Difficulties facing the South Sudan economy

By Dhieu Mathok Diing Wol

May 16, 2009 — There is no clear line provided by the CPA on what should be the interim arrangements on macroeconomic policies in the Sudan.

Unlike what was spelled out clearly about the new banking system in the country–that there must be two systems, an Islamic one in the North and a conventional/traditional banking system in the South–this has not been the case as far as macroeconomic policy in the Sudan is concerned.

Many people thought that since the overall system in the country is unitary, then the macroeconomic policies ought to be as well.

But the North already has adopted an Islamic system to govern all business transactions in both public and private sectors since 1990 as a part of Islamization of the economy in the Sudan. According to Muslims, Islam cannot be isolated from public life; it is a part of their daily activities (Five Prayers a day). Therefore, the issue is not confined to politics alone, but all aspects governing human activities and their lives including economic transactions.

Considering the above situation in “The Old Sudan”, GOSS has powers to establish its own economic trend, which is completely different from the Islamic system operating in Khartoum and should be in line with CPA determinations about Southern Sudan during the interim period.

Article 1.2 in the Machakos Protocol clearly stated “the people of South Sudan have the right to control and govern affairs in their region and participate equitably in the National Government.” This provision gave GOSS powers to formulate policies that suit South Sudan since human aspirations could be enhanced through introduction and promotion of relevant economic policies. It is a sole responsibility of the South Sudan’s autonomous administration in Juba to explore policies that could serve interest of the people based on the preferential peculiarity of the region.

Despite this clear responsibility, confusion arises due to enshrinement of the Article 32 in Schedule (A), “National Powers of the Interim Constitution 2005,” regarding economic policy in the country from the time. At the time the conflict over national prerogative was resolved by establishing concurrent powers shared together by the two levels established by the CPA to introduce symmetric systems (one country, two systems). The rationale behind the provision stemmed from the government insistence on an Islamic system in the country and the reluctance of the SPLM to accept this arrangement.

This confusion in the economic policies of the country must be relegated in favour of CPA since the Article 225 of the Interim Constitution 2005 says, “The Comprehensive Peace Agreement is deemed to have been duly incorporated in this Constitution; any provisions of the Comprehensive Peace Agreement which are not expressly incorporated herein shall be considered as of this constitution.”

The responsibility of promotion of the economic sector in the South should be carried out mutually by those institutions working in Juba, namely: Ministry of Finance and Economic Development, Ministry of Commerce, Supply and Trades, Ministry of Animal Resources, Ministry of Agriculture and Forestry, Ministry of Telecommunications, Ministry of Irrigation, Ministry of Industry and Mining, Ministry of Regional Cooperation and the GOSS Liaison Offices operating in neighbouring, sisterly and friendly countries.

It seems people are confused for what are exactly the functions and duties of the ministries and missions operating outside Southern Sudan. In the last meeting of SPLM Political Bureau in April 2009 when the economic devastation haunting Southern Sudan was reviewed, one of the members asked for amalgamation of all ministries into only security (SPLA and all other Armed Forces), economics (Finance, Agriculture, Animal Resources etc) and a ministry for general services (Health, Education, Roads, Culture and Information etc) as a solution to reduce the huge workforce and numbers of
constitutional post-holders in GOSS — but the proposal was overlooked and turned down.

Involvement of a private sector will help in boosting the economy. The attempt to support indigenous traders in Juba to capture markets was a good idea but lacking any professional mechanism which led to its total failure.

In Juba, one can easily realize very intensive presence of
foreigners and their domination of the markets. Having foreign partners in our economy is excellent but needs regulation. Our Offices working abroad are needed to be involved in regulating the trade between South Sudan and the neighbouring countries.

South Sudan should discover its own economic potential and not base its economy on the monthly oil percentage transfers from Khartoum. The oil revenues should be a catalyst for developing other sectors like agriculture, industry, telecommunications and other services. Depending on oil 90% to run our autonomous region is dangerous not only in terms of the economic dependency but as well as the political aspirations of people of Southern Sudan are concerned. GOSS should not misdirect our economy.

