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Transcript
Development Challenges and Prospects in the Post-2011 Sudan1
Ali Abdel Gadir Ali
Arab Planning Institute
Kuwait
(Preliminary Draft; January, 2012).
I. Introduction:
The 9th of July 2011 witnessed the birth of the Republic of South Sudan (ROSS) as
the 194th member of the United Nations (UN). The day marked the emergence of not
only one country; ROSS, but also a brand new Republic of Sudan (ROS) composed of
what remained of the old Sudan. Even though the borders between the two Sudan
countries, and hence the precise areas of either, are as yet to be determined, it can be
argued, based on historical records, that the area of ROS will be approximately equal
to about 1.9 million squared kilometers (about 72% of the area of the previously
unified Sudan). Based on the recent Sudan’s 5th Population and Housing Census the
total population of ROS is approximately equal to 33 million persons2, about 24.3%
of whom are living under conflict (Darfur region). Currently, six months after the
birth of the post-9th July 2011 ROS the percentage of the population living under
conflict increased to 31.4.
For administrative purposes the country is divided into 15 states (called wilaiat, from
the singular wilaia meaning state). This administrative structure is based on the
colonial one where the Northern part of the then unified country was composed of six
provinces: Central (with about 24% of the total population; currently split into four
states: Algezira, White Nile, Sinnar, and Blue Nile); Darfur in the far west of the
country (24.3% of total population; currently split into five states: North, West, East,
Central and South Darfurs) ; Eastern (14.7%; currently split into three states: Red Sea,
Kassala, and Gedarif); Khartoum (with a population share of 17.1%); Kordofan in the
west (14% of total population; currently split into two states: North and South
Kordofans); and, Northern (5.9% of total population; currently split into two states
Northern and Nile). These old provinces are officially referred to as regions in current
official documents.
It can be confirmed that over the 53 year period, since Sudan gained its independence
in 1956, the population of the old Northern Sudan, currently ROS, increased by an
annual rate of about 2.7 percent. There were, of course, regional differences in
population growth rates; latest estimates are 2.4 percent for the Central region; about
7 percent for Darfur; 3 percent for the Eastern region; 4.5 percent for Khartoum; 1.7
percent for Kordofan; and 1.4 percent for the Northern region. The exceptionally high
1
This paper is written for a CMI project on Post-cessation Sudan. I am grateful to Miss. Nada Ali, of
the University of East Angelia, for comments and suggestions.
2
The 5th Sudan Population census was conducted in 2008. Its results were vehemently contested by the
Government of Southern Sudan at the time, as well as by Darfur rebel movements and the Nuba
political activists of Southern Kordofan state. See, for example, DRDC (2010). The census estimate
was 39.2 million for the (old unified Sudan): 30.9 million in the North. We used this estimate, suspect
as it may be, together with a population growth rate of 2.5 percent per annum to arrive at the 2011
population of the ROS.
1
growth rate of the population of Darfur casts great suspicion on the credibility of the
Census results!
The total area of ROS is about 1.9 million square kilometers (compared to about 2.5
million square kilometers for the unified country). Darfur is the largest region
accounting for 28.2% of the total area of ROS, followed by the Northern region
(27.1% of the area), Kordofan (21.7%), and the Eastern region (19.4%). Khartoum,
the capital of the country, accounts for the smallest area (with 1.2% of the total),
followed by the Central region (8.1% of the total)3.
This paper seeks to identify the immediate development challenges facing the new
Republic of Sudan (ROS). Having set out the initial demographic and geographic
conditions of ROS above, the rest of the paper is organized in six sections. Section
(II) is on methodology, where we suggest that the development challenges facing
ROS could be looked at as comprising of three interrelated dimensions: politicalinstitutional; economic; and, social. Sections (III)-(V) deal respectively with each of
the three identified dimensions. In Section (VI), we address the issue of relevant
development policies with emphasis on macroeconomic policy which usually affects,
and is affected by, the three dimensions identified. Section (VII) offers a few
concluding remarks.
.
II. Preliminary Notes on Methodology:
Over the period following September 2000 there developed a world-wide agreement
that “development can be seen as a process of expanding the real freedoms that people
enjoy” (Sen (1999: 3)). The philosophical foundations of this approach require
judging the welfare of individuals not in terms of the utility of goods and services or
in terms of primary goods, but in terms of “substantive capabilities to choose a life
one has reason to value”. Capability is thus the substantive freedom to achieve various
lifestyles.
The capability approach, popularly known as the human development approach, is a
much broader one to understand what is meant by development compared to other
approaches that identify development only with increases in per capita incomes, or
with industrialization, or with technological advance, or with social modernization.
Over the period since 2000 such a broad approach to development garnered a lot of
support around the world, and was embodied in the UN Millennium Development
Goals (MDGs).
Five instrumental freedoms that have immediate policy relevance are identified.
These include:
(i) political freedoms: political freedoms, broadly conceived, refer to the opportunities
that people have to determine who should govern and on what principles, and
also include the possibility to scrutinize and criticize authorities, to have freedom
of political expression of an uncensored press, to enjoy the freedom to choose
3
See El-Battahani (1995: 245, table 2).
2
between different political parties and so on” (Sen (1999: 38)). Embracing “the
political entitlements associated with democracies in the broadest sense”;
(ii) economic facilities: “economic facilities refer to the opportunities that individuals
respectively enjoy to utilize economic resources for the purpose of consumption,
or production, or exchange. The economic entitlements that a person has will
depend on the resources owned or available for use as well as on conditions for
exchange, such as relative prices and the working of the markets” (Sen (1999: 3839)). Thus, economic facilities should be understood as pertaining to economic
growth (increases in the real income of individuals) as well as the distribution of
the fruits of such growth;
(iii) social opportunities: social opportunities refer to “the arrangements that society
makes for education and health and so on, which influence the individual’s
substantive freedom to live better. These facilities are important not only for the
conduct of private lives, but also for more effective participation in economic and
political activities” (Sen (1999:39). in the sense of “the arrangements that society
makes for education, health care and so on”;
(iv) transparency guarantees : Concern the freedom to deal with one another under
guarantees of disclosure and lucidity. Thus, transparency guarantees have a clear
instrumental role in preventing corruption, financial irresponsibility, and
underhand dealings” (Sen (1999: 40)); and,
(v) protective security : It is noted that “no matter how well an economic system
operates, some people can be typically on the verge of vulnerability and can
actually succumb to great deprivation as a result of material changes that
adversely affect their lives… The domain of protective security includes fixed
institutional arrangements such as unemployment benefits and statutory income
supplements to the indigent as well as ad hoc arrangements such as famine relief
or emergency public employment to generate income for destitute”(Sen 1999:
40)).
