South Sudan Economic Monitor Towards a Jobs Agenda FIFTH EDITION February 2022 Macroeconomics, Trade and Investment Global Practice South Sudan Economic Monitor Fifth Edition 1 © 2022 The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. Rights and Permissions: The material in this work is subject to copyright. Because the World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Attribution: Please cite the work as follows: World Bank. 2022. South Sudan Economic Monitor: Towards a Jobs Agenda. Fifth Edition, February 2022. © World Bank. All queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Photo Credits: Bullen Chol; World Bank Typesetting, graphics, and page layout: Artfield Graphics Ltd. Additional material relating to this report can be found on the World Bank South Sudan website. (www.worldbank.org/southsudan). 2 South Sudan Economic Monitor Fifth Edition CONTENTS ABBREVIATIONS iv ACKNOWLEDGEMENTS v EXECUTIVE SUMMARY vi State of the economy vi Towards a Jobs Agenda viii PART 1: RECENT ECONOMIC DEVELOPMENTS 1 1.1 Global and regional economic developments 2 1.2 Real sector developments 4 1.3 Living standards and access to services 7 1.4 Exchange rate and inflation developments 13 1.5 Fiscal policies and developments 17 1.6 Trade and external sector developments 24 1.7 Financial sector developments 25 ECONOMIC OUTLOOK AND RISKS 30 1.8 The economic outlook is cautiously positive 30 1.9 Risks to the outlook remain heavily tilted to the downside 33 PART 2: TOWARDS A JOBS AGENDA FOR RECOVERY AND PEACEBUILDING 37 2.1 What does a job look like in South Sudan? 39 2.2 What has been the impact of conflict, displacement, macroeconomic stress, and disaster on markets and jobs? 42 2.3 What do young South Sudanese expect of a job? 46 2.4 What opportunities are there to rebuild the weakened entrepreneurial sector? 47 2.5 There are many business obstacles, but there is also a clear hierarchy 50 2.6 A feasible agenda for jobs in early recovery 52 REFERENCES 57 South Sudan Economic Monitor Fifth Edition I LIST OF FIGURES Figure 1: Global Economic Developments 3 Figure 2: Global oil price developments 3 Figure 3: Regional Economic Developments 3 Figure 4: South Sudan Growth Contributions 3 Figure 5: Cereal production, thousand MT 5 Figure 6: Evolution of new weekly COVID-19 cases in South Sudan 6 Figure 7: Fully vaccinated persons in selected countries, % of population (December 2021) 6 Figure 8: Rainfall: MM above 2016-month level 10 Figure 9: Exchange rate developments 14 Figure 10: Inflation developments 14 Figure 11: Food price developments in selected towns across South Sudan (y-o-y changes, %) 14 Figure 12: Distribution of government revenues, % 21 Figure 13: Sector expenditure shares, % of total 21 Figure 14: Indicators of Public and Publicly Guaranteed External Debt under Alternatives Scenarios 24 Figure 15: South Sudan imports from Uganda 26 Figure 16: South Sudan exports to Uganda 26 Figure 17: Bank lending to the private sector, million SSP 27 Figure 18: Real Private Sector Credit Growth, % (y/y real terms) 27 Figure 19: Real GDP growth rate (percent) 33 Figure 20: Overall fiscal balance (percent of GDP) 33 Figure 21: Type of employment and sector of activity among urban workers 41 Figure 22: The role different job activities play in livelihoods varies by town 41 Figure 23: Conflict has had a pervasive impact on jobs in towns 43 Figure 24: business income declined steeply with the COVID pandemic and measures to contain it 44 Figure 25: A significant challenge and opportunity could result from pressure to re-integrate displaced workers and some members of the security forces. 45 Figure 26: Attitudes of young workers toward common activities 46 Figure 27: Established businesses offer few jobs in production. 49 Figure 28: Business access to banking and loans 51 Figure 29: How businesses cope with shocks 51 Figure 30: There are effective fiscal policy and investment options for jobs support 54 II South Sudan Economic Monitor Fifth Edition LIST OF TABLES Table 1: IDP access to basic services, % 12 Table 2: Distribution of non-oil revenue 18 Table 3: Government fiscal operations, % of GDP 19 Table 4: Distribution of revenue 20 Table 5: Decomposition of public debt by creditors (millions of US Dollars) 23 Table 6: The current account (Millions of dollars, % GDP in parentheses) 27 Table 7: Economic Outlook (annual percentage changes unless stated otherwise) 31 South Sudan Economic Monitor Fifth Edition III ABBREVIATIONS AfCFTA African Continental Free Trade Area EOR Enhanced Oil Recovery LIPW Labor Intensive Public Works SSA Sub Saharan Africa AfDB African Development Bank FAO Food and Agriculture Organization MOFP Ministry of Finance and Planning of the United Nations AML Anti-Money Laundering SSP South Sudanese Pound MSSMEB Multi-Sectoral Minimum Expenditure Basket FDI Foreign Direct Investment AY Annual Year TFA Transitional Financial Arrangement NGO Non-Governmental Organization FCS Food Consumption Score BSS Bank of South Sudan UN United Nations OCHA Office for Coordination of Humanitarian Affairs FSNMS Food Security & Nutrition Monitoring Survey CFT Combating Financing of Terrorism UNHCR United Nations High Commissioner for Refugees OPEC Organization of the Petroleum Exporting Countries GDP Gross Domestic Product CFSAM Crop and Food Security Assessment Mision UNMISS United Nations Mission in South Sudan PIM Public Investment Management GoSS Government of South Sudan CLIMIS Crop & Livestock Market Information System UNOCHA United Nations Office for the Coordination PFM Public Finance Management of Humanitarian Affairs CPI Consumer Price Index GRADE Global Rapid Post Disaster Damage Estimation POC Protection of Civilians USD United States Dollar DDR Disarmament, Demobilization, and Reintegration IDA International Development Association PV Present Value WASH Water, Sanitation and Hygiene DSA Debt Sustainability Analysis IDP Internally Displaced Person QNB Qatar National Bank WEO World Economic Outlook EAC East African Community IMF International Monetary Fund RCF Rapid Credit Facility WFP World Food Program EMDE Emerging Market and Developing Economy IPC Integrated Food Security Phase Classification SMP Staff Monitored Program FY Fiscal Year IV South Sudan Economic Monitor Fifth Edition ACKNOWLEDGEMENTS T he Fifth Edition of the South Sudan Economic Monitor (SSEM) was prepared by Joseph Mawejje (Economist, EAEM2) and Jan von der Goltz (Economist, HSPJB), with contributions from Lukas Loeschner (Disaster Risk Management Specialist, SAEU3) and Eric Nimungu (GEMS Consultant, GTFS2). We are grateful for comments provided by peer reviewers: Niko Hobdari (Mission Chief, IMF), John Litwack (Lead Economist, EAEM2), Paul Christian (Senior Economist, DIME1), and Rachel Sebudde (Senior Economist, EAEM1). Additional comments were received from Cheick-Oumar Sylla (IFC Country Manager, CAFE8). The special topic “Towards a Jobs Agenda” summarizes important findings of the study of “Jobs, Peacebuilding, and Recovery” that was prepared by a team comprising: Jan von der Goltz (Task Team Leader), Arden Finn, Bernard Harborne (Task Team Leader), Musa Kpaka, Zahia Lolia, Joseph Mawejje, Nadia Piffaretti, Mira Saidi, Ambika Sharma, Augustino Ting Mayai, and Melissa Williams. Preparation of the report benefited from useful discussions with colleagues in the South Sudan Country Office, Government of South Sudan counterparts, Development Partners, and the Private Sector. We thank FAO colleagues (Nicholas Kerandi, Alemu Manni, and Danvers Omolo) and Uzelac Kristina (IOM, South Sudan) for useful discussions and feedback during the preparation of the report. The team benefitted from the overall guidance of Firas Raad (Country Manager, AEMJB) and Mathew Verghis (Practice Manager, EAEM2). Florence Poni (Team Assistant, AEMJB) provided logistical support, while John Lomoro Sindani (Communications Consultant, AEMJB) managed the communications and dissemination strategy. Irfan Kortschak provided editing assistance. South Sudan Economic Monitor Fifth Edition V EXECUTIVE SUMMARY State of the economy After contracting by an estimated 5.4 percent in FY2020/21, South Sudan’s economy is projected to grow by 1.2 percent in FY2021/22, with a rebound of growth in services and trade supported by improving macroeconomic conditions and relative peace. In addition, high frequency indicators point to a strong rebound in the growth of private sector credit and in cross-border trade, with the receding impact of pandemic-related restrictions imposed last year. Despite these positive developments, the economic outlook is clouded by production bottlenecks in the oil sector and devastating flooding incidents that have impacted an estimated 7.5 percent of the population (850,000 people). In the agriculture sector, flooding has