset with additional cost from expected huge rebel army; and, finally institution reforms to stamp out wastages and leakages, is not attainable with current public service cadres but again, even if it was achievable, it will not assist in address this crisis in the short run.

As care-taker of the people and regulator of private sector, government got to support firms and households from live-threatening inflation, pound depreciation and hunger. It seems to me with its current revenues envelop, the government is helpless and that is why peace is the only viable option to insulate from imminent economic collapse.

Many analysts and advisors look at devaluation of pound as an option to merge black market with official rate but this is big nonsense as this will not address key issue of supply which is always less than demand at official rate.
Dollars access at official rate are not enough, many businessmen have now increased their prices to reflect black market prices. What option does the government, nothing more than peace.

Firms are in declining economy, their expected rational behavior is to cut back on investment, and lay off staffs all these reduces money in the pockets of individual and government. This accelerate contraction in the economy and increase misery to public.

As it stands now, South Sudan is facing dangerous economic outlook. It is high time South Sudanese academic, civil society, media and professional citizens take responsibility by highlighting the dangerous a head, encourage both sides to the conflict to compromise for the sake of the people and the nation.

The Vulnerability is not only internal, already Sudan is taking advantage in Abyei and bombing South Sudan territories, Kenya is eyeing Ilemi triangle. Uganda is thinking on encroaching on part of Central Equatoria and Sudan is doing something similar with South Sudan’s undefined borders. Exposure is not only in economic but in so many aspects which is going to affect South Sudan negatively. No wonder they say unity is strength.

Conclusion and recommendations

The government has tough choices make, resolving challenges ahead require unusual wisdom and courage. Government with mandate to take care of the people and private sector, got to think beyond constitutionality but about human concern. Both government and rebel must put the interests of their subjects above their interest.

With all the wisdom and witty human brain, South Sudan options are not many. Only limited to peace or a military win within a blink of an eye but again with world holding Cessation of Hostilities (CoH) before the eyes of warring parties and crime against humanity behind CoH, war is not without exposure too.
So we know the road, peace, military win or economic collapse. The citizens can watch as both parties take decisions.

Garang Atem Ayiik is an independent economic commentator and can be reached garangatemayiik@gmail.com.

The opinion expressed here is solely the view of the writer. The veracity of any claim made are the responsibility of the author, not PaanLuel Wël: South Sudanese Bloggers (SSB) website. If you want to submit an opinion article or news analysis, please email it to paanluel2011@gmail.com. SSB do reserve the right to edit material before publication. Please include your full name, email address and the country you are writing from.

By Garang Atem Ayiik, Juba

South Sudan's coat of arms, in which the eagle symbolizes vision, strength, resilience and majesty, and the shield and spear the people’s resolve to protect the sovereignty of their republic and work hard to feed it.

South Sudan’s coat of arms, in which the eagle symbolizes vision, strength, resilience and majesty, and the shield and spear the people’s resolve to protect the sovereignty of their republic and work hard to feed it.

March 4, 2015 (SSB) —Today, 3 March 2015, as hope hangs in peace talks in Addis-Ababa between warring SPLMs to put South Sudan back on peace trajectory, International Growth Center sponsored a 2 hours lecture in Crown hotel by Prof. Barbara from Columbia University.

The lecture centered on challenges facing South Sudan Public Service since independent in July 2011; provides comparative experiences of other countries; and suggested possible policy options base on public service realities and context of South Sudan.

The seminar was timely in the sense that it provided participants opportunity to reflect on the past, present and future. It was a period of reflection and in fact, time for despair and hopelessness, though chair Dr. Luka tried to restore hope by zooming in pieces of achievements in public service, the conclusion was that professionalizing public services is another mountain to climb.

As always, some participants tried to justify lack competency and services delivery with old phrase of ‘young nation’ and we have to crawl first. The reason why South Sudan will never grow old or crawl from Public Service performance can be view from three-perspectives.

First, the system is crowded with retarded Arabic oriented employees, and with English language as medium of communication after independence, ability of these employees to learn and deliver has been disable.

Secondly, many officers incivil service were deployed from army with little emphasis on their educational background, experience and ability to perform in Public Services. With possible background in liberation or integration from other armed groups, provided this group with comparative advantage to occupy mid and high level positions within Public Services their qualifications and experiences notwithstanding.

Thirdly, employment recruitment process has not been transparent. Access to employment opportunities are based on what Chinua Achebe called ‘whom you know not what you know’. This further, together with poor incentives prevent entrance of many young graduates that would blend the already existing rot in public service.

In 2011, I did a quick check of 33 graduates from my former University and not more than 5 were working for the government. Illustrating either government has closed its employment doors or it employment was not attractive.

Attempt has been made to do some reforms within public services, but from the seminar, it seem there were/are resistance from within. Obviously, the above early retarded-comers will not give way easily. Whether it is e-payroll, without right ability to put in place controls, management can over-run as accountants will like to call.

At some point, participants noted that reform program that was being headed by Madam Awut hit a wall when it was met with internal resistance. What is visible in public service is a system occupy by retarded, incompetent and any attempt to reforms will be resisted.

More worrying were numbers shown by Prof Barbara showing large spending in security with minimum non-revenue income. To put these numbers in context, Peter Biar, South Sudanese economist said oil as finite resource is projected to deplete in 2017. If oil get depleted, where will South Sudan finance its public sector he asked?

With this background in mind, it seem South Sudan is trapped in bloated, and ineffective public service. How will South Sudan gets out of this mess? From it early experience, negotiation ongoing in Addis-Ababa will not improve public service capacity. If anything, ability of public service will be compromise further, as new additional army come in, additional funding will be required. This will stretch resources’ envelop further.

In economic, human capital is crucial factor of production. Current peace negotiations might provide peace but will it enhance public service capacity? In this regards, there is need to look at problems in public services with more concern, care and where necessary pressure.

To bring peace and ignore public service is to cordons mismanagement

• There is need to have a structured negotiation on reforming public service. This negotiation must seek to professionalize South Sudan public services. What if stakeholders discuss and agree on key reforms within public services?

• Young South Sudanese must be given professional space in public service. Today, there are many young South Sudanese running the show in private sector. Why not retrench the retarded, and ineffective and replace them with young South Sudanese professional. If it is lack of money, can we get money from the budget or through other incentives mechanisms?

• As suggested by Peter Biar in the seminar, can South Sudan have two extremes?We can agreed to have an effective public service and ineffective army. In other words, transfer all unproductive civil servants to the army and professionalized the public services. It is harsh position but a call to do something with state of public service.

• South Sudan needs to create a link between research institutions, Universities and policy makers. Working in isolation, diminish synergy. Solution better be made in Juba and that is why preference treatment should be given to South Sudanese including those in diaspora.

• Establish a culture of performance base management. If everyone has job description, there is no reason why every employee cannot be held accountable for his duties. It is outdated to promote on age and years of services instead of content and delivery. South Sudan should know the world.

• There is need to improve the role of oversight institutions to reduce patronage, nepotism and bribery within public sector.

Garang Atem Ayiik is an independent economic commentator on South Sudan economic policy. He can be reached at garangatemayiik@gmail.com

The opinion expressed here is solely the view of the writer. The veracity of any claim made are the responsibility of the author, not PaanLuel Wël: South Sudanese Bloggers (SSB) website. If you want to submit an opinion article or news analysis, please email it to paanluel2011@gmail.com. SSB do reserve the right to edit material before publication. Please include your full name, email address and the country you are writing from.

Man U vs Arsenal Dueling: Lessons for Business Executives

Posted: November 25, 2014 by PaanLuel Wël in Garang Atem

By Garang Atem Ayiik, Juba

It seems Arsenal were going to win, controlling first half by 56% with strong lines of defend and mid-field. There were every signal that Arsenal was going to take home 3 points and improves it rating in the league.

