The Economic and Social Importance of the Juba- Bor- Malakal National Highway

The Economic and Social Importance of the Juba- Bor- Malakal National Highway

 

By  David Deng and Peter Nyok

 

When transportation decision-makers at the national, state, and county levels discuss possible investments in highway infrastructure and the impacts, they are sometimes overlooked by those who feel overstretched by their hard work toward a common good for the country and flop to see one very important potential impact – the economic benefits to national productivity and employment.
The signing of the Juba-Bor-Malakal Highway Deed of 2016 by the president on May 28, 2016, meant an additional influx of millions of dollars into the National-aid highway program targeted to the South Sudan National Highway System (SSNHS).

 

SSNHS will be a connected network of almost 75,000 kilometers of roadways that will serve major population centers, international border crossings, ports, airports, public transportation facilities, and other intermodal transportation facilities and major transportation destinations; meet national defense requirements; and serve interstate and interregional travel. SSNHS represents just 26 percent of South Sudan 450,000 kilometers of public roads, but SSNHS will carry more than 50 percent of the nation’s highway traffic and 70 percent of the truck freight traffic. NHS will provide the vital links to efficiently move people and goods to the desired destinations across the 10 States of the country.

 

Economic Benefits of Juba-Bor-Malakal Highway

How do millions of dollars invested in Juba-Bor-Malakal translate into improvements in economic productivity? A region’s industrial and employment base is closely tied to the quality of the transportation system. Good, dependable transportation infrastructure allows businesses to receive inputs to production facilities and to transport finished goods to market in an efficient manner. An efficient transportation system allows companies to lower transportation costs, which lowers production costs and enhances productivity and profits.
Funds invested to construct, upgrade or maintain the quality of Juba-Bor-Malakal Highway will enable the firms currently operating on the system to ship goods more cheaply (as trucks can reach destinations without major delays) and to improve service (as delivery schedules become more reliable). Subsequently, more timely and reliable deliveries allow firms located on or near Juba-Bor-Malakal routes to minimize their stationary inventories, thereby saving inventory and storage costs and enhancing productivity. Collectively, this translates into higher productivity for the nation as a whole.
The Africa Resource Corporation (ARC) accentuates the focus on key arterial highways serving inter-counties, interstate, and international commerce will be of greater benefit to the civil population living along the roads. The competitiveness of South Sudan in the regional and global marketplace will rely upon expectations for improved intermodal linkages between the highway system and other transportation modes. Economic impacts arising from these linkages will yield significant effects on the overall South Sudan economy, the standard of living of South Sudanese citizens, and the competitiveness of the South Sudan industry. Also, Juba-Bor-Malakal investment may result in net positive impacts to employment levels within the nation, as public funds are diverted from less labor-intensive investment options to those supporting greater overall employment, such as highway construction and maintenance.

Research on Economic Benefits of Juba-Bor-Malakal Highway

Highway infrastructure project in South Sudan for the past several years since the country got independence has been neglected; the African Resource Corporation has been involved in research on infrastructure investment and national productivity. The critical question is: “How do changes in highway investment translate to private productivity at the state and national level?”
This effort involves two very important and intertwined research areas. The first – macro-econometric analysis – investigates national and state-level linkages, using methodologies such as the production function to gain an overall understanding of the relationship between transportation and economic growth. The second approach – microeconomic industry analysis – explores the connection between individual industries and transportation infrastructure by examining in detail the impact of public highway investment on individual firms’ behavior.
The Macro econometric Analysis
Initial estimates at the national and state levels suggested a positive relationship between all public infrastructure investment (especially transportation) and economic productivity gains. Estimates of the impact of all public investment on national output, using production function methodology, have ranged from the extremes of highly positive to marginally negative. Although the majority of studies have indicated a positive relationship, the specific magnitude of that relationship is heavily debated.
The high extreme suggests that a 15-percent increase in public investment will yield (roughly) a 7-percent increase in national output. Although the initial research was concentrated on the broad macro-econometric area, recent advancements in knowledge have led to more concentration on the microeconomic (industry-and firm-level) research.

