BY DENNIS MARIAL MUORWEL IN JUBA SOUTH SUDAN.
As I’m on quarantine and having read through a lot of articles on the devastating state of our economy, I thought it wise from the School Of Strategic Studies Point of View to produce a synoptic analysis on the aforementioned subject, here under.
- Lack of Economic Diversification
According to African Development Bank; ED refers to the variation in economic status or the use of a broad range of economic activities in a region or country. Diversification is used as a strategy to encourage economic growth. The principle of diversification is that portfolios of different sort of assets differently correlated with one another will have negligible unsystematic risk. In other words, unsystematic risks disappear in a diversified portfolios and only systematic risks persist, those related to particular assets such as inflation and interest rate changes; changes in laws, tax reforms, interest rate hikes, natural disasters such as COVID-19, political instability, foreign policy changes, currency value changes, failure of Banks and Economic Recession which is now trending.
- High Public Debts
HPD is how much a country owes lenders outside of itself, regardless of what it is called; public debt is the circulation of annual Budget deficits. It is the result of years of government leaders spending more than they receive via tax revenues. A nation’s deficit affects its debts.
- Weak Financial Institutions
The Financial Institutions headed by The Central Bank of South Sudan have failed considerably to provided the standardised financial services. Because the banking sector had been founded on weak grounds, money laundering and corruption through misappropriation of Telegraphic Transfers (TTS) as well as the Letter of Credits (LCs). This morning I reading a note by Stanbic Bank prohibiting transfers and withdrawals until further notice. The weakness in financial institutions caused mistrust by the World Bank and IMF
- Political Uncertainty
Since 2013 when the first civil war of the Republic of South Sudan broke out there had been two agreements signed, the first that was abrogated in 2016 caused the first political uncertainty of partial implementation which later on led the Revitalise Agreement which is moving at a tortoise face. These uncertainties create lack of confidence in the international financial institutions such as World Bank and IMF to withhold loans and grants
- Fluctuation in oil global crises due to COVID 19
The international markets have been hampered by the COVID-19 pandemic as the world locked down. This led to significant fluctuations in prices because there was no demand for oil, Saudia Arabia was paying its buyers because if they shut down the production then at resumption the cost would triple.
- Improvised Tax Collection
According to African Development Bank if non oil revenue is put to maximum use, SSD would be paying salaries and its operation cost from there while keeping the oil money as a reserve. Tax Collection should be improvised by the use of Geospatial Technology ie geographic information system, remote sensing and the global position system to monitor the movement of goods from border points to their last destinations. There should be used Tax Software such as Cloud-based Tax Preparation Application, Scan and Populate System and Portals. This will create transparency and accountability through Automated Clearance System, digitalised customs and the use of telematics under the applications mentioned here-above
- Economic Diversification
The government should encourage the local production in order to boost the Balance of Payment BoP to reduced reliance on import. The 2016 buying of 300 tractors was miscalculated if that money was used to fund local Farmers in form of loans it would have helped a great deal.
- Strong Taxation Law
The current legal framework for taxation is too naive in such a way that the National Revenue Authority is running parallel to Customs Service which is supposed to be a directorate of the NRA this is a great setback in the collection of revenues
DENNIS MARIAL MUORWEL MA SSS/LLB UNIVERSITY OF JUBA