Ten positive effects of oil stoppage
By Steven Wöndu
March 8, 2013 – The government of South Sudan stopped the flow of oil because the oil companies were colluding with the government of Sudan in stealing. Oil revenue constituted more than 95% of the income of the government of South Sudan. The loss of revenue necessitated the introduction of the infamous austerity measures. Critics of our good Minister of Finance call them ‘Kostirity’ measures. Reduction in public spending impedes economic growth especially for a net importing economy. I know the measures are hurting many of us but forgive me for identifying the positive effects of the disappearance of oil revenue.
1. We have to rely on none oil revenue more than ever before. To this end we have to streamline the tax collection system which had been neglected before.
2. More attention is being paid to the financial management systems in revenue generating ministries, departments and agencies (MDAs).
3. Cash scarcity has forced mangers in spending MDAs and families to optimize resource utilization.
4. Corruption has suffered a hard blow because the purse is almost empty.
5. Our inability to import food and other commodities is forcing us to take practical steps to improve domestic production to which we had been paying lip service in the past.
6. Higher tariffs on imports raised the prices of imported food relative to locally produced crops. In economic language, this constitutes a protection of local industry.
7. For the first time, we are paying attention to rural roads so that agricultural services can reach the farmers. More importantly to us urban folk, access to the villages is access to food.
8. The loss of the Sudanese route to the sea has forced us to consider more seriously the obvious necessity for an alternative to Port Sudan.
9. We are now beginning to realize the risk of relying on one source of revenue. Product diversification is the best known strategy of risk management.
10. Finally, we have learned the hard way that our northern neighbuor is very reliable when it comes to deception.
The author is South Sudan’s General Auditor.