The Microeconomic Analysis

Industry case studies have attempted to determine the importance of reliable and timely transportation to specific sectors. ARC has learned that a reliable and efficient transportation network allows firms to:

(1) generate innovative new management and distribution systems;

(2) Save inventory costs by using just-in-time delivery techniques, which are based on minimizing inventory while maximizing the use of efficient and timely delivery;

(3) Pass savings on to customers as transportation and logistics costs are lowered;

(4) Access larger input and labor markets, thereby providing a more creative, efficient, or higher quality product.
Specifically, results from the first set of industry case studies performed by ARC indicate that, for the manufacturing sector, significant cost savings are achieved by using a reliable and efficient transportation network in the production process. (The magnitude of impacts differs over time and across industries.) Preliminary estimates indicate that current highway investments will yield significantly positive rates of return in the manufacturing sector as a whole.
ARC research has also shown that transportation infrastructure is playing an important role in the growing service sector. Results indicate a positive and significant relationship between transportation infrastructure and the transportation services, communications, and public utilities industries, as well as the retail trade and services industries.

Employment Research

Traditionally, the impacts of investment on employment have been categorized as the direct, indirect, and induced employment impacts of highway investment.
Naturally, millions increase in highway capital investment targeted to ARC will generate a direct impact on employment in the highway construction industry as managers, specialists, and semiskilled and unskilled laborers are called upon to construct new roads, resurface existing ones, or perform various capital improvements that enhance highway service levels.

These investments will also generate jobs in many other industries – an indirect impact. For instance, companies that supply materials for highway construction will receive orders for more materials. The need for more materials will require firms in these “supplying” industries to hire more labor to process orders and deliver materials to construction sites. And manufacturing companies will have to produce more materials to meet the need.
Also, individuals who work in these industries subsequently spend and invest their earnings within the local, state, and national economies, thereby generating jobs across many industries and geographic areas – an induced impact.

The ARC, with contractor assistance, recently completed studies to estimate the direct, indirect, and induced employment impacts of national-aid highway investment. The approaches used to estimate the direct versus the indirect and induced impacts differ somewhat, due primarily to internal data and technical constraints.

Direct, Indirect, and Induced Employment

Photo: A worker at the construction site along Juba-Bor-Malakal Highway
Attempting to estimate the employment supported by supplying industries and throughout the economy as a result of increased highway investment is more complicated than the direct employment estimation approach. This is due to the complex interactions that occur among many industrial sectors within an economy. It is well recognized that certain industries within a macroeconomy use the output of other industries as input into their production processes. By establishing some basic assumptions about where national-aid highway investment dollars are spent (e.g., new construction or maintenance), accepting the model structure as it relates to industrial interactions, and using ARC data regarding materials usage in national-aid projects, it is possible to estimate the impact of increased national-aid highway investment on employment in highway construction, in supplying industries, and throughout the economy.

To derive the indirect and induced employment estimates for this study, ARC researchers used input-output analysis. They assumed a $300 million national stimulus to national-aid highway investment (specifically, new construction) over three years (2020-2023), with 27 percent of funds invested in the first year, 46 percent invested in the second year, and 27 percent invested in the third year. Results indicate that each $100 million of national investment in Juba-Bor-Malakal highways supports approximately 10,800 indirect jobs and 14,900 induced jobs.
While the above employment estimates were derived from studies that examined national investment across the broader national-aid highway system (which includes ARC), one can get a general idea of the total national employment impacts that would likely occur if more than $300 million of national funds are invested in ARC.

