Trickle down effect, Sudanese style
By Ahmed Elzobier
October 21, 2008 — Despite the anti-western rhetoric, hypocrisy among the ruling elites in Sudan is plain for all to see; their clothes, cars, household appliances, their education and kids’ education, and their dream so clearly labeled “Made in the West”. Of course it is highly probable that their economic ideology will be borrowed/copied from Milton Freedman, but they will try desperately to conceal that, and declare their economic policies to be as sacred as their words and in compliance with the Holy Book – and eventually they will say that it is the Holy Book. The IMF will be initially baffled and then overjoyed by this free of charge self-inflicted liberalization policy, and because they are uniquely blessed by the powers in heaven and on earth they went to the extreme and privatized even vital sectors like education and health. Because health is a “commodity” according to the government National Insurance Fund for Health, of course you can’t make that up; it was written proudly in the Fund’s policy document. In fact the current health system in Sudan is a primitive and distorted version of the widely criticized American health system.
The dogma that has informed Sudan’s economic policy for the last twenty years is that the markets should be minimally regulated or not regulated at all. Central to this dogma is the privatization policy, according to the Ministry of Finance who characterise their second main function as: “Liberalizing the national economy from various forms of restrictions and distortions inhibiting economic activities and competitiveness”.
The Finance Minister has emphasized further their vision as: “The Government has opted for free market as a basis for managing the economy”. Free market on health, education, lands and properties, this is one of the most extreme hands-off economic policies in sub-Saharan Africa. To legitimize this borrowed free market theory the Stock Market in Khartoum Act of 1994 disingenuously states: “The stock exchange is governed in all its dealing and the performance of all its activities with Shariaa and its guidance”.
Nobody is readily at hand to explain how that will work in real life? But what we do know is that the gangster-style capitalism that we have in Sudan has literally been baptized. Greed and corruption are wedded together in holy matrimony, ushering in a new era where the sacred text turns out to have an economic theory that was accidentally rediscovered in Chicago by pretentious, ungrateful economist.
Now this cynically borrowed doctrine of the “trickle down effect” turns out to be no more than a casino, in fact it is all about “trickle-up”! Many economists around the world wonder whether the world will ever be the same again, could this be a sign of the collapse of the free market ideology that has reigned for more than three decades. However, the Canadian Journalist Naomi Klein, one the sharpest critics of capitalism has noted: “Whatever the events of this week mean, nobody should believe the overblown claims that the market crisis signals the death of ‘free market’ ideology”. Many share Klein’s sentiment, but whichever way things go, our clueless economic policy makers in Sudan can never fathom what has been happening in the world. Despite the extreme version of free market ideology they have adopted being discredited, the trigger-happy copy-cats of Sudan have already administered hefty doses and reduced the majority of the country’s population to abject poverty and unforgiving destitution. In short, the damage has already been done and the patient is in a complete coma.
Some government officials are displaying an embarrassing ignorance of the seriousness of the current financial situation in the world, claiming Sudan will not be affected by the financial crisis. Oil now comprises 90% of Sudan’s exporting, and 55% of the country’s annual income is generated from oil. The whole economy has become dependent on a single source of raw material. With all economic indicators showing that oil prices are getting lower, the situation in the next few years could be catastrophic. More importantly, millions of Sudanese in the South and Dafur depend on food assistance provided by World Food Program (WFP). According to the UN food agency, in 2008 it expects to provide food assistance to 5.6 million vulnerable people with an emergency budget of US$697 million. Sudan is the WFP’s largest operation in the world. Many in the humanitarian sector fear that charities and NGOs that provide food, medicine and other relief on the ground to millions of Sudanese will have some cutbacks in their projects as a result of the global financial crisis, and some have already started.
The economic liberalization has made the situation much worse for the poorest in Sudan. The policy officially started in early 1980s as part of the IMF structural adjustment program in the country, and was followed by an aggressive liberalization strategy after 1989. Consequently, in the last two decades, Sudan has become one of the most socially and economically inequitable countries in the world. Kabbashi Medani Suliman, a Sudanese Academic, observed in his paper addressing privatization policy in Sudan: “It could be said that Sudan’s liberalization program was probably the only one in the world that applied the toughest part of the IMF prescription, without having a deal in place with the Fund”.
The outcome of such policy is an invisible or a mythical trickle down, apparently something that you shouldn’t see but you feel. However, the reality is different according to the UN Human Development Index (HDI) Sudan ranks 148 worldwide (2007). Unlike the GDP indicator which is solely concerned with what has been consumed, invested, exported and imported regardless of the quality of life of the population. The HDI considers other factors such as life expectancy, literacy, education, standard of living, and GDP per capita. It is a standard means of measuring a population’s well-being, especially child welfare. In 2007 FAO estimated that 24% of the population is undernourished, i.e. nine million people, while 30% are without access to safe drinking water according to UNDP. The adult literacy rate in 2004 was 61 percent. Given these statistics the majority of the Sudanese population is considered poor by any reasonable standards. The ECHO Vulnerability and Crisis Index score (V/C) puts the population at the most severe rank of 3/38.
The main features of US style capitalism that has been adopted globally, is its endless competition fueled by the drive to maximize profits. In such a system there is little room for a social conscience or mercy for the weak, and such an unregulated system has generated inequalities in all societies. To mitigate these inequalities the state has a duty and a role to play, a point emphasized passionately by
In Sudan the state has completely abandoned its duty and responsibility – the only role it really cares about is limitless finance to the army and security, that where unashamedly 70% of the budget spent. In the process, millions of Sudanese have been left to fend for themselves or to be fed only with humanitarian assistance.
These are worrying times and the poorest and the most vulnerable might still pay a heavy price for the irresponsible policy of greed that has characterized Sudan’s economy for the last two decades.