South Sudanese Economy Collapsed

By Dominic Ukelo,

July 23, 2016(Nyamilepedia) —– Since the returning of the SPLA-IO members and prior to the Juba Street fighting, which led to the South Sudanese economy to collapse, there has been high tension all over the country, especially in the capital, Juba. Some elements in the government were unhappy with the returning of the SPLA-IO members. Meanwhile, the SPLA-IOs were feeling bitter and disappointed with the government forces’ perpetual harassments and intimidations whenever they met in the capital city. Tension remained high as government security forces began killing SPLA-IO members, including Lt. Colonel George Gismala and Sgt. Domach Koat Pinyien on July 2, 2016, the incidents which fueled the already existing tension. As a result of the tension, the SPLA and the SPLA-IO forces fought for five days inside Juba, starting from the event at Lou Clinic in Gudele road on Thursday July 7, 2016, followed by the deadly clashes outside the Presidential Palace (J1) on Friday July 8, 2016, leading to the several attacks on the IO position in Jebel Kujur, by the government forces. Subsequently, the security situation deteriorated, especially, in the capital, Juba.

South Sudanese government has continued to fail to provide its citizens with basic public services, such as security, which any government in the world should have provided to its people, in order for them to build their country and thrive economically. For more than five (5) consecutive years the regime in South Sudan adopted ruling style as of Zaire, Afghanistan and many other failed states, that characterized by ill decisions, wide corruption, and predatory ruling. Moreover, the regime relies entirely on the crafting ill-advised policy by tribal elites that became dangerous and unsustainable, which have been for long time a reason for the country to be destabilized and economy growth to be sluggish.

High officials of Salva Kiir’s regime continued to plundering the country’s resources, destined to increase their national stock of wealth, and yet the worst was the higher officials, including the president and his ministers, decided to deposit the stolen money in foreign bank accounts offshore, which attributed mostly to the collapse of the economy.

What has been happening in the South Sudan is unprecedented phenomenon. The economy was in critical condition even before the Juba Street fighting occurred. Before the Juba Street fighting, the government has failed to pay public servants in the country for almost four months. Further, Salva Kiir Mayardit’s regime not only has shelved most important and urgent projects that would have contributed positively into the development of the economy, if implemented. Unfortunately, the regime has further abandoned its duties to financially support important institutions in the country, leaving for example hospitals without reliable electric supply and the courts without ability to even go forward with its simplest duties, including failing to transport culprits from police station to the court.

After five days of Street fighting in the South Sudan capital, Juba, the fighting has finally dragged the already deteriorated and abnormal economy to its knell. As of Venezuela, which has inflation rate of 481.52 percent the highest in the world, now the inflation rate in South Sudan is predicted to be reached an all-time higher of around one thousand (1000) percent, instead of 309.60 percent in June of 2016 and averaged 35.75 percent in 2008. Moreover, foreign currency rates have climbed higher, leading for instance one hundred dollars to be equivalent to eight thousand South Sudanese Pounds SSPs, instead of five hundred SSP just in June 2016 before the fighting.

As the result, the high rocking of the hard currency rates have pushed the prices of the Goods in the local market to be tripled as well. As of 16 July, 2016, one kilogram kg of sugar costs one hundred South Sudanese Pounds SSPs instead of thirteen SSP before the fighting, one piece of Onion has increased from five (5) SSP to thirty (30) SSP, one plastic page of bread has reached to forty (40) SSP instead of four (4) SSP, a kg of meat costs eighty (80) SSP, one kg Maize flour eighty (80) SSP, Sac of charcoal cost hundred and twenty (120) SSP, and only four (4) pieces of tomatoes goes for one hundred (100) SSP after the fighting in the capital, Juba.

In the light of the hyper-inflation in the country, there has been a critical question rising by ordinary South Sudanese people, the question which needs an answer from their government. If the average monthly salary in the country is seven hundred (700) SSP, considering that the public servants remain without salaries for the last four consecutive months, how the population could survive without or even with the salary of seven hundred (700) SSP?

The most devastated reasons that led to the South Sudanese economy to be deteriorated rapidly, before flunked by the recent clashes in Juba, are for instance volatile political environment and constant civil wars in the country, both trends that could clog up the machine that powers any economy in the world, Lebanon in eighties (80^th) is one example.

The International Monitory Fund IMF and the World Bank WB remain important factors that could help resuscitate the collapsed economy. However, most contributors warn that major powers and the two financial organizations must be convinced first, by the government of South Sudan, in order to help support the failed economy. Mostly in the condition that parties are willing to put their differences aside, work together and are ready to put the country back together. The condition, after the Juba Street fight, observers couldn’t foresee in the near future. Therefore, as the economy collapsed, the worst scenario for South Sudan, if the international community did not intervene, would be, unfortunately, either another Rwanda or Somalia case in the continent.

Dominic Ukelo is a South Sudanese economist. He can be reached at ukelodominic@gmail.com