By Jacob K. Lupai
June 4, 2012 (SSNA) — In poverty estimation we can use income and consumption as welfare indicators to assess the extent of poverty. We earn income in order to have access to commodities in the market for our consumption. As expected the higher the income the more access one has to commodities. However, higher incomes do not necessarily mean immediate higher consumption for people may prefer to deposit their money in banks, deferring present consumption. What is of interest, though, is the relation of commodity prices in the market to income. This is in order to assess the extent to which poverty is prevalent. When there is a rise in commodity prices but incomes remain static then it is expected that access to commodities in the market will be limited hence reduction in consumption may be experienced. A retailer may experience a fall in sales because people may not afford to buy. People may employ coping mechanisms that hardly improve living standards.
Poverty line in South Sudan
In South Sudan the poverty line is about 73 SSP per person per month. People below the poverty line are considered poor. About 51 per cent of the population is poor in South Sudan. This suggests that about half of the population is poor. The average consumption of the poor is 39 SSP while of those who are not considered poor is 163 SSP per person per month. It can be seen that the difference in consumption between the poor and those not considered poor is 124 SSP. It is obvious that the poverty gap is wide. The poor consumes less than a quarter of what the rich consume, according to South Sudan standard. With rising commodity prices the gap between the poor and the rich is set to widen.
Commodity prices in the market
In Juba metropolis and indeed in any other town in South Sudan commodity prices seem to increase daily leaving people to groan. In a period of about six months, a kilogram of beef which was only 12 SSP is now 30 SSP, an increase of 150 per cent and mutton which was 18 SSP a kilogram is now 40 SSP, an increase of about 122 per cent. In a period of about one month a bag of five pieces of bread was 1 SSP but it is now about 2 SSP, an increase of 100 per cent. A heap of tomato that was 2 SSP is now 5 SSP, an increase of 150 per cent. A liter of diesel which was 2.5 SSP is now 6 SSP, an increase of 140 per cent. A bottle of cooking gas which was 70 SSP is now 140 SSP, an increase of 100 per cent. This is just a sample of commodity prices in the market to give a glimpse of what is happening in Juba market and what people are enduring.
On average price increase on a commodity is 127 per cent. This seems like a runaway inflation that is out of control. Prices of commodities in the market seem to increase daily. One reason may be acute scarcity. Prices may fluctuate according to demand and supply. However, there is no fluctuation but steady increases of prices. Fluctuation implies up and down movement which means prices may rise today and fall the following day depending on demand and supply. Juba market is fairly well supplied and stocked with the various commodities but prices seem to rise by the day. This begs the question, are there price control mechanisms in place. For example, how do retailers set prices for their commodities and who monitors prices in the market. It seems retailers are free to set any price for their commodities for maximum profit with no regard to fairness for the consumer. This may explain how people from the neighbouring countries find South Sudan a lucrative destination for business. Some shrewd citizens have also joined the foreigners in reaping off fellow citizens as consumers. The exploitation of consumers by unscrupulous retailers and thereby exacerbation of poverty should not have been the case. This is simply happening in the face of seemingly absolute absence of price control mechanisms.
Control of commodity prices
Businessmen are out for maximum profit with less regard to fairness for consumers. How consumers are protected from unscrupulous businessmen is the responsibility of the government. In Juba metropolis consumers seem to be at the mercy of retailers and other businessmen. Visiting what is claimed to be a five star restaurant one must first think twice because prices may not correspond to the claim. There is nothing much one can do but to wallow in poverty. The low income groups are especially hard hit by the spiraling commodity prices. Control of prices in the market is a great challenge. Commodity prices may differ from one retailer to the next. In the open market many retailers use containers and heaps as measures. Few use scales and weight measures. To standardize measurement of commodities, scales and weights should be used instead of containers and heaps as measures. This will minimize cheating. Also, all weights and measures should be in metric system to avoid confusion. The next step is for retailers and wholesalers to display prices against the commodities concerned. In this way it will be easier for market/price inspectors to check and compare prices from different retail outlets. The inspectors should be knowledgeable of what the commodity prices should be in order to relate to prices charged by retailers. Retailers who overcharge should face the law as a thief does in protecting consumers from unscrupulous retailers. What seems to be happening, though, is a created inflation by retailers in their greed for maximum profit.
