|Economic Policy in Africa’s Youngest Country|
|Tuesday, 22 March 2011 00:00|
Yet the fledgling country has several advantages, including a committed leadership and almost universal support from the population (99 percent voted in favor of secession). The country also has oil revenues. And being a late starter, the country can learn from (and avoid the mistakes of) other countries, many of which have been independent for over 50 years.
Against this backdrop, the SPLM leadership and a handful of us “guests” had a frank exchange of views on how to seize this opportunity to meet South Sudan’s many challenges. Harvard’s Lant Pritchett said that to have sustained and inclusive growth—which is the only kind of growth South Sudan should be striving for—policymakers need to focus on a few things they can get done to boost agricultural productivity. I followed by suggesting that to avoid government failures—such as elite capture, teacher and doctor absenteeism, and leakage of public funds—South Sudan could empower poor people more, by changing incentives and giving them information with which to monitor providers and hold politicians accountable.
Oxford’s Tony Venables pointed out that oil revenues were an asset (current projections are that oil will run out in eight years) that should be used to develop human and physical capital for long-term growth. Achieving this requires the proper balance among consuming, investing domestically and investing abroad the revenues from oil. Norway’s Thorvald Moe further suggested that these balances can only be reached by having some fiscal rules, such as requiring that a fraction of oil revenues be saved.
The ensuing discussion was both fascinating and inspiring. Lual Deng, the petroleum minister of Sudan, said that empowering poor people sounded like “the invasion of the NGOs” which further undermines the government’s legitimacy. I replied that when NGOs move in to fill a vacuum created by failed government services, then government is already undermined. But if the government contracted out services to whoever could deliver them most effectively, that could strengthen its legitimacy.
SPLM Secretary-General Pagan Amum Okiech gave a beautiful treatise on avoiding the resource curse: First, South Sudan was neither producing nor selling oil; it was receiving a check for its oil. Second, because the money comes as a check, it’s “easy money”—different from money that’s the fruit of one’s hard labor—and therefore more easily spent. This temptation should be avoided. He illustrated with an anecdote from his days as a rebel soldier. One morning, his group of hungry soldiers approached a young goat herder and, addressing him as “Comrade”, begged (albeit while carrying guns) for one of his goats, so they could eat. “Don’t call me ‘Comrade,’” the herder replied. “I don’t kill other people’s goats.”
Submitted by Shanta on Fri, 2011-03-18 10:59