Then came own-goal from Arsenal and an injury from Arsenal critical defender, these and probably second half tactics from Man U technical bench change comparative advantage of winning in favor of Man U.

Such scenarios play out in real business world. This game provides some lessons for leaders running business in a globalized world.

It is not over till done – Business environment are dynamic, today, if it is not exchange rate volatility, it is corrupt and bureaucratic system, multiple check points, arbitrary tax regime or favored incentives. Such unforeseen draw-back like Arsenal injury have a similar impact of changing business leadership.

Business own goal – Imagine a business run by incompetent executive who does know where to kick a ball; a leader who does not know his business defend lines. It is crucial to know that creating wealth for shareholders is sole aim of management – in world of capitalism. If business executive do not know this, he can scores own – goal in favor of his opponents.

Client is the king – Man U and its technical bench were concern delivering a win, this has two fold aims – contractual performance to its shareholders, and to please its fans – base. The losers, dinned in agony and annoyance including possible financial impact to shareholders. Business leaders must at all times have the interests of their various constituents at heart.

Planning and resource utilization – Business executive must plan, as there is injury in football, in business, there is a resignation; As there are strikers, mid-fielders, goalkeepers and defenders, equally in business, there are people who do various roles. Good business leaders must be forward looking and ensure all roles are planned for accordingly including providing for injuries.

It is the team that wins – It is important to assembly a right team, a business needs right chief executive, finance guru, marketing and procurement…….etc. As evidenced by excitement to Man U and its fans, it is a team that wins including Man U noisy and half- dressed fan who was sitting with us in Ocean Hotel during the match.


By Garang Atem Ayiik

Sections of the media reported that former Vice President of South Sudan, Dr Riek went to Khartoum to solicit support for his rebel movement and chief rebel negotiator, Taban Deng was in Heglig directing last week offenses against government’s positions in Bentiu.

This week, his Excellency President Salva Kiir returned from Khartoum after a two-days working visit to Khartoum. The two presidents of the Sudan are reported to have agreed to resolve the outstanding security issues; stop support and harbor rebels from both countries besides; agreed to form a joint committee to seek to cancel Sudan’s foreign debts; and agreed on administration of Abyei.

Between the lines however, there are issues that required detailed attention. As President plans to visit Sudan, two things happened, an onslaught on government’s positions in Bentiu and an air bombardment in Bar-ghazel area; and second increase allegations of diplomatic muscle of rebels in Khartoum by Dr. Riek and Taban Deng to muscle support for their movement.

Why would Khartoum show signs of working with the government of the Republic of South Sudan and at the same time with the rebels? Where does Sudan’s love weigh big! This article tries to consider Sudan decision paths, and highlight South Sudan’s key risks.

In the ongoing war between the government and the rebels, Sudan have a choice to choose a real partner model along the current Uganda’s role in South Sudan conflict. Sudan has a choice to fully support the government or support rebel but it chooses to be between.

Middle ground taken by Sudan can be interpreted in two folds; one, to keep two weak – South Sudan fragmented along tribal lines that will never have capacity to face Sudan head-on: on border issues; Abyei and other outstanding issues; and second, balance her oil interest between two – South Sudan power protagonists, government and rebels.

With Sudan economy relying majorly on oil revenues from South Sudan, Sudan can’t afford not hedge her economic interest. Her two-path support approach ensures she is partially in good books with the government and rebels. So in reality, no true supports but economic conditionality.

My view is that if Sudan truly supports the government of the Republic of South Sudan, it should supports and work with the government of South Sudan to liberate Great Upper Nile from the rebels. This will have two achievements; one, secure Unity and Tharjath oilfields for production resumption, this will increase both governments’ revenues; and second, this will mark withering of rebellion.

If Sudan truly supports the rebel, it can work with the rebel and cut an economic throat of Republic of South Sudan by disconnecting Paloch oil production. This will puts South Sudan economy into coma and truly displays Sudan’s enemy status to South Sudan.

From signals coming from Sudan and South Sudan bodies’ language, I get a feeling that South Sudan is not sure of Sudan’s degree of relationship going by recent accusations. However, as Sudan is a necessary evil, South Sudan has no choice but turn-a blind eye on Sudan’s possible slaps through rebel support.

Sudan has a history and strength of using divide and rule power intrigues. South Sudanese can learn from liberation challenges. A divided South Sudanese were cheap sources for manipulation and misuse.

With wars of South Sudan-selfing, the outstanding issues will be thing of the past, Abyei status will never be resolved, possibly South Sudanese can trade-offs her rightful economics things and oil dependency will increase.

The aim of this article was to try to illustrate that Sudan’s interest is not South Sudan’s interest. It is author’s believes that if Sudan supports any party to the conflict, this is designed along her benefits contrary South Sudanese benefits. Everything to South Sudanese whether on rebels or government side, not really support, all is cosmetic.

As the say experience is the best lesson, SPLM has benefit of its liberation experiences. A divided SPLM a long tribal lines, divide the nation a long tribal lines as correctly diagnosed by SPLM in Arusha, during SPLM party meeting in Tanzania.

With all ills we have done to ourselves, South Sudanese need peace, though not necessary to hold hands with Khartoum over outstanding issues but for the good of her citizens.

As they say in economic, ‘there is no such thing as free lunch’’, and as such, there is no such thing as free support, it is all cost on South Sudanese and their economy.

Garang Atem Ayiik is an independent South Sudan economic policy commentator who lives in South Sudan and can be reached at garangatemayiik@gmail.com


By Garang Atem Ayiik

In September 11, 2001, America was attacked by a terrorist group; an act that shaken the security foundation and capability of United States to insulate against terrorists and external aggression.

An attack that the then president of United States, George Bush Jr. described as series of deliberate and deadly terrors’ acts. The nation was united in her act; the political, security and economic experts were mobilized to restore the confidence of their constituents.

In the economic front, within minutes of attack, security personnel moved New York Reserve Bank employees to a secure building and other officials around the country were contacted to collect economic information from financial intermediaries.

Based on this information, on 12 September 2001, the Reserve Bank pumped 30 billion dollars into the financial system and made 45.5 billion dollars available to financial sector as a temporary caution to US economy.

All these responds by the US economic actors are well documented by Dornbusch (2004) and his co –authors in their Macroeconomic book. Critical is the swift manner with which both economic and security actors responded, and complimented each other in protecting of their state and economy.

America government had no slightest idea that the attacks will occur but the economic managers ensure the economy didn’t came to its knees with their swift actions, the economic actions were commendable.

Overtime, economists expanded their knowledge frontier, equipped themselves with skills that will enable them to identify risk, forecast and mitigate risks. Is south Sudan beneficiary of this knowledge?

In a document available on the Ministry of Finance and Economic website entitled ‘fiscal challenges and progress in public financial management’, prepared by the Ministry in 2008 for Sudan’s consortium brought out dependency on oil as greatest fiscal challenge for South Sudan. Prudent policy management expectation requires South Sudan to hedge against this risk.

There was every reason to believe oil will not flow after South Sudan independence. As Sudan considers South Sudan as an enemy, remember how sanctions work – reducing the capabilities of an enemy; in the same way, military strategists target to close source of supplies, and so was Khartoum going to cut or interfere with oil flow to weaken South Sudan after independent.

At the beginning of 2012, South Sudan closed oil flow. With all indications that Khartoum was going to interfere with oil flow, how did South Sudan respond? Do nothing. After agreement on transit fees, oil flowed again.

The crisis that began in December 2013 puts South Sudan on weak economic position and with an agreement on transit fee expected to expired, Sudan might bully South Sudan by asking for high transit fees.

