Good Start for New South Sudan Finance Boss
By John A. Akec
March 28, 2007 — You never get a second chance to make a first
impression. Gabriel Changson Cheng, the acting
minister of finance and economic planning in the
autonomous government of South Sudan, knows what that
mantra means. Mr Cheng, barely a week in the office,
has begun to sent out the first signals of financial
prudence by freezing payements by GOSS (government of
South Sudan). Mr Cheng was appointed to act in place
of Arthur Akuein who was suspended recently on
allegation of corruption.
According to a statement released today by South Sudan
Council of Ministers (28 March 2007, posted below),
the freeze will not include salaries. The main reason
given is to allow the new minister to acquaint himself
with current Government accounting system. It is also
possible that this will help stop any fraudulent
payments going through to rogue contractors. A very
wise move indeed.
According to information obtained by this author, Mr
Gabriel Chang comes from Nasir in the Eastern Upper
Nile State of Souternh Sudan and was one of the
founders and directors of Ivory Bank (Khartoum) in the
mid 1990s. As extremely unique Southern innovation of
its kind, Ivory Bank had a reputation for delaying
paying out money transferred from the Diaspora by
South Sudanese abroad to beneficiaries in Sudan. Not a
good reputation by any account. After many years of
ups and downs in which it made no profit, the Bank was
taken by the central government about four years ago.
As things currently stand, Ivory Bank has turned the
corner to become one of established banks in Sudan
with branches in Khartoum and major Southern cities (a
successful bank, at least by Sudan standard). What
that says is that Mr. Cheng is a man with significant
track record. He is well informed and competent in
finance to sort out the mess left behind by his
predecessor, and perhaps to leave his own fingerprint
and create a lasting legacy that will be uniquely his
own.
As the most important job after a president anywhere
in the world, Gabriel Cheng is taking over a huge
responsibility for economic planning and finance. Two
long years have passed since the nascent government
was set up in July 2005, and we have not seen any
clear macroeconomic policy
In fact, in the last two years, macroeconomic policies
have been anything but. Incompotence and muddle are
two terms that could best characterise GOSS’ economic
policies in the last two years.
A government’s macroeconomic policy influences total
economic output of a nation (that is, the goods and
services produced by an economy at any one time),
government and households income and expenditure,
unemployment, inflation, interest rates, and the
balance of international trade. All these are
interrelated and one affects the other.
It is the function of a good government macroeconomic
policy to keep all the above economic indicators well
balanced through allocation of resources. Two most
important economic indicators that can leave the back
of a government very much exposed are inflation and
unemployment. Ideally, inflation, which is the measure
of increase in prices of consumer goods (or consumer
price index, CPIX) month by month, and year by year,
should be close to zero or less than 10%.
Uunemployment which is the number of people out of
work should be also be minimal or constantly falling
for a healthy economy.
Under Mr Arthur Akuein, there was zero economic
policy. Nobody could understand why GOSS was spending
its money the way it did. One of good measures of
inflation which I can use to measure how high prices
have risend is the price of a head of a cattle (a gold
equivalent for many Nilotic tribes for storing wealth)
has gone up from $50 per head to $500 per head since
the arrival of GOSS in August 2005. This is an
increase of 1000%. As if this is not enough, Juba is
the most expensive city in the world. The main reason?
Wage inflation and increase in money supply (under
Arthur Akein’s watchful eyes) in a region that imports
everything from outside while producing little apart
from oil. That means there are too many people with
loads of cash chasing after too few goods. The prices
soar and poor majority suffer.
Moreover, GOSS pays very generous wages calculated in
dollars, and then paid out in Sudanese pounds. When
dollar goes up and down, wages goes up and down in
South Sudan. A masetrly work of a genius? I do not
know about that!
Also, unemployment in the South is as high as ever.
Bad still, more people are being laid off in Southern
States. This is happening at a time when the
government of Southern Sudan is suffering from the
lack of capacity (that is skilled work force). Instead
of facilitating the uptake of skilled workforce both
from within Sudan and from Diaspora by building
‘highways – figuratively speaking’, the GOSS’ policy
has been one of erecting obstacles and building
straits.