It is noted that these “instrumental freedoms tend to the general capability of a person
to live more freely, but they also serve to complement one another”4. Such a broad
understanding of the development process encompasses almost all of the narrow
concerns of various political players in the different countries in such a way as to
facilitate the expression of serious minded political commitment to development. It
also facilitates the exploration of the development challenges and prospects facing a
country like the ROS. For such an exploration we suggest the re-grouping of the five
instrumental freedoms into three interrelated categories of developmental challenges:
(a) political-institutional challenges: to include the original content of “political
freedoms” in addition to aspects of the other freedoms that have political implications;
4
Sen (1999: 38).
3
(b) economic challenges: to include the original content of economic facilities” and
“transparency guarantees” in addition to aspects of the other freedoms that have
economic implications; and,
(c) challenges of social arrangements: to include the original content of “social
opportunities” and “protective security”.
Be the above as it may, we hasten to note that the UNDP had in fact started the
measurement of the above broad approach to development since 1990 in the context
of the Human Development Report (HDR), an annual advocacy document developed
under the leadership of the late Mahboub ul Haq. The composite index used to
measure development came to be known as the Human Development Index (HDI).
According to UNDP (2010: 25) the HDI “as a simple measure of development and as
an alternative to gross domestic product (GDP), captures progress in three basic
capabilities: to live a long and healthy life, to be educated and knowledgeable and to
enjoy a decent standard of living”. In the latest versions of the HDR the development
index continued to use life expectancy at birth as a measure of health of societies, but
started to measure educational achievements by a composite of sub-measures of mean
years of schooling in the population 15 years and older, the expected years of
schooling for 5 years old. In addition it started to use per capita gross national income
in purchasing power parity as a measure of the decent standard of living. As is well
known, HDI measures development achievements in these three basic capabilities by
looking at the relative development gaps between the best and the worst performers
on each sub-indicator and by aggregating such gaps for each country. Prior to the
2010 HDR a simple average aggregation methodology was used (implying infinite
substitutability between each pair of the three component indicators). Since 2010 a
geometric mean aggregation methodology is followed, allowing for a unitary
elasticity of substitution between each pair of the component indicators. These
methodological changes in the measure of development promise future innovations to
incorporate all the five instrumental freedoms identified above.
To apply the above method we hasten to note that strictly speaking the economy of
ROS does not have a past: it is about two years old. Its aggregate indicators can only
be guessed. Two recent statistical sources could have been helpful in estimating ROS
initial development indicators: the Population Census of 2008 (noted in the
introduction) and the National Baseline Household Survey of 2009. Unfortunately
both sources are suspect. Nonetheless we will use some of their results whenever we
feel that they do not contradict our intuitive understanding of the relevant initial
conditions.
III. Political-Institutional Change: The Major Challenge:
The major development challenge that faces the country is, in our view, that of
effecting a democratic transition to guarantee political freedoms. At this initial
juncture in the history of ROS such a transition will hold the key for a cumulative
development process by enhancing the other instrumental freedoms.
To appreciate the challenge posed by the initial political and institutional conditions
of ROS it is perhaps important to visit the most recent history of the old unified
4
Sudan. The most important signpost in this recent history is the signature of the
Comprehensive Peace Agreement (CPA) in 2005. The CPA was signed by the
National Congress Party (NCP), the ruling political organization in the North of
Sudan at the time, and the Sudan Peoples’ Liberation Movement (SPLM) which
represented the Southern part of the then unified country5. Even though the CPA
served as the constitutional platform for the later independence of the Republic of
South Sudan (ROSS), it is important to recall that the Agreement was reached on the
fundamental understanding that the resolution of the longest civil war in Africa was to
be found in a political arrangement of “one country, two systems”. Following its
signature, the CPA was hailed as a major political achievement due to its success in
ending the civil war and bringing about peace between the two parts of the then
unified country. Indeed, the date of the signature of the CPA (9th January 2005) was
considered, by some, as the true independence date of the country: the Sudan created
in 1956 being looked at as the Old Sudan, while that hoped for following the CPA as
the New Sudan. As it happened, the CPA eventually created two countries: the old
South Sudan became the Republic of South Sudan (ROSS; the 194th member of the
UN), and the remainder of old Sudan retaining the name of the Republic of Sudan
(ROS) as noted above.
The CPA was incorporated in the Interim National Constitution of 2005 (INC). The
INC was to be followed during the interim period 9th July 2005 up to 9th July 2011;
when a referendum was scheduled to take place to determine the future of the
Southern part of the then unified country. According to INC the (old) Republic of
Sudan: (i) “ïs an independent, sovereign State. It is a democratic, decentralized, multicultural, multi-lingual, multi-racial, multi-ethnic, and multi-religious country where
such diversities co-exist”; and that (ii) “the state is committed to the respect and
promotion of human dignity; and is founded on justice, equality and the advancement
of human rights and fundamental freedoms” with a multi-party political system.
In addition to the above the INC included a “Bill of Rights”, the nature of which is
explained as “a covenant among the Sudanese people and between them and their
governments at every level and a commitment to respect and promote human rights
and fundamental freedoms enshrined in the constitution; it is the cornerstone of social
justice, equality and democracy in the Sudan”. In addition to the rights and freedoms
enumerated in the constitution it is stated that all “rights and freedoms enshrined in
international human rights treaties, covenants and instruments ratified by the Republic
of the Sudan shall be an integral part of this Bill”.
