JohnAkecSouthSudan

Tuesday, January 01, 2019

Sudan and South Sudan: The Tale of Two Economies


By John A. Akec

MORE THAN SIAMESE TWINS
The two Sudans, both north and south, share a troubled history, fear of the present, and hope for a peaceful and prosperous future within and across their borders.

The events of the past months, weeks, and days in Sudan and South Sudan are a testimony to this paradox; and can best be described by Charles Dickens’ words in the Tale of Two Cities: “it was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, … it was season of Light, it was season of Darkness, ...it was spring of hope, it was winter of despair.”  

The people of two Sudans may live in two independent sovereign states, yet are bound by ongoing conflicts, civil wars, and economic awes. Both are struggling in their different ways to overcome these challenges and carve out a brighter future for their citizens.

Analysts agree that none of the two Sudans will ever make it alone without the assistance and support of the other. Together the Sudans will fall. And together they will stand. And stand, they must. However, without clear understanding of the brutal facts and factors underpinning the current unrest in Sudan, and prospect for peace in South Sudan, the political instability caused by economic challenges in the two countries may persist long into the distant future.

UNREST IN SUDAN AND TRANQUILITY IN SOUTH SUDAN

On 19 December 2018, a day that marked the 63rd anniversary of unilateral declaration of Sudan’s independence inside the Parliament (which took place on 19 December 1955), demonstrations broke out in Sudan. First in Atbara, Nahud, and Gadarif, and then spreading to engulf many cities, among them the capital, Khartoum.

“Enemies those who killed our son. Enemies those who divided our country”, went the revolutionary song in social media played in the background of demonstration images intended to whip up emotions of the citizens to rise up against Al-Bashir’s government. High prices and shortage of basic commodities such as bread and fuel were amongst the reasons that sparked the anger. As we begin a new year, the demonstrations have already entered their thirteenth day.

On their part, the Sudanese authorities responded with full force of the state, followed by political mobilisation of the ruling party support base, and massive deployment of special forces, locally called “rapid support forces” in order to protect property and bring the situation in the capital and the country under control. The government has also expressed readiness to address the concerns raised by the demonstrators and political forces behind them. A very positive step.

Then some 740 miles South of Khartoum, in Juba, the capital of South Sudan, President Salva Kiir hosted a reception to celebrate Christmas day in which politicians, eminent personalities, and opposition figures queued up patiently to offer their greetings and well wishes to the President, expressing to the media their commitment to full implementation of the recently signed revitalized peace agreement, which was achieved with the assistance of Sudan government.

And to lend further credence to the intertwined politics of two Sudans, the war-displaced Sudanese, mostly from Blue Nile region and Nuba Mountains, and probably from Darfur; organised a peaceful march in Juba to express their solidarity with the ongoing demonstrations in Sudan.

WHAT DOEST IT ALL MEAN?

The big question is what can we make of all this? We need to first acknowledge that the signing of Sudan Comprehensive Peace Agreement (CPA) in 2005 that allowed South Sudan to exercise the right of self-determination in a referendum, and subsequently, the declaration of its independence from Sudan on July 9th, 2011, was an important milestone in the long road to untangling and sorting out what Dr. John Garang called “the Sudanese problem.” It was not a mere impulsive decision by Al-Bashir government as as many Sudanese opposition figures would like us believe. However, independence of South Sudan was by no means the end of the Sudanese problem. This is evident from conflicts and wars that have continued to rage in both countries since 2012.

What is the lasting cure to the “Sudanese problem”, then? We may ask. To be brutally honest, I see no quick fixes, nor priceless solutions around the corner, apart from the exercise of true statesmanship to move the two countries to the next level. Still, one can engage in useful conversation that can assist us to discover the avenues to finding more sustainable cures.

Le us briefly then consider what Sudan and South Sudan governments can do individually and jointly in order to achieve peace and prosperity. This is by no means a comprehensive prescription, but in my view, an important contribution.


