What has become of our Economic Liberation?

By Paan Luel (Washington DC, USA)

September 20, 2010 (SSNA) — In my last article, “Onto the Root Causes of our Economic Tribulation in South Sudan,” published by the South Sudan News Agency (SSNA) on August 27, 2010, I argued that the prospects of our economic transformation, as imagined and hoped by many southerners in the immediate aftermath of the groundbreaking Peace Accord of 2005, were, and are continually being, hampered by numerous hurdles. Among those impediments, as you might have read in the article, are intra-tribal clashes and political rebellions, weak public schools and poor health care systems, government’s failures to enforce the rule of law, and most importantly, low rates of savings and investments. In that article too, after detailed explications of each of those cited points, and especially at the final end, I posed a rhetorical question, that, given all the formidable obstacles hindering us in our march toward economic prosperity, “what is the panacea?”

I would have wished to satisfactorily answered, in this second part of my article, that rhetorical question by providing all the plausible solutions, there are, to our economic bedevilment. However, doing exactly that in our present circumstances would amount to claiming to elucidate more than I should and could possibly afford to. Nevertheless, there are some sound suggestions I can propose to the ministry of economic planning and development, the development partners, the business community and the general public of the Southern Sudan. Since it goes without saying that there are substantial payoffs to government policies that do increase economic growth rates, the most notable question in the mind of all concerned citizens become: what can the Government of Southern Sudan (GoSS) do to aggressively promote both long and short terms economic growth?

There are specifics, time-tested economic policies that GoSS can, and should have long ago, implement to inaugurate, promote and maintain continued economic growth. To increase economic growth rates, to realize higher standard of livings in the South, and thus, to fulfill its manifest destiny of total socio-economic liberation of the marginalized people, GoSS should consider to put into effect economically informed programs that would enhance the property right and the rule of law, improve health and elevate the quality of education, subsidize research and development in centers of higher learning, provide incentives for savings and investments, and most significantly, take advantage of and participate in global economy.

In Southern Sudan, the rule of law and property rights is particularly undermined by both corruption and political instability. There are certainly tremendous dividends and justifiable call for government involvement in a very immature market economy such as there is in the South. One particular benefit of GoSS intervention in market economy would be strict enforcement of the rule of law that would aggrandize the protection of the property rights. The principle of property right—privileges individuals or firms have to the exclusive use of their property—as enshrined in the interim constitution of South Sudan is doomed if not uphold sternly. As an essential doctrine of all successful economies in the world, continued absence of strict observance of the rule of law across the South mean that neither the entrepreneurs would be willing to risk their own hard-earned funds to expand or commence new business enterprises, and nor would the investors be enthusiastic to invest in new business start-ups.

Corruption in form of bribes surreptitiously taken by government officials before issuing permits for businesses is not uncommon in Juba and so is unwarranted taxation that either scares away or unnecessarily victimizes upcoming firms. Worse still, these taxes end up in the pockets of government officials and their surrogates rather than being utilized to build and extend public infrastructures like the much needed road network systems that would bolster economic activities in the South. The rule of law and the protection of the property rights is further severely undermines by increased political instability—civil strife by tribal bandits, rebellions spearheaded by aggrieved politicians and constant LRA brutal attacks—that has rendered large parts of the Southern Sudan Somalia-like. In those areas it is hard to imagine flourishing economic activities going on under frenzied banditry. GoSS must prioritize the tackling of rampant corruptions and reinforce political stability in the South in order to secure and boost property rights and the rule of law—the pivotal of economic development.

Having established and institutionalized the rule of law by eliminating corruption and curbing political instability, GoSS should then embark on providing upgraded basic education and improved health care for the population. For success to be attained, educational reforms in the elementary, primary, secondary and, above all, in higher education, must be urgently carried out. This will goes all the way to combating ignorance by eliminating illiteracy and to promote technological innovations by encouraging rigorous study of STEM—sciences, technological, engineering and mathematical courses. For that feat to materialize though, new schools should be built, more teachers trained, comprehensive new national curriculum instituted, textbooks published and distributed and teachers should be remunerated well and on time. Furthermore, peace and security must be created and maintained in many volatile regions so as to provide conducive environment for learning to take place.