Tourism

Tourism is a major global sector, and its relationship with poverty alleviation is debated. Alternative forms of tourism, such as those which although they are different, namely community-based tourism (CBT) and Responsible Tourism (RT) have been advanced as a strategy associated with community development and poverty alleviation through tourism, when compared to conventional tourism. As such it is fundamental to understand how RT and CBT interact with poverty and community (intended in this paper as disadvantaged community members) development. The aim is to unpack the RT relationship to general tourism and CBT and secondly, and principally, the infrastructure (roads) development relationship to general tourism and CBT. The findings seem to demonstrate that the main burdens are passed on to the poor when it comes to the need for the environmental friendliness of their tourism operation and also relate to their exclusion and jeopardized opportunities to CBT development. For example, as a consequence of road construction, many people will tend to venture into the tourism sector as a mode of their occupational.

The construction of the Juba-Bor-Malakal road project, which links Bor with Southern and Buma National Parks, is expected to spur international tourism in Greater Jonglei and the Eastern Equatoria States
Due to the existing poor road network, international visitors have never been to these national parks but once the construction of Juba-Bor-Malakal Highway is complete, they can expect to reach the park in less than two hours, while enjoying a game drive. The route will also shorter than the Bor-Pibor Highway.

How Juba-Bor-Malakal Highway will boost trade and commerce

With the construction of the highway by Africa Resource Corporation and support from the government of President Salva Kiir, major road corridors are being rehabilitated to foster the economic development of rural South Sudan. The newly rehabilitated roads which connect urban to rural areas have significantly reduced travel time, and increased vehicular movement along those routes, making access to markets, educational institutions, hospitals, and other social services critical for the economic growth and development of South Sudan stress-free.
The South Sudan road network construction that is currently undergoing in different parts of the country especially the Juba-Bor-Malakal Highway was designed to help reduce transport time and cost along the 560-kilometer highway linking South Sudan capital, Juba, with Bor and the Malakal via the Sudan border. There will be an uninterrupted movement of goods and services. The International Development Association (IDA), the Bank’s fund for the poorest countries, the World Bank, and regional partners should be at the forefront in supporting the re-establishment of South Sudan’s basic transportation infrastructure along this corridor and supporting the path to economic growth. The completion of the road is going to boost trade and commerce in rural South Sudan. Farmers will be happy that they can easily get their produce to markets, while traders can now easily truck commodities from the capital.
“There will be a lot of changes in improving our livelihood; the new road will be far better than before because it will give us a shorter time to get our goods to market and avoids our goods from perishing before getting them to market,” said farmer James Wal of the Anyidi Farmers’ Cooperative Society. He added that it will now be possible to leave his farm and travel to Bor and return the same day, which is good for marketing purposes.

The Juba-Bor-Malakal Highway will be running through Kolnyang, a commercial hub in Bor County, leading to the Twic East county border. Known as the city that never sleeps, Kolnyang is a transit point for those traveling to and from the southern part of the country Uganda and Kenya. Commuters will depend largely on Kolnyang for food, accommodation, and entertainment.

After the construction of the Juba-Bor-Malakal Highway, Kolnyang infrastructural development will greatly improve, paving the way for the construction of new and improved hotels, shopping and entertainment centers. Trade and commerce have been greatly improving since the construction of the road began. As a result of the business environment, Kolnyang will be booming, attracting people from Juba to hold retreats, seminars, and other businesses.
How the highway will improve Security and social cohesion among the communities.
The construction of the highway throughout the Upper Nile region will help in tackling areas such as security reductions, social cohabitation, and the establishment of social amenities among the hostile communities. This will help the current leadership to forge Peace mitigation across the region with diverse security networking that will be effective behind the improvement of infrastructural development. This super high will curb down cattle raiders and child abduction as law enforcers will be available for any eventuality in their interstates and Inter-counties precincts. It will also encourage citizens to return to the country from the diaspora to re-establish their new life as they prepare to adapt to the situation that will make them productive to their respective societies. People will establish a sense of ownership across the region; they will rely on agricultural products rather than rely on the government and other international donors. Juba- Bor- Malakal Highway will have a superior advantage to the people and the government of South Sudan since it will spur the development of economic sectors that were unexploited due to underprivileged road networks in the country.♦