had a significant impact on crop and livestock production, with estimated losses of 38,000 tons of cereals (4.3% of 2020 net cereal production) and 800,000 livestock according to FAO estimates. Given that agriculture remains the most important provider of employment in South Sudan, these developments are expected to have significant impacts on livelihoods. The food deficit has widened significantly in recent years, reflecting increased food requirements in the context of the low levels of productivity of the agricultural sector. The overall cereal deficit was projected to reach around 465,610 metric tons in 2021, equivalent to about 35 percent of the overall food requirement for the year. While this deficit has narrowed over the year, standing at four percent below the estimated deficit of 482,500 metric tons in 2020, it was still four percent higher than the average figure recorded over the previous five years. These unmet food requirements have contributed to record-high levels of food insecurity throughout the country, especially in areas where conflict and flooding have recently affected crops and livestock. Years of conflict, climate shocks and displacement have degraded productive capacity, markets, road infrastructure, and the social and economic institutions that supported agriculture. Floods and outbreaks of conflict in certain areas of South Sudan have taken a heavy toll on South Sudanese, destroying livelihoods and precipitating a humanitarian crisis. In 2021, flooding incidents affected an estimated 850,000 people in 33 out of 78 counties across nine of the country’s 10 states, causing severe damage to already limited and underdeveloped infrastructure. At the same time, communities in parts of the country have been affected by intensified localized conflict, particularly in Western Equatoria (Tambura) and Warrap (Greater Tonj). These concurrent shocks have resulted in a new wave of displacements, disrupting livelihoods and challenging the ability of the humanitarian sector to respond effectively. This has exacerbated food insecurity and worsened the already dire living standards in affected communities. The shocks that have afflicted South Sudan over the year have been accompanied by a collapse of service delivery. The delivery of social services and infrastructure has been affected by these concurrent shocks, resulting in extremely low levels of access, particularly outside urban areas. With IDPs among the most severely affected, a large proportion of people in this group do not have adequate access to safe water and sanitation infrastructure and face barriers in accessing healthcare services. Food insecurity is particularly high among IDP populations, with only 17 percent of households in the Juba IDP facilities and 40 percent in Bentiu recording an acceptable food consumption score. In the Greater Pibor Administrative Area, the violence has resulted in the destruction of critical infrastructure, including boreholes (often the only source of water), schools, markets, and shelters, and in the loss of livestock as a result of raiding. These developments have negatively impacted livelihoods and jobs and resulted in sustained high levels household vulnerability. VI South Sudan Economic Monitor Fifth Edition As a result of the ongoing macroeconomic reform process, South Sudan’s foreign exchange and inflation rates have stabilized. Following the gradual liberalization of the foreign exchange market that commenced in April 2021, the premium between the official rate and the parallel rate has been virtually eliminated. At the same time, the monetization of the fiscal deficit has ceased since September 2020. With these developments, inflation continued to decline in the second half of 2021, reflecting improved exchange rate stability and greater monetary and fiscal discipline. With the high inflation recorded in the recent past being recognized as one of the major constraints on business activities at all levels, it is expected that the reduction in inflation will play a positive role in promoting recovery. With the authorities having maintained their commitment to macroeconomic stabilization efforts, they have established the initial foundations to enable them to set forth on the long and challenging path to the implementation of their wider economic and public financial management reform program. The overall FY2020/21 budget deficit is estimated to have narrowed to about 6.9 percent of GDP, down from an estimated 9.8 percent in FY2019/20. South Sudan’s fiscal position has benefited from higher-than-projected oil revenues, improved domestic revenue mobilization, and fiscal consolidation efforts. The impact of the decline in oil production on budget revenues has been offset by an increase in prices, with oil revenue standing at an estimated 26.6 percent of GDP in FY2020/21, up from 25.5 percent in FY2019/20. At the same time, expenditure declined to an estimated 38.5 percent of GDP in FY2020/21, down from 39.3 percent in FY2019/20, reflecting lower financial transfers to Sudan, adjustments to operating expenditures, and the under-execution of the capital budget. South Sudan is at high risk of debt distress, with total public debt estimated to stand Following at 59.5 percent of GDP at the end of FY2020/21. The risk of debt distress has increased, the gradual despite the new SDR allocation partly used for debt management and debt-carrying liberalization capacity remains rated as weak. With relatively few counterparts accounting for most of South Sudan’s gross external debt, around 63 percent of total loans were highly non- of the foreign concessional in FY2020/21. Moreover, South Sudan’s debt to commercial creditors is exchange market collateralized against oil revenue receipts. Domestic debt, estimated at US$ 627 million that commenced (12.6% of GDP), is mostly in the form of loans from the central bank. Systems for recording in April 2021, and monitoring debt are weak, with relevant ministries, departments and agencies having the premium inadequate analytical capacity and suboptimal coordination between them. between the official rate and The balance of payments benefited from lower import demand and reduced financial the parallel transfers to Sudan, with the current account deficit narrowing to an estimated 5.5 percent in FY2020/21 from 20.3 percent in FY2019/20. The trade deficit narrowed rate has been to an estimated US$ 333 million (6.7% of GDP) in FY2020/21 from US$ 602 (12.3% of virtually GDP) in FY2019/20, with merchandise imports declining by 8.3 percent from US$ 3.690 eliminated. South Sudan Economic Monitor Fifth Edition VII billion in FY2019/20 to an estimated US$ 3.383 billion in FY2020/21, reflecting the impact of the pandemic, which constrained government consumption and investment and delayed private sector investment, particularly in the oil sector. Oil revenue receipts declined by an estimated 1.3 percent, going down from US$ 3.061 billion in FY2019/20 to US$ 3.021 billion in FY2020/21. The strong recovery in oil prices in the second half of the financial year, following their collapse following the advent of the pandemic, played a role in averting a steeper decline. At the same time, transfers to Sudan declined to an estimated US$ 169 million in FY2020/21, down from US$ 492 million in FY2019/20. As a result of these factors, the current account deficit improved to 5.5 percent of GDP in FY2020/21, from the figure of 20.3 percent recorded during the previous year. The economic outlook is cautiously positive. With a projected growth rate of 1.2 percent in FY2021/22, South Sudan’s economy is expected to record a mild economic recovery following the estimated contraction of 5.4 percent in FY2020/21, reflecting a rebound of growth in services and trade. In the medium term, the economy could grow by 3.5 - 5.0 percent if the peace process holds, the economic management reform program is successfully implemented, and global and regional economic recovery does not falter. However, this outlook is clouded by a high degree of uncertainty due to several factors, including those related to the still uncertain peace process, oil sector developments, climatic shocks, future path of the COVID-19 pandemic, and a weaker global economic context, all of which could exert negative pressure on the projected recovery. In an adverse scenario in which these downside risks materialize, growth could be as low as 2.5 percent in FY2022/23. Towards a Jobs Agenda With a As South Sudan looks to build stability, better jobs should take center stage. Armed conflict, projected natural disasters, and the COVID-19 pandemic have profoundly disrupted livelihoods in South growth rate Sudan. As the authorities seek to consolidate peace, there is an opportunity now to continue on of 1.2 percent the