Properly understood these constitutional provisions should have catered for a
democratic transition in the old Sudan. As it happened the period since the signature
of the CPA, and its incorporation in the INC, and up to 9th July 2011 did not witness
such a transformation. On the contrary the period witnessed the consolidation of NCP
political power, this time around with the help of the SPLM6. As a demonstration of
the consolidation of NCP’s political power mention can be made of the conduct of the
5
It is known that the regime that signed the CPA was the residual of the Islamic Movement, which
engineered the coup of 1989. For crisp details see Ahmed (2008) and references cited there.
6
Such colossal failure in the implantation of the CPA, however, did not draw the attention of any of the
parties charged with guaranteeing the agreement, and the monitoring of its implementation.
5
national multi-party elections (presidential and parliamentary) agreed upon in the
CPA. The traditional political parties boycotted the elections. Out of 466 seats for the
whole unified Sudan, the NCP secured 323 seats, leaving 99 seats for the SPLM and
the remainder for 9 parties with an average of 2.3 seats per party! After the
withdrawal of SPLM members of parliament after 9th-July 2011 this means that the
NCP will have about 88% of the vote in parliament7.
Thus, the post-9th July 2011 new ROS was born as an autocracy dominated by the
National Congress Party (NCP) which signed the CPA in 2005. The post-July 2011
autocracy in the country was born with an inherited wide-ranging civil conflict in
Darfur region (an area of 496 thousand square kilometers); and freshly hatched
conflicts in Southern Kordofan, and Blue Nile States. The nature of the three civil
conflicts, like that of the old South Sudan civil war, is political.
One of the most devastating, and long lasting, implication of the political dominance
of the NCP in the then unified Sudan and the emerging ROS is the depletion of the
institutional capacity of the country. It is known that when the old Sudan became
independent, it inherited a fairly decent institutional governance structure: a highly
competent civil service that was able to deliver public goods in a satisfactory fashion
given the poverty of the country; an independent, and relatively highly competent,
judiciary; and, a national army with no sectarian or factional allegiance. Over time
various political regimes tampered with the autonomy of this institutional set-up
under a variety of purgatory schemes. Such schemes, while weakening the inherited
institutional capacity, were not wide ranging. Under the Sudanese Islamic Movement
empowerment strategy (tamkeen), such a precedent was taken to the extreme where
wholesale changes in the leadership of the civil service and other organs of the state
were implemented and where Islamic party loyalists were installed in leading posts
irrespective of relevance or competence. Moreover, employment in government was
also restricted to party loyalists, ushering in a phenomenon of social exclusion on top
of poverty.
In addition to social exclusion the Islamic empowerment strategy paved the way for
total non-transparency in the conduct of the affairs of the state. Endemic corruption
became a trade-mark of the Islamic regime. Official accounts of corruption are
routinely reported by the Auditor General but popular stories are more telling.
According to Alfred Taban Logune (2006); a respected Southern journalist, bidding
“for government contracts, particularly in the oil sector, is still not public, and
contracts are awarded to people close to the regime. People close to the government
hurriedly set up companies, many in Malaysia and China, to take advantage of the
newfound oil money, as did the ruling National Congress Party. One such companybased in China and owned by the National Congress- reportedly skims a commission
of 35 percent for all trade with Sudan. Bilateral trade between Sudan and China had
been valued at US$1.2 billion a year in recent years”.
7
That the elections, conducted during the period 11-15 April 2010, were flawed was widely accepted
to the extent that Human Rights Watch issued a report with the title Sudan Flawed Elections
Underscore Need for Justice. The CPA troika (USA, UK and Norway) also declared the elections
flawed and not measuring to international standards but proceeded to accept the results!
6
The post-9th July 2011 new ROS was born as an autocracy with a highly weakened
institutional set-up. To further appreciate the political-institutional challenge facing
ROS it may be instructive to have a look at the comparative governance indicators of
ROS compared to the best and worst performing countries in the world. Governance
indicators are based on the understanding that governance "consists of the traditions
and institutions by which authority in a country is exercised. This includes the process
by which governments are selected, monitored and replaced, the capacity of the
government to effectively formulate and implement sound policies, and the respect of
citizens and the state for the institutions that govern economic and social interactions
among them"8.
On the basis of the above definition six governance indicators are identified and a
methodology for measuring them is developed (Kaufmann, Kraay and Mastruzzi
(2009)). Each of the indicators is normalized such that countries scoring a value of
zero can be interpreted to have an average institutional set up, while countries scoring
negative values can be understood as having weak institutions. The latest results are
reported for 2008. On the understanding that these indicators change very slowly over
time we may use the results as representing 2011. To guess the results for ROS we
use the population weights of the population census in addition to assuming that
ROSS would assume the indicators of the worst performing country (or countries).
Our results for ROS are reported in table (1).
Table (1): Political and Institutional Indicators: Republic of Sudan 2011
Indicator
Best Country
Voice and Accountability
1.53
(Norway,
Sweden)
1.53 (Luxemburg)
Political Stability and Absence
Violence/Terrorism
Government Effectiveness
Regulatory Quality
Rule of Law
Control of Corruption
of
2.53 (Singapore)
1.92 (Singapore)
1.96 (Norway)
2.34 (Finland)
Republic
Sudan
-1.66
of
Worst Country
-2.22
-2.20 (Eritrea, N.
Korea)
-3.28 (Somalia)
-1.12
-0.99
-1.18
-1.38
-2.51 (Somalia)
-2.77 (Somalia)
-2.69 (Somalia)
-1.90 (Somalia)
The table clearly shows that ROS is starting from a very low base of institutional
arrangements including, as we already suggested, the political arrangements. This
conclusion is borne out by the negative scores calculated for ROS.
Given the starting political situation in the country, and the continued
pronouncements of the political leaders of the current regime, a peaceful transition to
a democratic regime is highly unlikely. On more than one occasion leading politicians
of the current regime argued that they have usurped political power by the barrel of
the gun and that he who is interested in gaining such power should seek it through
such means. This is an open invitation to political opposition forces to organize in
military format. Thus far traditional political parties did not heed the invitation to
8
See the Worldwide Governance Indicators website: www.worldbank.org/governance/wgi.
