South Sudan: Searching for a Credible Development Path

Framing the issue

Highlights

  • South Sudan’s independence provided the new country with many opportunities to improve human development. However, in order for the peoples of South Sudan to translate these opportunities into sustainable development, the new government must bring about genuine institutional reforms.
  • As President Kiir has already discovered, appeals to nationalism and patriotism are not sufficient as incentives to prevent public officials from engaging in corruption and other extra-legal schemes to enrich themselves.
  • Given the fact that oil revenues account for as much as 90 percent of public revenues for the Government of South Sudan, resumption of production should significantly increase the flow of revenues into the national treasury.
  • Minimizing destructive ethnic conflict, achieving food security, providing employment opportunities for restless urban youth, improving the country’s economic infrastructures, diversifying the economy and reducing its dependence on oil, and generally placing the country on the road to sustainable economic growth and development remain major problems.

South Sudan’s independence from the Republic of Sudan on July 9, 2011 was met with joy, trepidation and many challenges. Despite the fact that South Sudan is endowed with significant amounts of natural resources, the country faces many obstacles. These include a population suffering from significantly high levels of poverty and deprivation; extremely low levels of human capital accumulation; food insecurity; poorly developed economic infrastructure; pervasive bureaucratic corruption; a failure to deal with various internal security problems, some of which arise from violent mobilization by groups that consider themselves marginalized by the government in Juba; and continued conflict with the Republic of Sudan, especially on border issues. Although today, February 4, marks the stated completion date of the withdrawal of South Sudanese forces along its border with Sudan, South Sudan has failed to remove its troops.

South Sudan’s independence provided the new country with many opportunities to improve human development. However, in order for the peoples of South Sudan to translate these opportunities into sustainable development, the new government must bring about genuine institutional reforms. At independence, citizens of the new country had hoped that Juba would provide the wherewithal for all of the country’s relevant stakeholder groups to build and adopt institutional arrangements capable of adequately constraining state custodians (i.e., civil servants and political elites) and preventing them from behaving with impunity. Unfortunately, the government is yet to undertake the necessary reconstruction and reconstitution of the anachronistic and dysfunctional state structures inherited from the Khartoum-based regime. South Sudan’s civil society, which is supposed to pressure the government to undertake the necessary institutional reforms, remains extremely weak and fragile and is currently unable to adequately serve this critical role. While a private media is gradually developing, it has not yet achieved the ability and independence to function as an effective check on government, as well as put pressure on the government to fully perform its constitutionally assigned functions.

The failure of South Sudanese citizens to engage in democratic institutional reforms to provide themselves with institutional arrangements that guarantee the rule of law has left the government unable to effectively manage ethnic and religious diversity, minimize corruption and public financial malfeasance, and provide the enabling environment for the creation of the wealth that can be used to fight poverty and enhance human development.

The failure of South Sudanese citizens to engage in democratic institutional reforms to provide themselves with institutional arrangements that guarantee the rule of law [1] has left the government unable to effectively manage ethnic and religious diversity, minimize corruption and public financial malfeasance, and provide the enabling environment for the creation of the wealth that can be used to fight poverty and enhance human development. One, of course, can argue that the type of institutional reforms being suggested can only be accomplished with time. While that may be true, it is still the case that South Sudan cannot progress without appropriate institutional arrangements.

At a recent forum on oil and gas management in East Africa, held in Kampala, Uganda and organized by Brookings’ Africa Growth Initiative in cooperation with partners in Africa—the Economic Policy Research Center (Uganda), Kenya Institute for Public Policy Research and Analysis (Kenya), and the Center for Strategic Analyses and Research (South Sudan)—participants considered “constructive engagement” between government and a country’s relevant stakeholders as the most important way to enhance efficient and equitable management of natural resources. However, for such engagement to be productive, all parties have to be fully informed and that requires, at the very least, that government operate in an open and transparent fashion. Such engagement is especially critical for South Sudan where continued distrust of the government by various groups has fueled violent and destructive mobilizations. Some of this ethnic-induced violence is responsible for the country’s inability to attract investment and place itself on the path to sustainable development.

