Why is South Sudan Failing Economically?

By Daniel Wuor Joak – The author of “The Rise and Fall of SPLM/SPLA Leadership,” MAR/24/2016, SSN;

Basically, South Sudan since the signing of the CPA and its subsequent establishment of GOSS in 2005, and thereafter the declaration of independence in July 2011, had never come out with clear and well-defined economic policy to tackle correctly issues pertaining economic stagnation like creation of job opportunities, inflation and currency exchange fluctuation rates with USD dollar which converts other currencies worldwide.

I am certainly afraid to admit whether our economy is based on the three categories of economies adapted worldwide like free market economy, mixed economy or command economy, which I doubt very much to precisely follow any of them. Therefore, none of the three economics setups enumerated above are truly applicable in our country.

Since there is no clear and defined economic policy, we should now explore some of the reasons why South Sudan’s economics is coming to the stage of bankruptcy.

To my understanding, the current economic conditions can easily be ascribed as “Instability Economy,” because our central bank which supposes to be the custodian of regulatory foreign exchange broker and government generated revenues that in essence could work independently from any external interferences.

Unfortunately, this has never been the case as the ministry of finance and the office of the president most of the time overruled and equally sanctioned the role of the Bank of South Sudan in favor of their two entities. It is more or less a toothless dog that has no teeth to bite.

Such unwarranted behaviors from above had greatly undermined the role of the central bank and I believe some of our economists like Dr. John Yien Tut and other handful personalities who were directly involved with our economic policy at the Bank of South Sudan would henceforth shed more light on this subject.

One of the major causes that attributed to economic decline in South Sudan was rampant corruption that later stimulated high inflation in SSP (South Sudanese Pounds) due to regular fluctuations of foreign currency exchange rates, where our currency was not fully incorporated to other currencies in the region.

The other factor is the decline in oil price at international market whereas our country since then has been depending exclusively from the oil income which could be translated to 98% of its overall revenues.

The third crucial factor in our economic catastrophe in South Sudan is the ongoing civil war in the country, in which most of the revenues generated from the oil have been used comprehensively by the government for purchasing war materials or allocated specifically to security sectors while leaving other segments neglected.

The most important components like agriculture, livestock, mining, fisheries, microeconomics and industries have seriously been ignored without being improved to accommodate several hundreds of thousands unemployed youth throughout the country.

Both public finance taxes and Personal income taxes had never been collected fairly or squandered by individuals assigned to such institutions concerned with full consent of their godfathers from above.

Most of the South Sudan’s checkpoints at the borders to Ethiopia, Kenya, Uganda, Congo, CAR and Sudan were generating several millions of SSP on daily basis but had never been accounted satisfactorily to the government coffers by those assigned tax collectors and their godfathers in Juba and other state capitals. As this was part of the ongoing rampant corruption in the country.

Due to lack of other source of employments, the government of South Sudan has been the only source of employment which could afford to employ less than 10% of its total workforce mainly on security sectors like the army, wildlife, police, prison services, national security, fire brigade and other government institutions like education, health, agriculture and forestry etc.

Generally, unemployment rate is very highly mostly among the university and college graduates, rural youth and former SPLA combatants. Whereas 90% of the population who are still in active service have been left without any form of income earnings except subsistence agriculture farming and livestock rearing among the rural population throughout the country.

In this unfortunate situation of ignorance and corruption practices, South Sudan is openly exposed to outright exploitation by inviting some visible and invisible exploiters who masquerade as investors and NGOs partners for the development of our country.

Since 2006, South Sudan Legislative Assembly (SSLA) had tried its level best to legislate two drafting bills, among many others on NGOs and Anti-corruption, as to enact them into laws in order to streamline and curtail the activities of those invisible foreign actors who have been operating independently with full protection of certain quarters highly entrenched in the system.

Unfortunately, the then minister for Legal Affairs and Constitutional Development, Hon. Michael Makuei Lueth, consistently and arrogantly rejected these bills to be tabled before the assembly for discussions and enactment into laws.

The reason was evidently simple! All companies and NGOs concerned used to be registered under his ministry and several millions of SSP revenues generated from them had never been remitted to the ministry of finance for proper accountability for several years. The moneys generated from registrations of companies and NGOs was benefiting some few individuals undoubtedly within his ministry including the minister himself and his close circles.

