The economy of South Sudan was run with oil money since its inception. There are other resources but they have not been exploited to boost the economy. With the closure of the oil production, what is the impact in the country? Gurtong spoke to Kenyi Spencer a South Sudanese Economist to get answers to this question.
In his view, shutting down of the oil has come at the right moment. “I wish it came much earlier than this,” he said.
“By shutting down the oil production, the government now needs to unleash some of the potentials that South Sudan has. When we were using the oil money it actually subdued the need to develop some of these potentials South Sudan has -like taxes, agriculture, gold, and uranium, copper among others.
As an economist, Spencer said the government should think on how to start developing the economy especially the revenue collection. Revenue collection has been very poor hence the need to be streamlined.
“The first window is to streamline the tax administration because the amount of money we are making through it is a lot closer to 60% of what we used to get from oil,” Said Kenyi
What South Sudan needed by then at the beginning of the Comprehensive Peace Agreement (CPA) was to start attracting investors in the Agricultural sector. Currently the government need to start engaging the armed forces to grow their own food to feed them and the excess be sold, to ease the purchase of food on daily basis.
“The government should set up its own demonstration farms specialized particularly in crops to teach people. We are saying people should start farming; it is not easy unless we show them how to cultivate huge farms,” he added.
For South Sudan to start involving herself in the international trade the healthiest way is to have its own products to trade. The strategy should be to open feeder roads for all products produced by our people to have access to the markets, Kenyi explained.
“I consider 20th of January 2012 to be the day for economic independence in South Sudan after the decision to stop oil production. We should have gone to the boarder stations the following day to correct the issues of tax administration, so that the money starts flowing smoothly.”
The economist also backed the decision by the Governor of the Central Bank of South Sudan; Mr. Kornelio Koriom of declaring that there is going to be no trading in dollars to Uganda and Kenya for medical and academic purposes apart from government exports.
“For any country’s economy to perform well, that country must start using its own currency, the moment we start using foreign currency, we will create a big problem because we shall not be able to track or control inflation. So, what the Bank of South Sudan has done is recommended because transfers are going to be easy,” he emphasized.
“Often traders used to import products by physically carrying money in a briefcase. What banks should do noe is to organize a commercial way of transferring funds from one bank to another.”
“For now, in order to support the South Sudanese pounds get strong, there has to be US dollars pumped into the markets, as mechanisms are being set for the transfer of money from bank to bank. If we don’t do so, it will be very difficult to sustain the economy and control inflation,” Kenyi warned.
“For the sustenance of the administrative system of governance, we might be forced to be borrowing. However, the culture of borrowing can mess up the economy because perpetually we are going to be in deficits. If there is going to be any borrowing at all it should be limited to salaries and developmental work.”
Most South Sudanese have developed a luxurious taste in machinery which is not productive rather for show-off. They have speed in consumption of lavishness; this was due to the free money from oil. Until they change their attitudes and learn how to tighten their economic belts as President Kiir said, then the shortfall can’t be resolved.
The closure of the oil production is a wake-up call that they need to scratch the ground to produce something, and teach our people that they have other resources, stop enjoying luxury in dust.