Grand corruption: a manifestation of institutional failure

According to an article by David Smith, published in The Guardian on June 5, 2012, South Sudan President Salva Kiir sent a letter dated May 3, 2012 to “75 current and former senior government staff” accusing them of stealing as much as $4 billion from the national treasury. In the same letter, President Kiir demanded that the money be returned and reminded the officials of the sacrifices made by many South Sudanese during the struggle for independence. According to Smith’s article, Kiir had declared: “We fought for freedom, justice and equality,” unfortunately, “once we got to power, we forgot what we fought for and began to enrich ourselves at the expense of our people.” The president added that “[p]eople in South Sudan are suffering and yet some government officials simply care about themselves.” Economists have long recognized self-interest as an important motivator for the behavior of individuals, whether they are in economic or political markets. As argued by Brennan and Buchanan in The Reason of Rules: Constitutional Political Economy, “man’s natural proclivity is to pursue his own interests and that different persons’ interests almost invariably come into conflict.” Thus, each society must design and adopt rules or what Adam Smith (1887) calls “laws and institutions” that coordinate the activities of individuals and provide for the peaceful resolution of any conflict arising from socio-political interaction. Perhaps, more important, is the fact that these laws and institutions serve as constraints on the state and effectively minimize the ability of civil servants and politicians to engage in any form of opportunism (e.g., corruption and rent-seeking). One cannot depend on the capacity of individuals—specifically those who serve in government and have responsibility for managing public funds—to love and care for their fellow citizens as a mechanism to prevent corruption and public financial malfeasance and enhance efficient public financial management. As President Kiir has already discovered, appeals to nationalism and patriotism are not sufficient as incentives to prevent public officials from engaging in corruption and other extra-legal schemes to enrich themselves. On the other hand, openness and transparency in government operations and communications would have a greater impact on corruption than the appeals that are coming out of the presidency. Unfortunately, South Sudan authorities continue to follow a policy of opacity, supposedly for reasons of national security.

Resumption of oil production

Shortly after South Sudan gained independence, the new country suspended production in its rich oil fields because of disagreements with the Republic of Sudan over charges for using Sudanese pipelines to transport the oil to export markets. South Sudan and the Republic of Sudan signed an agreement on various post-secession issues, including the common border, security and economic relations, according to the United Nations News Center, on September 27, 2012. The Government of South Sudan subsequently announced that oil production would resume by year’s end. However, various problems continue to prevent both South Sudan and the Republic of Sudan from resuming oil production. First, the two countries have still not withdrawn their armed forces from the disputed border area, effectively preventing South Sudan from getting its oil to export markets. Second, while in September 2012, both countries had agreed to set up a demilitarized buffer zone around the oil fields located on the border, this has not yet been accomplished and the area remains heavily armed. Third, Khartoum continues to insist that it would not resume oil production until all security arrangements between the two countries are completed. Finally, Khartoum has accused Juba of providing support to the Sudan People’s Liberation Movement-North (SPLM-North), which had supported South Sudan during its fight for independence and which now controls part of Sudan’s side of the border. Many observers, including important players such as the President of Nigeria, Goodluck Jonathan, have stated that direct talks and cooperation between Juba and Khartoum are critical for the achievement of the peace necessary for the resumption of oil production and the promotion of economic growth and development. However, there is progress. In mid-January, Juba announced a withdrawal of its military forces from the border area and hoped to complete the process by today, February 4, 2013. Juba hoped that Khartoum would act similarly, allowing the buffer zone to be established and, should that happen, the way could be cleared for oil production to resume. Unfortunately, South Sudan has not even begun to withdraw.

Given the fact that oil revenues account for as much as 90 percent of public revenues for the Government of South Sudan, resumption of production should significantly increase the flow of revenues into the national treasury. This development would have significant implications for public financial management, an area that is traditionally ripe with opportunities for corruption and other forms of malfeasance. Unfortunately, the country’s present set of institutional arrangements is not capable of adequately constraining civil servants and politicians and preventing them from plundering oil royalties. In the short run, the government must fully implement and pay fidelity to the Extractive Industries Transparency Initiative. This will require the country to abandon opacity and, instead, follow a policy of openness and transparency in public financial management. Such an approach would significantly enhance the ability of the government to minimize the various forms of grand corruption, which are usually endemic to public sectors characterized by significant levels of secrecy. However, in the long run, the government must provide all relevant stakeholders with the facilities to engage in comprehensive institutional reforms to create governance institutions that guarantee the rule of law.