Moreover, brain drain—situation whereby highly educated and successful Southerners leave for, or decided to remain in, high-income countries due to unfavorable conditions in the South—should be combated by a combine force of halting corruption, nepotism and favoritism usually based on tribes and/or connections rather than on one’s skill and educational qualifications. There are many viable incentives for our valuable sons and daughters who might be, out of no alternatives or just oblivious of the vice, advancing brain drain process. This could be accomplished by providing adequate secure environment, both for working and living in the south, and to a great degree, by improving the economic prospect in the domestic economy. Anyone who can easily make not only a decent living but also a great name for him- or herself within his/her native country has no further motivations to seek green pastures in foreign lands which are often unwelcoming to funny-looking aliens (as they think of us).

Similarly, health issues should be met head on since there is an unequivocal correlation between health and economic growth rate. Our sickened, malnourished workforce in the South should be replaced with strong, tall, healthy workers that would be the vanguards of our economic transformation. For the South to achieve that, new technological-equipped health centers should be built, more doctors and nurses trained, better drugs and medicines made available in hospitals, food and nutrition increased, improved access to clean water and sanitation, and children immunization should be expanded. Budget constraints might present a considerable headache but if corruptions and general mismanagements are done away with, funding from development partners could be secured to smoothen out the budget constraints. Increased learning in schools and improved health conditions would produce a healthy and an efficient labor force that would ultimately ensure increased return to human capital to pull us out of this extreme poverty.

But increasing human capital has diminishing return. Therefore, GoSS policies should, through subsidization of national education, facilitate access to crucial technology. Research and development should be financed through government’s funding as a form of investment. This is how many rich, developed countries such as the EU, the US, Israel, Japan, and lately China, incubated and nursed their technological innovations over the years. The National Science Foundation in the US, for instance, was purposely established and continually being funded with a clear goal of supporting university researchers. Israel, a tiny resource-less, desert country surrounded by countless adversaries, is today a global technological powerhouse owing to its government’s consistent funding of scientific research and development that cut across all aspect of the societal life ranging from the superb military to spectacular business innovations. For the sake of an efficient and productive work force, basic education and research and development should be encouraged through subsidization by the government using petro dollars. The subsidization of education will undoubtedly play an essential role in the promotion of economic growth that South Sudan badly need.

In addition to a committed government funding, South Sudan can easily access technology, just like the Asian Tigers—China, South Korea, Taiwan, Singapore etc—through foreign direct investment. This can be realized by allowing firms from developed, rich countries to build new factories or to acquire struggling domestic firms in Southern Sudan. Through direct foreign investment, India, a country that had, until recently, been as poor as many African countries, has been able to gain enviable access to the software technology of giant multinational corporations such as Microsoft, Dell and Apple among others. It is little wonder then that a today software engineer in many multinational corporations’ laboratories is highly likely to be an Indian than a British or an American. For South Sudan to achieve any remarkable break from the present day grinding poverty, GoSS policies should aid the growth of technology by subsidizing research and development and through tax breaks to those firms interested in or are already undertaking research and development to facilitate technological change.

Of all the available policies geared toward economic growth, none is more important than those that increase the incentive to savings and investments among the population. In order to break the vicious cycle of abject poverty, GoSS should pioneer strategies that would encourage both individual and business savings and investments that could result in the increase of loanable funds for entrepreneurial ventures. Tax reductions should be carried out on individuals so that their disposal income would be enough to cover both present expenditures and future consumptions—saving for future use. These funds should then be placed in a scheme—say individual retirement accounts—where the savings could get compounded over the years before retirement and where businesses can make use of them to finance their investments. Firms too can be cajoled to save through investment tax credits which would allow firms to reduce the portion of their taxable profit provided they are committed to invest the extra cash in business investments. These incentives, if successfully facilitated by the government on individuals and firms to save and invest, would greatly promote the prospect of economic growth and prosperity in the South.

For much of our living history, South Sudan has been wallowing in despicable poverty. The war only exacerbated the already dire economic situations. Today, more than ever before, we have within our firm grips the prerequisite means to change the pathetic living standards of our country men and women if only we are prepared to give little resolve to do so. The key to better economic prospects lie in nothing more than establishing the rule of law by curbing corruption and political instability, provision of basic education and health care systems to the people, subsidization and funding research and development in the universities to further the cause of technological change, provision of incentives for firms and individuals to save and invest, and for the most part, participation in globalized international trade to attract foreign direct investment and gain access to technology of multinational corporations. The road is wide open, the direction is obviously clear and the potentials dividends, not to mention the opportunity cost of inactions, are enormous. Something has to be done and now is the time! That something is the fulfillment of our long promised Economic Liberation according to the SPLM/A’s manifesto.

Mr. Paan Luel, a concerned Sudanese student studying in the United States, can be reached at [email protected] or through his blog: http://paanluel2011.blogspot.com

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