I hope this time; South Sudan is planning something as she cannot afford interference with oil flow. I suppose, nations should respond to more predictable economic challenges like infrastructure issue in South Sudan oil sector than unpredictable terrorists’ attacks.

Immediately after independent, Bank of South Sudan auctioned dollars. In this arrangement, banks and bureaus bought dollars within a band set by the Bank. From the data I obtained while doing my MA-thesis, during this period, difference between black and official rate was small.

Thereafter, the Bank adopted allocation system which led to growth of shallow financial institutions, encourage inequity and transfer of public money to private pockets through black market.

Attempts to organize foreign exchange market will be meet with resistance by the cartel that has grown. Is South Sudan relocating its human resources to correct places to fight black market menace? Fighting black market involves allowing shallow financial institutions to wither away and this might be resist immensely.

Reviews of autobiography of former governor of Central Bank of Kenya, Michael Cheserem, highlighted difficulty in correcting faulty foreign exchange market with matured cartel. Is South Sudan wholly, heartily and skilfully fighting the black market war as US did during terrorists attack?

For the period it has been in existence, Government of South Sudan got less than 5% revenue of its budget from non-oil revenues. This is explained by Dutch disease theory. If South Sudan knows this problem why can’t it be addressed, is the problem knowledge or willingness to focus on non-oil revenue? It is a mirage to expect an economy to grow on one resource.

Recent circular on reducing the role of foreigners on labour market, despite its right intention for South Sudan, it is being bullied to dustbin by the region and the world. However, signs suggesting government ministries involved are pulling in different directions displays incoherent or lack of internal synergies within government.

The labour market problems can be traced to two issues; work ethic and competency of South Sudanese; and second, unregulated entrance of foreign workers without designed living strategy into South Sudan labour market. Any policy must take into consideration the labor gap that might be created.

On labour circular, foreign economic interest seems more powerful than the domestic interest. There seems to be an interest clash between South Sudan and other partners.

It is a clear message that whether South Sudan builds a pipeline through Djibouti or Kenya, Economic interest dictates behaviour. Recent blackmailing and name-calling on labour circular should provide a bigger lesson to South Sudan beyond the labour case.

The future engagement with other countries must be guided by the fact that international trade can be use an intimidation tool. Whether it is on alternative infrastructure, port, bank or a labour. Truly, economists are right when they say there is no free lunch.

South Sudan has many sectors that have the potential to propel her economy and equally potential high risks that can ruin her economy. What she needs are economic managers who monitor, diagnose and act rightly as US did in her difficult time in 2001. To wait or act in an emotion and say ‘our people have suffered before and they are prepare to suffer’, is act of no plan, care, responsibility and ownership.

South Sudan must address macroeconomic challenges; diversify her economy; use and improve local resources – labour and natural resources and develop strong institutions. For this to happen, policies must adopt a holistic view. I suppose, Obama was right when he said ‘Africa needs strong institutions not strong men’.

Garang Atem Ayiik is an independent South Sudan economic commentator. He lives in South Sudan and can be reached at garangatemayiik@gmail.com. First version of this article was published in New Times, South Sudan in 2012.


By Garang Atem Ayiik

  1. Introduction

John Perkins in his book, ‘Confession of Economic Hit Man’, explained how he and his colleagues designed economic assistance programs in Saudi that will make huge in-flows of petrodollars to United States; and make Saudi more intertwined to United State economy.

The objectives according to Perkins was to make US benefits from Saudi natural resources; and inhibits Saudi from implementing punitive economic policies against the United States as she did in 1970s during Yom Kippur war. John illustrated how Countries around world were made vulnerable to be submissive to United States.

The programs in Saudi took forms of capital intensive programs with long term contracts management and maintenance provisions to keep United States in business in Saudi. The programs according to John were intended to ensure United States milk Saudi to Sun set economically.

Though the above scenario has different connotation, its applicability to South Sudan is precise. South Sudan got her independent in July 2011. She formed a government on a background of emptiness in term of infrastructure, social services, institutions and human capital.

This circumstance provides an opportunity for wrong policy prescription in forms of assistance programs design to disadvantage South Sudan economy.

  1. Economic Vulnerabilities

This article, explore possible scenarios economic agents with interest in South Sudan can design economic assistance programs with an intention to milk South Sudan till Sun set; identify South Sudan economic vulnerability to monitor and propose policy recommendations.

A two decade war eroded South Sudan social services, institutions, human capital and work attitude. As result of these gaps, immediately after Comprehensive Peace Agreement, well wishers and self seekers ran into South Sudan by air, land and rivers.

Ten years later, an arm of experts, advisors and businessmen are rooted in South Sudan. The legitimate concern is why experts, advisors and businessmen haven’t passed on their expertise and altitude towards the local people and institutions?

The failure of capacity building in South Sudan can be explained by two reasons; tactical behaviors by consultants not to pass capacity to locals so as to retain their jobs; and tactical behavior by public employees not to employ capable locals to reduce knowledge pressure underneath them.

I am not a believer of lack of capacity but capacity mismatch. The above scenario, have serious economic implications.

First, South Sudan will be indebted to capacity building; second, local resources will be repatriated out in forms of salaries and profits putting pressure on South Sudan pound; third, lack of employment will increase, increasing social problems and these are typical problems of economic hit men – economic vulnerability.

Any public officer or institution that benefited in forms of economic assistance for more than two years, thereafter has no capacity is guilty of the above explained selfish behaviors. You must have met those consultants whose soul almost fades when their contracts expired.

Rwanda and Singapore demonstrated that countries that have confidence in their young people; place them central to economic policy; and encourage local content and solutions make long economic strides then those that depend on outsiders-reduction of economic hit man influence.

After all, John Perkins explained that consultants and international institutions are first for themselves and their masters. So why do policy makers place these actors central to South Sudan economic needs?

In 2012, pissed off by behavior of Sudan, South Sudan halted oil flow through Sudan. Though this was a onetime decision, its lessons live on. Whether oil flows through Sudan, Kenya or Djibouti, it is possible that economic interests and geo-economic dynamics can halt oil flow. This is an area vulnerable to economic hit men.

An economy that runs on one resource is like a driver on long road without spare parts. The uproar caused in Uganda, Kenya and around the world by recent circular by Ministry of Labor in regulating foreign nationals’ jobs in South Sudan points to possible economic and diplomatic war in case interests clash.

It is a clear manifestation of how those who come to help live to protect their interest. South Sudan needs to reduce economic vulnerability by develop good road networks with all its neighbors for possible road transport in case the existing pipeline(s) is compromised; develop local oil refinery for local consumption and possible exports – road networks link to existing refinery plan; diversify productive sectors from oil.

Lack of pipeline, refinery and huge depend on imports through Kenya subject South Sudan to possibility of bullying, arm twisting and name calling with little alternative and economic breathing space.

Perkins explained how international financial institutions and consultants suffocated nations with natural resources for economic vulnerability. This is done through huge loans for submissiveness, geo-economic and politic. South Sudan needs strong institutions on public loan so that she is not suffocated.

In 1970s, Malaysia used to sent her employees to Kenya Institute of Management for training in Kenya, above fifty years later, Malaysia has enjoyed economic growth as Kenya continue to swim in poverty and underdevelopment.

South Sudan needs to conceptualize her economic path like Malaysia. In a world build on capitalism; in a world where consultants and international partners have different interests as explained by John Perkins in his book; in a world where Kenyans demonstrated against Chinese working on Thika road and condemn South Sudan for acting in her interest in the same circumstance, South Sudan is better off in the hands of her Citizens.