High commodity prices exacerbate poverty
A little over half of the population of South Sudan is poor and the poor are in the low income groups. The low income groups are within grades 10 to 17 in the public service system of salaries. An employee in Grade 10 receives a total of 938 SSP per month assuming the employee lives in a government house. In contrast an employee in Grade 17 receives a total of 503 SSP per month. On average the size of household in South Sudan is 8. Given that the poverty line is about 73 SSP per person per month, a household of 8 should have 744 SSP per month to sustain it at poverty line. As can be seen an employee in Grade 10 with a household size of 8 has an income barely a little above the poverty line. However, with commodity prices increasing at the average rate of 127 per cent the employee and their household will find themselves living below the poverty line and in abject poverty. For the employee in Grade 17 and with spiraling prices out of control they are in abject poverty of unimaginable proportion. In view of this it is realistic to assert that high commodity prices exacerbate existing poverty in South Sudan. This is even more so when increases in salaries are not inevitable. With loud talk of austerity measures to cut down expenditure allegedly to save money for services the poor are likely to be poorer and the gap between the poor and the rich will grow wider.
Best practices in reducing poverty
A best practice is an intervention that reduces poverty. However, the question is how much poverty reduction is sufficient for people to claim that an intervention has been successful and should be classified as a best practice. Some people have tried to solve the problem by establishing a poverty line under which no one should fall. Nevertheless, no practice can be considered best unless it is accompanied by a monitoring system that gives a reliable picture of the extent to which poverty reduction has been achieved through a certain intervention. Another aspect of a best practice in reducing poverty is that it should be sustainable in eliminating poverty altogether. This means supporting the poor in climbing the ladder of self-reliance. For example, establishing a poverty line under which no one should fall should be to encourage people to get engaged in productive activities to sustain their living standards above the poverty line. Another best practice in reducing poverty is investment in training for social integration of the poor and in small-scale vegetable production to get the poor out of exclusion. Investment in training is to provide the poor with training opportunities which allow them to become integrated socially and work wise. Through training the poor can become skilled workers with wider employment opportunities for higher incomes in realizing high standards of living. Investment in small-scale vegetable production and training of smallholding producers is one best practice in reducing poverty. There is high consumption of vegetables in towns and cities in South Sudan. Hotels, restaurants and homes consume enormous quantities of vegetables. This clearly illustrates that there are already local and regional markets that vegetable growers can have access to in generating incomes for self-reliance thereby getting out of poverty. Investment in vegetable production is therefore an intervention that is one of the best practices in reducing poverty in South Sudan.
In conclusion, the spiraling commodity prices in the market are biting hard and people are groaning. It is not only the low income groups that are hard hit but the high and middle income groups are frightened of having their affluent life style being threatened by the seemingly uncontrollable hyper inflation. People simply do not know what the prices for their essential necessities will be the following morning. It seems there is always a new commodity price every now and then. With the knowledge that authorities seem to care less about the hype inflation, people are apprehensive. People seem to have resigned to the situation. Retailers who are mostly foreigners with some shrewd citizens seem to be in full control of the market and the people carrying the burden are the poor locals. With foreigners and shrewd locals conspiring to dictate higher commodity prices through hoarding of goods to extract maximum profit from consumers is something the authorities should wake up to face the challenge. Playing ignorance or being naïve of what is happening in the market to the common man in the street has far reaching implication in the long term. People easily remember the things that have affected them adversely and will act accordingly at the opportune time. A better way forward is to address a challenge head-on in the best interest of the public.
The author can be reached at [email protected]