x Abu Dhabi, UAETuesday 25 July 2017

Desperate hope South Sudan's dream does not become a nightmare

Has South Sudan already squandered the economic fortune it inherited from Khartoum – or can it revitalise its embattled oil sector?

Has South Sudan already squandered the economic fortune it inherited from Khartoum - or can it revitalise its embattled oil sector?

Listening to South Sudanese, there is a strong sense of urgency that the government should adopt innovative measures to make South Sudan's oil potential wealth work in the best interests of its citizens - fulfilling the Sudan People's Liberation Movement and Army (SPLM/A) party's promise made at South Sudan's independence.

In April 2004, just a few months before the signing of the peace agreement between the Sudan government and the rebel SPLM/A that now runs South Sudan, the late SPLM leader, John Garang, laid down his vision for the new country in a booklet entitled The SPLM Strategic Framework For War-To-Peace Transition.

The document looked to an economic framework for prioritising agriculture as the engine of economic growth and poverty eradication. It was an ambitious idea.

"Our economic plan and development vision for an independent Southern Sudan was to use the oil revenues to fuel agriculture," says Peter Chol, a former rebel fighter and currently an official at the ministry of finance and economic planning in Juba, South Sudan.

"Our slogan for socioeconomic and political development was to take the towns to people in the countryside rather than people to towns," he adds.

"There was tremendous hope and great expectations among our people for independence, because they literally expected paradise on earth upon secession."

Indeed, such sentiment is not hard to understand given that an independent South Sudan was expected to take about three-quarters of Sudan's oil output. When independence came on July 9, 2011, there was a great fanfare and pride in the belief the hard-won political freedom would soon translate into tangible material benefits from South Sudan's potentially vast amount of oil wealth.

An independent South Sudan was projected to produce about 350,000 barrels a day, enough to meet people's expectations for peace and security via economic development.

Yet, two years on, those hopes have been dashed as its relationship with its northern neighbour has soured.

"We have been having serious disagreements with Khartoum over oil and the use of the export pipeline [to Port Sudan] and so we halted oil production temporarily," Obwach William, a senior official at the South Sudan's Nile Petroleum Corporation, the commercial arm of the ministry of petroleum and mining, said when Juba shut down production in January last year.

"They were stealing our oil and we had to take the necessary step, notwithstanding the centrality of oil revenues to our national budget and economic viability."

The two sides are still in dispute over issues including rights to the oil-rich Abyei region straddling the border between the countries. Sudanese troops have been ambushed and killed there by local rebels and the area remains volatile.

Depressing as the economic situation might appear, many South Sudanese still believe their fledgling nation could yet turn its oil assets of about 7 billion barrels in proven reserves into positive economic change, particularly for the poorest. A number of informed economic policies, formulated in liaison with foreign oil companies and the Addis Ababa-based African Union (AU), could help South Sudan to reverse its fortunes and offer a better future for its stressed people.

But it will not be easy.

South Sudan faces the stark reality of declining oil production by 2015, a very limited time to allow the diversification of the economy. Creating a secure and healthy environment for foreign oil companies would increase the chances of them investing to develop the oil sector more as well as finance alternative export routes, perhaps via Kenya.

"Foreign investment in the oil sector can assist us to finance not only an alternative oil pipeline but also oil exploration and field development in the vast unexplored areas of our country where there is great potential to discover commercially viable amounts of oil," says Gatluak Dhol, a director general at the ministry of commerce in Juba.

For foreign oil companies to invest in the country, though, the government must do more to ensure security and curb economic malpractice. Joining the Extractive Industries Transparency Initiative, an international body formed in 2002 that the US joined this year and which promotes transparency in resource-rich countries, was a commendable step. Juba is aware of its responsibility.

On Friday, following the agreement of Khartoum not to close the pipeline to Port Sudan, South Sudan's oil minister Stephen Dhieu Dau said the government had an obligation under the Petroleum Act to make public information on oil production and sales. "I take this opportunity to express my optimism that the renewed spirit of cooperation between the South Sudan and Sudan will continue to guarantee the undisrupted flow of South Sudan crude oil to the international markets for the mutual benefit of both countries", he was quoted as saying in the Sudan Tribune.

Many feel for South Sudan to survive and thrive, the governments of both countries must lead the way.

"There is no good chance of economic revival without political resolution," says Justin Kenyi, a South Sudanese businessman who owns a construction company.

After two decades of civil war and two years of independence mired in economic meltdown, the government of South Sudan owes its people a debt that cannot be repaid until there is a substantial improvement in their everyday lives.

Otherwise, Mr Garang's slogan of "using oil revenues to fuel agricultural growth" and of "taking town to the people in the countryside" will haunt the nation for years to come.

 

business@thenational.ae