  1. Conclusion and Recommendations

South Sudan interests are better in hands of South Sudan. The government needs to integrate this into migration, labor policy and education financing. Do we need a circular when a permit and visa can do the job silently? If South Sudan doesn’t have capacity, why don’t South Sudan takes money to Universities where capacities are made!

John Perkins demonstrated that countries with natural resources are more vulnerable to world geo-economic and political dynamics. South Sudan needs to place its people, business and capacity central to economic expansion and policies to address economic vulnerabilities.

There are lessons from countries like Rwanda, Malaysia and Singapore that South Sudan can learn. Whether to be like Kenya or Malaysia, South Sudan has herself to choose. Central is the manner and capacity to make economically conscious decisions.

Garang Atem Ayiik is an independent South Sudan economic policy commentator base in South Sudan. He can be reached at garangatemayiik@gmail.com


By Garang Atem Ayiik, Juba

juba

  1. Introduction

John Maynard Keynes, a British economist pioneered the role of government in term of using monetary and fiscal policies to keep the economy on track during 1930s great depression. His intellectual economic breakthrough provided comfort to economists about their ability to control the direction of economic growth till recent financial crises.

Recent financial crisis points to insufficiency of these tools, however, policy makers have learnt to combine private and public sector twin – interests in a complementary manner to achieve desired economic policy objectives for public and private sectors good.

South Sudan, a nation once described by its late founding father, Dr. John Garang ‘as never got a tarmac road since creation’ has recently got some pockets of costly tarmac roads in capital, Juba and 192 Km Nimule – Juba financed by USAID resulting in ‘peace dividends’ as commonly described in Juba.

Though these roads and other inter-states roads can be equated to ‘peace infrastructure dividends’, it is inadequate, costly and slow in delivery mechanism. With all states without tarmac road, rail, water, sewage and airport net-works, there is a great need to review infrastructure financing in South Sudan to accelerate infrastructure progress.

  1. Financing Conditions and Options

Monetary policy has evolved overtime, at each stage, economists, policy makers and independent analysts identified challenges and propose a policy prescription. The genesis for instituting and reforming many Central Banks around the World has been to make them independent in term of making their monetary policies with little influence from the politicians.

South Sudan requires creative, workable well thought financing mobilization, this can only happens with a strong regulatory and independent infrastructure financing environment. The first step is to conceive institutions, relationship and objectives manned by people competitively recruited.

These institutions’ objectives range from needs identification, financing mobilization, and implementation. It is important each key stage is assigned to an independent institution within infrastructure system to ensure internal control as it happens in the corporate World.

In corporate world, a case of Oil Company, production, processing, marketing and sales of oil are handle by independent wings of the same company to ensure results and successes are measured at each stage, remuneration and progress of individuals in charge is attached to progress of their units.

Key issue is whether to have institutions for need identification – Authority; Financing – Investment; and implementation – Need implementation run on corporate model. Thorough conceptualization, and sustainability studies are very important ingredients in conceptualizing these initiatives. Without independent procurement processes, and contracts enforcement mechanisms important international players can easily be ‘crowded out’.

Once you have infrastructure needs identified by an independent authority, these needs will reflect economic priority, otherwise, needs will be based on ad hoc non-economic relationship which affect national equity and harmony.

The next stage after independent needs assessment is to finance the project, in my view, South Sudan should have an independent investment wing, this institution, will mobilized funds from excess government source like Pension Scheme and Future Funds at agreed interest rate. At start, government and donors can put ‘seed money’ and thereafter, run as corporate organization. Where possible, it can be co-owned by private companies.

I am imagining electricity, water, roads, rails, airports and sewage supply as partially owned by private sector in commercial viable areas. Just to paraphrase, electricity supply will be owned by an independent company owned by South Sudan Electricity Corporation, Infrastructure Investment Authority and other private investors.

South Sudan Electricity Corporation roles will be limited to its ownership but more importantly as regulatory organization. The key issue here is not about which institution but the concept of independency to identify, finance and manage viable infrastructure projects.

In term of roads supply, need assessment will be done by government authority, financing will be done by Infrastructure Investment Authority in conjunction with other private financiers that will own the road and collect money from the users. This approach will apply to all infrastructure and utilities goods.

In areas where it is not economically viable for Infrastructure Investment Authority and other private financiers, the government can provide services in the interim, but at any time it is viable for private sector, the government, can always sell its investment.

Whether this is a wild thought in an environment of South Sudan, South Sudan got to think outside the box. Initiatives that encourage independency, and business environments are keys to having a robust economic progress. Private sector lead – economic growth was key model used by Asia tigers and South Sudan might want to try this path.

  1. Conclusions and Recommendations

Private sector lead infrastructure development with government influence might be a very important model. South Sudan needs to engage private financiers in a controlled and prioritized manner. Government investment wings in this sector will be key;

Economic growth depend on confidence and unleashing private sector potential in South Sudan is essential. Government has been the main employer because of limited private sector growth. Better infrastructure development, supported by good regulatory environment, will expand private sector in South Sudan and this will reduce un-employment pressure;

The natural resources potentials have high value in an environment of good infrastructure. Today an investor in South Sudan starts from the basic – water, sewage, electricity and costly transport network. This article call for reduction of this cost to the investors and citizens through a national investment these services;

South Sudan has Future Fund and Pension Scheme which have potential to hold huge sum of money if their operation and independency is institutionalized. It is only in an environment of strong private sector lead economic – growth model that this monies can be reinvest- as there is no capital market in South Sudan;

South Sudan got to be creative in financing and prioritizing infrastructure projects to make progress. Recently, LAPSSET project, a project conceived and developed by Kenya that the authors believe is meant to open up Northern Kenya but fashioned as regionally initiative, attracted the attention of everyone including South Sudan;

This is what happens in an environment without well-thought and continuous economic investment modelling. Without inter-states roads in South Sudan, South Sudan needs to prioritize inter-states road in South Sudan and lobby Kenya to tarmac Lokichar – Lodwar road to divert traffic from Uganda for goods destined to Eastern Equatoria and Jonglei states instead of LAPSSET;

Development is not resources given, Singapore and Malaysia demonstrated this. South Sudan got to sit and draw its intended economic path – resources aside, policy makers and citizens must and should add value for South Sudan economic progress.

Garang Atem Ayiik is an independent South Sudan Economic Policy commentator. He can be reached at garangatemayiik@gmail.com


By Garang Atem Ayiik, Kuala Lumpur, Malaysia

kuruc1. Introduction

In his book ‘Leap into the Future’, Prof Anyang Nyongo’, narrated his experience when he asked a senior Malaysia government officer on what Malaysia did right that leap them into better economic prospects and what Kenya did wrong?

The officer, surprisingly told Nyongo’ while Kenya killed Tom Mboya, Malaysia used Kenya Sessional Paper Number 10 of 1965 developed by Tom Mboya when he was a minister for Economic Planning as its blue-print for Malaysian economic growth.

Whether this was a made up by the good political science professor to smartly experience his argument on how Malaysia overtook Kenya economically, there is some good sense in the statement.

Kenya 1965 Sessional Paper Number 10 was conceptually based on government planning as tool for socio-economic development. Whether true or not, Malaysia economic growth has been built around government planning and hence the same economic foundation as Kenya Sessional Paper Number 10.

In this regards, the officer was in other words telling Prof. Nyongo’, Kenya and other third World Countries at large the followings: one, there will never be development without well-thought out economic path (economic plan), economic actions (implementation of plan), routinely follow up and correction mechanisms (monitoring and evaluations of economic progress); and finally without Tom Mboyas (technical and financial resources).

Prof. Nyongo’ documented in his book how in 1971 Malaysia government officers were impressed by the level of progress in Kenya and requested Kenya government to trained Malaysia government’s employees at Kenya Institute of Management. Today, Malaysia has made significant and steady economic progress overtaking many countries that they were at far in 1960s and 1970s.

