PROLONGED CONFLICT IS TAKING TOLL ON THE SOUTH SUDAN ECONOMY – EXPERT
by Denis Elamu JUBA South Sudan (Xinhua) — The economic situation in South Sudan seems getting out of hand despite devaluation of the South Sudanese Pound by 84 percent in 2015 under the managed floating exchange rate, experts have said.
Since 2011, the country had been operating under a fixed exchange rate, but the outbreak of conflict in 2013 halted its oil production, distorting macro-economic stability.
Despite attempts by the central bank to rein in soaring prices of goods by auctioning of 70 million U.S. dollars to commercial banks, the economic situation seems to be getting out of control as fuel and food prices continue to rise.
According to Nhial Tiitmamer, Programme Manager for Environmental, Energy and Natural Resources at the Sudd Institute, a Juba-based research organization, despite being locally produced, coupled with drastically plummeting global crude oil prices, fuel costs more in South Sudan than elsewhere in the region.
“The prevailing shortage and high cost of living are a consequence of hard currency shortage, high taxes and duties, absence of refineries and depots, growing demand for oil from electricity producing and consuming sectors, and inefficiency in energy use,” Tiitmamer said early this week.
“These factors are exacerbated by gaps in institutional, regulatory and policy frameworks, lack of fair market restraints, and corruption.
“Consequently, this has led to fuel hoarding, hikes in transport cost, reduced productivity, amplified social stratification, and the soaring prices of basic commodities,” he added.
According to the UN Development Program (UNDP) national development report 2015, foreign exchange market distortions in South Sudan are a major challenge to redirecting the economy in a positive direction.
“The Ministry of Finance and Bank of South Sudan have agreed that the rationing and allocation of foreign exchange since 2011 have created increasing distortions in the economy.
“They have reinforced perceptions of poor economic management fostering corruption and rent seeking, altering price signals, and deterring foreign investments,” the report finds.
The report says foreign currency rationing has also led to a parallel market for foreign exchange since 2011.
The parallel exchange rate has responded to stimuli and changes in oil flows.
“Severe capacity constraints, corruption and a lack of a legal framework and resources have delayed setting up an efficient system of non-oil revenue administration,” says the report.
South Sudan depends on oil exports to finance 98 percent of its fiscal budget, but oil production has since declined from over 300,000 barrels per day to less than 160,000 bpd. This has been exacerbated by the global fall in oil prices.
The country’s abundant natural resources include oil, teak, gum Arabic, gold and natural mahogany.
A large portion, 90 percent, of its land area is deemed suitable for agriculture yet less than five percent is cultivated.
“Outside the oil sector, livelihoods are currently concentrated in low productive, unpaid agriculture and pastoralist work, with this accounting for around 15 percent of GDP,” the UNDP says.
Alic Garang, economist with Ebony Center for Strategic Studies, a South Sudan think tank, said the fundamental thing for the country was to work around increasing non-oil revenue.
“As long as we don’t identify where resources are coming from, you cannot spend without knowing where the money is coming from,” Garang said.
Analysts said South Sudan’s economic fortunes depend on the expeditious formation of the transitional government of national unity as per the signed August 2015 peace deal to end more than 23 months of conflict.
The peace deal leaves Salva Kiir as president and returns rebel leader Riek Machar as the first-vice president.
However, Machar has not returned to Juba, citing delays in transportation of his 1,370 rebel troops to Juba and security concerns for his safety.
Khartoum and Juba relationship returns to accusations with threats square
KHARTOUM Sudan (Xinhua) — Since South Sudan has officially separated from Sudan in 2011, the relationship between the two countries has remained swinging between relative improvement and tension, while the tow sides’ efforts have failed to reach full normalization of ties.
Following a remarkable stability after decisions by the two countries’ presidents to remove the reasons of tension, and after Sudan’s move in last January to open its border with South Sudan, the relationship between Khartoum and Juba has returned to the square of exchanged accusations and hinting to adopt what is beyond threats.
To this end, local Sudanese media on Friday reported Sudanese Presidential Assistant Ibrahim Mhamoud Hamid have accused Juba of continuing its support for the rebel Sudan People’s Liberation Movement (SPLM)/northern sector which is leading a rebellion against Khartoum at Blue Nile and South Kordofan regions.
“Juba is continuing to support the rebels despite the goodwill expressed by Sudan through opening the border and non-restricting the movement of the Southern Sudanese citizens,” Hamid said.
“If South Sudan failed to stop supporting the rebels, we will be forced to adopt measures to protect the country even if that led to closing the borders again,” he noted.
He went on saying that “we are waiting for the implementation of the cooperation agreements signed in 2012 so that there won’t be security issues between the two countries.”
Last January, the two countries’ presidents issued decisions opening the joint border, withdrawing the forces from the border and reviewing the transit fees of exporting South Sudan’s oil through Sudan’s oil utilities.
However, Khartoum insists that Juba has not stopped its support for the rebel movements and has not committed to withdrawal of its troops from the joint borders, particularly the disputed areas.
Nevertheless, South Sudan government reiterated commitment to the decisions made by President Salva Kiir Mayardit last January and his order for the army to withdraw from the border with Sudan.