During the first autonomous government of the Higher Executive Council (1972-1983), the main sources of our revenues were agriculture, taxes and custom duties from border trade. Agricultural products produced in Northern Bahr el Ghazal, Western and Eastern Equatoria and the Upper Nile, for example, were sold in the neighbouring countries. All the agricultural schemes are supposed to be rehabilitated and innovated for solving the problem of food security in South Sudan. The amount spent in purchasing cereals was more than enough to maintain the existing projects and establish new ones.

China is expressing its interest to invest in forestry in South Sudan by purchasing woods and timbers. Since the forest is a renewable resource, there was no point as why China was denied this golden opportunity, which can generate income for South Sudan until the recovery of the economy.

Another important economic sector which needs GOSS attention to is animal resources. The huge numbers of the cattle owned by people of Southern Sudan–which oft now becomes a source of conflicts between the tribes–is unbelievable. Formulating policies that would encourage people to invest in their cattle is needed for which it can serve two advantages: introducing the animals in the economic circle of the South, and minimization of conflicts generated by cattle ownership in the communities.

With globalization, the investment in telecommunication is profitable. The South currently, operates two companies of Gemtel and Vivacell. However, the market is still being dominated by the companies originated from the North and the money generated from this investment goes back to Khartoum, even as liquidity because there are no regulations that prevent carrying monies out of South Sudan. The best ways would have been through the bank transfers. This has caused great damage to our economy.

Behaving as consumers all the time is what GOSS should discourage through formulating new economic policies — and surely it can succeed, since all factors of production are available in the South. The imbalance of foreign trades becomes the immanent opposite to what late Dr. John Garang had been telling people, that South Sudan has a good market for selling its products to a huge population in East Africa and Great lakes countries.

One wonders why economic theories are not functioning well in South Sudan; there are only imports instead of both imports and exports, there are consumers, instead of producers and consumers, there is demand, only for supply from outside. This is an unacceptable situation.

GOSS must formulate laws and regulations helping to enhance economic and social developments and serve to eliminate the corruption in the government institutions. The bringing of corrupt elements to book needs laws and regulations governing the administrative procedures and behavior of the public personalities.

South Sudan is a rich land, but the regime in Khartoum has been permanently misinterpreting the Agreement for its benefits.

The National Petroleum Commission which is supposed to act as a national body to promote utilization of petroleum in the whole country at large was manipulated by Northerners and used for the welfare of their economy. More explorations are being conducted in the North since the era of the CPA and the South was denied this right. Instead, its contracts which were signed with foreign companies before implementation of the Agreement were refused execution and canceled.

The Bank of Southern Sudan (BOSS) is facing difficulties in possessing foreign currencies. The Central Bank of Sudan (SBOS) dominates possession of a reserve funds in hard currency. The crisis over this issue was generated by rumours circulated last year that there was a shipping of military equipments from Ukraine via Kenya to South Sudan and the goods were alleged to be owned by SPLA. This allegation was disputed by GOSS and Kenya Government.

Developmental projects which are already on ground are threatened to cease from operation, because of lack of the cash liquidity in the South and the refusal of the Federal Ministry of Finance and National economic to grant the companies the Bank Guarantees. All attempts by the GOSS to open the Accounts in foreign countries were rejected by GONU.
A little amount from donors’ pledges to South Sudan is administered by Khartoum and directed to projects like infrastructures and capacity buildings.

The ambiguities that surround the Wealth Sharing Protocol of the CPA and provisions regulating the economic relations between the two levels of the government in the National Interim Constitution of 2005 were exploited by the North to speed up its marginalization to maximum standard during the Interim period before the South decides its destiny in 2011. In the long run, this has contributed effectively to making unity less attractive. One can further conclude that this may lead to the secession of South Sudan.

Dr. Dhieu Mathok is a former Minister and lecturer at the Center for Peace and Development Studies, University of Juba. He can be reached at [email protected].