As an open policy being condoned by South Sudan government based on material interests, almost all the international NGOs used to bring expatriates either from overseas or selectively from the neighboring countries of Uganda, Kenya and Ethiopia. Such vacancies like managerial positions, field coordinators and the simplest jobs like watchmen, drivers and cooks were also brought from the neighboring countries while South Sudanese citizens were capable to fill those vacancies at ease.

The government never questioned the NGO’s motives in the country with respect to their working conditions and interests, employment policy and the accountability of the donor’s moneys intended for helping the needy people in our country.

Nevertheless, it took them some years to employ South Sudanese nationals as cooks, cleaners, drivers, watchmen leave alone such senior positions like field coordinators or managers which the international NGOs reserved only to foreigners.

They operated in our country all these years without paying Personal Income Taxes to the government of South Sudan while in the past, South Sudanese who used to work in any of the neighboring countries similarly with NGOs he or she was subjected to paying PIT tax unconditionally.

As it happened to several South Sudanese who used to work in Kenya with the Operations Lifeline Sudan (OLS) before the Sudan peace agreement or CPA was concluded in 2005. All of them were subjected to paying taxes.

The same condition was also applied to our people working in Ethiopia, Sudan and Uganda. The NGOs bill was just passed recently by South Sudan National Parliament on 12 February 2016. This has been resisted by those who benefited from this scams for the last 10 years where all the international NGOs workers had been working in isolation without paying any taxes to the government.

Nobody from South Sudan government for sure had ever known how much billions in USD such NGOs brought to our country, how they spent it or how many people benefited from it. This question remains a mystery and will never be answered either including Hon. Michael Makuei who personally assisted them to loot our country.

Hence, the government of South Sudan never bothered to tax its citizens according to their annual personal incomes on regular basis like the rest of the world. Knowingly or unknowingly, the ministry of finance imposed a unified PIT system to all government employees from cleaners, messengers, drivers up to the level of MPs, ministers, presidential advisors etc. with the same uniform tax of 10%.

This was done tactically by those from above in order to avoid paying too much taxes to the government at the expense of the poor citizens who were unjustifiably equated with the middle and upper classes in the country. This has been the official policy of all government institutions from national to the state levels to equate the payment of taxes for all.

In general trading and supply of goods and services, the roles were divided equally by those unscrupulous entrepreneurs from the neighboring countries whereas, Ugandan were dealing mainly on supply of construction materials, food, human waste disposals, internal transports: Boda-boda (motorbikes), mini buses, long journey buses, supply of water and also engaged in building constructions as laborers.

While the Kenyans controlled mainly the banking system in Juba and other major towns in South Sudan. Some of the noticeable banks like Equity, KCB and the South Africa based Stanbic Bank all had established branches throughout the country.

Their Somali satellites dealt mainly in supply of fuel, lubricants and general trading. About 95% of petrol stations in Juba used to be controlled by the Somali businessmen through their local South Sudanese agents who provided them with all the necessary protections and appeared only in registration certificates by proxy as owners.

In this business there was no proper recording and accountability as their godfathers were active SPLA generals who always intimidated the tax collectors with death threats whenever they tempered with their Somali agents in the country.

While the Ethiopians and Eritreans controlled hotel industry, restaurants, general trading, human waste disposals and water supply. Most of the hotels being owned by the Ethiopians and Eritreans have been registered under South Sudanese partners most likely some ministers, generals from SPLA and senior officers from South Sudan national security services.

Unfortunately, some of the water tanks were used during the nighttime to ferry human waste disposals where they dumped them in river Nile which has sadly become one of the deadliest human hazards in Juba town or scattered them along Yei road and during the daytime some of the same water tanks could be used with written marks on them as clean drinking water. Such complaints had been raised several times by Juba residents to both national and Central Equatoria State governments but to no avail.

Some of the Kenyan leading banks in South Sudan have indeed monopolies over their South Sudanese complements which are being owned by a group of Dinka influential mafias closed to President Salva Kiir Mayardit. These cliques of Dinka mafias have been the ones behind rampant corruption all along for the benefits of their unscrupulous businesses.