road to economic recovery. In this process, paying attention to jobs is key: economies that in FY2021/22, create opportunities are more stable and investment projects that create jobs can also hope to South Sudan’s foster positive attitudes toward the peace process. economy is expected to With South Sudan’s enormous investment needs and limited resources, it is crucial to identify record a mild the most significant opportunities to support better jobs. While South Sudan receives economic substantial oil revenue and development assistance, the prospects of foreign investment recovery remain distant. Investment needs far exceed the available resources. In a high risk, high cost, following the and low demand business environment, public investment can play a key role in facilitating estimated recovery. These public investments can lower costs (notably in transport), raise returns (notably contraction of in agriculture), and sustain demand by ensuring public-sector salaries are paid. To deploy the 5.4 percent in limited available resources well, it is essential to understand which investments are most likely FY2020/21, to make a real difference in the lives of South Sudanese workers. reflecting a rebound of Initiatives to support jobs during recovery must begin with a realistic understanding of what growth in a job means to most workers. Jobs policy is never a matter of ‘one size fits all.’ In South Sudan, services and most jobs involve low-productivity self-employed or household work in agriculture and services, trade. with typical incomes in the range of US$ 2 per day. In rural areas, jobs are tied to subsistence agriculture and other vulnerable livelihood models, while in urban areas, they mostly involve VIII South Sudan Economic Monitor Fifth Edition own-account or household work in agriculture (37% of to aspire to obtain employment in the public sector, the all jobs) or services, almost always commerce and basic proportion expressing hopes of this kind has declined personal services (46%). The goal of jobs policies at the since the last assessment in 2014. early stages of recovery should be to broadly increase the productivity of these common activities, including through With few thriving firms, jobs programs must seek out measures to harness the potential for higher returns in unconventional ways to support productive employment, food sector value chains. including in household businesses active in promising value chains. South Sudan’s established business sector Years of violence, natural disasters, and economic crisis is far from what one would wish it to be. It provides little have had severe impacts on virtually all forms of economic employment and has little engagement in value chains activity. Between 2013 and 2018, 380,000 people are that have strong potential for growth, with most jobs reported to have died as a result of armed conflict. Since in commerce and basic services. Hence, it is important then, destructive floods have become an annual event. to consider even unconventional opportunities to build At present, more than a third of the population remains on business activities in productive sectors. Household forcibly displaced; more than half experience acute food activities in processing and artisanal production may insecurity; and poverty has reached unprecedented present such an opening: they employ far more workers levels. Even in towns, almost all job activities have been than established businesses in the food sector and affected, with a survey conducted in 2019 showing manufacturing and may be similarly productive. Secondly, that a half of all households in towns could no longer given that foreign-owned businesses are already engage in a previously important economic activity. Of integrated into broader labor and product markets, they the 4,000 businesses surveyed, precisely two reported could be encouraged to play a greater role. that their operations had not been negatively affected by conflict. With improved stability, up to an estimated one Surveyed households, market traders, and businesses million displaced workers may begin returning to their consistently report that insecurity, a lack of funding, low communities. While integrating large returnee groups into demand, and poor roads are the key factors constraining local labor markets may create opportunities in moving their activities. With the poor state of South Sudan’s towards sustainable livelihoods for the country, it will also economy, people face a wide range of challenges in their involve huge challenges. endeavors to make a living, regardless of whether they work in their households, casual businesses, or more In general, young workers have reasonable expectations established businesses. Despite a multitude of obstacles, regarding jobs and are open-minded towards available however, businesses, traders, and households all tend activities, particularly in agriculture. The willingness to agree that the most significant challenges they face of young South Sudanese to take advantage and build relate to lack of funding for their activities, low demand from the limited opportunities available to them has (including as a result of inflation), bad and dangerous significance for the achievement of both political stability roads, and the direct impact of insecurity. and economic recovery. Young workers have realistic expectations regarding available incomes. Even in urban South Sudan’s critical development challenge remains areas, they hold positive attitudes towards work in to consolidate peace and find a way to use its oil agriculture, with more youth currently active in the sector revenue to develop a sustainable economy. In addition to saying that they would rather do better in agriculture than consolidating peace and building stability, South Sudan’s shift to a different activity. This is particularly important fundamental development challenge is to transition from considering the large proportion of the population that taking economic policy decisions with a view to managing derives their livelihood from the food sector currently and conflict to making policy for development and good the significant potential for the future competitiveness of job opportunities. Improved security is the single most the sector. While a large proportion of the young continue important condition for a recovery in job opportunities. At South Sudan Economic Monitor Fifth Edition IX the local level, improved security would relieve many of the constraints facing workers and businesses. Secondly, oil revenues continue to provide a large income stream, with the effective management of these revenues vital for the transition to development-oriented policy. The Government has formulated a clear reform agenda, and it must be engaged. Given the pervasive toll of conflict, second-best measures and gradual changes have a role to play during the early stages of recovery, aligned with a peacebuilding process. Little in the economy today is as it should be, and the level of capacity and resources is very low. In their endeavors to support jobs, it is therefore particularly important for the Government and development partners to maintain a realistic view of the measures that are both possible and effective in the immediate term, and to allow for some second-best measures until more sustainable approaches become viable For instance, at the policy level, while the reform of public financial management systems will take time to accomplish, partial success in reducing payroll arrears or gradual increases in agriculture investment can make a substantial difference. At the program level, prospects for supporting the emergence of a formal, high-productivity private sector are remote – but effective support to household businesses can broadly raise revenues. Such actions can promote early recovery and, despite their short-term horizon, lay the groundwork for increasingly ambitious and sustainable reforms. The government could implement a number of policy measures to curb inflation, revive demand and ease fees, all of which could make a real difference for jobs in the short term. The transformation of macro-fiscal management that is required to set South Sudan on the path toward sustainable growth and better jobs will take political will and effort, sustained over a long period of time. Yet, there are significant opportunities to take first reform steps that, while far from perfect, can make a concrete difference in improving the conditions of South Sudan’s workers. Key short-term measures to create better conditions for local markets, small business and livelihoods include: (i) continuing efforts to limit the monetization of the deficit and curbing inflation pressure, (ii) clearing domestic arrears to rebuild market demand and redirecting