Published on Africa Can End Poverty

Economic Policy in Africa’s Youngest Country

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UPDATE: Here is a copy of an interview I gave to Otieno Ogeda, from the Pioneer newspaper in Juba.


I felt truly privileged to participate in a workshop in Juba on “Growth and Sustainable Development in the new Republic of South Sudan,” organized by the Sudan People’s Liberation Movement. 

South Sudan, which becomes independent on July 9, 2011, faces extreme challenges and opportunities.  Devastated by civil war, the country has high and deep poverty.  The poverty rate is 51 percent. In a recent survey, among the assets of the population is “a pair of shoes”: among the poorest 20 percent, only 37 percent owned one. About 80 percent of the people earn their living from (mostly subsistence) agriculture.  Low levels of literacy (27 percent) translate to extremely weak capacity throughout.

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.”


Shanta Devarajan

Teaching Professor of the Practice Chair, International Development Concentration, Georgetown University

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