The Impact of World Economic Crisis in Southern Sudan and the Related Socioeconomic Factors: Analysis BY: Deng Malok, JUBA
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Apr 8, 2009 - 11:21:46 AM
The Impact of World Economic Crisis in
Southern Sudan and the Related Socioeconomic Factors: Analysis
BY: Deng Malok, JUBA
The world is currently in an economic recession. A recession -in a layman's language- is a general slowdown in economic activity in a country for a prolonged period of time. This means that there is less money circulating in the market.
When the world economy slows downs it means that new potential investors will hold back their money, new projects will be stopped, households income and profits will fall since the clients have no money to spend. Big multinational companies will retrench workers in an attempt to cut on costs.
Sudan has currently being hit hard by the economic crisis because of our overdependence of on oil as a major source of national income. The price of oil has dropped from US$147 per barrel in July 2009 to US$50 per barrel since February 2009. Lets do some simple mathematics, if US$147 represents 100%, then US$50 represents 294% this means that the value of oil per barrel has fallen by 194%. This fall in the price of the oil revenue is nothing near the
Zimbabwe situation but is nonetheless a problem of major economic proportions.
This is because GOSS is now having a problem paying for it’s staff salaries and essential services that it needs to function effectively and efficiently. The
Sudan is part of the global economy and when the big boys of the Western countries sneeze, they say, we all get a cold. I must say that the cold that we are catching here in
South Sudan is going to be terrible and it may turn into tuberculosis. There are a number of reasons why this cold may turn into tuberculosis.
One of the reasons is that before the coming of the global economic crisis, we in South Sudan were already facing our own local economic recession this is because much the money that is meant to be circulating in the economy was being repatriated to foreign capitals to pay for rent, school fees and upkeep for the families of many of the South Sudanese who're in exile during the war.
With the coming of the CPA and the commencement of payments of salaries, many SPLA officers and civil servants have sent their children to East African countries and other parts of the world to get a good education as we slowly try to repatriate back the Universities of Juba, Wau and Malakal in their full capacities South and also as we try to develop the capacities of our local primary and secondary schools.
90% of day to day commodities like vegetables, fruits and fish are imported from our neighbor countries.
South Sudan is in a construction phase and hence much of the materials that we use like cement, metals are imported.
All the above-mentioned factors means that South Sudan economy has be losing a lot of money or has been slowly moving towards an economic recession since the formation of the GoSS in 2005. This is why the Sudanese Pound has been slowly loosing value against the dollar. This is simply because much of the hard currency is flowing out of the economy and nothing is coming in to counteract the loss. This is simply because we in
South Sudan are exporting zero products and services.
This situation is made worst by the laziness of most young able South
Sudanese man who prefer to sit down the whole day playing cards, dominoes or sitting under trees sipping tea and talking about the latest political developments in the corridors of power and gossiping about the next person to be sacked or the next person to be appointed to a plump government job instead of going to look for work as a manual laborer in many of the construction projects going on in all the corners of South Sudan.
For them, been employed as a manual laborer or any other blue collar job so that they can earn six hundred Sudanese Pounds a month (since most laborers are paid twenty Sudanese Pounds a day) is below their “Standard”. Remember that many of these people saying that the manual jobs are below their “standard” do not have the qualifications or experience for them to get the imagined jobs in the government that they think is to their “standard”.
My question to these individuals with this kind of mentality is that what is the best sustainable option between working as a manual laborer so that you can make ends meet as you wait for your desired job that meets your “standards” or begging for handouts from friends and relatives so that you can go use it to drink tea, more tea under the trees?
When young Sudanese men and women are unable to do such kinds of jobs that are available in the blue collar industry, foreigners like Ugandans, Kenyans, Congolese naturally take up these jobs and fill the vacuum left by the Sudanese. These foreigners will in turn earn their wages and send them back to their countries. Leading to more damage to the economy.
My great uncle the late Col. Dr. John Garang de Mabior Atem used to talk about taking towns to the people and not peoples to town but Southerners seem to doing the opposite at the moment. One of the reasons that is causing some of the people to move to the towns is because of insecurity in some of the parts of
South Sudan but many are moving to towns for different reasons.
One of the main reasons for their move is that they can no longer stay in the villages and farm. To them subsistence farming is no longer fashionable and is a primitive way of living. They want to come to towns get hired by the government and live off their salaries. Most of these people moving to towns are young and able bodied. This means that in country side of
South Sudan very few people are making use of our rich and not commonly mentioned source of wealth called the land. This is the main reason we are depending on the importation of foodstuff.
The GOSS at various levels has been having a problem of spending much of its’ budget on salaries. The total amount of money that goes for salaries as per the media reports is about 60%. The problem is largely due to lack of capacity and procedures by the government to properly manage and identify their staff using a standard agreed upon methods that go along with appropriate globally approved technological tools like biometrics that are almost 98% fool proof.