some resource revenue toward domestic consumption; and (iii) easing fees in markets and at checkpoints and paying security forces transparently through the payroll. An effective jobs support program would invest in immediate livelihood support, the recovery of modest business activities, and the revival of markets. An effective program for jobs in recovery should operate on three levels: First, it should support the recovery of production in agriculture through provision of inputs and assistance to producer groups and of temporary income support through Labor Intensive Public Works (LIPW) or cash transfers. Secondly, following progress towards the achievement of local stability, jobs support should invest significantly in areas where there is the most potential for broad- based productivity gains in business activities by supporting individual, household, and co-operative productive activities through cash grants and complementary psycho- social support. Thirdly, to facilitate the recovery of markets and rural-urban linkages, investments in rural feeder roads are a high priority, together with measures to promote local procurement and support to aggregators through the UN system. X South Sudan Economic Monitor Fifth Edition South Sudan Economic Monitor Fifth Edition XI PART 1: RECENT ECONOMIC DEVELOPMENTS 1 South Sudan Economic Monitor Fifth Edition 1.1 Global and regional economic developments prices to the highest level on record, with oil prices also rising steadily with the recovery from the pandemic. Before Despite a resurgence of the COVID-19 pandemic and the emergence of the Omicron variant, US oil benchmark continued supply bottlenecks, the global economy West Texas Intermediate increased to a level in excess of showed strong signs of recovery in 2021. Following an US$ 78 a barrel in October 2021 for the first time since estimated contraction of 3.1 percent in 2020, the global 2014, while Brent crude rose to US$ 82 a barrel for the first economy is estimated to have grown by 5.5 percent in 2021, time in three years (see Figure 2), following the OPEC+ 0.5 percentage points lower than previously forecasted, group’s decision to increase production only gradually, before moderating to 4.1 percent in 2022 (see Figure 1). by 400,000 barrels a day each month, despite a growing Among advanced economies, the downward revision deficit between supply and demand. Oil prices are expected to global economic growth forecasts reflects supply to average at US$ 74/bbl in 2022 before declining to US$ disruptions, softening consumption, and shortages of key 65/bbl in 2023 as global production recovers. inputs. The outlook for low-income developing countries reflects worsening pandemic dynamics, particularly in Sub-Saharan Africa recorded an economic growth rate of cases where the rollout of vaccination programs has lagged 3.5 percent in 2021, supported by increased commodity and where policy support has been limited. Beyond 2022, prices, a relaxation of stringent pandemic measures, and global growth is projected to moderate to approximately a recovery in global trade. However, economic recovery 3.2 percent over the medium term. The output of in the region remains fragile, with the slow pace of the advanced economies is forecast to exceed pre-pandemic rollout of vaccination programs continuing to expose it medium-term projections, reflecting sizable anticipated to the impacts of emerging strains of the coronavirus. further policy support in the United States. By contrast, With Sub-Saharan Africa recording a growth rate of 3.5 persistent output losses are anticipated for the emerging percent in 2021, it is forecast that this could increase to 5.1 market and developing economy countries, due to slower percent in 2022 and 5.4 percent in 2023 if the rollout of vaccine rollouts and generally less policy support than in vaccination programs is intensified. By contrast, a slower the advanced economies. The emergence of the Omicron than expected implementation of these programs could variant (B.1.1.529) of the SARS-CoV-2 virus and the potentialimpede the relaxation of pandemic-related restrictions and emergence of other variants creates additional uncertainty otherwise result in disruptions to economic activity. Under for the global outlook. this scenario, it is projected that the regional growth rate would reach only 2.4 percent in 2023. It should also be noted Following a large slump in 2020, global energy prices have that there is significant variation in the rates of recovery rebounded strongly, with the world economy continuing between countries within the region. It is estimated that on its path to recovery from the pandemic. Global oil prices Angola, Nigeria, and South Africa, the largest economies in rallied in the second half of 2021 to reach their highest the region, have emerged from the 2020 recession, growing level in seven years after OPEC and its allies declined to at 0.4 percent, 2.4 percent, and 4.6 percent respectively. accelerate plans to increase crude oil production, snubbing Excluding these three countries, the other economies in the calls to implement measures to address the growing global SSA region are recovering at a faster rate, at 3.6 percent in energy crunch. Europe and Asia have been affected by tight 2021. It is projected that the regional economic growth rate energy supplies that have pushed natural gas and coal will stand at 3.6 percent in 2022 and 3.8 percent in 2023. South Sudan Economic Monitor Fifth Edition 2 Figure 1: Global Economic Developments Figure 2: Global oil price developments 7.5 80 70 5 60 2.5 Real GDP growth, % 50 Oil price, $ 0 40 - 2.5 30 -5 20 - 7.5 10 0 -10 2019M01 2019M05 2019M07 2019M09 2019M11 2020M01 2020M05 2020M07 2020M09 2020M11 2021M01 2021M05 2021M07 2021M09 2019M03 2020M03 2021M03 2018 2019 2020 2021 2022 Wo rld United States Euro Area Japan United Kin gdo m EMDEs Crud e oil , Brent ($/ bbl) Crud e oil , WTI ($/bbl ) Source: World Bank Source: World Bank Figure 3: Regional Economic Developments Figure 4: South Sudan Growth Contributions 12 10.0 9.5 9 7.0 3.2 3.8 6 4.0 1.2 3 1.0 0 -2.0 -3 -5.0 -5.4 -6 -8.0 2018 2019 2020 2021 2022 FY2019 FY2020 FY2021 FY2022f FY2023f SSA Ethiopia Kenya Agriculture Non-oil (Excluding Agr) Uganda Sudan Rwanda Oil GDP Growth Source: World Bank – Global Economic Prospects, January 2022 Source: World Bank staff estimates 3 South Sudan Economic Monitor Fifth Edition While South Sudan’s regional peers are positioned for reform and stabilization, political developments in Sudan and Ethiopia could drag on economic growth. Regional economies will benefit from improving global economic prospects, with an anticipated recovery in the trade and tourism sectors. At the same time, a number of countries have taken advantage of the pandemic to address long-standing structural impediments to growth by implementing politically challenging reforms, creating improved conditions for the achievement of sustained long-term growth. Examples of such reforms include Sudan’s exchange rate unification initiative and the liberalization of the telecommunications sector in Ethiopia. Kenya’s economic growth rate is projected to rebound from -0.3 percent growth in 2020 to 5.0 percent in 2021, reflecting improvements in the construction, education, information and communication, and real estate sectors. Similarly, Uganda’s economy is projected to grow by 3.4 percent in 2021, with the impact of additional waves of the pandemic and associated lockdowns having impeded an even more rapid recovery. In Rwanda, the economy is estimated to have grown by 10.2 percent in 2021, the highest rate in the region. However, these projections are subject to significant downside risk. In particular, recent political developments, particularly the coup d’état in Sudan and ongoing conflict in Ethiopia, could weaken or even reverse the expected economic gains in the region. 