Wednesday, March 28, 2007

Good Start for New GOSS' Finance Boss, Gabriel Changson Chang

By John A. Akec

You never get a second chance to make a first impression. Gabriel Changson Cheng, the acting minister of finance and economic planning in the autonomous government of South Sudan, knows what that mantra means. Mr Cheng, barely a week in the office, has begun to sent out the first signals of financial prudence by freezing payements by GOSS (government of South Sudan). Mr Cheng was appointed to act in place of Arthur Akuein who was suspended recently on allegation of corruption.

According to a statement released today by South Sudan Council of Ministers (28 March 2007, posted below), the freeze will not include salaries. The main reason given is to allow the new minister to acquaint himself with current Government accounting system. It is also possible that this will help stop any fraudulent payments going through to rogue contractors. A very wise move indeed.

According to information obtained by this author, Mr Gabriel Chang comes from Nasir in the Eastern Upper Nile State of Souternh Sudan and was one of the founders and directors of Ivory Bank (Khartoum) in the mid 1990s. As extremely unique Southern innovation of its kind, Ivory Bank had a reputation for delaying paying out money transferred from the Diaspora by South Sudanese abroad to beneficiaries in Sudan. Not a good reputation by any account. After many years of ups and downs in which it made no profit, the Bank was taken by the central government about four years ago. As things currently stand, Ivory Bank has turned the corner to become one of established banks in Sudan with branches in Khartoum and major Southern cities (a successful bank, at least by Sudan standard). What that says is that Mr. Cheng is a man with significant track record. He is well informed and competent in finance to sort out the mess left behind by his predecessor, and perhaps to leave his own fingerprint and create a lasting legacy that will be uniquely his own.

As the most important job after a president anywhere in the world, Gabriel Cheng is taking over a huge responsibility for economic planning and finance. Two long years have passed since the nascent government was set up in July 2005, and we have not seen any clear macroeconomic policy

In fact, in the last two years, macroeconomic policies have been anything but. Incompotence and muddle are two terms that could best characterise GOSS' economic policies in the last two years.
A government's macroeconomic policy influences total economic output of a nation (that is, the goods and services produced by an economy at any one time), government and households income and expenditure, unemployment, inflation, interest rates, and the balance of international trade. All these are interrelated and one affects the other.

It is the function of a good government macroeconomic policy to keep all the above economic indicators well balanced through allocation of resources. Two most important economic indicators that can leave the back of a government very much exposed are inflation and unemployment. Ideally, inflation, which is the measure of increase in prices of consumer goods (or consumer price index, CPIX) month by month, and year by year, should be close to zero or less than 10%. Uunemployment which is the number of people out of work should be also be minimal or constantly falling for a healthy economy.

Under Mr Arthur Akuein, there was zero economic policy. Nobody could understand why GOSS was spending its money the way it did. One of good measures of inflation which I can use to measure how high prices have risend is the price of a head of a cattle (a gold equivalent for many Nilotic tribes for storing wealth) has gone up from $50 per head to $500 per head since the arrival of GOSS in August 2005. This is an increase of 1000%. As if this is not enough, Juba is the most expensive city in the world. The main reason? Wage inflation and increase in money supply (under Arthur Akein's watchful eyes) in a region that imports everything from outside while producing little apart from oil. That means there are too many people with loads of cash chasing after too few goods. The prices soar and poor majority suffer.

Moreover, GOSS pays very generous wages calculated in dollars, and then paid out in Sudanese pounds. When dollar goes up and down, wages goes up and down in South Sudan. A masetrly work of a genius? I do not know about that!

Also, unemployment in the South is as high as ever. Bad still, more people are being laid off in Southern States. This is happening at a time when the government of Southern Sudan is suffering from the lack of capacity (that is skilled work force). Instead of facilitating the uptake of skilled workforce both from within Sudan and from Diaspora by building 'highways - figuratively speaking', the GOSS' policy has been one of erecting obstacles and building straits.

