Oil: Is it a curse or a blessing in South Sudan?

BY: Jacob K. Lupai, JUBA, SOUTH SUDAN, MAY/17/2013, SSN;

In the late 70s when for the first time oil was discovered in Southern Sudan there was euphoria that poverty would be a thing of the past, replaced by a high standard of living. After all when oil was discovered in the Arabian Peninsula the Arabs made gigantic strides in development and the economic boom raised the standards of living.

However, although the oil was discovered in Southern Sudan, the South was not to become the major beneficiary. The central government with focus on the interest of Northern Sudan had other plans to deny Southern Sudan development opportunities.

To exploit the oil resources of Southern Sudan, the central government made sure the refinery was sited in Northern Sudan. In addition, the oil from wells in Southern Sudan was to be transported to international markets through Northern Sudan. Siting the refinery in Northern Sudan and the subsequent transportation of the oil to international markets deprived enormously Southern Sudanese of employment opportunities and income to reduce poverty.

Also, lack of revenues to Southern Sudan for vital development projects, as a result of siting the refinery in the North, was obvious. Arguably, the discovery of oil was hardly a blessing in Southern Sudan when it was an integral part of old Sudan.

One would expect oil as a blessing in independent South Sudan. Between 2005 and 2011 Southern Sudan became self-governing and with it got a better deal on wealth sharing with Northern Sudan with reference to oil revenues. This was an arrangement in a comprehensive peace agreement (CPA) between Northern and Southern Sudan in 2005.

In the arrangement Northern and Southern Sudan agreed that 2 per cent of oil revenue derived from oil producing wells in Southern Sudan should be allocated to the oil producing states in proportion to output produced in such states. It was also agreed that 50 per cent of net oil revenue derived from oil producing wells in Southern Sudan should be allocated to the Government of Southern Sudan.

In the CPA the wealth sharing arrangement was indeed a relief in light of acute underdevelopment and poverty in Southern Sudan. In independent South Sudan oil production indeed would be a blessing because South Sudan would have 100 per cent of revenue from its own oil. However, the extent to which oil revenues will be used for an impact on living standards will indicate whether oil is a curse or a blessing in independent South Sudan.

Indicators of especial interest to be used are poverty and insecurity. This is because when oil is a blessing there shouldn’t be a high prevalence of poverty and insecurity because of the expected adequate budgetary allocations. Naturally oil is seen to produce substantial revenues that can be used to eradicate poverty and insecurity. Nevertheless, others may argue that it is not oil that may be a curse but corruption.

On the other hand a counter argument can be made, though simplistic, that when oil creates corruption then oil is a curse. However, oil in itself may neither be a curse nor a blessing as when it is underground but then it depends on how it is managed above ground.

Unity State in South Sudan was the lead oil producer which should have been getting 2 per cent of oil revenue from its wells according to the CPA. However, its consumption per capita per month was lower than non oil producing state like Western Bahr el Ghazal. Similarly Upper Nile was the lead region in oil production but its consumption per capita per month was low in contrast to consumption per capita per month in non-oil producing Equatoria.

On poverty Unity State as oil producing has 68 per cent of its population living below the poverty line while the population of non oil producing Western Bahr el Ghazal is 43 per cent below the poverty line. This seems to suggest that oil is not everything. With or without oil a state or region can still flourish. So there is no way an oil producing state or region should boast.

On services oil seems to have no impact. Salaries were not received promptly. Insecurity was rampant when people were murdered by armed gangs who were nowhere to face justice, and this happened when the budget for security was one of the largest. There was hardly any running clean drinking water in the majority of residential areas and availability of electricity was a joke. People depended and are still depending on food items imported from the neighbouring countries even when the oil was flowing. Roads in cities and towns were of little difference with roads in remote rural areas. The list of poor services could be long in a country that was oil producing.

What guarantee is there that the resumption of oil flow will make any difference as a blessing in reducing poverty and insecurity? With or without oil life will be as usual with people who have experienced life in South Sudan since 2005. What may rid people of poverty and insecurity are radical reforms and a thorough cleaning up of the system of incapability otherwise the number of millionaires will grow up spectacularly with the resumed flow of oil.

Sugar-coated lies and naked intimidation to silence genuine dissent will not work because people are already alert and may have been fed up with words without concrete action since 2005.

In conclusion, hopefully South Sudan will not enter the Guinness Book of Records as a failed state barely within two years of gaining independence because when oil revenues are mismanaged and with insecurity so rampant; oil becomes more of a liability than an asset or rather more of a curse than a blessing. The religious may need to offer a prayer for divine intervention and the secular may need to use all their mental faculties for a decent and peaceful way out.

2 Comments

  1. Oil is the only natural mineral resource in south Sudan, it can be a curse to the nation.

  2. juma says:

    Mr lupai, in my view, oil is not a curse if administration is serious, look at Libya before Gaddafi died, the GDP of Libya higher than many Europeans nations just because of his good administrative techniques. our problem is south Sudan is that people serve themselves than the nation. no accountability, transparency etc. if such basics of public sector are not present, then there is likelihood of insecurity, greed in which a person think of how much he can loot than what he can do to the nation as a whole. good enough elections are coming soon, the new government would perhaps learn from this lengthy list of mistakes.

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