1.2 Real sector developments After contracting by an estimated 5.4 percent in FY2020/21, it is projected that The performance South Sudan’s economy will grow by 1.2 percent in FY2021/22, with floods and of South Sudan’s bottlenecks in the oil sector constraining a more rapid recovery. South Sudan agricultural sector faced significant headwinds in FY2020/21, with the pandemic, floods, and flareups of subnational conflict significantly affecting economic activities. In terms of has been impacted by volume, oil production is estimated to have declined by 5.9 percent, with average climate shocks and daily production levels declining from 170,000 to 160,000 barrels. This decline conflict in parts of was due to the impact of floods and to the delays, resulting from the pandemic, the country, affecting on new investments to replace exhausted wells. Non-oil GDP is estimated to have the livelihoods of contracted by 5 percent, with a widening exchange rate premium, high inflation, a major part of the and tight credit conditions constraining economic activity in the first half of the population. Climate fiscal year. For workers and businesses, this contraction has been reflected by shocks, including wide-spread declines in income (see below). Nevertheless, it is projected that the economy will grow by 1.2 percent in FY2021/22 (see Figure 4), with a rebound of those related to growth in services and trade supported by improving macroeconomic conditions flooding and droughts and relative peace. However, the FY2021/22 economic outlook is subject to in certain regions, significant downside risks related to production bottlenecks in the oil sector, with have disrupted the dwindling production due to limited new investments. This decline highlights the recovery in agricultural need for South Sudan to diversify its economy. production, potentially exacerbating food The performance of South Sudan’s agricultural sector has been impacted by insecurity across the climate shocks and conflict in parts of the country, affecting the livelihoods of a major part of the population. Climate shocks, including those related to flooding country. South Sudan Economic Monitor Fifth Edition 4 and droughts in certain regions, have disrupted the recovery facilities (Figure 5), with these losses contributing to food in agricultural production, also potentially exacerbating insecurity. Due to the lack of storage facilities, farmers often food insecurity across the country. Prior to the floods in have no option other than to sell their produce when prices 2021, agricultural production had recorded significant are low. To put these challenges in perspective, eliminating improvements for at least three years, with the return of the cereal losses experienced in 2020 would have reduced relative peace in parts of the country since 2018 supporting the cereal deficit by as much as 45 percent. To address increases both to the area of land under cultivation and these constraints, policymakers should strive to develop a production, albeit from very low bases. The area of land Warehouse Receipt System and an associated warehouse under cultivation increased by 5.3 percent, going up from receipt policy, together with interventions to facilitate low- 882,000 hectares in 2018 to 929,000 hectares in 2019, and cost storage options at the individual farmer and farmer- then by a further 6.3 percent, to 987,500 hectares, in 2020 group levels (World Bank, 2021). (FAO, 2021a). However, the floods inundated a significant proportion of this agricultural area, leading to losses in the Sudan’s food deficit has widened significantly in recent order of 38,000 tons of cereals and 800,000 livestock in years, reflecting both increased food requirements and the period from May to December 2021 (FAO, 2021b). At low levels of agricultural productivity. In 2021, the overall the same time, flareups of conflict in parts of the country, cereal deficit was projected to reach around 465,610 particularly in the states of Western Equatoria and Warrap, metric tons, equivalent to about 35 percent of the overall led to mass population displacements, significantly food requirement for the year which is estimated at affecting farming activities in these areas. Agriculture 1.34 million tonnes (FAO, 2021a). While this deficit is 4 remains the mainstay of livelihoods for South Sudanese percent lower than that estimated for 2020, which stood households, including in towns, with shocks to agricultural at 482,500 tonnes, it is still 4 percent higher than the production resulting in broad welfare losses. average figure recorded for the previous five years. The unmet food requirements contribute to record-high levels South Sudan loses substantial quantities of agricultural of food insecurity throughout the country, particularly in produce due to gaps in post-harvest handling and storage, areas where conflict and flooding have affected crops and with only very limited opportunity for value addition. livestock. The protracted conflict, economic crisis, climate Production and consumption have been affected by a lack shocks and population displacements have degraded of post-harvest handling, storage, and agro-processing productive capacities, markets, road infrastructure, and the facilities. The FAO estimates that more than 20 percent of social and economic institutions that supported agriculture, agricultural produce is lost due to the absence of storage in addition to creating a major humanitarian crisis. Figure 5: Cereal production, thousand MT 1400 1050 409 223 249 518 483 559 365 384 468 291 479 700 1022 922 892 826 764 745 818 874 350 695 753 558 0 (179) (140) (199) (223) (247) (229) (206) (191) (143) (205) (215) -350 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Net cereal production Cereal deficit Losses Source: CLIMIS and FAO 5 South Sudan Economic Monitor Fifth Edition While the number of new COVID-19 infections begun to Progress in the implementation of the national COVID-19 increase since December 2021, the impact on the economy vaccination program has been slow. The authorities is expected to be less severe than with previous waves. launched a national vaccination program in March 2020, at While the health impact of the pandemic in South Sudan which point they received 132,000 AstraZeneca COVID-19 was relatively contained in 2021 compared to elsewhere in vaccines through the Covax initiative. By 31 December the region, the number of new infections increased rapidly 2021, 269,000 COVID-19 dozes had been administered, starting in December 2021, indicating that South Sudan with 182,000 fully vaccinated individuals, equivalent to had entered a third wave of the pandemic (Figure 6). By 3 approximately 1.6 percent of the population (Figure 7). In January 2022, the cumulative number of recorded COVID-19 the implementation of its vaccination program, South Sudan cases had risen to 15,152, up from the 12,517 cases reported faces significant supply issues, with the number of doses at the end of the first week of November 2021. While most allocated through COVAX initiative (732,000) sufficient to of these cases have presented as mild or asymptomatic, cover only around 5.2 percent of the population, making the World Health Organization notes unconfirmed reports it challenging for the authorities to achieve their target of widespread community transmission of COVID-19- of vaccinating 40 percent of population. Additionally, like sicknesses (WHO, 2021). However, testing capacity inadequate capacity and logistics remain significant continues to be constrained by the high costs of PCR barriers to the vaccination roll out. A timely and efficient test kits, although other, less expensive rapid diagnostic rollout of the vaccination program would play a strong tools are now being progressively used. To enforce public role in reducing deaths and preventing further outbreaks, compliance with pandemic mitigation measures, South supporting initiatives to build resilience and enabling a Sudan’s National Taskforce on COVID-19 announced new more rapid recovery of the country’s non-oil sectors. At restrictions on 21 December 2021 through the issuance of the same time, the firm implementation of rational public Public Order No. 16/2021. Despite the recorded increase health measures, including social distancing, the use of in case numbers, however, the impact on the economy is face masks, and effective testing and contact tracing, is expected to be limited, with the authorities seeking to avoid still necessary. stringent lockdown measures. Figure 6: Evolution of new weekly COVID-19 cases Figure 7: Fully vaccinated persons in selected in South Sudan countries, % of population (December 2021) 1400 Kenya 7.9 1200 Sub Saharan Africa 6.9 1000 800 Low Income 5.0 600 400 Ethiopia 3.5 200 Uganda 3.1 0 30-Mar-20 31-Oct-20 31-Dec-20 31-Mar-21 31-Oct-21 30-Apr-20 31-Jul-20 31-Aug-20 30-Sep-20 31-Jan-21 28-Feb-21 30-Apr-21 31-Jul-21 31-Aug-21 30-Sep-21 31-May-20 30-Jun-20 30-Nov-20 31-May-21 30-Jun-21 30-Nov-21 South Sudan 1.6 0.0 2.0 4.0 6.0 8.0 Source: World Health Organization: https://Covid19.who.int/ South Sudan Economic Monitor Fifth Edition 6 1.3 Living standards and access to services In 2021, South Sudan experienced severe flooding for the third consecutive year since 2019. As of November 2021, more than 850,000 people (7.5% of the population) have been affected by flooding in 33 out of 78 counties across nine of the country’s 10 states since May (UNOCHA, 2021). The floods have had particularly severe impacts in the states of Jonglei, Unity and Upper Nile, with more than three out of four households directly affected by the disaster in these states. The impact has been