Mr Chang, if he stays long-term, has a lot of work in
his hand. First and foremost, he needs to cut wages
and control money supply. He should clearly define the
role of Bank of Southern Sudan in the economy. He also
needs to come up with innovative policies to speed up
transfer of skills from abroad to South Sudan as well
as providing meaningful jobs for hundreds of skilled
and unskilled South Sudanese youth now roaming streets
of Khartoum. Next, Mr Chang would need to scrutinise
the balance of trade with East African countries and
to negotiate terms that would benefit South Sudan
economy in short, but more importantly in long term.
Last but not the least, he should seriously consider
the wasteful spending of public funds in expensive
hotels in Juba costing over $120 per night per an
official. He needs to come up with policies, and
projects to bring down house and hotel rent in Juba by
supplying cheap housing based on prefabricated
materials.
In short, Mr Chang has a big job in hand. Having
created a positive first impression, I have every good
reason to be optimistic that he will deliver.
John A. Akec
London, UK
Council of Ministers 28 March 2007: Statement from Minister of Information
This evening, following a meeting of the Government of Southern Sudan (GOSS) Council of Ministers which was chaired by HE President Salva Kiir Mayardit, the following statement was given to the press by HE Dr Samson L Kwaje, Minister for Information and Broadcasting.
The Council had received a briefing by the Acting GOSS Minister for Finance and Economic Planning, HE Gabriel Changson Cheng, which aimed to update the Council on the current financial situation of GOSS. The briefing covered a number of areas, including oil revenues, salaries, expenditures and the finances of the States.
The Acting Minister suggested a number of immediate steps to be taken. These include:
* An immediate freeze on all payments by GOSS. This measure excludes salaries, which will be honoured as usual. This urgent step is designed to allow the Acting Minister time to reorganise the accounting system. It is expected that the payment freeze will be brief, lasting one week or less.
* Balances are to be sought for all government accounts, in order to gain an accurate picture of the current cash situation. Accounts are currently held by GOSS with the Bank of Sudan, as well as with commercial banks in Khartoum and internationally, particularly in Nairobi.
* The Acting Minister recommended closing all but the account held with the Bank of Sudan, in order that there should be just one financial system in operation.
HE Dr Kwaje further reported that the Council had issued a number of Circulars. The first related to the recent problem of reductions in salaries to Civil Servants, resulting in losses of up to one fifth of the accustomed salary. These losses had resulted from reductions in the value of the US dollar relative to that of the Sudanese Pound. This had affected the salaries of Civil Servants because accounting is carried out in dollars, whilst salaries are paid in Sudanese currency. The Minister of Finance together with GOSS would be responsible for educating citizens about this issue.
The second Circular concerned the cleaning of Juba Town. HE the Minister stated that Juba had become the “dirtiest town in the world” and pointed out with concern that the coming rainy season would inevitably bring many deaths due to cholera and other water-borne diseases. Responsibility for cleaning Juba had been an issue of confusion. The Council had stated that this responsibility lay with the Commissioner of Juba, in the office of the Governor, who would receive some assistance from GOSS. HE the President would personally be taking up the issue with the Governor of Central Equatoria.
The third circular related to the release of staff, mostly from the Ministry of Transport and Roads, to attend training as pilots, ground crew and technicians.
The Council had considered a Memo for the Minister for Presidential Affairs relating to progress with implementation of the 200 day action plan. The Council noted that some progress had been made, by nearly all the Ministries, towards achieving the aims set out in the 200 day plan. Also noted was the fact that there had been constraints and challenges which affected this performance, including delays in accessing cash. The Council hoped that these delays could be addressed in the shortest possible time.
The council had next expressed its concern with the continued slow pace of progress with certain infrastructure projects for the construction of roads, housing renovation, installation of electricity, provision of clean water and construction of sewage systems. These tasks were part of large contracts, mostly held by two Ministries. The Council felt that, in view of the very slow progress, some of these contracts may have to be reviewed.
Source: Larco Lomayat, SPLM Diaspora.
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* Dr John Akec is a political analyst based in London . He is also the editor of a blog where he posts articles and comments about the Sudan. He can be reached at [email protected]. To view past articles by the author please click the following link to author’s personal blog:
http://johnakecsouthsudan.blogspot.com/