South Sudan′s economy is among the victims of the conflict | Africa | DW | 23.03.2018
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South Sudan

South Sudan's economy is among the victims of the conflict

As the armed conflict rages on, South Sudan's President Salva Kiir is looking for ways to revive the economy. The solution he came up with was to replace the finance minister. But will that help?

Economists say the reason South Sudan's economy is in disarray is instability. The only way to revive the economy, they argue, is to restore peace and stability, thereby giving production a chance and encouraging investors to come back to the country.

Last week, South Sudan's President Salva Kiir sacked and immediately replaced his long serving Finance Minister Stephen Dhieu Dau with Salvatore Garang, himself a formerly sacked undersecretary at the finance ministry. Kiir said at the time that a change in the leadership of the finance ministry will help the economy along.  At the swearing-in ceremony of his new minister he said: "We have lost the value of our currency and there is nothing that we can do soon to gain the value of our currency unless we produce. This is a challenge that is ahead of you and you must think very hard on how to get out of this.”

Garang is the fourth finance minister since the conflict in South Sudan broke out four years ago. His appointment comes amid soaring prices of goods and services and increasing devaluation of the South Sudanese pound. The currency has fallen steeply since the outbreak of the conflict. Five years ago one US dollar (80 eurocents) bought five South Sudanese pounds; the current exchange rate is 1:240. Accordingly, prices for goods and services rocketed, making life hard for ordinary citizens.

Skyrocketing prices

A South Sudanese government soldier wearing a wig and holding a grenade launcher

The armed conflict is at the root of South Sudan's problems

A 50kg (110 pounds) sack of flour used to cost 120 South Sudanese pounds before the outbreak of the conflict. In Juba markets today, people pay 7,000 South Sudanese pounds for the same amount. This is twice the monthly salary of a senior civil servant in the national government.

Kimo Adiebo is a professor of economics at the University of Juba. He is critical of Kiir's motives for the reshuffle and points out that the president often reappoints politicians who have been accused of corruption and lack of public morals. "If you want to control the economy, you have to address the spillovers of the war, the insecurity resulting in lack of confidence on the part of the private sector and also development partners,” Adiebo told DW.

The economist accuses the government of increasingly overspending on security. Almost 50 percent of the budget is allocated to security. The money should be spent on sectors like agriculture and infrastructure as a way to foment the economy, Adiebo said.

A myriad of problems

South Sudanese children being fed

South Sudan's population is dependent on foreign help to survive

He added that, despite the difficult times, former Finance Minister Dhieu had tried to improve the situation by making it difficult for individuals to cash checks at the ministry of finance - a corruption scheme then in existence – and stopped issuing monies to government officials to travel abroad.

Augustino Ting Mayay, a policy analyst with South Sudan's Sudd Institute, a private research firm, says that besides the state of the economy, Garang will also have to deal with other serious problems. "You have civil servants who have not been paid for months. You have corruption that plagues the economy and the ministry of petroleum is littered with that. If you look at remittances from oil revenue, you will find some issues there.”

South Sudan depends almost completely on oil revenue; the export finances up to 98 percent of the annual budget. But half of the oilfields have been destroyed in the armed conflict, seriously reducing the state's income.

 

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