particularly severe in Jonglei, where wetlands and tributaries of the White Nile have overflowed with the earlier-than-usual arrival of seasonal rains. These floods have weighed heavily on South Sudan’s already vulnerable population, with widespread disruptions to livelihoods, access to services, and humanitarian programs. At the same time, floods have precipitated displacement and are likely to exacerbate an already dire food insecurity situation across the country. In addition to destroying crops, pasturelands, and other assets, floods have led to an increase in waterborne and malarial diseases. Reports from across the country have indicated an upsurge in malaria cases, with the rainfall and vegetation creating good breeding conditions for malaria-bearing mosquitoes. According to available data, malaria is the leading cause of morbidity in South Sudan, accounting for 20 to 40 percent of all health facility visits and for 30 percent of hospitalizations. About one-third of South Sudan’s population relies primarily on surface water to meet basic needs, with a minimal reliance on utility-provided water. Even in urban areas, over half the population engage in open human waste disposal, with the rate at 80 percent in rural areas. In the context of inadequate household access to safe The impact of water, sanitation, and hygiene facilities, increased rainfall and flooding has resulted the floods is in outbreaks of diarrheal diseases across the country. At the same time, there has likely to lead been an upsurge of cases of reptile invasions, with increased hospitalizations due to to an increase snake bites of particular concern. in the prices of Flooding has impacted living standards in affected areas, placing significant strain food and basic on household-level resilience and coping capacities. Flooding has been particularly commodities. The intense in areas that already experienced high levels of food insecurity and conflict, MSSMEB cost exacerbating pre-existing hardships (Maps 1-6). With floods driving a new wave of remains above displacement, living standards have deteriorated. Among the affected populations, the median levels constraints on access to water, sanitation, and hygiene (WASH) infrastructure are in areas affected of particular concern. At the same time, the impact of the floods on agricultural by floods, production, transport infrastructure, and market functionality is likely to lead to including in parts an increase in the prices of food and basic commodities. As such, the cost of the multi-sector survival minimum expenditure basket (MSSMEB), which represents of Jonglei, Unity, the minimum culturally-adjusted group of items required to support a six-person and Central household for one month, remains above the median levels in areas affected by Equatoria states. floods, including in parts of Jonglei, Unity, and Central Equatoria states, despite an overall downward trend in areas not affected by the floods (REACH, 2021a). 7 South Sudan Economic Monitor Fifth Edition Recent flooding events are indicative of the longer-term of support for water management and crop adaptation climate risks facing South Sudan. The 2021 floods have initiatives. been the worst recorded for more than half a century, The concurrent shocks, including those related to flooding, weighing heavily on South Sudan’s already vulnerable conflict, and food insecurity, have precipitated population population. However, an analysis of rainfall trends over the displacements in recent periods. As of November 2021, past six years indicates that the flooding events in 2021 it was estimated that there were approximately 2 million were not the result of above-normal rainfall in that year, IDPs in South Sudan, a 25 percent increase from the but rather are the manifestation of a trend that has been figure of 1.6 million recorded at the end of September apparent since 2018 (Figure 8). Higher than normal rainfalls 2020 (UNOCHA, 2021). At the same time, according to the in 2018, 2019, and 2020 in a number of regions have broken latest available data, the number of IDPs recorded by the the ability of the natural environment to absorb water, International Organization for Migration (IOM) more than resulting in the devastating flooding in 2021, even though doubled, going up from 184,787 in 2019 to 388,722 in 2020. the rainfalls in that year were considerably less than the Natural disasters were the main causes for displacement in average for the previous three years. In addition, higher- 2020, with floods accounting for the largest share (54%), than-normal water levels in the upstream of the Victoria followed by communal violence (32%), and conflict (13%). Nile and in the Great Lakes, including Lake Albert, also In the state of Western Equatoria, hostilities between rival contributed to the severe flooding observed in 2021 (REACH, organized armed groups resulted in at least 200 deaths and 2021b). At the same time, decreasing rainfalls combined the displacement of more than 80,000 people in Tambura with temperature increases in the Eastern and Southern County over the period from June to October 2021 (USAID, regions of the country could reduce the availability of water 2021). In Warrap State, insecurity and flooding in Greater for agriculture, thus impacting crop production, livelihoods, Tonj have resulted in major population displacement and jobs. In addition, land degradation is jeopardizing the and prevented vulnerable populations from practicing productivity of the most heavily cultivated areas of the agriculture, with heighted insecurity related to cattle country. These climate changes require farmers to adapt rates, leaving highly vulnerable groups without access to to changing conditions, which in turn requires the provision livestock products and cash (REACH, 2021c). South Sudan Economic Monitor Fifth Edition 8 Map 1: Extent of flooding Map 2: IPC Food insecurity Sep 2020 – Jan 2021 Map 3: Conflict hotspots Jan 2021 to Oct 2021 Map 4: Conflict and displacement 2021 Map 5: Conflict and food security Map 6: Flooding, access, and prices 9 South Sudan Economic Monitor Fifth Edition Figure 8: Rainfall: MM above 2016-month level Warrap Northern Bahr El Ghazal 7 00 800 600 700 500 6 00 400 500 300 400 200 100 300 0 200 -100 100 -200 0 -300 -100 Jun-17 Dec-19 Oct-20 Nov-17 Dec-19 Oct-20 Sep-18 Feb-19 Jul-19 Sep-18 Feb-19 Jul-19 Jun-17 Apr-18 Apr-18 Jan-17 Aug-21 May-20 Mar-21 May-20 Mar-21 Nov-17 Jan-17 Western Bahr El Ghazal Lakes 500 500 400 400 300 300 200 200 100 100 0 0 -100 -100 -200 -200 -300 -300 Jun-17 Feb-19 Jun-17 Feb-19 Nov-17 Dec-19 Oct-20 Nov-17 Dec-19 Oct-20 Jan-17 Jan-17 Jul-19 Jul-19 Sep-18 Sep-18 Aug-21 Aug-21 May-20 Mar-21 May-20 Mar-21 Apr-18 Apr-18 Eastern Equatoria Western Equatoria 700 900 6 00 800 700 500 6 00 400 500 300 400 200 300 100 200 100 0 0 -100 -100 -200 -200 Jun-17 Nov-17 Dec-19 Oct-20 Sep-18 Feb-19 Jul-19 Apr-18 Jan-17 Aug-21 May-20 Mar-21 Nov-17 Jun-17 Sep-18 Feb-19 Jul-19 Apr-18 Dec-19 Oct-20 Jan-17 Aug-21 May-20 Mar-21 Source of data: FAO/CLIMIS online databases: https://climis-southsudan.org/agromet/rainfall_data South Sudan Economic Monitor Fifth Edition 10 11 South Sudan Economic Monitor Fifth Edition While the number of conflict events and fatalities was the violence subsided in the second half of 2021, flooding lower in 2021 than in 2020, the risk of flareups remains destroyed many households’ remaining assets, including high. Incidents of inter-communal violence declined livestock, as well as disrupting market activities and supply significantly in 2021, with the number of fatalities in the routes. These developments have resulted in high levels of ten months to October 2021 (2,134) 23 percent fewer than food insecurity and have exacerbated vulnerability at the in the same period in 2020 (1,638). However, as recent household level. developments in the states of Western Equatoria (Tambura) and Warrap (Greater Tonj) show, the risk of intermittent but Internally displaced populations experience significant intense flareups of violence remains high. The persistence service delivery gaps which impacts their quality of life. A of subnational conflict across many states has disrupted significant proportion of IDPs do not have adequate access supply chains, affected local economies, and constrained to safe water and sanitation infrastructure and healthcare humanitarian activities. In 2021, over the period from services, with a high level of food insecurity. For example, June to August, the United Nations reported 164 incidents in Bentiu IDP Camp, only 20 percent of households have related to humanitarian access, including 22 ambushes and access to safe and timely water supply; while nearly one of 25 lootings. As of 1 September 2021, six aid workers had households in Juba IDP camp (49%) have to travel for more been killed in South Sudan in 2021 (UNHCR, 2021). than one hour to collect water. While access to healthcare services is high across IDP sites, the limited availability of The persistence of violence in parts of the country has been medicines and discrimination have been cited as significant accompanied by the destruction of social infrastructure constraints on healthcare service delivery among the IDP and the collapse of service delivery. The delivery of population. At the same time, food security indicators show social services and the construction and maintenance of that large proportions of these populations experience infrastructure have been impacted by flareups of violence inadequate food consumption, with only 17 percent of in the affected areas, limiting access to these facilities households in Juba IDP facilities and 40 percent in Bentiu almost exclusively to urban households. In the Greater Pibor recording acceptable food consumption scores. Table 1 Administrative Area, the violence resulted in the destruction below describes access to basic services in terms of key of critical service infrastructure, including boreholes (often service delivery indicators among IDP populations across the only source of water), schools, markets, and shelters and South Sudan in December 2020. to the loss of livestock of parades (REACH, 2021c). While Table 1: IDP access to basic services, % IDP site Juba Bentiu Malakal Wau Sufficient access to safe and timely water 23.6 20.0 47.8 33.1 Need more than one hour to collect water 48.7 36.1 35.0 2.6 Improved latrine (shared communal or private) 78.2 76.9 35.5 46.8 Access healthcare services when needed in the past six months 64.3 87.7 85.2 65.9 Access to healthcare services within one hour on foot 92.7 86.3 88.8 75.1 ● Lack of medicines as a main barrier to access 26.9 8.2 9.0 25.5 Households with acceptable food consumption score 16.6 40.2 77.5 51.6 Received humanitarian assistance 37.4 73.0 76.5 8.1 Children school attendance in previous year 79.9 79.2 65.6 76.1 Source: IOM’s Displacement Tracking Matrix (IOM DTM), August 2021 South Sudan Economic Monitor Fifth Edition 12 1.4 Exchange rate and inflation developments Following the gradual liberalization of the official exchange starting in April 2021, the premium between the official rate and the parallel rate has been virtually eliminated. As a result of the implementation of the Bank of South Sudan’s exchange rate policy reforms, which involved an auction-based gradual adjustment toward a market-determined exchange rate, the gap between the parallel and official rates has virtually ceased to exist. The nominal USD/SSP exchange rate appreciated to an average of 418 in November 2021, up from 620 in March on the parallel market. At the same time, the official USD/SSP exchange rate depreciated to an average of 413 in November 2021, down from 186 in March (Figure 9). With these developments, the spread between the parallel and the official exchange rates declined to approximately 1 percent in November, down from around 233 percent in March 2021. The ongoing exchange rate policy reform initiative is part of a wider reform process that is intended to facilitate macroeconomic stabilization and to improve public financial management. Inflation continued to decline in the second half of 2021, reflecting greater exchange rate stability and improved monetary and fiscal discipline. According to official data, the 12-month inflation rate declined from 46.8 percent in January 2021 to 5.8 percent in October 2021 (Figure 10). The decline in the cost of non-food items has been the largest contributor to reduced inflation, with food inflation going down at a much slower rate, declining from 67.5 percent in January to 11.3 percent in August. In fact, non-food inflation has continued to decline since January 2021, effectively reaching negative levels between January and September 2021. These developments largely reflect greater exchange rate stability and improved monetary and fiscal discipline. With inflation a major concern for both formal and informal businesses, the reduced price pressures may help to stimulate a recovery in market activity. With receding inflation and exchange rate pressure, the inflation rate for the minimum expenditure basket has continued to decline. The year-on-year change in the cost of the MSSMEB, which represents the minimum culturally adjusted set of items required to support a six- person household for one month, has declined from a peak of 93 percent in March to -12.1 percent in December. During the same period, the year- on-year change in the cost of the food basket declined from a peak of 102 percent in March to -17.5 percent in December 2021. These developments are consistent with greater exchange rate stability and falling inflation. If sustained, these factors will have a positive impact on the living standards of the poorest households, with a large proportion of these households having been affected by the recurring shocks described above, including flooding, outbreaks of violence, and those related to the pandemic. 13 South Sudan Economic Monitor Fifth Edition Figure 9: Exchange rate developments Figure 10: Inflation developments 650 200 600 175 550 150 500 125 100 450 75 400 50 350 25 300 0 250 -2 5 Jan 20 19 Apr 20 19 Jan 20 20 Apr 20 20 Jan 20 21 Apr 20 21 Jan 20 18 Apr 20 18 July 2019 July 2020 July 2021 July 2018 Oct 2019 Oct 2020 Oct 2018 200 150 12-Apr 24-May 8-Nov 18-Oct 16-Aug 6-Sep 22-Mar 3-May 5-Jul 14-Jun 27-Sep 1-Mar 26-Jul All items Food Parall el X R Official XR BSS Aucti on XR to Comm. B anks Non -Food Linear (All items) Source of data: South Sudan authorities Figure 11: Food price developments in selected towns across South Sudan (y-o-y changes, %) Juba Wua 700 350 600 300 500 250 400 200 300 150 200 100 100 50 0 0 May-21 May-20 Jan-21 Mar-21 Sep-21 Mar-20 Sep-20 Nov-20 Jul-21 Jan-21 May-21 Sep-21 Jul-20 May-20 Sep-20 Nov-20 Mar-21 Jul-21 Mar-20 Jul-20 -50 Beans (1 KG) Wheat flour (1 KG) Beans (1 KG) Wheat flour (1 KG) Sorghum flo ur (1 K G) Ri ce (1 KG) Sorghum flo ur (1 K G) Ri ce (1 KG) Renk Yei 200 150 120 100 50 70 0 -50 20 -100 Jan-21 May-21 Sep-21 May-20 Sep-20 Nov-20 Mar-21 Jul-21 Mar-20 Jul-20 Jan-21 Mar-21 May-21 Sep-21 Mar-20 May-20 Sep-20 Nov-20 Jul-21 Jul-20 -30 Beans (1 KG) Wheat flour (1 KG) Beans (1 KG) Wheat flour (1 KG) Sorghum flo ur (1 K G) Ri ce (1 KG) Sorghum flo ur (1 K G) Ri ce (1 KG) Source of data: FAO/CLIMIS online databases: https://climis-southsudan.org/markets South Sudan Economic Monitor Fifth Edition 14 15 South Sudan Economic Monitor Fifth Edition Box 1 The IMF completed the first review of the Staff-Monitored Program The IMF approved a nine-month Staff Monitored Program (SMP) on 30 March 2021. The SMP was implemented in combination with a disbursement of US$ 174 million (50% of quota) through the Rapid Credit Facility (RCF) to address urgent BOP challenges and to establish a track record towards an upper- credit tranche financial arrangement. This followed an earlier disbursement through the RCF in November 2020 of US$ 52 million (15% of quota), which was the first ever financial disbursement from the IMF to the Republic of South Sudan. The SMP is intended to support the implementation of the Government’s current reform program. The authorities are committed to a reform program that prioritizes the modernization of the country’s economic and public financial management systems. The SMP aims to foster greater transparency within government operations; to strengthen governance; and to reduce vulnerabilities. Specifically, the SMP includes a package of measures with a focus on strengthening governance and facilitating the emergence of the conditions necessary for strong, inclusive growth through measures to restore fiscal discipline, to reduce debt vulnerabilities, to implement a rules-based monetary policy framework, and to eliminate distortions in the foreign exchange market. The SMP has achieved broadly satisfactory results. The IMF completed and approved the first review of the program on 18 October 2021. The review focused on reforms aimed at sustaining the recent gains towards achieving macroeconomic stability and exchange rate unification and continuing governance reforms. Supported by the RCF disbursements and the strong recovery of oil prices, the economic reforms implemented under the SMP have helped to ease the adverse impact of the pandemic and to address a history of weak macroeconomic governance. In particular, the exchange rate has stabilized, price levels have started to decline, and the government has substantially reduced salary arrears. While the authorities implemented the reforms targeted under the structural benchmarks, two quantitative targets were missed, with the first