Aggrey Tisa Sabuni, economic advisor to the President of the Republic of South Sudan, looks back on a tumultous year and reflects on the political challenges of statehood, and the choice before the international community.
One year ago today my country became the world’s newest nation.
Our first year has been a tumultuous one. We have had to deal with a resurgence of open hostilities in our border regions, insecurity from cattle raiding, rising domestic prices for basic commodities and a limited ability to provide basic services. But just as we are determined to be free and independent, we are also determined to build long long-term prosperity.
Along with many countries in Europe, South Sudan is currently facing a period of austerity. This follows our Government’s decision in January to shut down oil production – depriving us of what was 98 per cent of our revenue. But unlike our friends in Europe, this period of austerity has come at a time when we are still building the basic foundations of statehood.
It is important to be clear on the circumstances that led to the decision to shut down oil production. In November last year the Government of Sudan began blocking shipments of oil leaving Port Sudan. Sudan then demanded extortionate fees for the transport of our oil – fees more than 30 times the standard international rate. Finally, in early January this year, the Government of Sudan began to divert oil pumped in the South for their own purposes.
In shutting down oil production, we chose to forgo revenue in the short term to ensure our country’s natural resources are protected for future generations.
We did not take this decision lightly and we are under no illusions as to the challenge it poses to our young country. But despite the challenge, the Government of South Sudan is determined to continue laying the foundations for long term economic prosperity. As with building a house, the foundations are the first step in building a strong and resilient nation. We must get this right before we move on to building the rest of the house. And we cannot give in to simplistic and shaky solutions in the rush to have a roof over our heads.
Being the world’s newest country affords us one clear advantage in this respect: we can learn from the past mistakes of other countries. We will not risk an explosion of inflation by printing money or by borrowing excessively from the Bank of South Sudan. Nor will we risk miring future generations in unpayable debt by borrowing more than we can afford from international markets.
Instead, we are focussing on establishing a sound economic policy and building better ways of managing our public finances, in order to achieve more with less. In this regard, we have already begun to see the fruits of our labour in many important activities. A new currency was successfully introduced under extremely challenging circumstances, but with minimal disruption to the South Sudanese. Reforms to our taxation and revenue collection systems have led to a rise in non-oil revenue of 250 per cent since July 2011.
These are not insubstantial achievements. They are a direct reflection of a country determined to ensure that its people benefit from improved security and economic prospects. They have all been achieved under the framework of the South Sudan Development Plan - our first ever national plan - which holds the key to our country’s development progress and charts a course for our partners in the international community to work with us for the benefit of South Sudan.
Building on these important achievements, our Minister of Finance recently submitted an austerity budget to the National Assembly. This will see sharp reductions in non-essential expenditure across the whole of government on items such as travel, vehicles and supplies. At the same time the drive to improve our payroll procedures and improve accountability will continue, ensuring only workers who are working get paid. While painful, these spending cuts are crucial to ensure that we have sufficient funds to maintain security and provide basic services during the period in which we are without oil revenues.
Over the medium term we will focus on improving the productivity of our agricultural sector, which currently provides a livelihood to 80 per cent of the population. This holds enormous potential – currently, just 5 per cent of our land is being cultivated; but an estimated 50 per cent is considered prime agricultural real estate. By promoting agricultural production and trade, we will begin to see the benefits of a thriving economy that is less reliant on oil.
These initiatives will go some way to contributing to a solid foundation for South Sudan. Nevertheless, managing the challenges we face is not a simple task. We are a nation rich in potential but hampered by circumstance. Until the political challenges with Sudan are resolved, we will continue to be held back in our efforts to build a solid foundation for our nation. Ultimately, the complex nature of our negotiations with the Government of Sudan disguises their unwillingness to compromise. As such, this is the precise moment where we need our friends in the international community to stand up, to acknowledge our successes and help us to overcome our failings.