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Safer Paths Out Of Our Wartime Economy

By: Mayen D.M.A. Ayarbior

For some reason, many optimistic citizens may have been thinking about the latest developments relating to South Sudan’s path out of the current man-made disaster into which the country has been plunged. When we lump together three interlinked factors which will be key to S. Sudan’s future prosperity (Transitional Government of National Unity (TGoNU) - current huge budget deficit- and the latest good news on South Sudan’s accession to EAC), their positive interplay could chart a bright future for the embattled country. Accession to EAC: Looking at the bigger economic picture with regard to the country’s acceptance into the EAC, South Sudan will belong to a sub-continental economic community which is quickly cementing its status as the main gate to the rest of Africa. The greatest percentage of the continent’s trade with established economic powers in the European Union, and rising giants like China, India, and Russia will totally (over ninety percent) depend on the land/sea ports at the long East African costal line on the Indian Ocean.

The ports of Djibouti, Mombasa, Lamu, and Tanzania (construction of which is currently underway) are going to be the main ports through which Southern, Central, and West African countries will depend for their imports. Considering the position of South Sudan, as one of the key links and transit countries between those ports and the rest of the continent, especially to Central and Western African states, the country stands to benefit from establishing transit zones for fuel deports, accommodation and feeding centers (hotels/motels/inns), free trade markets, etc. Given the expected high volume of transit goods through the country, GoSS (TGoNU) should start developing short (5-10 years) and long (above 15 years) term elaborate strategies on how this unprecedented flooding of transit goods and services could be captured and transformed into a viable economic opportunity. Gone must be the days of hoping to benefit and develop from the confusion of transition. Budget Deficit: There is so much pressure on GoSS to close its huge budget deficit through currency devaluation. Ironically, such pressure is being piled on the country by those who were the genuine friends of yesterday. The Troika countries (United States-United Kingdom-Norway) are at the forefront of pushing GoSS toward devaluing the South Sudanese Pounds as a means of closing its budget deficit. In practice, instead of pledging that they would collectively lend the coming TGoNU money to close the budget deficit, Troika is twisting our arms to sell the meager oil dollars accruing to GoSS (Ministry of Finance and Bank of South Sudan-BoSS) to commercial banks at a rate far higher than the current official one (ssp 3.1) so that BoSS and Ministry of Finance collect more SSP with which they would close the budget deficit. This is their only rational for currency devaluation.

This request (looks like an order) coming directly from both Troika and IMF (International Monetary Fund) is one of the weirdest ways of “helping” a country out of a war economy. Normally, there is one and only one reason for a country to devalue its currency. That is when a country is forced to readjust its negative balance of trade to make its exports cheaper and get hard currency for buying essential imports. Any other reason, not least closing an essentially temporary economic phenomenon like a war time budget deficit, must be flawed and riddled with danger. However much we loath the fact that a few are becoming overnight millionaires because of the current man-made parallel exchange rates in South Sudan, the fact remains that the official rate of SSP 2.96 is the only chain leash holding back inflation from becoming a galloping one. Once that leash is broken, moreover through government consent, then there will be no end in sight in BoSS’s frantic chase after the fast escaping black market. Your guess is as good as mine as to who will be the first victims of inflation in the country. Surely, that will be the greatest majority of wanainchi (common man and woman) who do not even want to see how the USD looks like. Once inflation becomes galloping, then there is no way that we could talk of the current budget deficit, as the country may end up dollarizing (of shillingizing) its economy for SSP will surely become more than useless not only in the region, but even at home. A good friend will come to your rescue when you are in dire need, not ask you to sell your last cloth for you just to buy your final meal.

I hope our good friends are not pushing us to the East. After all, even Queen Elizabeth was riding to Buckingham Palace with Chi Jing Ping of China the other day. One can’t help but to think that they either do not know what they are asking S. Sudan to do or there is bad faith towards the entire EAC as a viable super power in the region. The link between this fatal prescription and EAC is that South Sudan will be forced to join the sub-continental economic community while crawling on its knees. And looking at the fact that the USD at the black market did fall by half in one day when President Kiir signed the IGAD-Plus agreement, there is no way one could argue that formation of TGoNU and coming of the SPLM-IOs and SMPL-FDs to Juba and their participating in government will not cut it by two thirds in hours. Closing our budget deficit will cost our Troika friends, or China, less than 0.001 of their collective annual GDP. If they could bail Greece with over $300 billion (with capital B) in less than two years, just two (only two) billion LOAN per annum – not even in form of cash but of kind- for the three years of TGoNU (a total loan of $6 billion over three years) shall rescue the country from economic collapse. Finally, everything depends on whether the country’s revolutionaries could rise above personal hatred, grudges, and mutual mistrust for the sake of the country’s survival.

From the last trip of the Vice President to the UN General Assembly, the world community of developed nations spoke with a collective voice that they are more than ready to assist South Sudan if only its leaders are ready to come together and form a Transitional Government of National Unity. One hopes that the request for devaluing is but a way of telling S. Sudan that ‘we will not rescue you if you don’t come together.’ Prosperous Future: Once the TGoNU is formed, devaluation is strongly rejected by the representatives of the people in parliament, the current wartime budget deficit is closed by loans in form of developmental projects as opposed to cash, and accession to EAC is complete, there is no way that South Sudan’s take-off into economic growth and development should not be meteoric. Once the country is out of its self-inflicted damage, death, and despair, all the above forces will surely bring a level of prosperity to the country almost unprecedented in the region. It seems that, in the history of nation building and statecraft, nations that have sunk too low both morally and economically are the ones that have risen so high. Germany, Japan, Rwanda and Angola could be handy examples to site. With diversification of the country’s peace-time economy, especially in the extractive industries and agriculture, South Sudan is destined to go places. The same hopes that greeted its independence shall be realized and those victims whose lives were robbed brutally and inhumanely should have monuments built in their memory in all regions of the country as reminders of the horrors of civil wars. All is not lost. 


Mayen Ayarbior, BA Econ Poli. Science (Kampala Int’l Univ.), MA Int’l Security (JKSIS- Univ. of Denver), LLB (Univ. of London).

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