Folly of South Sudan Leadership All but Guarantees Total State Failure

Notwithstanding the grave human capacity conditions in South Sudan and the serious humanitarian crisis facing the country, the government of South Sudan has banned all foreign workers in the country and ordered that their jobs be filled by South Sudanese nationals.  A statement issued on Tuesday, September 16 by the government states that “all non-governmental organizations, private companies, banks, insurance companies, telecommunication companies, petroleum companies, hotels and lodges working in South Sudan are directed to notify all aliens working with them in all positions to cease working as of from 15th October” (for more information, see this article from the Daily Nation).

The decision by the government is clearly a stupid one. It lacks any sound basis, and it runs counter to any informed and developmental-minded leadership. Such a move reminds us of the action by the former dictator of Uganda, Idi Amin, who, early in his reign, expelled foreigners and even seized their investments. The consequences of such actions—namely the collapse of the Ugandan private sector—are well-known, and it is quite surprising that a struggling economy would take actions that accelerate the downward spiral of economic growth and human development. Again, I say this is quite stupid on the part of the South Sudanese government.

South Sudan is in real bad shape when it comes to human capacity. It lacks well-qualified personnel to run the government and private sector. There is a dire scarcity of medical personnel, teachers, engineers, agriculturalists, private sector managers, and indeed workers in all sectors. The country needs all the support it can get to build human capacity. It needs more teachers and doctors, and greatly benefits from private investors. It needs additional training facilities for agriculturalists to train extension workers in order to more effectively exploit the great agricultural opportunities that abound in that country. With a very weak financial system and where most of the population is excluded from access to finance, foreign banks and workers have been playing critical roles in extending financial access. The expulsion of all these workers clearly spells doom for the economy.

The action by the government will have the immediate effect of undermining the prospects for foreign investment.  This action itself will exacerbate the already very poor environment for doing business in the country, which is compounded by the ongoing conflict. It is a totally poorly thought-out action and one that must be reversed if South Sudan is to make any progress in development. The African governments must make bold statements criticizing such actions as they have broader implications for the region.

A few years ago, I had the opportunity to discuss development challenges and opportunities with then-Vice President Riek Machar. My advice (in this 2012 Brookings report discussing post-independence development in South Sudan) then was that the country must focus on attracting foreign direct investment (FDI) and concentrate on human capacity development. I noted that many neighboring countries have a surplus of well-trained workers, which provides a great opportunity for South Sudan. I noted that the availability of skills and FDI are intractably linked, and it is critically important for South Sudan to focus on the two. This latest action shows that the government is receiving terrible advice or the leadership has absolutely no interest in the long-term development of the country.

But African governments have moved very far from the times of Idi Amin: Since the 1990s alone, the number of democracies has increased from four to 17, and the number of autocracies has decreased nearly fourfold, indicating a dramatic change the continent’s political landscape. South Sudan needs to not retreat to outdated and dangerous political decisions and risk falling into economic chaos. In addition, the actions by the government of South Sudan will have negative effects on other African countries as perceptions about a worsening investment climate in South Sudan will spill over to its neighboring countries. This decision should be a red flag for members of the East African Community (EAC) and signals that they should not rush to admit this country into the EAC. Its actions remove it far from the convergence necessary for a well-functioning economic community. The government of South Sudan must reverse this action immediately or it will have serious development consequences.