South Sudan Economy Part II: systems, regulations, diversification and attracting investors
By Suzanne Jambo
April 14, 2013 – Sudan and South Sudan continue to have a back and forth a seemingly ‘diplomatic fallacy’ of a relationship; ‘good friends-cum bad-friends’; ‘frenemies’. It was in April 2012 we almost teetered on the brink of all-out war. Save for some concerted effort notably, by the African Union and the United Nations were able to design a political framework to ease the tension, resolve outstanding disputes and ‘mediate’ for another agreement signed in September 2012 to restart oil production, oil is a national resource of the Republic of South Sudan, RSS, whilst the pipelines, refinery, export, marketing and the port in the Sudan (North). This deal, if managed well, would in the short-term boost both neighbouring countries’ economies; the RSS and the Sudan (North). Although, one hopes, a lot depends on both the political will (especially by Khartoum) to honour its word and for Juba to manage the revenue better this time. Critically, we anticipate a more effective role by the regional and international community to monitor and timely-advise. As a very concerned citizen and not an economist, I have in my earlier article (Part I) touched on the RSS economy, appealed to the world community to ensure this crucial role due to past unpredictable upheavals. Today, I shall focus less on oil, rather on the RSS government commitment to its own economy boost; immediate financial systems, regulations, internal rules, accountable mechanisms establishment and the diversification of its economy.
Enough reasons to lead me to this. For one, oil is perishable and secondly, the good old ‘lay-person’s economic philosophy’; oil money alone and in the absence of long term economic development plans, we surely are headed toward a ‘lazy-cum-easy come easy go money’ and extremely corrupt nation and citizens. Indications are that our current oil reserves may last only another decade or so. Though not an oil expert, general knowledge is that there’re other oil reserves yet to be explored, but I dont want to delve on this as I prefer to leave this to the experts. However, and primarily, the RSS government needs to paramountly transparently manage the current oil revenue in Unity State and utilize it soundly too for that matter!
So what’s our best option now? The RSS government must establish sound internal governance and the basis for a productive sustainable diversified economy in the immediate – long terms. Notably, there are a number of western base governments trying to backstop the RSS to initiate and sustain this pillar, namely the U.S and the Norwegian governments. Regional governments, namely, Kenya and Uganda have vested interests to backstop, directly and indirectly. Both East African countries have through various capacity building and bilateral relations agreements established a regular flow of capacity building programmes for the RSS government since the Comprehensive Peace Agreement signing in 2005.
Good will abound, indeed. We are very grateful. However, justifiable intrigue and questions shroud the impact of the effectiveness of these pockets of ‘capacity building’ for the government. In addition, one wonders; What type of framework are such institutional building governed by…? And the ‘who, how when, whys and what’…? Not to slight, local capacity building and ownership of the whole process, how much vision and foresight is encompassed within the RSS government to ensure this? I appreciate the government-government assistance to build the capacity of the RSS government. However, in a post-conflict country as the RSS, it is more than ‘capacity building’ and it is not ‘any/generic’ capacity building. Time and again, this has been repeatedly voiced by several concerned individuals and groups, especially the RSS Diaspora and other South Sudanese alike. The government must seek to broaden this whole ‘capacity building’ and ensure the involvement of other highly qualified and competent individuals, bodies and entities. Critically, the engagement of South Sudanese professionals. Needless to add, the experiences of e.g. Botswana, South Africa and Rwanda where the involvement of both their Diaspora/or other African expertise continues to prove extremely productive. The involvement of concerned expert groups, no doubt, is the only viable option but critically ensuring the ‘South Sudanization’ and RSS ownership and stewardship are paramount.
On the economic diversification endeavour, frankly, the onus is really on the RSS government to own, propel and sustain this. A high(est) visionary political-cum economic will is essentially required. The RSS has the advantages of some of the world’s best agricultural land, other natural resources; vast land (infrastructure, industries etc.), water, organic produce, huge cattle and fisheries to name a few, a significant skilled extremely patriotic Diaspora population and an overwhelming reservoir of external goodwill (as was manifested in 2011 during RSS Referendum by the UN member states).
The RSS, though landlocked, it has tremendous goodwill by almost all its neighbours and opportunities too. Well, except for one neighbour, Sudan (North) which, to-date, keep overly engaging the RSS in continuous ardours negotiations upon others, mysteriously, why….?!? Yes, your guess is as good as mine!
The potentials of people-people, trade, regional cooperation, peaceful co-existence and regional security are enormous between the RSS and its African neighbour countries. Juba is reportedly developing plans to build an oil pipeline that would connect the RSS with its East African neighbour to the Kenyan coast. Preliminary estimates put a $3 billion price tag on the pipeline. Both the RSS and Kenya are extremely enthused about this plan as it would open up plenty other trade opportunities between the two sisterly countries. Not only oil! Recently, and through elections, there’s a new government in Kenya, one hopes, time’ll soonest tell us how swift and efficient this cooperation between the two East African nations will shape. One is encouraged so far; on 9th April, President Uhuru Kenyatta’s statement during his inauguration ceremony in the presence of several African heads of states including H. E. Cde Salva Kiir, President Uhuru emphasized on intra-African trade especially within the East Africa region and on equal partnership basis. This, if swiftly negotiated and implemented, would prove vital to an RSS booming economy.
However, and once more, I would like to strongly reiterate, it is only through a high(est) political-cum economic will by the RSS government to firstly build sound, efficient financial institutions, systems, internal regulations and rules that really almost anything thereafter is possible to achieve; sustainable economic prosperity.
The RSS is a country with a relative small population standing barely (estimate) between 8-10 million and an huge size Country; acclaimed to be the size of several African neighbouring states. The RSS further is reputed to have, in addition to large oil deposits and reserves, vast other national natural resources, primarily large-scale agricultural fertile land, produce, animal husbandry, water, other minerals and a rich wild life etc.
Furthermore, assuming the RSS government attains a political will to immediately address internal governance, sound systems establishment, conducive investment and trade environment, the next question would be how to attract regional and international meaningful investment? CRITICALLY too, the empowerment and safe guarding of indigenous investment in key sectors other than oil production? Between 2006-todate there have been a number of investment conferences in Juba and other cities around the world to attract such. For instance, in 2007 one was held in Nairobi as well in 2011, Washington hosted an investment conference for South Sudan.
However, though much hype always excites such investment attraction conferences, there always, almost seem to be no follow ups, any feasible commercial projects or even proposals. My argument above, the political will is what is required and has been missing to create a conducive efficient investment environment and regulations which are factually implemented. It is worth noting at this juncture that, most of the existing trade largely, and investment to a lesser extent in the RSS are from neighbouring countries, especially Kenya e.g. banking and transport, Uganda on retail and food, Ethiopia and Eritrea hotels and sub-standard ‘affordable’ accommodation.
Suzanne Jambo is a South Sudanese lawyer, communities & human rights activist and is the current SPLM Secretary for External Relations and can be reached via email: [email protected]