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.

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