In 2011, South Sudan became an independent nation. Like Malaysia in 1960s and 1970s, South Sudan has consistently, sent and continue to send its nationals for capacity building missions both on private and public cost.

Today, I am sitting in a lavish Hilton hotel in Kuala Lumpur at the cost of my employer, like the Malaysians of 1970s in Kenya, I am impressed by the progress Malaysia has made and wondering if South Sudan can learn some lessons from Malaysia in accelerating its economic progress.

The aim of this article is to try to review economic paths taken by Malaysia and link the relevance to South Sudan economic case; second, identify prerequisite economic conditions for economic progress in South Sudan and finally, suggest some policy options for South Sudan.

This article, try to illuminates South Sudan economic priorities, institutional development and policies and hence should not be treated as holistic economic policy guide.

2. Malaysia Experience

Since it became an independent country in 1957, Malaysia has since maintained an average of over 6% Gross Domestic Product, experiencing some economic challenges during 1990s Asia- financial crisis but recovered quickly than other affected Asian-nations. It demonstrated it is a resilient and steady economy within the Asian-Tigers.

It has reduced reliance on agriculture and natural resource based activities which were the main contributors to GDP in 1970s by expanding manufacturing of exports, mainly electronics and electrical products; increased investments in services and construction industry by encouraging foreign investments and tourism.

As result of its economic policies, Malaysia has experienced stable macroeconomic indicators in term of growth, low inflation, low interest rate, high investment rate and stable exchange rate except during 1990s financial crisis which were speedily arrested coupled with exceedingly good infrastructure improvement.

Though, not homogenous, racial issue that aroused in 1970s commonly known as 31 May incidence were quickly addressed to ensure equity between the three communities of Malay, Chinese, and Indians that made up Malaysia.

Malaysia has maintained a five-year economic plans. Starting with its first plan in 1965. These plans ensure that economic direction envisaged are achieved. In 1971, when there was a riot in Kuala Lumpur on racial basis, the government implemented New Economic Policy to ensure equity to all ethnic group through education and business affirmative actions.

In 1991, the government implemented National Development Policy that envisage self-sufficient and industrialized nation by 2020. With the current progress, there is no doubt that Malaysian is heading in the right direction. This courage might be useful for cohesive and nationalistic policies after 15 December 2013 incidence in South Sudan.

Malaysia has demonstrated ownership of its economic growth. When its economy underwent throughout financial stress in 1990s, Malaysia refused economic aid package from International Monetary Fund and World Bank and instead fought its economic challenges to surprise of many analysts.

Whether this was a sign of self-confidence or economic lab-test, the fact Malaysia recovered than other affected economies in Asian, points to its right judgment. South Sudan needs this courage to tackle its reliance on oil, fight corruption and manage its exchange rate menace with conviction.

During the same period of 1990s, when it currency depreciated, Malaysia adopted fixed exchange rate against now favored float rate; and suspended trading of shares in capital market to reduce the impact of capital flight.

Though these measures, were against now favored liberalization principles, Malaysia has quite often utilized protective policy to its favors. Malaysia used subsidies and protective policies were it deems fit. Essential commodities like food, construction materials and natural gas had at times been subsidized to ensure right incentives and/or services are given to the citizens cheaply. This approach and view might be useful for South Sudan regional and international economic policy respond.

The government through its Economic Planning Unit has directed, continue to direct growth of open but state-influenced economy in Malaysia. Sovereign Wealth Fund, Pension Scheme and Industrial Master Plan help the government to plans and invests in key strategic sectors of the economy in partnership with private companies. Some of the sectors the government invested are automotive, banking and pharmaceuticals companies.

This points to the fact that Malaysia government believes in planning and old economic wisdom of mercantilism as used by other countries. There is need for South Sudan to have strong economic policy advice before economic decisions – oil shutdown, devaluation by Central Bank in 2013 and ongoing EAC proposal are some critical decisions that required good economic thought processes.

Though initially a natural resource and agriculture economy, Malaysia has diversified its economy by encouraging private sector to grow services and manufacturing industries becoming number 6th in ease of doing business according to World Bank report, 2013.

The infrastructure has immensely improved since 1970s making Malaysia a tourism, foreign direct investment destination. The Twin Tower of Petronas and Communication Center signals the rise of Malaysia and act as ‘confidence breathers’ into the investors. Overall Malaysia, there is evidence of Oil money in development, it might be rightful to show South Sudan oil money through development.

Malaysia discovered that diversification is key and there can never be a growth without human capital which is the diversification tool. The growth and easy financing for education, demonstrated Malaysia rightful investment.

There can be resource as Oil in South Sudan, but without right capacities and technology, the sector will go to the owners of capacities like Malaysia, Indian and Chinese as the case for South Sudan. South Sudan needs to show like Malaysia, 40 years later that its benefits from capacity building and have ‘leap into economic future’.

To increase service industry and manufacturing to grow the economy, a nation requires great deal of human capital, good legal framework work and corruption free-country, which are key ingredients of Malaysia growth. Malaysia has also engaged in regionally economic partnership on cautious approach.

3. Lessons and Policy Options for South Sudan

Malaysia has demonstrated economic plans are key and must be prepare, follow, financed and revised when and where necessary. It is not sufficient to have South Sudan Development 2011 – 2013 that is not followed and implemented;

Though initially a resourced and agriculture based economy, Malaysia has identified other key sectors to diversify its economy. There is need to invest in education, infrastructure, regulations and proper planning to move the economy into envisaged diversification direction;

Macroeconomic stability in term of low interest rate, low inflation, stable exchange rate, and economic growth are indicators of a well manage economy and are ingredients of economic growth. It is not easy to have economic progress in an environment of volatile exchange and inflation rate; renting seeking exchange rate environment and lack of access to loans – South Sudan must and should put its thought right;

Malaysia experienced racial sentiments in 1970s, and experience financial crisis in 1990s. It seems these crisis has given Malaysia a better way to solve them as the high magnitude has not resurfaced. South Sudan has recently experienced bad economic and political signals, its authors believes that if South Sudan takes ownership and do right prescriptions, these challenges will never resurface in a big magnitude;

Malaysia has been cautious in term of adopting out right liberalization policy. Subsidies, protection policies, exchange rate and capital control policies have been instrumental in arresting the 1990s financial crisis and help in diversifying and developing strategic sectors. South Sudan might want to rethink its current open-arms liberalization approach;

Improve ease of doing business in term of developing better infrastructures, human capital, and good legal framework work and corruption free-country business environment;

There is Economic Planning Unit in the office of the Prime Minister of Malaysia to help directs, responds and advises on economic issues to the Prime Minister. It could be useful for South Sudan to institutionalize economics decision making in the Office of the President/Government with well-equipped and competently staffed. Economics decision is bread and butter for a nation, it cannot be left to ad hoc processes and more importantly as it touches on economic interests.

Garang Atem Ayiik is an independent South Sudan Economic Policy commentator. He lives in Juba but was in Kuala Lumpur at the time of writing this article. He can be reached at garangatemayiik@gmail.com


Peace is near than services delivery in South Sudan, analysing capacity building and long road to services delivery

Garang Atem Ayiik

  1. Introduction.

In around 2012, IGAD countries initiated a program of providing professionals to be attached to various government agencies with an aim to provide capacity to these agencies. Between 2005 – 2012, donors through Multi Donor Trust Fund (MDTF) initiated various projects with capacity building components.

Commonly referred to as ‘young nation,’ the above named programs and other capacity building opportunities accorded to government officers were aim at accelerating government officers’ capacities, and hence by extension expedite peace dividends in term of services that were much needed in South Sudan after independence in July 2011 and interim from 2005.