SUDAN – THE CALL FOR A NEW SOCIAL CONTRACT
For a starter, good economics makes for good politics. And despite the impressive expansion of the Sudanese economy in the last two decades, majority of Sudanese increasingly feel disenfranchised and impoverished. And as pointed out earlier, high prices and acute shortage of basic commodities are behind recent Sudan’s unrest.

To give credit where it belongs, the expansion in higher education since 1990s has improved Sudan’s institutional, technical, technological, and administrative and managerial capacity. It also empowered women as demonstrated by the number of female university graduates exceeding that of males by June 2011. The expansion has also immensely increased country’s absorptive capacity for foreign direct investment. Sudan tops China’s investment priority destination in Africa, according to recent reports.

And like it or not, Sudan has attained a significant level of a functional state that includes monopoly on the legitimate use of violence and administrative control of its territory as well as increased diffusion of ICT and communication technologies throughout its economy. 

However, the unintended consequences of the new economic structure are that it left a great majority of the Sudanese citizens worst off, especially those working in the public sector. The level of unemployment amongst graduates is staggering although no study has been carried out to know the precise rate of unemployment. This is a ticking bomb, and what we saw in the past two weeks is nothing but a mere taster, if nothing is done to avert it.

Areas of economic reforms include, among others: embracing flexible exchange rate policy, as well as lifting of subsidies on fuel and wheat flour. While these subsidies may give an appearance of benefiting the poor, they are actually subsidising the rich while placing enormous burden on the government, preventing it from funding targeted social policies that can benefit well defined sectors of the Sudanese society. What’s more, subsidies provide arbitrage opportunities for extortion and self-enrichment by those connected to the system, especially by elements of national security apparatus.

The savings from subsidies can be used to increase public sector pay and improve social services such as education and health. This will improve citizens trust and allow national economy to adjust because consumers will rationally shift to local and cheaper substitutes.

The government also needs to adopt a more progressive tax policy with the aim of fairly redistributing the national cake between the very rich few and the very many poor in such a way as to raise median incomes across the board. In medium to long term, these reforms will move Sudan to middle income country within a decade.

Moreover, Sudan could upgrade its successful Students Support Fund policy to a Student Loan Scheme like one in Kenya. That means, students can contribute to funding their higher education without placing undue burden on their families.

In addition, Sudan can establish non-discriminatory Enterprise Fund to support young entrepreneurs. It would be an uphill battle changing attitudes towards subsidies. Done transparently and honestly, these reforms can make huge difference to Sudanese economy.

Finally, Sudan needs to adopt an equal opportunity employment policy in both public and private sectors, and must include key strategic government institutions, and get away from current employment policies that are perceived as partisan and sectarian. All Sudanese need to feel that their government is working for them, irrespective of their religion, ethnic background, region, or political affiliation. This will enhance citizens’ trust in the government. This, is in short, is a call for a new, just, fair, and more comprehensive social contract in Sudan.

SOUTH SUDAN – LAYING FOUNDATIONS TO A FUNCTIONING AND EFFECTIVE STATE
South Sudan is starting from a different baseline, as one may expect, and therefore its priorities are different from those of Sudan and very basic in nature.

And right now, South Sudan priority is to consolidate peace and stabilize its economy through the recently launched 3-year National Development Strategy 2018-2021.

The success and credibility of the strategy is tight to South Sudan’s ability to reform its grossly underperforming civil service through competitive recruitment and training, adoption of a centralized planning regime, improvement in coordination amongst and between different levels of the government, enhancing revenue mobilisation through taxation, investment in human capital formation through education and skills training, and a more aggressive investment in basic infrastructure (electricity, water, communications, and roads).

 Like Sudan, there is need for government to commit itself to floating exchange rate policy as opposed to current ‘managed float’ which is really a reversion to old “fixed exchange” rate policy; as well as adopting inflation indexed pay structure in public and private sector. South Sudan should avoid following the example of Sudan which has allowed national security personnel to muddle in economic institutions and policies that are the domain of civil servants.