7
armed struggle9; but, newly emerging regional political opposition forces are in the
process of obliging10. If the current regime is toppled by regional armed movements,
however, the emerging governance regime may, or may not, measure up to a
democratic governance arrangement. It is this scenario that represents the conundrum
of the prospects for political freedoms in the ROS.
Equally violent and problematic is the democratic transition that could be effected by
the politically uncommitted youth who have access to modern social media ala
Tunisian and Egyptian revolutions and uprisings. On various occasions the leaders of
the current regime insinuated to a Libya-Syria style repressive reaction to such
political mobilization.
IV. Economic Challenges:
4.1. Economic Structure:
Irrespective of the prospects for regime change ROS faces the challenge of effecting a
structural transformation of its economy. To appreciate this challenge it is perhaps
worthwhile to look at the initial production structure of the ROS economy.
To begin with it is known that prior to the cessation of the South, the old Sudan over
the period September 1999- 9th July 2011 became an oil producer (and an oil
exporting country). Indeed over this period oil dominated the export earnings of the
country (contributing about 95% in 2008), as well as government revenue
(contributing about 66% in 2008).
Despite the pre-2011 relative importance of the oil sector in the then unified economy
there did not exist official estimates of the GDP share of the oil sector. One possible
way of estimating this share is to use the reported GDP growth rates of the oil and
non-oil sectors together with the overall GDP growth rate. For the four years
following the signing of the CPA (i.e. 2006-2009) we estimate the share of the oil
sector in GDP as 10.1% in 2006; 10.6% in 2007; 13.2% in 2008; and, 13.6% in 2009.
The projected GDP share of the sector for 2010 is 12% while that for 2011 is 11%11.
Given the above estimate it will probably be safe to suggest that a reasonable
guesstimate of the share of ROSS in non-oil GDP of the country could have been
9
Salih (2003) provides a comprehensive discussion of the evolution, institutionalisation and
governance of the traditional North Sudan political parties. The discussion reveals that these parties
would not be qualified to effect a democratic transition.
10
Among these the Justice and Equality Movement (JEM) of Darfur is the most credible and capable.
The leader of JEM, Dr. Khalil Ibrahim, was assassinated by the NCP government during the third week
of December 2011 (23rd or 25th of December). This event marks another twist in the repressive
inclination of the ruling regime which will have negative political implications for the future.
11
These estimates are based on the IMF (2011: 19, table 1). Estimates by the Ministry of Finance and
National Economy (MFNE: (2011: 8-9, table 1) give higher shares for this sector for 2009.
8
equal to its historical share in overall GDP in 195612 (i.e. a share of 13.6%). Recalling
that non-oil GDP is projected to account for 89% of the country’s GDP in 2011
(leaving 11% for the oil sector) it can be suggested that ROSS would start with the
equivalent of 22% of the projected 2011 GDP of the unified country
(0.136x0.89+0.85x0.11). This implies that the GDP of ROS would amount to 78% of
the GDP of the unified economy. In this respect it is to be noted that the IMF (2011:
25, table 6) medium-term macroeconomic scenario projected the 2011 GDP of the
unified economy as US$65.6 billion, which means that the starting GDP for the ROS
would be about US$51 billion (IMF, (2010: 28, table 6)). This estimate, together with
that of total population, means that the starting per capita GDP for ROS would be
about US$1536.
Given the above GDP estimate an attempt can be made at this stage to guess the likely
production structure of the ROS economy. This can be done using the officially
reported production shares of the three major production sectors for the year 201013,
together with the above assumptions about the share of sectors for the ROSS. It can be
confirmed that the economy of ROS would have an initial production structure such
that the share in GDP of the agricultural sector would be about 33%; that of the
industrial sector would be 22%, while that of the services sector would be 45%.
Such an initial production structure needs to be restructured for the purpose of
increasing the efficiency of the economy. As is well known the fundamental
requirement of structural transformation in the development process is embodied in
the famous dual economy model (Lewis (1954)). Such a model looks at a typical
economy of a developing country as composed of two broadly defined sectors: a large
rural (traditional, or agricultural) sector characterised by low productivity; and a
relatively small urban (modern, or industrial) sector characterised by high
productivity. Among the highly aggregated descriptive features of such a model
economy is an asymmetry in production techniques: that in the low productivity
sector is labour intensive relying on an abundant supply of labour and land; while that
in the high productivity sector is capital intensive relying on labour and capital. The
supply of labour to the modern sector is infinitely elastic at an institutionally fixed
wage. In the context of such an economy development takes place in the form of
capital accumulation in the high productivity sector supported by the migration of
labour from the low productivity sector, implying the idea of structural economic
transformation14.
The structural transformation process has been subjected to empirical studies by a
specialized development literature on the patterns of economic and social
12
Such an assumption would be consistent with the observations made by the late John Garang on the
state of the economy of the South and the challenges facing the SPLM: an economy “starting from
scratch” in infrastructure: “since creation, there has never been a single tarmac road in Southern
Sudan”; and that needs to be transformed from its “present subsistence traditional agriculture”. See
“SPLM Chairman’s 22nd Anniversary Address at a Mass Rally in Rumbek on 16th of May 2005;
www.gurtong.org.
13
Use was made of the official figures reported in MOFNE (2010: 9, table1) for the unified Sudan.
14
For a most recent deployment of such a concept of structural transformation see UNCTAD (2010).
9
development (Chenery and Syrquin (1975) and Syrquin and Chenery (1989)). In this
literature a structural transformation indicator, such as the GDP (or employment)
share of a sector, is used as a dependent variable to be explained by the level of
development (as represented by real GDP per capita) and total population. The
relationship is usually posited as non-linear in income and population (e.g.
quadratic)15.
