Country Session 11: South Sudan

South Sudan is a unique engagement for the IGC and the Growth Week 2013 session on the country reflected that. The country’s challenges have a strong political economy nexus at its root, and Peter Ajak, IGC South South Sudan Co-Country Director, began the session by exploring these issues and the centrality of oil to the economy and the role of leadership in navigating political and economic barriers to growth. Although many thought the oil shut-down would be an opportunity for constructing better institutions under a period of effective austerity, it frustrated the use of revenues to construct stability. The increased uncertainty over the durability of political settlements has placed growth on a lower gear: resolution of political issues is paramount for growth.

Following Mr Ajak’s overview of these crucial dynamics, the session heard from Jaime De Melo (University of Geneva) and his analysis of trade opportunities and constraints for South Sudan. The striking characteristic of South Sudan is that geography matters enormously in a sparsely populated country with under-developed infrastructure networks. The goal is a stable, ‘competitive’ exchange rate and reduced transport costs, and building institutions which are WTO compatible, as well as ones compatible with potential EAC or COMESA membership as a way to reduce behind border trade costs.

Eric Verhoogen (Columbia University)’s presentation built upon the discussion of trade, drawing attention to the importance of agriculture in exports – not just in the economy. Perhaps the absence of institutions already in place to handle rents is possibly a blessing in disguise as it allows for Norwegian style off-shore institutions to avoid some of the risks of Dutch disease by leaving money abroad.

The bulk of the session focused on explaining the high level of foreign workers in the South Sudanese context. Utz Pape, former country economist, presented evidence from field research which indicates that the higher employment of foreigners is due to a skills gap: foreign workers have higher skills and these are demanded. Interestingly, Nada Eissa, IGC South Sudan Lead Academic, presented her own research which also noted that the nationality of an employer is associated with the nationality of the employees. Understanding the demand for higher skills and the division along lines of nationality is a call for future research, and indeed, the discussion which followed was focused on how we could understand whether employers’ hiring practices of people like them is due to a preference for similar people or simply because they need to trust them.