In 2011 the government announced that South Sudan’s illiteracy rate was 73 percent. Credit: John Robinson/IPS

By Charlton Doki
JUBA, Dec 12 2012 (IPS)

South Sudan may have received slightly more than 10 billion dollars in oil revenue from 2005 to January 2012, when oil production shut down, according to both government officials and the World Bank.

But development experts have urged the government to begin investing in the country and its people, as basic social services remain scarce.

South Sudan shut down its production of oil after a dispute with neighbouring Sudan over transit fees earlier this year. But production is expected to resume in the next few months, after an agreement between the two countries was reached in September.

However, Dr. Leben Nelson Moro of Juba University’s Faculty of Peace and Development Studies told IPS that the government needed to start setting part of the oil revenues aside to build much-needed infrastructure to kick start this east-central African nation’s development.

“The oil money must be used in a manner that will be beneficial to the whole country and not the few people who are close to the treasury,” he said.

While the government helps fund primary and secondary school education and health services at hospitals in some state capitals, its contribution to these services is minimal.

In some hospitals, workers’ salaries and medicines are paid for by NGOs, and sometimes the not-for-profit organisations are the sole providers of school textbooks and other stationary supplies in schools here.

“The government needs to adopt new ways of managing the oil revenues so that money goes to development projects that benefit the whole country,” Moro stressed.

“We know that while many parts of the country are food insecure, there are places like Yei (Yei County in Central Equatoria State) and Western Equatoria state that produce plenty of food. You need to build roads to where the food is produced,” he said.

South Sudan has only 110 kilometres of tarmac roads in the capital, Juba, with only one tarmac road linking the city to the Ugandan border. In addition, many areas here are only accessible by air.

Moro said that the government also needed to prioritise education and also provide basic services like healthcare.

“We have many young people who need skills. The government should ensure young people receive skills training to enable them to get jobs.

“In order for our people to work hard and develop the country, they must first be in good health. But for them to be healthy there must be good healthcare services in the country,” said Moro.

The majority of South Sudan’s nearly nine million people have no access to any form of healthcare.

According to the Ministry of Health, South Sudan currently has 120 medical doctors, slightly over 100 registered nurses and less than 150 qualified midwives.

In some rural areas patients have to walk for two or more days to reach the nearest healthcare centre.

South Sudan has some of the worst health indicators globally. According to the United Nations Population Fund, this country’s maternal mortality rate is the worst in the world with 2,054 deaths for every 100,000 live births, largely because about 90 percent of women give birth away from formal medical facilities. Hospitals here lack drugs, equipment and trained workers. In addition, they are overcrowded.

Kenyi Spencer, an environmental economist and World Bank consultant on private sector development, told IPS that given that oil is a non-renewable resource, the money earned from it should be used to develop other sectors, like agricultural production.

“Agriculture will be the real driver of South Sudan’s economy in future, but the government has to take measures to develop it,” Spencer said.

He urged the government to prioritise education, arguing that the country’s high illiteracy rate was hindering development efforts. In 2011 the government announced that South Sudan’s illiteracy rate was 73 percent.

This country became Africa’s newest nation in July 2011. But decades of war with Sudan have meant that only a handful of the population were able to attend school.

“What is needed here is really a technical, rather than a theoretical, education. For this country to develop it needs plumbers, electricians, mechanics, carpenters and so forth. That is where the money should be invested,” Spencer said.

High among expectations is that as oil begins to flow again, the government will end the current austerity measures introduced in February. The measures, which included a cut in civil servants’ salaries, were implemented soon after the shut-down in oil production, which accounted for 98 percent of the country’s total GDP.

Many have not been happy with the forced cutbacks in this landlocked nation. On Sep. 7, in Rumbek Central County in the Lakes state, a group of 30 policemen attacked and shot the county’s Police Inspector Lieutenant Colonel Mangar Kajeny Kamich in the arm. They were reportedly unhappy about pay cuts.

The previous day, wildlife officers in the same state beat up their immediate superior after a reduction in their pay was announced, according to a report by the local Sudan Tribune newspaper.

Moro said that the government needed to increase civil servants’ salaries once the country began producing oil.

Soldiers patrol an oil field in Paloug, in South Sudan’s Upper Nile state. Credit:Jared Ferrie/IPS

“Many civil servants were affected by these measures. In the universities, some of the staff lost almost 75 percent of their income. Once oil begins to flow, it is inevitable that the government will have to do something about salaries,” he said.

South Sudanese President Salva Kiir promised in November that once oil production began, resources would be devoted to service delivery. Currently 40 percent of the country’s budget is spent on defence, and significant amounts have be lost  through corruption.