This article aims to explore why early identified gap of capacity building has not been bridged about 10 years later after Comprehensive Peace Agreement, and secondly, after exploring the capacity building challenges, I will suggest some policy options for consideration.

  1. Why road to service is long

In the recent past, programs had been formulated to capacity build government officers. It is critical to note that the government is task with providing capable employees while the donor community does supply, by providing training experts and financial resources to facilitate the programs.

The cadres who are currently occupying government positions at national and decentralized levels are not trainable. In the states, though data is not available, number of graduates are negligible. And in the county, maybe only the commissioner had seen the gate of a university in some cases.

Unless the right matching between job description and qualification is made, South Sudan will continue to swim in the river of no capacity; not even capacity building will clean the mess. When designing public policy, expectation is that both supply and demand side must move to an equilibrium.

It is this basic principle that explains why most capacity building programs that target government employees will never achieve desired objectives. Donors supply the right training experts while the trainees are sleepy, aged academic shrubs. What this kind of training does is like asking Harvard professor to teach form four student Harvard graduate’s syllabus. How good the professor, the gap is wide between form four student-Harvard’s graduate syllabus.

In an ideal capacity building set up, it works the same way a teacher and student relationship work. The teacher teaches her/his student and thereafter, the student does the exercise. However, in the case of the cadres within the government, some do not even understand the exercise given by the teacher in our case herein, training professionals.

Quite often, you must heard them when they came from a training oversee, ‘the country that I have seen, we will never reach its status even after 100,000 years. Maybe, they should be told about United Arab Emirates, and Asian tigers recent progress or they should be ask to read Lee Kuan Yew’ book ‘ From Third to First World,’ this will give them hope.

Critical is the trend that young graduates are not getting opportunities or are not willing to work for the government. I consider it irresponsible or ignorance to talk of lack of capacity when the government do not know what capacity exists in South Sudan labour market. Did anyone did any research? I mean let talk evidence based issues that can be substantiate.

In an article I wrote in 2012, I illustrated that out of 33 graduates from Moi University between 2005 – 2011, only 3 were working for the government. This illustrates the low absorption capacity of the government. It is either it has not made itself attractive or entry is denied for these young freshers.

The Moi University sample with its limitation, reflects the low entry by young graduates into career bureaucrats. It seems the government employment policies deliberately close government employment doors while those in government’s roll-call continue to sing lack of capacity loudly.

  1. What is Missing

It is known that human capital is the agent that exploit available resources, Norway has illustrated this. Human capital is a tool that create productive sector from nothing Singapore has shown this. There are debates now if the newest nation on earth learnt from mistakes of Africa countries. In this regards, I suggest the following:

  • South Sudan needs to increase incentives to attract capable South Sudanese in the Diaspora and those in Juba – the government must get its incentive right, motivating staffing through stealing is not fair, get the cash in payslips;
  • There is need to create transparent, fair and competitive recruitment process. Current building tribal loyalties can be explained by recognition that nepotism, tribalism and corruption are key individual growth pillars;
  • Enough resources must be put into higher education, it is a policy contradiction for government to sing lack of capacity; and import training skills without investing in local universities. If capacity building is important, can resources be made available to where capacities are built
  • Parliament can allocate budget for compulsory retirement of old and incompetent civil servants to Pension Scheme. Vetting can be done to sieve out non-productive and get them paid from a pension scheme – I know Pension Scheme is not yet operational. South Sudan needs to be creative and get priorities right.
  1. Conclusion

Service delivery is a function of resources and human capital is central. My greatest fear is the deform public service, it doesn’t matter who heads the government. A deformed public service is like a body with a dysfunctional heart. Whoever want to deliver services, must get his tools right, the public service.

Till such time right matching between jobs and qualifications are made; youth is place central to public service agenda; incentives that will attract competent people to government are rolled out, South Sudanese will wait a little longer for what they want yesterday, the peace dividends. It will be easy to get peace in South Sudan than to get services in the current public service set up. Service delivery will wait a little longer.

Garang Atem Ayiik is an independent South Sudan economic policy commentator. He can be reached at garangatemayiik@gmail.com


By Garang Atem Ayiik, Juba

town to people

  1. Introduction

On 22 May 2014, I was on ‘Wake Up Juba’, a radio program that discusses current issues in South Sudan.  On this day, the topic for discussion was what does ‘taking towns to the people’ means? a concept popularized by Dr. John Garang, the late SPLM leader. Taking towns to the people and water agriculture with oil money, demonstrated Dr. Garang intention for a strong decentralized economic and governance system for delivery of ‘peace dividends’ in term of services.

On 5 June 2005, on the occasion of signing Nairobi declaration on launching final phase of peace in the Sudan in Nairobi, Dr. Garang De Mabior, said, ‘it is SPLM intention to devolve power to the maximum so that decisions shall be taken at the lowest possible level of governance’.

Taking towns to the people can be view in the context that people needs’ shall be met at their rural locality. Immediately after signing Comprehensive Peace Agreement in 2005, SPLM formed strong decentralized states’ base governments with each of the 10 states headed by ‘who was who’ during the liberalization struggle. During the interim period, and after independent, much of government revenues are spent in Juba.

The ‘who was who’ in the first SPLM governors flocked back to Juba for jobs in accordance with the same wisdom fish flow water when river dries. On 15th December 2014, power struggle between His Excellency President Salva Kiir and former Vice President Dr. Riek Machar pulled the country into chaos. Now the nation is grabbing every twig or calling every help to remains above water.

The aims of this article are to examine economic reality of taking towns to the people – how it can be done in term of perquisite policy conditions; and proposes policy positions on reality of ‘taking towns to the people’ beyond rhetoric.

  1. Taking towns to the people in reality

It is easy to hear people and mostly politicians talking about taking towns to the people. This article argues that taking towns to the people is an ingredient of three key deliverables from the central government, and citizens to the decentralized units of governments a) resources – money and human capital; b) minimum services delivery from the centre ; and c) constitutional mandate and governance.

2.1  Resources – Financial and human capital

The concept of ‘taking towns to the people’ can be understood well if answers are provided to why people move to towns. There is huge literature on rural-urban migration which is beyond the scope of this article. However, the main reasons why people move towns are primarily for employments, and services. Therefore, taking towns to the people is to provide employments and other vital services at the grass-roots.

The first condition to be met in taking towns to the people is to decentralized resources to states and counties. The resources include both financial and human capital resources. As it is today, huge government budget is spent in Juba according. However, huge population resides outside Juba and continued centralization of resources in Juba, attracts to Juba the educated, and uneducated. This becomes critical given high dependency and socialistic life of South Sudanese.

With the current low resources-envelop going to the states, counties, and other lower decentralized units, it is difficult to find at the counties and in other lower units graduates with a bachelor’s degrees unless a county commissioner. At the states’ ministries, the graduates are exceptionally few. With low resources in term of human and finances flowing to the states, counties and other lower units, who and with what are services provided to decentralized units of government?

It is critical too to note that service is not an abstract, it is a reality, planned and deliver. To hold people in their village and create towns for them mean buying and delivering sustainable services to them.  This means providing education, health, water, security, house, electricity and jobs at their rural homes. In our case, with our huge resources spent in Juba, taking towns to the people becomes an empty rhetoric. Policy correctness is to take huge resources to decentralized units of government.

The questions remain how do you provide services at the grass root without right employees and no financial resources to buy services and/or ingredients of services?  Aware that resources are spent in Juba and to some extent at the states, citizens act rationally by moving closer to services/resources in towns leaving taking towns to the people as policy contradiction or historical statements.

