Life Beyond Oil: Momentum for Economic Growth Through Improved Tax Management in South Sudan

Jan 24, 2017

Mechanics fix a car in Aweil. Photo: ©UNDP/Albert Gonzalez

“If the economy improves we will have industries, investors will come to South Sudan and people will be busy. They will have jobs, incomes, and they will be able to participate in activities. They will have the freedom and opportunities to go to school, have access to health care and able to develop their own businesses…nobody will want to fight and war will be over,” said Jubek State Minister of Finance Hon. John Ijino Lako, explaining his vision of how a new non-oil revenue system at state and county levels could improve South Sudanese citizens’ lives.

With the generous support from the Government of Japan, the South Sudan Ministry of Finance and Economic Planning and UNDP are working together on a multi-functional project which aims to support public financial management through improved national, state, and county-level government capacity to collect non-oil revenues.

This improved tax revenue system will allow the Government of South Sudan to effectively manage the funds at all levels, and use the revenue to expand services to the public, such as funding education, health, and other urgent social services.

 “South Sudan has a lot of resources, but we need infrastructure and to generate employment. The new non-oil revenue system can be completely implemented in three years and we would see the results: these economic measures could bring peace,” Hon. Lako continued.

South Sudan is a potentially rich country. The country’s large fertile lands have produced cassava, groundnuts, sweet potato, sorghum, sesame, maize, rice, finger millet, cowpea and beans. Although 85 percent of the working population is engaged in subsistence agriculture and livestock rearing, the oil sector remain the main economic driver. The Nile River is one of its major natural features but remains largely untapped as an economic resource. It traverses the country and flows through some of its regional centres which can facilitate trade, administration and urbanization in some rural areas. Apart from oil, the country holds other natural resources including gold, silver, iron ore and copper and many more. There is a growing consensus that infrastructure and stability are urgently needed to turn these economic opportunities into tangible benefits that can trigger economic expansion. 

“With resources, states will be able to open roads which will improve access to rural areas and therefore the livelihoods of rural people. We will grow food and return to fishing, as we have from the Nile in previous times,” said Hon. Wani Buyu Dyori, Undersecretary for Planning at the Ministry of Finance and Economic Planning, in painting his own vision of how improved non-oil revenue management will impact lives.

In 2016, UNDP experts in public financial management supported the development of a unified tax schedule, standardized training manual on non-oil revenue administration and trained 74 members of the state legislative assemblies from Yei River, Jebek, Aweil and Gbudwe on budget execution, monitoring, expenditure and value for public funds.

“Doing a better job of collecting revenue means building a more effective way to move from relying solely on oil revenue. We have seen during this difficult time that maintaining oil revenues has been a challenge for different reasons. Since 2013, our oil fields have not been working full scale,” said former Deputy Minister of Finance and Economic Planning Hon. Mary Jervase Yak, addressing South Sudan’s dependence on oil.

“Non-oil revenue collection is important because it is a sustainable long term source of income for the country. Oil won’t be there forever but agriculture will. We need to diversify the economy. The government currently only receives $10 million dollars per month from oil revenues, which is not enough to sustain the entire country,” explained Hon. Lako.

IMG_9083Jubek State Minister of Finance Hon. John Ijino Lako and Olympio Attipoe, UNDP Technical Specialist, Support to Public Financial Management project.

"We have been depending on oil revenue since independence but we did not take care of alternative sources [in the meantime]. If we don’t mobilize resources in the states, then we cannot provide services to the people and ensure that these services are distributed fairly across regions,” said Undersecretary Dyori.

“This process has been a sort of wakeup call through UNDP to the national government of what is possible if we carry this through and see the path that lies ahead. No economy will survive without the engagement of private sector, and foreign investors. We need the skills and expertise that UNDP and other partners provide to push us towards being self-sufficient,” he declared.

Supporting the call to strengthen non-oil revenue systems remains a priority between the Ministry of Finance and UNDP moving ahead will continue to build on the work UNDP specialists have supported since 2011.

“UNDP has been with us the whole time and it is one of the institutions that has never left our side. There is still much work to be done going forward, as there remains a need for all levels of government to be made aware of the revenue generation systems. Even after laws are passed, we find that people do not know their roles and the implementation procedures,” said Undersecretary Dyori.

One strategy to eliminate misunderstanding among the three levels of government about collection, was an in-depth technical training on tax jurisdiction for 60 tax officers from both national and state levels.

“The four states that were trained now know their role and can see the gaps in their systems and are better off than those who have not yet benefited from the training. If you gave the attendees of the training a test, they have more expertise now. And I saw this in person in Aweil when I visited, and both the governor and the state minister of finance were very appreciative of the support,” recognized Undersecretary Dyori.

In the coming months, UNDP will work together with Ministry of Finance and Economic Planning, the state ministers of finance and state governments to implement the new unified tax collection system across the country.

Through strengthened public financial management in South Sudan, the state governments will be able to move towards collecting non-oil tax revenues, sustainably expanding the domestic resource base, and efficiently allocating these resources in a transparent and equitable manner to improve the lives of citizens.

 

Economical activities 21A man collecting charcoal in a market in South Sudan. Photo: ©UNDP/Albert Gonzalez