Mr Chang, if he stays long-term, has a lot of work in his hand. First and foremost, he needs to cut wages and control money supply. He should clearly define the role of Bank of Southern Sudan in the economy. He also needs to come up with innovative policies to speed up transfer of skills from abroad to South Sudan as well as providing meaningful jobs for hundreds of skilled and unskilled South Sudanese youth now roaming streets of Khartoum. Next, Mr Chang would need to scrutinise the balance of trade with East African countries and to negotiate terms that would benefit South Sudan economy in short, but more importantly in long term. Last but not the least, he should seriously consider the wasteful spending of public funds in expensive hotels in Juba costing over $120 per night per an official. He needs to come up with policies, and projects to bring down house and hotel rent in Juba by supplying cheap housing based on prefabricated materials.

In short, Mr Cheng has a big job in hand. Having created a positive first impression, I have every good reason to be optimistic that he will deliver.

John A. Akec
London, UK

Council of Ministers 28 March 2007: Statement from Minister of Information

This evening, following a meeting of the Government of Southern Sudan (GOSS) Council of Ministers which was chaired by HE President Salva Kiir Mayardit, the following statement was given to the press by HE Dr Samson L Kwaje, Minister for Information and Broadcasting.

The Council had received a briefing by the Acting GOSS Minister for Finance and Economic Planning, HE Gabriel Changson Cheng, which aimed to update the Council on the current financial situation of GOSS. The briefing covered a number of areas, including oil revenues, salaries, expenditures and the finances of the States.

The Acting Minister suggested a number of immediate steps to be taken. These include:

* An immediate freeze on all payments by GOSS. This measure excludes salaries, which will be honoured as usual. This urgent step is designed to allow the Acting Minister time to reorganise the accounting system. It is expected that the payment freeze will be brief, lasting one week or less.

* Balances are to be sought for all government accounts, in order to gain an accurate picture of the current cash situation. Accounts are currently held by GOSS with the Bank of Sudan, as well as with commercial banks in Khartoum and internationally, particularly in Nairobi.
* The Acting Minister recommended closing all but the account held with the Bank of Sudan, in order that there should be just one financial system in operation.

HE Dr Kwaje further reported that the Council had issued a number of Circulars. The first related to the recent problem of reductions in salaries to Civil Servants, resulting in losses of up to one fifth of the accustomed salary. These losses had resulted from reductions in the value of the US dollar relative to that of the Sudanese Pound. This had affected the salaries of Civil Servants because accounting is carried out in dollars, whilst salaries are paid in Sudanese currency. The Minister of Finance together with GOSS would be responsible for educating citizens about this issue.

The second Circular concerned the cleaning of Juba Town. HE the Minister stated that Juba had become the “dirtiest town in the world” and pointed out with concern that the coming rainy season would inevitably bring many deaths due to cholera and other water-borne diseases. Responsibility for cleaning Juba had been an issue of confusion. The Council had stated that this responsibility lay with the Commissioner of Juba, in the office of the Governor, who would receive some assistance from GOSS. HE the President would personally be taking up the issue with the Governor of Central Equatoria.

The third circular related to the release of staff, mostly from the Ministry of Transport and Roads, to attend training as pilots, ground crew and technicians.

The Council had considered a Memo for the Minister for Presidential Affairs relating to progress with implementation of the 200 day action plan. The Council noted that some progress had been made, by nearly all the Ministries, towards achieving the aims set out in the 200 day plan. Also noted was the fact that there had been constraints and challenges which affected this performance, including delays in accessing cash. The Council hoped that these delays could be addressed in the shortest possible time.

The council had next expressed its concern with the continued slow pace of progress with certain infrastructure projects for the construction of roads, housing renovation, installation of electricity, provision of clean water and construction of sewage systems. These tasks were part of large contracts, mostly held by two Ministries. The Council felt that, in view of the very slow progress, some of these contracts may have to be reviewed.

Source: Larco Lomayat, SPLM Diaspora.


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