Currently many government institutions used a pay sheet based system with no appropriate ways of verifying the staff on pay day. This is why there are many incidences of relatives of government officials coming to towns and end up collecting salaries monthly from government offices they have never worked in. This means that the government is overstaffed with many ghost workers.
The other problem that the government is facing is the employment of too many non essential staff like messengers, tea makers and more then two secretaries in one office. The various institutions of government need to clearly define the roles of each of every official to ensure that we do not have unnecessary duplication and hence avoid wastage of minimal economic resources.
The measures that many governments take to counteract or to try and stimulate the economy during the recession are the measures currently been taken by the American government under Barrack Obama administration like adopting policies that enable the government to invest in large infrastructure developmental projects like construction of new highways, building or re-modernizing the railway system.
As the government is increasing its expenditure at this time, it normally reduces it’s taxation on goods and services so as to reduce the economic burden on the common citizen. Many governments the world are also beginning to adopt protectionist policies. What this means is that they'rel reducing on imports and focusing of purchasing of locally available raw materials.
What do all this issues that I've mentioned mean for
South Sudan in the election year of 2009? All these issues mean that 2009/2010 will be one of the worst years for South Sudanese. This is because a lot of money is leaving the economy, we the Southerners are not producing anything and hence exporting zero, we are over depending on the oil revenue and no money seems to be forthcoming from it in the near future, the people in the country side are not carrying out subsistence farming due to insecurity as well as change of cultural perception. This means that we as Southern Sudanese are staring at famine and starvation with their open eyes.
What shall the Government of South Sudan try to do to cope with this grave economic situation? When I was in the process of writing this article, GOSS took positive step towards the management of these crisis by the appointment of a Ministerial Committee on 27th March 2009 by the FVP of the Republic of Sudan and President of GOSS, Lt. Gen. Salva Kiir Mayardit to look into political, economic and administrative issues and to recommend possible measures to the government for action within a week.
My humble advise and suggestion to this Ministerial Committee is for them to adopt a multi-dimensional approach to solving this problem. By the way I’m not an economist by profession but I’m gifted with an analytical mind by God. What I mean by them adopting a mult-dimensional approach is for them to come up with short term solutions and long term solutions.
In the short term they need to cut on all nonessential expenses, cut down on the number of supporting staff e.g Messengers, tea makers, drivers, close some missions abroad or bring some of the staff back to
Sudan and leave only the critical staff. GOSS needs to adopt technology that will enable it to efficiently and effectively collect non oil revenue, identity its staff such as a biometric fingerprint device or an optical device.
The GOSS will also need to take a loan/grant from the international monitory Institutions like the World Bank and the IMF. This loan will enable to government to pay for salaries and essential services that it
needs to function properly. The long term strategy will include the establishment of vocational technical institution that will enable the young South Sudanese to get skills such as carpentry, masonry, mechanical engineering so as to enable them to take part in the
We need to set up a national grain reserve in
South Sudan to as our food security fall back.
About two weeks ago the wounded SPLA war veterans went on strike and blocked the border entry points from
East Africa because of not getting their salaries for about six months. What is the permanent solution to the management of the payments of wounded SPLA veterans, retired veterans and windows? I do not think is it practical for the GOSS to be giving cash directly from its coffers to the veterans. This is because the coffers will one day be eventually depleted like they already are.
So the only way forward is for GOSS to invest in establishing Cooperatives or business entities and ventures like hotels, commercial farms that will generate revenues as well as create employment. These revenues can then be used to pay for the monthly allowances or pensions of SPLA veterans or their benefactors.
The GOSS, civil society groups, church leaders and the media need to take part in education of South Sudanese so that they can adapt positive work ethics. The local population needs to be told and educated that this is their country and it is their responsibility to take part in developing it and as well as getting money. They need to be informed that work is work and there is no work that is below anyone’s standard as long as you are making your living in a decent way.
If the government embarks on a major infrastructure development, it will only have a positive economic impact if it’s the local population that is hired to do the job.
Security should be improved in the country side and the locals should be assisted with modern seeds, digging hoes and if possible they shall be trained on modern farming techniques. The roads to the country side shall be opened up so as to encourage farmers to venture in commercial farming hence boosting the local economic since they will be able to bring their goods to the market place.
We as South Sudanese must look very seriously into ways of guaranteeing our own food security and developing strategies that will enable us to be major food exporters in the region by 2020. The days when UN used to respond quickly with emergency food supplies are
over. The current situation is that almost 40% of the youth that are supposed to farm in the country side have come to towns to look for work and the GOSS is unable to pay salaries. So no money to buy food in the market and not food in the village, is this not starvation?
The oil price in the international market in general has dropped but according to some reports the quality of the oil being extracted by the Chinese in
Sudan is very poor because the Chinese are using inefficient and environmentally unfriendly ways of extraction. So the standard of the Sudanese oil in the international market has dropped. Does anyone have a clue about this?
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