In this connection, Sudan Tribune reported South Sudan’s Presidential Advisor on Security Affairs Tut Gatluak have said “that order has been complied with long time ago.
“Our forces have been withdrawn more than one kilometer away from the common border with Sudan but they want us to go beyond that, which has security concerns.”
He further warned that negative and hostile rebel forces could take advantage of movement away from the common border and may use the area for activities which may compromise security between the two countries.
Meanwhile, and according to Sudan Tribune, South Sudan’s new deputy chief of general staff for finance and administration, James Ajonga Mawut Ajonga, also confirmed that government forces have complied with the order after the army’s chief of general staff, Paul Malong Awan, sent out to all units at the border with Sudan to act in compliance with the order of the president.
In the meantime, and in a move regarded by observers as “escalation,” the Sudanese government decided Thursday to treat the Southern Sudanese nationals living in Sudan as foreigners when receiving services.
The decision was made by the Sudanese Council of Ministers in its session, chaired by Sudanese President Omar al-Bashir on Thursday, according to official SUNA news agency.
The government decision came contrary to a previous decision by al-Bashir to treat the Southern Sudanese fleeing the fighting in their country as citizens.
The council of ministers also decided to check the identity of the Southern Sudanese nationals in Sudan, saying that legal action would be taken against anyone who does not hold a passport or an official entry visa.
A’mer Abdalla, a Sudanese political analyst, speaking to Xinhua Friday, said “Khartoum wanted to send a signal to Juba that it has means of pressure that it can use.”
“This is an escalating move that is likely to increase the tension in the two countries’ relations, where the Southern Sudanese nationals will pay a high price if Khartoum pressed ahead with its measures which threaten the presence of the Southern Sudanese nationals in Sudan,” he noted.
According to the Sudanese Humanitarian Aid Commission, the number of the Southern Sudanese refugees who fled the violence in their country to Sudan amounted to 352,000.
These South Sudanese refugees are distributed in 14 Sudanese states, but the majority are in Khartoum state which hosts 142,000 refugees, followed by White Nile state where there are 93,200 refugees.
In September 2012, Sudan and South Sudan signed a cooperation agreement in the Ethiopian capital of Addis Ababa under the patronage of the African Union.
The agreement included a package of understandings related to security, citizens’ status, border and economic issues and others relating to oil and trade.
However, the signed agreements did not tackle the issues of Abyei and border demarcation.
The border issue constitutes one of the biggest barriers hampering the settlement of differences between Sudan and South Sudan, which involves disputes over five border areas, including Abyei, Dabatal-Fakhar, Jabel Al-Migainis, Samaha and Kafia Kanji.
United Nations Security Council calls for protection
of civilians amid violence in South Sudan
UNITED NATIONS New York (Xinhua) — Expressing particular alarm at attacks against civilians, the UN Security Council has called on South Sudanese government to uphold its responsibility for the protection of civilians and honor peace agreement.
The council, in a presidential statement, expressed particular concern at “credible reports of armed men in Sudan People’s Liberation Army (SPLA) uniforms entering the United Nations Mission in the Republic of South Sudan (UNMISS) protection of civilians site and firing on civilians.”
The 15-member body stressed that “attacks against civilians, UNMISS personnel, as well as United Nations premises are unacceptable and may constitute war crimes.”
Moreover, the council underscored the importance of honoring the “Agreement on the Resolution of the Conflict in the Republic of South Sudan” and called for progress in its implementation, such as on ceasefire and civilian protection.
The council urged South Sudanese government and the Sudan People’s Liberation Movement in Opposition (SPLM-IO) to “fully and immediately adhere to the permanent ceasefire in accordance with their obligations under the agreement.”
On civilian protection, the statement said the government and the SPLM-IO should “protect civilians and civilian facilities, including schools and hospitals, allow people to move freely,” and ensure “timely delivery of humanitarian assistance, to all those in need.”
The council also expressed its intention to review progress on the steps outlined above no later than March 31, said the statement.
The agreement was signed in August 2015 and aimed at ending a two-year civil conflict.
South Sudan to scale down staff in its foreign embassies
JUBA South Sudan (Xinhua) — South Sudan has dismissed reports of closing down 32 of its foreign embassies, saying that it will instead downsize the number of staff due to economic slump stemming from a two-year civil war.
A statement from the Ministry of Foreign Affairs said the world’s youngest nation was reducing the number of staff in its embassies abroad in order to cut down on the costs.
“The Ministry of Foreign Affairs and International Cooperation is planning to reduce or downsize the staff in its embassies abroad. This does not mean that the embassies are being closed down,” the statement said.
The statement came after unconfirmed reports that some of South Sudan’s foreign missions have been served with eviction orders for not paying rent, while some staff have not been paid for more than six months due to economic crisis.
The government last year devalued the South Sudanese Pound (SSP) by 84 percent.
The major cause of the current economic crisis is the conflict that broke out in December 2013 between factions of the ruling party, which led to a two-year civil war.
“The foreign affairs ministry can at any time increase or decrease the number of staff in its embassies abroad. This is done everywhere in the world,” it added.
South Sudan won independence from Sudan in 2011.