Focusing on the GDP share of the three production sectors (agriculture, industry and
services) in addition to the manufacture sub-sector, the most important results of the
vast specialized literature are usually summarized in four stylized facts of structural
transformation which can be stated thus: over a long period of time as real per capita
GDP increases, the share in GDP of (i) Agriculture is expected to decline and reach a
minimum; (ii) Industry is expected to increase and reach a maximum; (iii) Services is
expected to increase and reach a maximum; and, (iv) Manufacturing is expected to
increase over time without necessarily reaching a turning point in terms of real per
capita income;
Can such an economic transformation be effected by a developing economy like that
of the ROS? The answer is in the affirmative. A relevant example is given by
Malaysia: a country that has frequently been compared to a number of African
countries in terms of initial conditions and subsequent growth performance and
development achievements. As noted in Ali (2010) the “Malaysian growth story can
be viewed as a narrative of the structural transformation of a predominantly
agricultural economy to a more industrialized economy, and then to attempts to
transform it further in the latter part of the 1990s towards a knowledge-based
economy” (Yusof and Bhattasali (2008: 30)). The story demonstrates, among other
things, the vital role that a developmental state, appropriately defined, can play in
transforming a developing economy into a prosperous high middle income one in a
period of about three decades or less.
The prospects for ROS to achieve such a structural transformation would depend
crucially on its ability to launch a sustained growth process. In the Arab context and
over the period 1985-2008 Ali (2011) defined a sustained growth process as one that
requires an average annual real GDP per capita growth of 2.8 percent or more with
relatively low volatility for the entire period 1985-2008; where relatively low
volatility is defined by a coefficient of variation for the growth rates of one but less
than three. On this definition of sustainability it is found that only one Arab country
(namely Egypt) recorded sustained growth over the period in question.
Combining the sustainability and volatility of the Arab countries growth processes, a
sustained, relatively low volatility, growth country is classified as having achieved a
classical structural transformation of its economy over the period 1970-2007 if the
respective GDP shares of the conventional three sectors of agriculture, industry,
services, in addition to that of the manufacturing sub-sector, obey the stylized facts of
15
Other transformation indicators include a host of variables relating to trade (composition of exports
and imports); labor employment (e.g. share of agricultural employment in total); labor productivity;
final demand (e.g. consumption and investment); and, social indicators (e.g. fertility and life
expectancy).
10
structural transformation as real GDP per capita increases. According to the available
evidence none of the Arab countries that achieved positive growth over the period
since 1985, including Egypt, was able to satisfy the requirements of a classical
structural transformation.
Within this production structure the ROS economy emerges as a high unemployment
economy. According to MFNE (2011: 17), basing itself on the 5th population census,
total labour force in the ROS can be taken as 8.4 million persons, with an annual
growth rate of about 1.3 percent. Total employment can similarly be taken as 6.9
million, with an annual growth rate of about 0.9 percent, giving an unemployment rate
of about 17.9 percent16. This means that ROS is starting with about 1.5 million
unemployed persons. More seriously the number of those who were unemployed and
seeking work for the first time can be taken as 1.1 million representing about 70% of
the total number of the unemployed. In this respect it is noted that “more than half of
them were in the young age groups of 10-14 and 20-24”.
In addition to these structural features of the economy, and as is well known, ROS
will be starting as a highly indebted economy. As of September 2011 total external
debt of the old Sudan was estimated as US$36.2 billion, of which US$30.6 billion are
arrears. According to World Bank (2011: 3) ROS and ROSS agreed to a so-called
“zero-option approach regarding debt. In this approach ROS would take on all debt as
the continuing state” under conditions relating to debt relief by the donor community.
This means that ROS will emerge with a debt/GDP ratio of about 71%.
4.2. Economic Policy:
Effecting a structural transformation is a long-term development challenge. During
short-terms it is economic policy, especially macroeconomic policy, which presents a
challenge for ROS.
The post-9th July 2011 new ROS was born with an Islamic regime that fully
subscribed to economic liberalization of the IMF-World Bank variety. It will be
recalled that the central message of IMF-World Bank policies was to "get the prices
right, unleash the markets and rein in the state". The principal components of this
policy package included: anti-industrial policy stance; liberalization of agricultural
markets; financial liberalization; opening-up of economies and the liberalization of
trade regimes; allocation of budget resources to education on the basis of the rate of
return; and, administrative reforms to enable technocrats to initiate and implement
market-based economic reforms (see, for example, Mkandawire and Soludo (1999)).
The story of the nature of the belief in IMF-World Bank policies goes back to the
early days of the current regime. It is now known that such belief in economic
liberalization was grounded in the grand political strategy of empowerment
(tamkeen), a corner stone of which was economic empowerment of the members of
the Sudanese Islamic Movement17. The economic liberalization policy, ala the IMF
16
These estimates are based on the 2008 estimates for Northern Sudan and the growth rates calculated
for inter-census years with a base in 1993.
11
and World Bank model, was officially adopted by the Islamic regime on the 3rd of
February 1992. Not surprisingly the privatization of public enterprises was one of the
most important vehicles of empowering the members of the Islamic Movement to the
exclusion of the rest of the population.
The economic empowerment of the members of the Islamic movement created
strange bed fellows of liberalization and monopoly, though theoretically a
contradiction in terms. However, it could be understood as a home grown type of an
Islamic economic policy. The post-9th July 2011 ROS inherited this type of confused
policy orientation.
In the context of the grand Islamic empowerment strategy the overall objective of
economic policy seems to have been the survival of the political regime, rather than
achieving production efficiency in the allocation of resources as the IMF-World Bank
model claims in its structural adjustment programs. Prior to September 1999, when
the old Sudan exported its first oil shipment, the Islamic state became an addict of
predation within the context of its strange policy mix of liberalization and monopoly.
This habit continued to plague the economy and society even after the country
became an oil producer and after the signature of the CPA.