These are the same cliques that have been lobbying the president to hurriedly endorsed the membership of South Sudan to East African Community so that they could continue investing several hundred millions of USD that they illegally siphoned from the country through deceitful dealings.

The inflation of SSP in exchange rates to USD has drastically declined from 3.1 to 400 SSP per one USD. In actual fact, South Sudanese Pound has now reached a point of losing its original value by 1000%. In marketing terms, when money lose value the investors virtually lose interest to invest in the country.

Presently, the cost of living has soared very high in the country as result of sky rocketing prices in the market whereas demand and service have also declined. In this connection, South Sudan has now reached the level of hyperinflation which amount to the total collapse in living standard or in worse case scenarios the country is virtually pronounced bankruptcy.

Surely, the government in Juba has failed to tackle economic measures and therefore the international community must urgently step in to avert South Sudan falling into the Somalia’s saga of anarchy by supporting an alternative leadership to rescue the country from imminent collapse.

If the August 2015 IGAD Plus imposed peace agreement is not fully implemented so soon, the inhabitants of Juba and other major towns in South Sudan shall have no any other alternative means for survival than joining their brothers and sisters already at UNMISS Protection of Civilians camps located in various states for their own survival from starvation.

Or else they will join over 600,000 South Sudanese refugees who had previously escaped the Jieeng Council of Elders (JCE)/Mathiang Anyor led government’s onslaught to the neighboring countries of Congo, Central African Republic, Uganda, Kenya, Ethiopia and Sudan in search of food and shelters.

South Sudan is in the crossroad of disintegration into mini-enclaves like the ones in Somalia, Libya, Iraq, Afghanistan and Syria if the international community could not urgently step in to rescue it from collapse.

The author of this article can be reached via this email: dwjoak21@hotmail.com

6 Comments

  1. Eastern says:

    One of the key reasons I have mentioned numerous times for the crumbling economy is patronage, for lack of a better word.

    During the nearly two years war between Kiir and SPLA-io, many generals bled with the promise that if they stuck with Kiir, the future will be bright for them. With the dwindling oil output and declining global prices, out of the woods some “smart” head advised Kiir to print more bank notes to appease the aforementioned loyal generals ahead of the arrival of SPLA-io in town with their “reform agenda”. Now the newly printed banknotes are just adding more money in circulation without any purchase parity.

    The printed “worthless” notes are doing wonders in the lives of the generals in Juba though. Many can be seen cruising top of the range Toyota Landcruiser SUVs, they own “permanent” houses and others have added on to their number of wives. That goodwill from Kiir to his generals has send the SSP scuttling against the US dollar at over SSP40. The much hyped salary increment for the lowly paid Grade 10-plus on the government salary grid won’t see any change.

    Kiir and cohorts are very arrogant and proude in dealing with the Chinese, now why can’t Juba think of weighing the SSP against the Yuan moving forward?

    To all those processing in Christianity, happy Easter.

    The Eastern Rock

  2. Ray says:

    After all the wordings and meandering the final answer is to have international community step in – OMG and event laughable and this is the core soul reason why African/south Sudanese will never solved their own problems. We create our own problems and call someone else to come and solve them and they (international community) do not understand our problems very well. South Sudan belong to all of us and we understand in and out what we need and what affect us and we must have solutions for our problems. We should ONLY ask for technical assistance if necessary but everything else must be tried first. South Sudanese intellectuals need to take the task of rebuilding South Sudan serious instead of taking sides in fake wars that serve no purpose but squander resources.

    • Eastern says:

      Ray,

      If I were you, I would avoid the use of the phrase “our own problems…”. There is a saying among the old timers in the AU these days that African problems require African problems. That’s the most stupid reasoning goes ever.

      From the scarge facing the continent ranging from HIV/AIDS to famine and poor governance, what can African on their own, let alone your claim that “they understand their problems”, do to make the continent a source of a success stories rather than the current dooms and miseries.

      Good luck with your trust in the current “letters” struggling to remain at the top oblivious of the fact that the piles of the skulls of the hapless chaps who died for them is increasing by the day.