“Our physical and food security are top on the list of priority services we want to provide to our people. We will use the oil money to improve agriculture by providing farmers with seeds, tools and improved access to markets,” he said.

For several decades, governments around the globe have turned to privatisation as the best option to help relieve the world’s destitute by providing them with health care services, water and electricity. By and large, however, this effort has failed.

Numerous experimental alternatives to privatisation exist, but a report by the Municipal Services Project has an idea that is not outlandish or even terribly experimental.

If public pension and other government funds redirected their investments, it says, they could help provide improved access to water, energy and health services for the world’s poor. Municipal Services Project is an organisation that researches alternatives to privatisation and the commercialisation of public service provision.

“Public funds should serve to reinforce much needed public services,” David McDonald, co-director of the Municipal Services Project, said.

The research initiative is co-directed by Queen’s University in Canada and the University of the Western Cape in South Africa, with other partners including the Universidad Mayor de San Simón in Bolivia, as well as NGOs such as the Bangkok-based Focus on the Global South and the Accra-based Africa Water Network.

An approximate sum 75 billion U.S. dollars is needed to bridge the global public services gap, mainly in the developing world, where up to two billion people lack access to basic services such as water and sanitation, electricity and health care, says the report.

So how can countries close this gap? The Municipal Services Project suggests taking advantage of two types of funds: public pension funds, made up of contributions from public employers and employees; and sovereign wealth funds, through which governments collect and invest revenues from natural resources, budget and trade surpluses and other forms of state income.

Together, these two funds manage as much as 10 trillion U.S. dollars worldwide and invest heavily in the private sector, seeking – though not always achieving, in the volatile current economic climate – an average return rate of seven percent, according to the report.

Some funds currently invest in some public service providers, such as privately owned utility companies and infrastructure operators, such as those at toll roads and airports.

If the funds were willing to invest as little as 1 percent of their assets in publicly owned and operated infrastructure, argues the report, it could create an initial capitalisation pool of up to 100 billion U.S. dollars – 25 billion more than the 75-billion-dollar gap.

Investment in public services more beneficial

Research has shown, the report’s authors point out, that while investment in the private sector may be more profitable for shareholders over a period of one to three years, “regulated public utilities tend to be more reliable sources of income growth over the longer term”.

In fact, some public pensions funds are already being invested in ways that provide public services, although they usually do so through private firms, thereby complicating the picture.

The Ontario Teachers’ Pension Plan invests in three private for- profit Chilean water companies, for example, and has been pressured by activists to divest.

“Privatisation of public services has had disastrous development results,” Madeleine Bélanger Dumontier, spokesperson for the Municipal Services Project told IPS. When private entities are responsible for providing services that traditionally have been publicly provided, the poor tend to end up worse off.

The privatisation of the delivery of public services – water or electricity, for example – have offered “disappointing results”, the report agrees, explaining that these results occur even though “governments and international financial institutions have touted” privatisation as a “solution to…shortcomings”.

Ultimately, the report sees funds such as pension plans and sovereign wealth funds as an alternative source of public funding that could help bolster public services.

It points out that while no single model exists to subsidise the provision of essential services, including health care, to the world’s neediest, current experiments “suggest that the ‘public’ approach is alive and well, thriving with community participation and constituting a real alternative to privatisation”.

NGOs and researchers must collaborate

Donald Cohen, chair of In the Public Interest, a national resource centre on privatisation and responsible contracting, thinks the report is an important addition to the discussions about public-private partnerships. “There is massive need for capital across the world, and there are lots of pension funds which are looking to invest,” he said.

According to Cohen, fund managers might be more easily convinced to put money into public infrastructure rather than a single public service, because more money is involved and therefore more revenue is to be gained.

The question, however, is whether investors exist that are interested in not only financial profits but also in social well being, and so the report also looks into how fund managers might be convinced to invest in public service provision for those 1 to 2 billion people without adequate water, sanitation, energy and health care.

“We are proposing that civil society activists and fund members put pressure on pension and sovereign wealth funds, possibly working with governments, to commit some funds for ‘experimental’ purposes,” Bélanger Dumontier said.

This would require a major collaborative effort among researchers, NGOs, legislators and activists in both the North and the South, as well as the creation of a global coalition that can pressure funds, governments and even the United Nations to commit to a set of development goals and targets that allocate public funds for public services.

Education and information campaigns, which would inform the public as well as fund members about the nature of current investments and strategies of the funds, are one strategy the report suggests.

It also recommends lobbying legislators and politicians to change existing laws or impose new legal requirements on existing funds.

Fund members should, insists the report, use their power to actively contribute to the funds’ policy strategies and put pressure on the funds’ boards to redirect the investments.

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