Given the overall strategic objective of the survival of the Islamic regime, and despite
the grave doubts about the credibility of all type of information that it releases, a
cursory look at the allocation of budget resources would help in ascertaining the
nature of the economic policies that ROS would start with. According to a Ministry of
Finance and National Economy (MFNE; 2010: 47) official document the total
expenditure envisaged for 2011 was estimated at 11.9 billion Sudanese pounds (where
the pound is translated by the official IMF documents as guinea and where Sudanese
pound is abbreviated as SDG). Of this total SDG 6.5 billion is allocated to the
defence, security and police (representing about 55% of total expenditure). By
contrast about SDG 421 million is allocated to each of the education and health
sectors (representing 3.6% of total expenditure for each). Moreover, a so-called
sovereignty sector is allocated SDG 1092 billion (representing 9.2% of total
expenditure; double that for the education and health sectors combined). Another
catchall sector called the assorted sector is allocated about SDG 2030 billion
(representing about 17.1% of total expenditure).
To further appreciate the above allocation of budget resources it may be instructive to
note that MFNE (2010: 30) projected the 2011 GDP of the unified Sudan as SDG 190
billion. According to our own previous estimate of the share of ROS in GDP this will
mean that the 2011 GDP of ROS should amount to about SDG149 billion18. This
implies that the total 2011 expenditure resources of ROS would amount to about 8%
of GDP: 4.4% of GDP for defending the survival of the regime and 0.03% for each of
the education and health sectors.
17
For the details of the empowerment strategy of the Islamic Movement see Abdel Salam (2010: 291318).
18
This is almost identical to our estimate derived from IMF source above of US$51 billion at an
exchange rate of SDG2.9 per dollar.
12
Assuming that a peaceful democratic transition can be effected, highly doubtful as it
may be, and recognizing that ROS is a poor country with very limited public
resources, there is no reason to believe that a developmentally relevant allocation of
budget resources can’t be agreed upon. We hasten to note, however, that public
resources will be needed to reform the current institutional set-up to make it
consistent with a democratic governance regime. While the cost of such reforms could
be calculated there exist as yet no such estimates, partly due to the lack of data but
importantly due the institutional weakness of political opposition forces19.
V. The Challenge of Social Arrangements:
As noted in section (II) above social arrangements are a core concept in human
development. Indeed their inclusion in HDI is a major distinguishing feature of the
human development approach compared to other competing approaches. The post-9th
July 2011 ROS was born as a low human development country. After appropriately
manipulating the information provided in the UNDP (2011: 127-130; tabl1 1) for the
unified country we are able to recalculate the HDI for ROS. Our results are presented
in table (2) where a comparison is made with Norway, the highest human
development achiever, and the Congo Democratic Republic, the lowest achiever.
Table (2): Republic of Sudan: Human Development Indicators 2011
Indicator
Norway Republic of Sudan Democratic Republic of Congo
HDI Rank
1
172
187
HDI
0.943
0.386
0.286
Life Expectancy at Birth (years)
81.1
60.0
48.4
Mean Years of Schooling (years
12.6
4.2
3.5
Expected Years of Schooling (years) 17.3
6.0
8.2
GNI per Capita (constant 2005 PPP$) 47557
1873
280
Source: UNDP (2011: table 1), except for ROS which is own calculation.
It is interesting to note that UNDP ranked the unified Sudan in 169th position out of
178 countries, with an HDI of 0.408: on the basis of a life expectancy at birth of 61.5
years and a per capita GNI of PPP$ 1894, but lower education indicators of 3.1 mean
years of schooling and 4.4 expected years of schooling.
The conventional HDI does not include a political freedom sub-component. One way
of introducing such a component is to use the Freedom House measures of political
rights and civil liberties (each one of them ranging from one, for highest achievement
to 7 for lowest achievement). The simple (or geometric) average of the two gives a
composite index for the dimension of political freedoms. For 2011 the old unified
country was classified as non-free with a score of 7 for both the political rights and
the civil liberties sub-components. Applying the HDI normalization methodology it
can be shown that the normalized political freedom index for ROS will work out as
19
One would have expected the political opposition forces to have engaged in collecting and collating
all manner of detailed data relating to the mobilization and use of national resources over the years
since 1989. Moreover, one would have expected these forces to concern themselves with the
fundamental and strategic question of how to go about managing the economy and society of the
country assuming that the current regime is changed. Dealing with such question would require a
process of continuous monitoring of relevant data!
13
0.143. An extended HDI, incorporating the freedom dimension for all countries
considered by HDR 2011 is calculated. The initial condition for ROS human
development achievement is reported in table (3).
Table (3): Republic of Sudan: Extended Human Development Indicators 2011
Indicator
Norway Republic of Sudan
Extended HDI Rank
1
184
Extended HDI
0.957
0.299
Life Expectancy at Birth (years)
81.1
60.0
Mean Years of Schooling (years
12.6
4.2
Expected Years of Schooling (years) 17.3
6.0
GNI per Capita (constant 2005 PPP$) 47557
1873
Average Freedom Score
1.0
7.0
Source: as in table (2) in addition to Freedom House (2011).
Eritrea
187
0.279
61.6
3.4
4.8
536
7.0
Comparing the above two tables it is clear that ROS is starting from an extremely low
base of human development, ranking as it does only three places above the lowest
performing country under the extended HDI.
The above very low achievements in human development are reflected in that based
on income poverty. According to CBS (2010-b 52-57) an analysis of the National
Baseline Household Survey (NBHS) conducted in 2009 showed that 46.5% of the
population of ROS was living below a national poverty line of SDG 114 per person
per month (equivalent to US$1.8 per person per day). The incidence of poverty varied
among ROS regions from a low of 26% of the total population of Khartoum to a high
of about 63% for Darfur. Though the design of the NBHS is highly suspect, these
incidence results are indeed high even by Sub-Saharan African standards confirming
that at the initial stage of its emergence ROS is indeed a very poor country20.
Be the above as it may, it is perhaps comforting to note that over the period 19802011 none of the developing countries for which the HDI was calculated reported a
decline in its HDI except for Liberia21. This time trend in human development
achievement is in sharp contrast to results pertaining to economic growth and the
observed divergence in per capita income levels between poor and rich countries.