As citizens migrated towards the resources and services, employment and deployment opportunities in centres are based on patronage, nepotism, and tribalism which have strengthen tribal commitment and loyalty. The crisis of December 2013 points to this hypothesis.

2.2  Minimum services from the central government

Even within the premises of a decentralized system of governance, there are services that are keys to success of the decentralized administration. Author believes these services can be provided by decentralized units of government but the complexity, financial demand and unwilling of the private sector to invest in these services, make it difficult for smaller units of government to deliver these services. However, delivery of these services is crucial for creation of towns in villages.

Services like security, road, electricity, water, and sewage require mega financial muscle or/and mobilization that is above the capacity of states and counties governments. Without these services, taking towns to rural areas is near impossible for the states and counties governments.

After signing of CPA, we have witnessed growth of private schools, health facilities and farms. However, none of what author’s call ‘minimum services’ can be sufficiently provided by private entities in current set-up of South Sudan.  It is author believes that initiations of these should be started by central government because of its capacity and ability; and maintenance and linkages of these services should be left to lower units of government.

Without these minimum services, flow of cash and human capital to rural areas is not sustainable and hence ‘taking towns to the people’ without these minimum services is not sustainable. December 2013 crisis almost uprooted all government agencies and people in greater Upper Nile. This points to how central security is to towns’ creation and sustainability.

Though other services like education, health and farming are important, private sector and lower units of governments easily fill up these roles in an environment where human capacity and financial resources are decentralized. This view is not intended to undermine importance of these services but only to show preferential roles of different levels of government.

2.3  Good governance and constitutionalism

Another pre-condition for taking towns to the people is institutionalization of government procedures where citizens are central to national decisions-making, transparency in employment and revenue management processes. Adequate resources taken to states and counties must be managed in transparent, with auditable procedures and adequate oversights.

States and counties must be given adequate resources with capacity and ability to make decisions. These decisions involve deciding leadership in open and transparent process; held leaders accountable through oversight mechanism; strong parliament and other bodies like procurement authorities, anti-corruption agencies, audit chambers, and other ad hoc vetting mechanism.

The peripheries must decide who to lead and where; where to spend resources with little interference from the centers. These mechanisms will eliminate patronage, nepotism and tribalism as jobs will be given according to qualifications and competencies. The constitution must not leave issues of appointment, deployment, employment, elections and other decisions without check and balance. Experience has shown relying on robust systems is better than relying on individuals good will.

  1. Conclusions and recommendations

As evidenced in the above analysis, taking towns to the people and other decentralized governance must be planned.  As South Sudan struggles to bridge differences created by December 2013 crisis with possibilities of transitional government, the following are key conclusions and recommendations that might be useful in forming an interim government and fulfilling pledge of taking towns to the people:

  • Adequate resources must be decentralized to states, counties and other lower units of governments. A government that will address needs of the people must take resources where the people are. As Dr. Garang asked in his 5 June 2004, just to paraphrased, why would South Sudanese fight for twenty years just to transfer resources to few elites in Juba?
  • Create accountable systems of government between agencies including percentage resources to transfer to the states and counties. This should be supported by strong and independent oversight from the center to the lower levels of governments;
  • The government at the center must and should support provisions of minimum services at the lower levels of government as basis to build solid foundation for decentralization. Security, and infrastructure must not wait;
  • There should be transparency in employment, deployment and promotion to reduce tribalism, patronage and nepotism that has strengthened tribal loyal. This will reduce the collective incentives for tribal efforts to work together for power but encourage individual performance as basis for career growth and personal prosperity.

Garang Atem Ayiik is an independent South Sudan economic policy commentator who lives in South Sudan and can be reached at garangatemayiik@gmail.com


By Garang Atem Ayiik, Juba

  1. Introduction

I had kept an eye on the performance of South Sudan pound and exchange rate for the last two years. In being alert, I had published three articles related to exchange rate policy options and participated on ‘Wake Juba’ to discuss devaluation late last year.

Recently while on Easter leave in Nairobi in April 2014, a colleague asked me why these days banks denied their customers their demanded dollars even if these customers have dollars accounts.

Another new observation is the appreciation of South Sudan pound to 3.85 SSP in May 2014 from 4.5SSP in December 2013 in parallel market while the official rate sits comfortably at 3.16SSP. This is despite the fact that Central Bank of South Sudan is not giving regularly monthly allocations of dollars to the bureaus and banks after December 2013 crisis.

So how could pound appreciate against the dollar even after disruption of dollars flow resulting from shutdown of oil-fields of Adar, Unity and Tharjath. This article aims to put into perspective the latest behaviour of pound; second, sketch possible economic risks on latest behaviour of pound; and thirdly propose policy options.

It is important to note that the author has not explored the merits/demerits of appreciation but rather analysed the sources of appreciation and highlight key associated risks on these paths.

  1. South Sudan Pound Appreciation

The concept of demand and supply determines price for goods. Equally, if dollar is treated as good bought with money, pound, it is therefore, lawful that if dollar supply reduces, the price of dollar goes up. The expectation base on demand and supply is that dollars supply have been reduced resulting from oil production disruptions in Adar, Unity and Tharjath oil fields.

The expected conventionally behaviour of pound base on the law of demand and supply was that it should continue to depreciate as it did in December 2013. But recently, pound has gained in the parallel market to 3.85SSP in May 2014 from 4.5SSP in December 2013. This happens as production in three key oil-fields remained close reducing oil production to below 50% before December 2013 crisis.

Despite reduction of oil flows reducing dollars income to Central Bank, author suspects that pound has gained due to the following reasons; first, reacting to December 2013 crisis, the public-firms and individuals have cautioned themselves by buying dollars and transferring them to neighbouring countries and abroad.

This led to stocking-back of pounds with the banks; and banks finally deposit them with Central Bank. This means the public has few pounds in circulation and hence the shortage has led to gain by pound in parallel market. In the meantime, pound is building up in banks and Central Bank.

Second, the government has not paid its employees mostly the civil servants and army for the last three months. This section of society spends all its income nearly in totality increasing the velocity of pound. As the government has not paid its employees, pounds that accumulated in banks and Central Bank has not moved out causing a shortage in the market and this is exhibits in appreciation of pound in the parallel market. This becomes critical considering the multiplier effects in the economy.

Author believes the appreciation of pound in the parallel market is not in any way determined by supply fundamentals but by intrigues of demand. It is tempting to argue to insulate their staffs from possible depreciation of pound, development agencies, private sector and humanitarian agencies brought-in a lot of dollars resulting in a strong pound. There is little evidence that local staffs in these agencies are paid in dollars and even if some cases exist, lack of dollars in commercial banks invalidates this argument.

Critical is the fact that pound gains in the parallel market while in the official market-banks are rationing the withdrawal of dollars for their customers with dollars’ accounts. To reconcile this contradiction, the author’s hypothesis is that some dollars are going to the parallel market without going through official market. If this was not the case, why would pound in parallel market appreciate while banks lack dollars to pay their customers with dollars accounts?

If the above hypothesis holds, where would dollars move to parallel market without passing through the official market-through banks? The first case would have been Crisis Management Committee in case they were given any money in dollars. Ideally, they didn’t need dollars; and second, if there is a cartel within Central Bank with capacity to bypass official channels to obtain dollars and sell them to parallel market.

There are indications that black market is becoming a key profitable business in South Sudan with foreigners actively engaging in large scale. With this participation, it is author’s believes that Sudan, Kenya, and Uganda are key intermediary hubs.

Every trade in dollars, accumulate pounds in banks and Central Bank. After short-while, it is author’s view that pound shortage is eminent and likely to cause serious economic hardships and disruptions.

