UNDP 2012 Annual Report: South Sudan

MACRECONOMICS

UNDP ANNUAL REPORT ON SOUTH SUDAN, 2012

SANIKA RANADIVE

SYBA ‘A’

SYNOPSIS [TM1]

This UNDP 2012 Annual Report on South Sudan focuses on the role played by the UNDP (United Nations Development Programme) in solving the economic problems of a country, namely South Sudan, bleeding from the wounds of a 5-five-decade long Civil War and separation from the mother state. It traces the UNDP’s role in the Comprehensive Peace Treaty and the South Sudan Referendum to work with the Government on upliftment and empowerment in South Sudan at all levels of policy making:policy making: ieslikestate building, public finance, growth of ministries and skill development, as well asnd services in the health sector. The January 2012shutdown of oil exports in January 2012 affected thise economy which largely depended on it for its income. The UNDP thushelped in reduceing thise dependency on oil exports. Food security, addressing local grievances also formed part of the socio economic development. The report elaborates on the Action Plan and Outcomes of these efforts over the 10 states of South Sudan. Theses outcomes include establishing accountability, development planning and financial administration, increasing ein income and supply, eradicatingon of food insecurity, inclusive growth, development of trade, and most importantly controlling the money spent on arms; instead using it towards successful community projects and reintegration. The report highlights how South Sudan in its Recovery program has directed funds towards infrastructural development in the health and maternity sector. However, there was a drop in the GDP by -55%;while its neighbors, Kenya and Uganda, too faced conflict during this period, their inflation rates were much lower than that of South Sudan. By employing decentralization measures such as harmonizing fiscal deficit, and creating accountability mechanisms and criteria for equitable distribution of resources, this Although it was a new economy , the country has made tremendous progress within a year of its independence making optimal use of the allocated budget and support from the UNDP[TM2].

OUTCOMES OF THE UNDP PROGRAMS – HEART OF THE REPORT

The UNDP measured the results of its programs and implications on the economy based on the following outcomes:

• Core Governance
• Food Security and Increase in Household Incomes
• Key services increased for the public
• Reduction in violence, funds spent on wars and community benefit plans

I. Core Governance

The report states that there has been a massive improvement in accountability, which is important for a country in order to instill public cadence and provide equitable resources to all. A National Audit Act was created for the independence of the Audit Chamber and prevent interference in the balance and accounts. This led to prevention of leakages from the economy. In the period from2002- 2012, leakages worth US $26.6 billion[1][TM3]were reported in three African countries –South Africa, Ghana and Sudan, of which South Sudan was earlier a part. An Anti–Corruption Commission was also set up to look into these leakages.

In order to boost the employability of the youth, Human Resource and training experts were appointed. Their appointment helped collect commercial funds and donations for the same in providing skills transfer and ‘long-term mentoring’ to the youth aided in efficient state building. The public administration sector employed officers in the Ministry of Health, Labor, Public Service and Human Resource Development, the health and maternity sector, appointed midwives, nurses and lab technicians were hired in public hospitals. The economic growth of a country thus not only depends on its profits or trade but also factors like health and rate of mortality. Decentralization was a key feature of this outcome. 10% of the national budget was allocated to agriculture at the central level while 27% of it was allocated to the 10 states. These 10 states were provided with technical support and financial management, statistics, local revenue generation using the socio economic data gathered by the National Bureau for Statistics.

II. Food Security and Increase in Household Incomes

The launch and development of South Sudan National Co-operatives Strategy and the Enhanced Integrated Framework provided trade related assistance to some among the Least Developed Countries (LDC’s). The UNDP also supported the National Bureau of Statistics to find out the dynamics of the data related to labor markets, workforce age group and working age population. The report throws light on the income status of the people; for example, 19% of the population relied on natural products to collect and sell as source of income.[2] 50.6% of the population falls below the poverty line while 55.4% of the population lives in the rural areas of South Sudan.[3]This however is not sustainable as it leads to environmental degradation as well as insufficient income. Thus in order to protect the environment, a private sector led economy and inclusive growth was essential. Gross National Savings was recorded at 23.5% while Natural Resource Depletion was at a whopping -70.3%.[4] The UNDP along with the National Co Operatives strategy and Enhanced Integrated Framework supported small farmers, rural development and trade, which was a part of inclusive growth. The aid of micro finance was given to senior workers to ensure awareness, and so it could be passed on to the women and youth for their economic empowerment. These steps collectively helped in inclusive economic growth and a gradual increase in the income that would ultimately reduce the food insecurity.