Factors that can explain this puzzle include the role of ideas and innovations at a
global level; the role of institutions, policies and equity; and, the role of markets,
states and social contracts22. Except for the global dissemination of ideas and
innovations the remaining factors contributing to human development are political in
20
It should be noted that the methodology used for estimating the incidence, depth and severity of
money-metric poverty did indeed follow up-to-date practice in this respect. However such estimates are
as good as the underlying distribution of consumption expenditure on which they are based. Such
underlying distribution, in turn, is as good as the design of the sample of the survey. We suspect that
either the design was flawed or else that the returns of the survey were tampered with prior to the stage
of the poverty analysis.
21
See UNDP (2011: 131-134, table 2).
22
For details see UNDP (2010: 45-64).
14
nature. Thus, it seems that we came a full circle to confirm that the major challenge
facing ROS is a political one requiring as it does a change in the political regime.
VI. Relevant Development Policies:
Now, assuming that a democratic transition can be effected, hopefully, though highly
unlikely, in a peaceful manner, and appreciating the low level of development from
which ROS will be starting, the multiple challenges noted in the above sections would
require the pursuit of enlightened, and relevant, development policies. As is well
known, in the 1960s most of the newly independent African states, diverse as they
were, adopted a planning approach to effect deep-seated changes in their economies
and societies. This was not surprising, given the major theoretical and policy
propositions of the pioneers of development economics23.
These pioneers formulated grand, and visionary, models of development strategy that
aimed at effecting structural transformation with a central role assigned to the
government in planning and programming development24. The policy content of these
models was informed by the observation that “a less-developed economy was
characterized by pervasive market failures. To correct or avoid market failure, they
advocated central coordination and allocation of resources. The newly expanding
subject of welfare economics also provided considerable rationale for government
action to correct market failure” (Meier (2001: 14)). In addition to pervasive market
failures, the role of the government was justified on the belief that the supply of
entrepreneurs was limited in these countries, and that major structural changes, rather
than marginal adjustments, were needed to effect development. Thus, the
“government of a developmental state was to promote capital accumulation, utilize
reserves of surplus labor, undertake policies of deliberate industrialization, relax the
foreign exchange constraint through import substitution, and coordinate the allocation
of resources through programming and planning”.
Programming, and planning, to coordinate the allocation of resources by the
government is understood as “just another word for rational, deliberate, consistent
and coordinated economic policy”(Rosenstein-Rodan (1955: 679)). An obvious
reason for why developing countries need to plan their development is the recognition
that, under the then existing historical conditions, development would not take place
automatically. Under such understanding the essential of planning economic
development is in “assuring an amount of productive investment which is sufficient to
provide for a rise in national income substantially in excess of the rise in population,
so that per capita national income increases. The strategic factor is productive
23
The pioneers of development economics of the 1940s and 1950s, and their followers up to the early
1970s are dubbed by Meier (2001) the first generation of development economists in contrast to a
second generation that emerged in the 1970’s.
Classical examples of visionary models of development include Nurkse’s “vicious circle of poverty”,
Rosenstein-Rodan’s “big push”, Leibenstein’s “critical minimum effort” and “low-level equilibrium
trap”, Lewis’ “dual economy model”, Rostow’s “take-off stage”, and Chenery’s “two-gap model”. The
ideas expressed in these early contributions to development economics are called the "high
development theory" by Krugman (1997). Lewis (1954) dual economy model is one of the most quoted
papers in the development economics literature.
24
15
investment” Lange (1961: 695-696)).
A major controversy that surrounded the experience of planning in developing
countries, including African ones, had to do with the policy content of the planning
approach to development, especially the methods recommended for the mobilization
of resources for productive investment. As it happened the methods recommended for
use in various proportions depending on the development stage of country included
the nationalization of industries, finance, trade, and foreign owned natural resources;
the contribution to state finance from agrarian reform; in addition to general taxation,
public loans and deficit financing. In this respect it is significant to note that a method
of inducing private savers to undertake productive investment was also recommended
(Lange (1961: 696)). In this respect it is noted that such inducement of private savers
can be achieved by, among other measures, the taxation of unproductive use of
wealth, compulsory saving, appropriate restrictions on the distribution of profits, and
compulsory loans. Thus, for those infatuated with the role of the private sector in the
development process there is no ground for equating the practice of comprehensive
planning with an antagonistic dispensation towards the private sector, however
embryonic such a sector may be.
The demise of planning the development of poor countries started with the advent of a
second generation of development economists (1975 up to the present). This second
generation is seen as having been “almost moralistic, dedicated to a somber realism
grounded on fundamental principles of neoclassical economics” (Meier (2001: 17)).
Neoclassical economics is seen by this generation as being good for the governments
of the developing countries. “Governments were admonished not only to remove price
distortions but also to ‘get all policies right’. Not differences in initial conditions but
differences in policies were now thought to explain the disparate performances of
developing countries. A country was not poor because of the vicious circle of poverty
but because of poor policies. Markets, prices and incentives should be of central
concern in policy making” (Meier (2001: 17)).
The new development wisdom was embodied in the Structural Adjustment
Programmes (SAPs) of the World Bank and the IMF which were imposed on
developing countries, especially African countries since the early 1980s and up to the
end of the 1990s. In this context it is now firmly established in the specialized
literature that the World Bank’s commissioned Berg Report provided the theoretical
justification for SAPs.25. The advent of SAPs, with the accompanied array of
conditions, marked the end of post-independence attempts at development planning in
developing countries.
From the above rather brief outline it should be clear that the planning approach to
development and SAPs approach to the management of the macroeconomics of a
developing country share two basic, but differentiated, features: (a) a focus on
economic growth: with the planning approach aiming at achieving economic growth
over a relatively long period under successive 5 year plans; while SAPs promising the
achievement of economic growth in shorter periods of time; and, (b) a concern with
25
For an interesting account of the institutional, World Bank, events that eventually gave rise to SAPs
see, for example, Stein (2008).
16
policies: with the planning approach seeking to identify relevant development policies
for the mobilization of required investment resources to achieve the planned rate of
growth, while SAPs imposing macroeconomic policies believed to be effective in
achieving higher rates of growth.