  3. False Millionaire says:

    Ray,
    I don’t disagree with u.Your assertion is the most genuine point of a good begining.
    Just look at our neighbours southword meaning Uganda and Rwanda.Their capital as the root laying the foundation of their progress was the good brains of their political elites who knew what to do to help their countries and societies long before taking power.With conceptual road map of their home work in their hands,it was easy for them to ask for economic and techenical assistance from relevant international institutions like the world bank after they took power.
    The money they had borrowed could be seen reflected on the infra structures that they have improved,on such services as education,health care and security manning that they have put in place and without shorteniong to mention the quality of life of their masses which has brilliantly improved.
    The problem of RSS is a human problem and the governing elites are the reason.I am pesimistic about any change for better if those failing internal elites are not cleared out by RSS’ constructive elites before hoping for external,”techenical assistance”,as u correctly assert.

    Consider Eastern’s position of,”African problems require african solutions”,which for him,”that’s the most stupid reasoning goes ever”.
    But it’s good to be patient,bear and accept to reason with him.The best question to ask is,is it the phrase it’s self that bears no sense of conviction or is it the people who use it?If it’s in the context of an old crocodile which refuses any change therefore feeds on baby crocodiles becouse it doesn’t want the young crocodiles to live after his death of old age as it’s ordained by the nature to preserve the crocodile’s race,then there are very good reasons to agree with Eastern.
    But we don’t belong to the crocodile’s race.We are human beings well characterized by the principles of rationality and common sense.We have ability to reason as what is good and that which is bad for us.
    There is no need to go too far and proceed to think of,”the old timers in the AU”.They are already here at home as symbolized by the SPLM/A elites among whom are Kiir and Dr Riak.
    So let’s permit ourselves to set them apart and we would never have any good reason to paint RSS’ constructive elites as,” stupid”,if they ever dare to say that,RSS problems require south sudanese solutions.

    • Eastern says:

      False Millionaire,

      Let me make some clarifications here if that helps. The architect of the “African problems require African solutions” now resounding in the corridors of AU in Addis Ababa is non other than Museveni of Ugandan; a man who is so filled with self ego to the extend that he would be happy referred to as the “president of Africa”.

      Museveni came to power riding on the backs and wading through the blood of Rwandese refugees residing in Uganda for dacades. He used these hapless folks in his NRA gorilla outfit to oust the Okello’s aka the Anyanya from power. The rest is history you need to find out for yourself if you are not already familiar with.

      Then in the 1990s, the World Bank came to the aide of Museveni’s government which was really doing badly compared to our current situation in South Sudan. One of the bitter pills Museveni had to swallow was the Stratural Adjusment Program. This program saw many of Museveni’s cronies losing their jobs. Then came the privatisation of government enterprises which were sold to private often foreign entities.

      Rwanda’s success came as a result of its mixed approaches: resolute leadership (other call Kagame the village school headteacher type leader) and strict fiscal and monetary discipline. In Rwanda you don’t see these “no brainers” in the streets of Juba cruising the those top of the range SUVs with those abnoxious number plates with the inscriptions GOSSxxxxBC, who often have no regards for other road users. Lavish expenditure, corruption and appeasing cronies by Kiir must stop before South Sudan returns on the path to recovery.

      False Millionaire, the two southern neighbors “gave a listening ear” to the outsiders. They also fought hard in their bushes and died in numbers. SPLA and SPLM must not appear to be unique so as to be accorded a special treat.

  4. False Millionaire says:

    Eastern,
    John Garang could never have managed to command the SPLM/A as a backward gurrilla movement down to the CPA permitting the birth of an independant RSS if he wasn’t capable of listening to the voices of good will from well wishers.
    Today I agree with u.Our problem is the lack of elites who give,”listening ear to the out siders”,as u correctly say.
    The only small point of disagreement is,we must have the idea of what we want and how to get helped without selling ourselves out.
    Thank u for recognizing Rwanda’s success story under the leadership of Kegame whom u call,”village school head teacher type leader”.
    As it said,”spare the rod and spoil the child”.I am forced to believe that Mouseveni wasn’t too stupid.The cost of sacrificing his cmrades is the very good reason that has put his country and the society in the path of development and prosperity that has brought so much sense of happiness to his country and countrymen today.
    Our salvation will never come beyond the two hard realities.
    Merci et bon fète de pàques mon cher ami.

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