In addition, the government of South Sudan should manage its oil revenues in more transparent manner and eliminate fuel subsidies. It should also review and estimate the cost of medical treatment and officials travels abroad for purpose of regulating and redirecting the savings to better state-building goals.

JOINT ACTION
The governments of the two countries should collaborate to resolve outstanding issues in the implementation of the comprehensive peace agreement that include Abyei, and conflicts in South Kordofan, South Blue Nile, in addition to Darfur and Eastern Sudan.

Sudan must also end its self-imposed trade embargo on South Sudan and that the two countries negotiate fair terms of trade for their mutual benefit.

All in all, there is room for much improvements in the economies and governance of the two countries.

Monday, November 12, 2018

Building a Functional State in South Sudan


By John A. Akec
Political and economic literature is replete with books describing the causes and reasons behind states’ failure. ‘Failed states’ are polities that do not function properly, and hence are incapable of delivering stability and prosperity to their citizens. This is according to Ashraf Ghani and Clare Lockhart, authors of a book entitled “Fixing Failed States: A framework for rebuilding a fractured world” (Oxford University Press, 2008).

According to the authors, the number of states in the world today that fall in this category range from 40 to 60 in total; and are home to 2 billion people, representing almost half of the population of the globe. Failed states, as described by Ghani and Lockhart, are “either sliding backward and teetering on the brink of implosion or have already collapsed”. What’s more, a state is said to have failed when “vicious networks of criminality, violence, and drugs feed on disenfranchised populations and uncontrolled territory.”

Unsurprisingly, many of us will rush to a conclusion that such a description fits South Sudan’s political and economic situation squarely, like a glove. May be. Yet I beg to differ with this characterization in some ways. South Sudan never had a state to speak of before 2011 so that we can truly describe as failed. What is true is that South Sudan is striving to build a functional state from scratch after half a century of devastating conflict with Sudan, and in the last 5 years with itself. It is not an easy task, and it is a goal being pursued with slow and varying degrees of success.

That being the case, one cannot entirely dismiss Ghani and Lockhart’s and other similar works as such as that of Acemoglu and Robinson (Why Nations Fail), Greg and Obasnjo et. al (Making Africa Work), David Landes (The Wealth and Poverty of the Nations), Osborne and Gaeble (Reinventing Government) etc., as irrelevant. In fact, these works have much to teach us about how a nascent nation like South Sudan can accelerate success in building a fully functioning state. They provide useful tips and clues.

At the very core of Ghani and Lockhart’s book is a framework within which success can be measured against 10 cardinal functions a state is expected to deliver on. In other words, the 10 functions of the state, if correctly understood by policy-makers, can serve as the barometers against which progress can be assessed.

These functions are as follows: rule of law which is concerned primarily with making rules that regulate how society operates, while  defining powers and limits of the state and citizens; monopoly on the the legitimate use of violence; full administrative control of all state’s territory; sound management of public finances to minimise corruption and create public value; investment in human capital necessary for economic growth and industrial development; creation of citizenship rights through developing and implementing social policy that gives citizen a stake and boost trust in government; provision of infrastructure services; creation of favorable conditions for development of markets and jobs creation; prudent management of public assets such as land, equipment, buildings, cultural heritages, and national capital such as rivers and forests; and last, but not least, effective and responsible public borrowing that allows the state to accelerate socio-economic development without losing its economic and decision to lenders.

What it takes to achieve each of the 10 functions of the state can be a whole article. Suffice to say that effective performance of the above functions by the state leads to synergies that create virtuous circle of mutually reinforcing decision processes and expand opportunities for the citizens. This is what Ghani and Lockhart describe as “sovereignty dividend.”

On the other hand, failure to deliver on some of the above functions leads to vicious cycle in which various centres of power compete over control of the state, the prevalence
 of multiple and contradictory decision processes that confuse government’s priorities, citizen loss of trust in their government, loss of legitimacy by institutions of governance, disenfranchisement of the citizens, and, in many cases, the eruption of violent conflict.