III. Laying the Groundwork for Increased Supply and Key Services

Social and health indicators are equally important for an economy, especially when it is among the LDCs. The infant mortality rate in South Sudan was 102 per 1000 live births while maternal mortality rate was 2054 per 100,000, in 2006. However steps were taken in 2012 to improve the conditions. Policy decision makers built a relevant and effective sustainable social security system to take care of peoples’ needs. A partnership with the UNICEF gave rise to several cash transfer schemes and programs in reduction of poverty. The country was the Principal Receiver of Global Fund to fight AIDS, Malaria, Tuberculosis and such diseases. Investments were also supported in the delivery of medical facilities. Capacities were developed for inventories and supply chain management in order to prevent medicines form going out of stock.

IV. Reduction in Violence and Community Benefit Plans

The conflict between Sudan and South Sudan left behind an economic disaster. The destruction was not only physical and psychological, but also left behind a deep hole in the economies of both counties. While the country lost US $50 billion in the 50 long years, it cost US $25 billion to all of its neighbors and a total of US $30 billion for peace keeping and humanitarian aid.[5] The UNDP thus decided to direct funds from the arms and weapons sector to community welfare schemes. The Small Arms Committee and Community Security Services were brought together by authorities in what was considered as a welcome step by military as well as women alike, showing how immensely a war affects individuals and how they do not want it. The SSRF focused on taking large scale infrastructure projects that aimed to stabilize communities in conflict- stricken areas. Thus with input from the states of Lakes, Warrap, Eastern Equatoria and Jonglei, services like construction of water points and boreholes, roads, buildings and service centers were set up. All this helped the GDP to go up from -55.8% to 1.9% in the next year.[6][7]

SIGNIFICANCE OF THIS REPORT FOR A STUDENT OF MACRO ECONOMICS

The annual reports basically give us a comprehensive account of the country’s activities throughout the year which are largely macroeconomic in nature.

The report talks about various macroeconomic theories with examples.

It firstly talks about employment. There has been unemployment in the country after independence as prior to that; most were involved in the freedom struggle while others in the oil pipelines. End of war over and the shutdown of oil manufacturing has rendered many youths jobless and as a result the country depends heavily on remittances from abroad.

Next, the report focuses on leakages and accountability which is a must for any country. Leakages in the form of corruption and uncertain policies lead to a downslide in the economy. The country has also suffered from a very high rate of inflation which is a cause of leakage. Weakened South Sudanese Pound and a 48% inflation rate have increased the prices of consumer and capital goods.

As a result of low agricultural growth rate, only seasonal crops in small quantities are cultivated for personal use. South Sudan cultivates only 54% of what they consume in the form of cassava, sorghum and maize and hence they are not self sufficient. Due to which, they import large quantities of food from outside. The money spent on import of food grains and products plays an important role in the Balance of Payments chart. The country also depends on funds from other European countries and the World Bank for development programs and as a result it is a debtor country.

The report also makes us understand the reason for the inflation being 47.7%.[8] The Gross National Income of South Sudan was worth US $6 billion and ranked 152^nd in the world. The Gross National income per capita was US $549.5. These economic indicators after reading the report give us a better explanation of the condition of that economy. The Nominal GDP was US $52 billion SSP while the Real GDP was US $29 billion SSP. [9] Thus it makes these concepts easier to understand. It was also deduced that the multiplier effect does not account for here due to very little investment rates and little or no excess capacity. Also, there is no fixed not increase in the stream of investment. However, most of the private and public money is directed towards social overhead formation and hence the reverse multiplier takes place.

HOW THE REPORT HELPS CAPE VERDE:

Cape Verde is a ten-island archipelago nation that won its independence from its Portuguese colonial masters in 1975. Like South Sudan, it is a small sub-Saharan African economy. The core competence sectors of the two nations vary however; the former relies on the service sector and some manufacturing, being scarce in natural resource endowments – fisheries and very few mineral commodities like clay, salt, limestone, gypsum and iron ore and pozzolana. On the other hand, South Sudan has core competence for agriculture and crude oil extraction. Thus the nature of policies employed by both governments in encouraging the growth of their respective sectors would vary.