As is well known in the early years of the development experience of developing
countries over the period since 1960 and up to the middle of the 1970s, development
policy revolved around social equity mechanisms including public expenditure on
health and education, food price subsidies, agricultural input price subsidies, other
social transfers and public employment. From the middle of the 1970s up to the end of
1990s, under SAPs, such policies came to be labelled as "poor economic policies".
After wasting two decades on experimentation with SAP policies, the donor
community is rediscovering that what they dubbed as "bad economic policies" do,
after all, constitute relevant development policies in the context of poor countries,
especially those in Sub-Saharan Africa26.
Be the above as it may, and in recognition of the urgent need to formulate “relevant
development policies” the United Nations Department for Economic and Social
Affaire (UN DESA) commissioned a number of policy notes to help developing
countries in preparing “national development strategies” as per the recommendation
of the UN Social Summit of 2005. According to the preface of the volume collecting
these notes the objective of preparing them is to “provide those at the country level
who shape and set policies, with a range of policy alternatives to the standard policy
solutions that have prevailed over the past two decades… and to help countries take
advantage of and expand their policy space”.
The areas relevant to the formulation of national development strategies included
macroeconomic and growth policies (Ghosh (2007)); trade policy (Gibbs (2007));
investment and technology policies (Khan (2007)); financial policies (Chandrasekhar
(2007); social policy (Ortiz (2007)); and, state-owned enterprise reform (Chang
(2007)). A careful reading of the individual policy notes will show that five of them
are dealing with details under the theme of macroeconomic and growth policies. In
what follows, therefore, we will discuss the major thrust of the policy suggestions
dealing with this umbrella theme.
As a reflection on the experience of developing countries with SAPs policies Ghosh
(2007) notes that while macroeconomic stability is a necessary condition for
development and growth “the record of the past two decades shows that recently
fashionable ideas, and policy recommendations, of what makes for good
macroeconomic management and for such stability have been overly narrow. Indeed,
in many countries they have wrought the opposite of what was intended”.
The experience of the “past two decades”, it is suggested, gave rise to a broad
“understanding that macroeconomic management in open developing economies
should be guided by” a planning framework. The most important guidelines for the
design of relevant development policies would include the following:
26
See, for example, the Commission for Africa (2005) and the World Bank (2005).
17
(i) A planning approach: in the context of a planning approach to the
management of an open developing country “macroeconomic policy needs
to be developed within a coordinated framework, so that fiscal, monetary,
exchange rate and capital management are consistent”. The consistency of
the macroeconomic policies needs to be ascertained for the medium term
to provide the “contours within which macroeconomic and public
expenditure strategies are organized”.
(ii) The design of macroeconomic policy: in a planning approach macroeconomic
economic policy is expected to be based on the overall objectives of the
plan. Economic growth, livelihood stability and employment generation
must be given significance, and should not be crowded out by overly
narrow focus on macroeconomic stability and inflation control.
(iii) Objective of Policy: it is not just the aggregate rate of economic growth, but
also the pattern of that growth, which is crucial. For most countries, the
primary goal should be productive employment generation providing
decent work. This requires more than macroeconomic policy alone; in
particular, industrial policies providing carefully considered incentives to
promote desired investment and financial policies including directed
credits will play a role.
(iv) Public Expenditure: the significance of public expenditure in sustaining and
expanding the productive human resource base of the country through
social spending must be recognized. Macroeconomic policies must ensure
that public expenditure in the social sectors is maintained at adequate
levels. Developing country governments need to be more confident of the
positive effects of appropriate expansionary fiscal policy and, in particular,
of the critical role of public investment.
(v) Revenue Mobilization: there needs to be more emphasis on raising public
resources in ways that do not adversely affect the poor through effective
implementation of progressive direct taxation, flexible trade taxes, and
taxes on capital movements.
(vi) Monetary and Exchange Rate Policy: monetary policy should accommodate
fiscal policy, not the other way around, and both should be targeted to real
economic goals such as employment generation, livelihood protection and
expansion and poverty reduction. Exchange rates should be flexibly
managed even to the point of creating a band within which market forces
are allowed to work. This requires some control over capital account
movements, preferably through a range of flexible instruments.
We hasten to note that the above guidelines imply, for all intents and purposes, the
reinstatement of the crux of the development policies of the 1940s and 1950s of the
pioneers of development economics. Needless to note that such reinstatement would
require taking note of the economic and political changes that took place in the world
over the past sixty years or so, including those brought about by the third wave of
globalization.
18
VII. Concluding Remarks:
After noting the initial demographic and geographic conditions of the Republic of
Sudan (ROS) that emerged following the birth of the Republic of South Sudan on the
9th of July 2011, this paper suggested the use of the human development approach to
explore the development challenges and prospects of ROS. Three dimensions of these
challenges and prospects are proposed: the political-institutional dimension which is
shown to be the key challenge facing the country and requiring regime change and a
deep-seated democratic transition; the economic dimension which is shown to have
two components: a long-term one of structural transformation, and a short-term one
requiring the continuous design of relevant development policies including
macroeconomic policies; and a challenge of social arrangements which is shown to be
linked to both the political-institutional, and economic dimensions.
We argued that the key to unlocking the human development potential of the ROS is
the resolution of the political dimension. Under a democratic governance regime, and
after a transitional period where the institutional set-up of the country is appropriately
reformed, it is possible to resolve issues pertaining to the sharing of wealth and
political power in an amicable fashion without resort to violence. Long-run prospects
for human development can then be approached in a planning framework where the
relevant development policies can be agreed upon without prior convictions or
simple-minded beliefs. The democratic governance regime would provide for the
accountability of the governments of the day to the Sudanese public in matters
pertaining to the design of relevant development policies.
Among the relevant development policies for the case of a poor country, in terms of
real per capita income, and a low human development achievement country like ROS,
is macroeconomic policies. A democratically governed country does not have to
parade in front of the dominant powers of the world as towing the line of thoroughly
discredited neo-liberal policies of the IMF-World Bank variety. Guidelines for policy
options, depending on the circumstances of the country, are briefly outlined.
19
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