April 4, 2012 (JUBA) – The governor of South Sudan’s Central Equatoria state, Clement Wani Konga, said on Thursday that the government should stick to mobilising more internally generated resources rather than depending on oil revenues and external borrowing from multilateral financial institutions which generate “huge kickback”.
Konga said unifying the people of South Sudan and ending tribal conflicts should be the government’s number one priority.
“As a new nation, we must pay much attention to [the] unity of our people. [The] unity [of] our people is the priority of any government whether it is us at the state level or those at the central government. There must be peace among our people. This is priority [number] one”, he said.
“The second priority is self-reliance. We must till the land which is abundantly available for use to produce food. The third is proper management of the locally generated revenues. There must be [a] proper taxation system between the two levels of governments, the states and the central government”, he added.
Early last March, officials at the ministry of justice said they were studying a proposal aimed at introducing legislation that would limit how much the government could borrow from either local or international financial lending institutions, arguing that an open borrowing system results in excessive borrowing by the government, leaving it short of funds to support other important projects.
If drafted, the legislation will firstly be handed to the council of ministers for discussion before going to the national legislative assembly for further in-depth deliberations. The house would then decide on whether to pass an act giving the country power to determine the terms and conditions on which money is borrowed or reject the legislation outright on the grounds that it sees no basis for introducing such a law.
South Sudan remains heavily dependent on oil generated revenues, but is currently facing severe budgetary deficits as a result of shutting down oil production last year after accusing the government of neighbouring Sudan of diverting its crude oil for its own profits.
However, an agreement signed recently between the two countries permits the South to use oil infrastructure located in Sudan to export its crude oil to international markets.
Konga, who appears to be sanctioning the idea of legislation which would limit how much the government can borrow, maintains it is not possible for any borrower to independently set the terms and conditions of borrowing.
“That is why I have always supported a fairer taxation system, for example, for those that exploit our natural resources, such as timbers. If we are able to maximise what we generate locally, it minimises the requirement for us to go to outside institutions to borrow, whether on their conditions or on our conditions”, he said in an interview with reporters after meeting investors interested in establishing a brewery in the state.
“Usually, even at a personal level, when you go to a bank to borrow you don’t go there at your conditions, you borrow at the conditions that the bank has. So, I don’t think it is possible for [a] country which is still new, or even any other country, to set their own conditions when they borrow from multilateral institutions like the African Development Bank, the World Bank and many others, he explained.
Konga says the country should instead focus on boosting key sectors of the economy such as agriculture, tourism and communications to cut down on borrowing, adding that South Sudan should also team up with other third world countries to negotiate for better lending conditions.
“I have always heard people [speaking] of huge kickback which means interest to pay later. This can be addressed [if] we seek cooperation with other countries. It is the cooperation which can put pressure on these institutions to make them moderate the lending conditions. But, on [an] individual basis, it’s impossible for any country to set its own conditions and then go to any of the international banks and say ‘we want to borrow at these conditions’; it doesn’t work,” he said.
“But if you work with other developing countries and other continents and say ‘let us have better lending conditions’, you stand a better chance. As customers, you can cooperate with other third world countries [and] those that borrow, and lobby for better lending conditions.”