The UNDP Annual Report on South Sudan, 2012 reflects the “knowledge-based approach” employed by the UNDP working at the national, state and county levels through policy work, capacity development and service delivery. Its focus is on the outcomes of its contributions to the economy with respect to accountability, food insecurity and poverty, public services, reducing violence and improving access to justice. These support mechanisms, particularly with respect to food insecurity, can be applied to take Cape Verde (a relatively developed economy in the Sub-Saharan Africa region, with an HDI of 0.636) since this economy relies heavily on food imports and has less than 10% cultivable land of its own. The severe impact on the current account of this nation owing to this necessary import is indicated by the CAD (-11.7 % GDP in 2012, and estimated at -5.7% GDP for 2013). Due to shortage of water that causes drought like conditions in the area, the environment condition is similar to South Sudan and hence steps like construction of necessary infrastructure like wells and reservoirs is important. Also, the imports of durable consumption goods are high, leading to current account deficit of budget. So people need to be made self sufficient and provided employment skills and opportunities to produce their own food. This will help in converting the economic growth into development with GDP of US $1.9 billion, Growth rate 0.49%.

LESSONS LEARNT

The analysis of this report provided many insights into the country that I was analyzing- South Sudan which is a new economy and Cape Verde, the country of my mentor about which I had not heard of before. It gave me a lot of new information on how geo political factors make or break a country’s economy, in this case – Sudan and South Sudan. It also learnt to apply concepts that we learn in class and test the practical aspect of it in the report. I learnt how rate of savings and investments differ from country to country and what implications it has on that country. For example, not every country can have a good savings rate, yet its economy can survive on other factors. I got to know about the importance of microfinance and how handling it wisely can lead to a sustainable living. This assignment has made me more enthusiastic in opening up new reports and using them as references instead of looking at pages on Wikipedia for a particular concept. The World Bank, UNDP and HDR sites are a treasure trove of stories about each country and concept and I will make sure I refer to such verified and well researched material in future. Lastly, technology plays an important role, be it economic development or the development of this assignment. I learnt the use of some advanced functions in Microsoft Word like putting citations. My mentor also played a very important role throughout by encouraging me and helping me at every step and I have learnt to be more patient and prepared in advance, from her.

bydecentralization measures like harmonizing fiscal deficit, accountability mechanisms and creating criteria for equitable distribution of resources.In spite of these development measures, there was a drop in the GDP by -55%. Although its neighboring countrieslike Kenya and Uganda too faced conflicts during this period, their inflation rates were much lower than that of South Sudan. [TM4]

[1]http://www.ghana.gov.gh/index.php/2012-02-08-08-32-47/features/6157-blocking-the-extractive-sector-leakages

[2] Report on Food Security and Nutrition in South Sudan: How a Country Can Feed Its People, 2012.

[3] Oil Depletion And Adjusted Net Savings In Sudan and South Sudan, World Bank Report, Toru Nishiuchi, March 2013.

[4] World Bank Report, 2013.

[5]http://www.aljazeera.com/news/africa/2010/11/20101125191213564712.html

[6]http://www.tradingeconomics.com/south-sudan/gdp-growth-annual

[7]http://www.worldbank.org/en/country/southsudan

[8] http://www.worldbank.org/en/country/southsudan

[9] http://ssnbs.org/storage/GDP Press Release 2011-2012October.pdf

[TM1]Well written synopsis. I’ve formatted it for you. Let me know if the format specifications Aggie has asked for are different from this: Times New Roman, 11, 1.5’ line spacing, Justified.

[TM2]Don’t know if this last part about UNDP support is necessary, but it sounds conclusive since the report is an Annual UNDP report on the country.

[TM3]I think Aggie prefers citations in brackets to footnotes. Did he say okay to this? Shouldn’t be a big deal but no harm in taking precautions.

[TM4]I changed this last part by moving your words and lines around, just to make it sound conclusive and end on a positive note.