When this second scenario persists, it gives rise to “sovereignty gap.” This means the government of the country concerned is required to do more to reduce the sovereignty gap and increase the sovereignty dividend.

For South Sudan, we can agree that there is currently more “sovereignty gap” than “sovereignty dividend.” We should not lose hope, though. To be able to fulfill the 10 functions of the state as enumerated above, enabling conditions must to be created by our government.

These conditions include but not limited to reforming the civil service to raise its competence and capacity to design and implement policies, creation of institution for strategic and centralized planning, creation of a ministry for coordination of all the government, strengthening of the revenue authority to mobilise domestic revenues, and investing in education and skills training in order to raise nation’s scientific, technological, administrative, and managerial capacity.  Without these ingredients of success, nothing can really move forward.

Above all, our government must muster strong political will so as to take all such measures as would propel our country out of conflict, insecurity, and poverty, into the league of functioning states, among the world community of nations.  

The goal of building a fully functioning polity in South Sudan in one generation is a challenge pregnant with opportunity. It is an opportunity worth ceasing.

Tuesday, July 10, 2018

Wrestling at Heaven's Gate: The Challenge of Forging a Vision for Peaceful and Prosperous South Sudan


By John A. Akec

The importance of a vision in the life of a nation is as ancient as our planet earth. Visions have underpinned the rise and fall of great civilisations through out the recorded history of the world. Its mention goes back as far as the Bible time, where in the book of Proverb we read: “where there is no vision, people perish.” Other versions of the holy book put it more starkly: “when there is no vision, people cast off restraint.” What does this mean exactly?

One the one hand, and in the biblical context, lawlessness and sin reign supreme in societies and nations where divine guidance and the moral anchors, which Christianity and all other forms of organised religion strive to provide, are no longer central to what people do or not do. Sodom and Gomorrah were examples of visionless societies that abandoned all restraint, and have been recorded to serve as a warning on the terrible end that awaits similar societies. 

On the other hand, and in the political and secular context, governments, societies, and political parties of every stripe need “a vision of the end, and without a vision there is aimlessness and vast chaos” as once noted by the great American educational philosopher, Robert Maynard Hutchins.

And without any shred of doubt, any possibility of agreeing a comprehensive peace deal in South Sudan is a welcome news. After all, “bad peace is better than good war,” as Yiddish wisdom puts it. But we also need to be reminded that this famous Yiddish wisdom is not without critics who counter that “a bad peace is worst than war.” In our context, one can argue that any peace deal that has no vision of the ‘end result’, is bad peace. Specifically, for South Sudan at this moment in time, the end result should be a united, prosperous, and resilient nation.

Hence, while we applaud the current momentum towards an inclusive peace deal that has been jump-started by the signing of Khartoum Framework Agreement, the absence of clear pointers to state-building goals should be a cause for concern, lest the emerging peace deal eventually unravels like its predecessors. Therefore, it is incumbent upon the parties to the regionally backed peace talks to try their hardest in order to negotiate a peace settlement whose primary goal does not merely stop at the distribution of power, but that which must be based on a farsighted vision capable of propelling the country out of the vicious cycle of violence and socio-economic stagnation into spheres of sustainable peace, unity, security, and prosperity. In short, we need a peace deal that “will end all wars” in our country.  And here are some, not necessarily all, of the elements of such a vision.

First, the agreement should resolve that South Sudan must be governed by its constitution. Our Interim Constitution is a good document that must guide and inspire all that we do or not do. And if there are clauses in the constitution that hinder our progress towards building a prosperous and united country, then we should speedily amend them. And until the amended constitution is passed, our current constitution should be our reference point and the anchor on which all government, business, and civil society actions are based.