Acting rationally, many foreign traders might have noted that margin obtain in importing is more less equal to premium on getting dollars at official rate and sell them in the parallel market. Armed with this view, it is possible that for long time, these traders have been buying dollars and selling it in parallel. This view reinforce an argument that appreciation was due to accumulation of pounds in the Central Bank as traders buys dollars with pounds- filing pounds in the Bank.

  1. Risks, Policy Options and Conclusions

The current appreciation of pound in author’s view resulted from pound shortage, supported by reduce economic activities as economic actors become cautious and stock their wealth abroad in dollars.

It is critical that peace is restored immediately otherwise, economic activities will continue to diminish as firms and individuals continue to withdrawal their wealth in South Sudan in form of dollars, stocking pounds in the banks and Central Bank;

As economic activities reduce, economy will contract causing hyperinflation and unemployment which is likely to cause misery to the citizens. Already fresh graduates cannot be absorbed by the economy; this is an indication of a deteriorating economic performance. The government should engage the rebels with view to restore stability, this improves confident of businessmen and citizens hence reviving economic activities;

There is need to monitor asset position of Central Bank of South Sudan with view to locate pounds-dollars moments. This will help in locating possible path-way of dollars to the black market in unofficial manner;

The government should pay its civil servants immediately and explore other ways of injecting pounds to the market to rejuvenate the economy;

There is need to enhance technical capacity to supervise banks and bureaus, do surprise audits and enforce money laundering to reduce the roles of financial services in promoting parallel market, money laundering and economic inequality;

All decisions affecting monetary performance must be reviewed and approved by competent, independent and cautious policy team.

Garang Atem Ayiik is an independent economic policy commentator base in South Sudan and he can be reached at garangatemayiik@gmail.com


 By Garang Atem Ayiik, Juba

Immediately after independence, South Sudan lodged an application to join the East African Community (EAC). In April 2013, the community secretariat sent a committee to verify if South Sudan meets the community’s admission criteria. The findings of the committee were that South Sudan met many criteria.

In November 2013, South Sudan was asked to form negotiation structures by the community in preparedness for admission into the community. In March 2014, His Excellency Salva Kiir Mayardit, the President of the Republic of South Sudan, forms a committee primarily made up of the government ministers to lead the negotiation.

The priority attached to joining the community by the government can be interpreted from three different viewpoints: economic incentives, political considerations and security concerns. During the war, SPLM and South Sudanese received and continue to receive assistance from East Africa countries; this together with economics sense could form the basis for analysing prospects and importance of joining the community.

From South Sudan perspective, His Excellency Aggrey Tisa Sabuni, South Sudan’s Minister for Finance, Commerce and Economic Planning, in his presentation during the Investment Conference in Juba in December 2013, outlined the economic gains that are likely to accrue to South Sudan resulting from joining the community, namely: increase exports; institutional, legal and business environment improvement, capacity development and security improvement.

As the wind of globalization blows, it is understood that nations are obliged to accept best practices and liberalizing economies today is a necessity for a better ‘world and regions’. However, countries in the region had in the last 50 years created institutions that are the bedrock of managing their economies, an advantage an infant South Sudan doesn’t have yet.

The EAC countries have common economic structures, namely market driven exchange rate, high literacy rate, diversified economies, functioning fiscal systems, sustainable public debts and inflation rate. These economic indicators show economic convergence of these nations.

It is possible that EAC economic priorities could be the same given the convergence of their economic indicators. However, this is not absolute, the simmering heard between Tanzania and Democratic Republic of Congo on one side against other members point to underlying differences on economic priorities. South Sudan needs to understand the causes of this tension – it origins and economic arguments.

South Sudan sees access to about 140 million markets as a road to increase exports. This is a fallacy because it is not true that South Sudan’s exports are not increasing now because she is not a member of EAC. In reality, South Sudan only exports are natural resources whose markets are not and might not necessary be within EAC soon.

In the short term, joining the community will not in any way enhance the country’s export. If anything, it will inhibit the ability for the government to groom it local goods and services. South Sudan agriculture production needs live-breathing in form of subsidies and other pro-poor programs. Tools that are likely to be lose if she joins the community.

Increasing exports is largely a function of improving structural impediments to production like access to technology, access to capital, entrepreneurship training, infrastructure improvement and security. Incentives can be created internally, and any increase in production can be consumed locally.

My view is that South Sudan needs to focus on imports reduction strategies for now and thereafter, if local production increases to exceed local consumption, South Sudan can switch her strategies to export enhancement. This in my view will take years, and that is why prioritization of exports now is a wrong economic dose prescriptions.

There is also a possibility that health and safety standards are likely to curtail any progress to export non – natural resources exports whether to EAC or elsewhere. Lack of certification for professionals like lawyers, engineers, accountants, dentists and doctors will reduce their competitiveness in the community and hence services exports is not a dream in a short term. All these points to a fallacy to say exports will increase when South Sudan join EAC. In essence, it is clear South Sudan balance of payment will NOT improve in a short term.

The other benefits that South Sudan expects to get are security improvement and capacity building. South Sudan can still gain these issues from a bilateral approach. Nothing more or less is South Sudan likely to enjoy after joining the community. From theoretical analysis, South Sudan will lose more than its gain from a short term perspective. There are going to be serious institutional shocks.

As a country that depends on oil transported in unreliable and sometimes unsecured gateway, South Sudan admission to the community possesses serious challenges to herself and to the community. As an importing country, the local prices depend of exchange rate, though currently fixed, long halt to oil production will affect the ability of Central Bank to defend a fixed rate.

The above scenario has deadly economic implications. First, fixed rate goes against the principle of market driven and hence against the spirit of EAC treaty. Second, if South Sudan liberate its exchange rate, inflation rate is likely to increase causing misery to her citizens.

Third, if South Sudan does not liberate her economy, any modification for preferential treatment of South Sudan will complicate the implementation of the community’s protocols. With all these implications why would South Sudan rush and why will the community accept a country with such huge risks? South Sudan should be left alone with the arts of economic war to fight it challenges in good faith.

South Sudan as a one-resource economy is at a risk should anything affect oil production. In such time, a fiscal space to borrow and fiscal policy to mobilize local revenue is critical for economic survival. But in accordance with the customs union, and common market protocols, South Sudan will lose such economic crucial economics tools.

If admitted, preferential treatment that will  be given to South Sudan will create complexities of administering the protocols, and more importantly, the experience of Eurozone where weak economies caused financial stress is a warning to any attempt to turn a blind eye to the inherent risks.

For now, South Sudan should be given an observer status till such times it has created institutions that will help the community achieve its objectives. This will create a relationship between South Sudan and the community in readiness for full admission.

Secondly, such status will protect the region from associated risks of admitting South Sudan fully; thirdly, it will allows South Sudan to retain its monetary and fiscal policies to lay a foundation for a stable economy in readiness to join the community and fourthly, it will give South Sudan first-hand experience in navigating joint economic policies. South Sudan and community can’t ignore the immense macroeconomic divergence between them; it is an economic suicide especially for South Sudan.

In the interim, key priorities for South Sudan should be to establish strong economic team to support her economic integration positions sectors-wise, and engage its citizens; secondly, to start mainstreaming the integration into her economic policies and in the short term, adopts a bilateral approach with its neighbours and an observatory status with the community.

Now, the dice is cast; it is up-to South Sudan to refuse the old wisdom that state that you can’t test the deep of the water with all your feet and equally, it is up-to the community to ignore due diligence mechanisms put in place by its treaty. As for South Sudanese, they are waiting to participate-if it is going to be a politicians driver process, it will be a true economic and political coup against the citizens of South Sudan.

Garang Atem Ayiik is an independent economic commentator on South Sudan economic and Policies. He can be reached at garangatemayiik@gmail.com