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12 Reasons South Sudan’s Economy Has Not Recovered Post Civil War

12 Reasons South Sudan’s Economy Has Not Recovered Post Civil War

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In August 2015, South Sudan’s warring parties agreed to form a power-sharing transitional government, bringing an end to the civil war that cost the country tens of thousands of lives and created over 2 million refugees. Despite the peace deal, however, the country continues to be plagued by security issues, political discord, and a failing economy that has hindered the country’s post-war development. Here are several important factors as to why South Sudan’s economy has not been able to grow in the aftermath of the conflict.

Sources: NYTimes.com, Frontier-Economics.com, Center for Conflict Resolution (CECORE), Centre for Peace and Development Studies (CPDS), SudanTribune.com, Bloomberg.com, ANBA.com.br

South Sudanese citizens showing support for a more open and transparent oil economy AllAfrica.com
South Sudanese citizens showing support for a more open and transparent oil economy
AllAfrica.com

Oil fields were damaged in the war

Many of South Sudan’s oil fields were damaged in the war, and production has dropped to less than half of what it was at its peak. The country is paying approximately $25 USD in debt repayments for every barrel of crude oil exported, making it extremely difficult to turn a profit, especially when coupled with low oil prices worldwide. Due to these factors, South Sudan is likely to record a negative GDP growth in 2016, despite growing 30.7 percent two years ago.

Cattle in South Sudan American.edu
Cattle in South Sudan
American.edu

South Sudan has failed to develop its non-oil sectors

Despite the fact that nearly 90 percent of South Sudan’s land is arable and cattle and sheep are plentiful, the country imports the vast majority of both food and non-food items. The lack of diversity in the economy has made the declining oil revenue an even bigger problem for the struggling economy.

Proprietor Elena stands outside her restaurant, Santa Maria, in Rumbek Oxfam.org
Proprietor Elena stands outside her restaurant, Santa Maria, in Rumbek
Oxfam.org

Small businesses are forced to pay for private electricity supplies

Small business owners unable to deal with irregular electricity supplies have had to turn to private companies to power their storefronts. Privately owned generators, many of which draw on black market fuel, charge top dollar, making it difficult for entrepreneurs to turn any kind of significant profit.

Food insecurity issues have worsened the already difficult refugee problem in South Sudan UNHCR.ie
Food insecurity issues have worsened the already difficult refugee problem in South Sudan
UNHCR.ie

Food security issues further exacerbate the economic situation

Human costs of conflict, such as death, disease, and hunger, are enormous, and the food security issues in Sudan are of special concern. A study by Frontier Economics, the Center for Conflict Resolution, and the Centre for Peace and Development Studies found that the effects of hunger on labor productivity could cost the Sudanese economy over $6 billion in lost GDP in the next five years alone.

South Sudanese soldiers in Juba News.Ebru.tv
South Sudanese soldiers in Juba
News.Ebru.tv

Security costs take away from the funds available for increased infrastructure and economic investment

Due to continuing skirmishes and sporadic violence across the country, the government is slow to demilitarize, increasing the amount spent on security forces and equipment. This detracts from funds that could be spent on building necessary infrastructure and takes focus away from economic development.

From left: Riek Machar, First Vice-President of South Sudan; President Salva Kiir; and James Wani Igga, Second Vice-President, after the swearing in of a new Transitional Government of National Unity, 29 April 2016. UN Photo/Isaac Billy UN.org
From left: Riek Machar, First Vice-President of South Sudan; President Salva Kiir; and James Wani Igga, Second Vice-President, after the swearing in of a new Transitional Government of National Unity, 29 April 2016. UN Photo/Isaac Billy
UN.org

The transitional government is racking up enormous operational expenses

An International Monetary Fund consultation in May 2016 found that the Sudanese transitional government is spending far more than necessary on operational expenses. In order to limit its arrears accumulation, South Sudan must cut its expenses, especially payroll, operations, travel and investment, according to IMF.

South Sudanese finance officials at signing of the treaty to become the World Bank/IMF's newest member SudanTribune.com
South Sudanese finance officials sign the treaty to become the World Bank/IMF’s newest member
SudanTribune.com

The central bank needs to control over the country’s finances

The IMF recommends that South Sudan’s central bank reestablish its position and regain control over monetary policy by refraining from lending to the government, setting inflation on a decelerating path, and gradually start replenishing its international reserves.

Source: SudanTribune.com

People protesting corrupt officials in the South Sudanese government TheNiles.org
Protesting corrupt officials in the South Sudanese government. TheNiles.org

International support is small due to a lack of fiscal transparency

With an uncertain security situation and lack of fiscal transparency, potential international donors are wary of pouring money into South Sudan. The IMF has urged the government to increase transparency and demonstrate a strengthened commitment to political unity and public financial management in order to raise the necessary money from external sources to aid the economic rebuilding.

Inflation has plagued South Sudan, lowering the value of its currency on the international stage Radio-Miraya.org
Inflation has plagued South Sudan, lowering the value of its currency on the international stage
Radio-Miraya.org

The value of the South Sudanese pound has dropped significantly

Since the exchange rate of the South Sudanese pound was liberalized in December 2015, the value of the South Sudanese pound has dropped nearly 90 percent. Inflation has approached 300 percent, exacerbating the already fragile economy.

Increasing food prices are making it difficult for South Sudanese citizens to buy the essentials FAO.org
Increasing food prices make it difficult for S. Sudanese to buy the essentials. FAO.org

Commodity prices are up in relation to currency devaluation

Prices for food and general household products have increased in conjunction with the devalued South Sudanese pound, making it difficult for importers to bring in necessary goods and for citizens to purchase what they need.

The UN voting to impose limited sanctions on South Sudan back in March 2015 BBC.co.uk
The UN votes to impose limited sanctions on S. Sudan in March 2015. BBC.co.uk

International sanctions continue to limit economic development

The U.S.s still has an economic embargo on South Sudan, making it difficult for the country to engage with international partners to further its economic development. IMF mission chief Eric Mottu encouraged the country to “secure comprehensive support for debt relief and the lifting of sanctions,” pointing specifically to its eligibility for debt relief under the IMF’s Heavily Indebted Poor Countries Initiative.

Source: ANBA.com.br

Rebel group leader James Koang speaking to media reporters in Juba in April 2016 NewsOK.com
Rebel group leader James Koang speaks to reporters in Juba in April 2016. NewsOK.com

Some rebel groups have not signed onto the peace deal

Making the security situation in South Sudan even more uncertain, leaders of some rebel groups have not signed onto the peace deal. The danger of continuing violence threatens the transitional unity government’s effectiveness, and deepens the already existing mistrust between its leaders.