A new anti-corruption campaign?

The government of President Kiir has launched a new anti-corruption campaign, which has included a decree demanding that all public officials submit a declaration of assets to the country’s anti-corruption commission. One can immediately recognize two problems with this program: First, presidential decrees—an essentially top-down approach—are not the most effective way to deal with as pervasive a problem as corruption. Like many other problems that this young country faces, dealing effectively with corruption requires the adoption of a participatory and bottom-up approach to policy design and implementation—this is part of the constructive engagement that participants at the AGI-sponsored Kampala forum spoke of. Second, during the last several decades, many African countries have taken similar elite-driven, top-down approaches to corruption control, including asset declaration and the prohibition of public officials from engaging in entrepreneurial activities while in office, and none have worked. In fact, civil servants and political elites in these countries have been able to easily subvert these constraints, by, for example, placing their assets in the names of relatives and forming business enterprises in which they remain silent partners. With the advent of electronic funds transfer, it has become relatively easy for civil servants and politicians to place their ill-gotten gains outside the purview of the government. In fact, as President Kiir’s letter indicated, a lot of the money stolen from South Sudan’s national treasury has “been taken out of the country and deposited in foreign accounts,” as noted in the Smith article in The Guardian. It is generally believed in Juba that a lot of the stolen money either now resides in Kenyan financial institutions or has been used to purchase real property there. In any case, the money is out of the reach of South Sudan authorities and, unfortunately, Juba does not have the capacity to recover these badly-needed funds.

The challenge for 2013

South Sudan faces a lot of challenges in 2013. Despite the agreement signed between the two countries in September 2012, the border issue remains essentially unresolved. However, the decision by Juba to unilaterally withdraw its army from the border should improve opportunities for setting up the buffer zone, which is necessary for the resumption of oil production.

Minimizing destructive ethnic conflict, achieving food security, providing employment opportunities for restless urban youth, improving the country’s economic infrastructures, diversifying the economy and reducing its dependence on oil, and generally placing the country on the road to sustainable economic growth and development remain major problems. It is important, however, to emphasize that South Sudan will remain in its underdevelopment trap until such a time that it provides itself, through democratic (i.e., bottom-up, people-driven, participatory and inclusive) constitution-making, with institutional arrangements that guarantee the rule of law. For, without a set of laws and institutions that adequately constrains civil servants and politicians, the latter will continue to consider themselves above the law and behave with impunity. Hence, the most important challenge for the government of South Sudan in 2013 is the reconstruction and reconstitution of the post-colonial state through democratic constitution making to provide institutional arrangements that (i) adequately constrain the state (and hence, prevent its custodians—that is, civil servants and political elites—from engaging in the various forms of opportunism), (ii) provide effective mechanisms for the management of ethnic and religious diversity, (iii) create an enabling environment for entrepreneurial activities and the creation of wealth, and (iv) generally improve the country’s ability to participate in and benefit from the global economy.


Footnote

[1] While the “rule of law” is a complex concept, some of its important elements include “supremacy of law”—that is, all citizens are subject to the law, including those who serve in executive, legislative and judicial positions; judicial independence; openness and transparency in government operations; and protection of human rights. If, for example, there is a constitutional guarantee of the supremacy of law, then those who serve in government (e.g., civil servants and politicians) would find it difficult to act with impunity and engage in behaviors such as corruption and rent-seeking to enrich themselves.

References

Boswell, Alan, “American Expelled from South Sudan for Anti-corruption Work,” The Miami Herald, August 20, 2012, accessed on November 1, 2012, http://www.mcclatchydc.com/2012/08/20/162893/american-expelled-from-south-sudan.html.

Brennan, Geoffrey Brennan and James M. Buchanan, The Reason of Rules: Constitutional Political Economy, Cambridge, UK: Cambridge University Press, 1985, ix.

Smith, Adam, An Inquiry into the Nature and Causes of the Wealth of Nations, London: T. Nelson and Sons, 1887, 40.