Second, we must recognise that stagnation and the lack of socio-economic development could be a cause of current and future wars. Citizens must be given stakes that will raise the opportunity costs of war and consolidate peace. In the last 4 years, our country experienced negative economic growth as indicated by an ever contracting GDP. Oil production has dropped from over 350,000 bpd in 2011 to under 120,000 bpd in 2018. We remain amongst the most oil dependent countries in the world. The contribution of tax to government budgets is insignificant We fought three disastrous wars since 2011. Our ability to provide services such as health and education has been affected negatively. Foreigners want to take over security of our citizens.

And as the late architect, Constance Adams, who worked in American space programmes once noted: “no nation in the history of the earth has failed to conduct great projects and remained significant.”  The Great Wall of China, Pyramids of Egypt, Burj Khalifa in Dubai, and Ivor Tower in Paris, are all expressions of what peoples of those great nations are capable of dreaming up and achieving. Until now, we as a nation are yet to complete a single ambitious project that we can be proud of.

What is holding us back? One may ask. It is my view that we can only reverse our fortunes if we can look inward to identify the weaknesses in our systems; and then device strategies for overcoming them. Let me briefly outline some of these internal systemic weaknesses and possible strategic options for future success.

To begin with, by failing to raise enough taxes from our citizens to fund government’s budgets, our country is missing out of the benefits that come with dependence on tax revenues. Research shows that the benefits of depending on taxes for government revenues include strengthening of the institutions of fiscal governance, improved government transparency and accountability, and strengthening of nation’s bureaucratic capability.

Furthermore, as a country, we must recognise that we have been drinking from a poisoned well. That is, our oil dependent economy hinders our progress at many fronts. Economists have long found strong links between dependency on primary commodity for export earning and likelihood of civil wars. They argued that rents from extractive industries (oil and gas, diamonds, and timber) increase greed and attract the wrong kinds of people into politics. Researchers made their conclusions after studying underlying causes of 47 civil wars in resource-rich countries around the globe. Commenting on these stark findings, Tina Rosenberg of New York Times wrote: “Every nation wants to strike oil, and after it happens, nearly every nation is worse off for it.” Weaning ourselves from too much dependence on oil revenue could be the beginning of progress. The sooner, the better.

The question is how? Help is around the corner in terms of availability of models to emulate in order to escape the resource-curse. The same research that unearthed these dark findings also points to possible remedies and experiences of others such as Norway (locking oil revenue out of economy), Alaska (distribution of rents to all citizens and future investment accounts), Botswana (establishing cluster of institutions for protection of private property), and Rwanda (developmental state) are just few examples of countries that have succeeded to break loose of resource paradox by following certain strategic options. One radical strategic choice recommended by Mick Moore at the Institute of Development Studies at University of Sussex in England (and coauthor of an up coming text book: Taxing Africa: Coercion, Reforms, and Development), is for the resource-rich countries to distribute all revenues from primary commodity export to their citizens and then ask the citizens to pay percentages of that back in tax. He believes this can create a sense of commitment amongst citizens and strengthen accountability.

Moreover, our country needs to build its bureaucratic capability not only to be able to collect sufficient taxes but also to be able to manage external shocks more effectively as well as being able to turn our societal aspirations into actionable policies and projects. This can be achieved by reforming civil service so that only, and only the most capable and ethical amongst our citizens can be admitted into the public service, irrespective of the ethnic background or religious belief.

Finally, any future peace agreement should aim at reducing the transitional period to no more than 12 months. Why? Elections by and in themselves are part of democratic development in the life of a nation. Regular elections do much to exercise tolerance of citizens and the politicians to celebrate victory in humility, and accept electoral defeat in grace. Elections also provide the needed once-in-a-while opportunity for citizens to hold their government accountable and chose those who will rule the country on their behalf, and hence impart legitimacy and give strong mandate to elected government nationally and internationally.

Depending on how the above nation-building blocks are captured by the peace deal being negotiated, we will be wrestling at heaven’s gate. And wrestling for that goal we should.