relating to the ceiling on cash deficit of the central government and the second to the ceiling on contracting or guaranteeing non-concessional borrowing. With the successful implementation of economic reforms supported by the SMP, the authorities have established a basis for a potential ECF request at the end of the SMP. The authorities’ achievements under the SMP, especially in terms of stabilizing the economy, reducing distortions in the FX market, and initiating governance reforms, indicate significant progress. Nevertheless, a number of significant steps still need to be taken. In particular, the authorities need to implement measures to (i) sustain fiscal and monetary discipline to consolidate gains in macroeconomic stabilization; (ii) consolidate foreign exchange market liberalization reforms by bolstering reserves and expanding the set of available monetary instruments; (iii) strengthen debt management and oversight; (iv) deepen public financial management reforms; and (v) strengthen the anti-corruption and AML/CFT frameworks. A sustained commitment to the implementation of these reforms will improve the government’s credibility with donors and may lead to increased access to concessional financing. Source: IMF (2021) South Sudan Economic Monitor Fifth Edition 16 While at the national level, pressure on food prices has paths, they are also more reflective of broader macro- continued to decelerate, there have been considerable trends, particularly the parallel exchange rate movements variations between different markets around the country. and cross-border trade flows. Various factors, including Following the pandemic-related food price spikes last year, inefficient connectivity and insecurity along major trade the prices of basic food items have stabilized, with nominal routes, could explain the weak market integration in South price decreases reported for some items in markets across Sudan. Non-integrated markets lead to inefficiencies, as the country. One factor driving these reduced pressures is producers are unable to determine what is appreciated in the stabilization of the exchange rate, with the exchange other markets, and are therefore unable to make the best rate reform process eliminating the premium and ushering possible production decisions. in a period of relative stability. Consequently, the year-on- year increase in the prices of unprocessed beans in Juba 1.5 Fiscal policies and developments declined from 250 percent in March 2021 to 44 percent in September 2021. Similarly, the year-on-year change in the The overall FY2020/21 budget deficit is estimated to prices of sorghum flour in Juba prices declined to 65 percent have narrowed to about 6.9 percent of GDP, down from in September 2021, down from 338 percent in March 2021 9.8 percent in FY2019/20. South Sudan’s fiscal position (Figure 11). These developments may reflect improved benefited from higher-than-projected oil revenue, improved cross-border trade between South Sudan and its regional domestic revenue mobilization, and at least partially neighbors. While this trade all but collapsed at the height of successful fiscal consolidation efforts. The impact on the implementation of the pandemic -related restrictions, budget revenue impact of declines in the production of oil it recovered strongly during the second quarter of FY2021 was offset by higher prices, with oil revenue increasing to (Figure 15). Another factor supporting trade recovery was 26.7 percent of GDP (SSP 253.4 billion) in FY2020/21, up the appreciation of the local currency. However, food prices from 25.5 percent of GDP (SSP 201.1 billion) in FY2019/20. remain susceptible to intermittent spikes due to localized violence and conflict-related food supply disruptions, The authorities have intensified efforts to increase non- as has recently occurred when truckers from Kenya and oil tax revenues. The total value of collected non-oil tax Uganda suspended food stuff deliveries due to security revenue increased from an estimated 4 percent of GDP concerns along the Nimule-Juba highway. (SSP 31.8 billion) to about 5 percent of GDP (47.6 billion) in FY2020/21, reflecting the authorities’ efforts to expand the Food price movements in locations outside Juba vary tax base and to enforce compliance. Specifically, collected between regions, possibly indicating weak market sales tax was more than budgeted projections (18%), as integration. Food price volatility tends to be higher in was excise duty (48%) and business profit tax (46%). In markets outside the capital, possibly indicating that they addition, the FY2021/22 Finance Bill outlines a number of are subject to different location-specific market forces. measures to improve domestic revenue, including: phasing Figure 11 shows recent developments with the prices of out tax exemptions; a gradual adjustment of the customs four main food items (beans, wheat flour, sorghum flour, valuation exchange rate¹ ; expanding the digitalization of and rice) in four locations (Juba, Wau, Renk, and Yei). While the tax collection system; and continuing the adjustment of pressure on prices has declined greatly since April 2021, custom duty rates towards the levels recorded by the East there are visible differences in trends across locations. African Community. Specifically, food prices in Juba not only follow smoother 1 In December 2021, the National Revenue Authority directed that the exchange rate applied to all customs duties and taxes must be consistent with the prevailing daily Bank of South Sudan reference exchange rate. 17 South Sudan Economic Monitor Fifth Edition Table 2: Distribution of non-oil revenue FY2020/21 FY2020/21 FY2021/22 (Budget) (Estimate) (Budget) Bn SSP % GDP Bn SSP % GDP Bn SSP % GDP Non-oil revenue 44.41 4.67 47.57 5.00 58.25 2.60 Non-oil tax revenue 42.81 4.50 47.49 4.99 55.50 2.48 PIT 21.02 2.21 19.91 2.09 22.56 1.01 Sales Tax 5.68 0.60 6.69 0.70 9.37 0.42 Excise duty 6.79 0.71 10.06 1.06 10.57 0.47 Business Profit Tax 4.92 0.52 7.20 0.76 5.39 0.24 Customs Duty 4.42 0.46 3.63 0.38 7.61 0.34 Other non-tax revenue 1.60 0.17 0.09 0.01 2.75 0.12 Source: South Sudan Authorities, World Bank estimates Public expenditure pressures were largely contained, a daily allocation of 10,000 oil barrels for this purpose despite the impact of the pandemic and of increased (World Bank, 2020a). With few prospects for foreign investment outlays on infrastructure. On the expenditure direct investment, increased public capital expenditure side, the fiscal position benefited from large adjustments may play a vital role in encouraging a revival in domestic to operating expenditure, which declined from 10.5 percent investment. Continued attention to capital investment can of GDP in FY2019/20 to 6.6 percent in FY2020/21. Over the thus contribute meaningfully to recovery. However, capital same period, the value of South Sudan’s financial transfers spending is still affected by limited absorption, leading to to Sudan declined from 10.4 percent (SSP 81.7 billion) to under-execution and increased fiduciary risks. Although 5.9 percent (SSP 52.2 billion). Thus, while capital spending capital expenditure outturns reached 3.6 percent of GDP by increased from 3.8 percent of GDP (SSP 29.8 billion) to the end of FY2019/20, this is still well below the budgeted 5.5 percent of GDP (SSP 52.1 billion) over the period, total figure of 14.8 percent, reflecting underlying weaknesses current spending in proportion to GDP declined from 35.6 in public investment management. Over the longer term, percent in FY2019/20 to 33.1 percent in FY2020/21. With public investment management could be strengthened these developments, total expenditures declined from 39.4 by the adoption of an indicative reference multi-year percent of GDP in FY2019/20 to 38.6 percent in FY2019/20. expenditure framework, consistent with South Sudan’s national development strategy. Capital spending has been driven by a renewed focus on infrastructure development projects. With this The draft FY2021/22 National Budget and accompanying focus, capital spending is expected to remain high, with financial and appropriation bills were presented in a budget allocation equivalent to 10.3 percent of GDP parliament on February 2, 2022. This is the first time in two (SSP 230.4 billion) in FY2021/22. The increase in the years that a national budget has been read in parliament. capital budget has in large part been driven by increased While cabinet deliberated and passed the FY2020/21 spending on roads infrastructure, operationalized through budget on 24 September 2021, its approval was delayed an oil-for-roads arrangement, following the approval of pending the reconstitution of the requisite parliamentary South Sudan Economic Monitor Fifth Edition 18 committees. The budget envisages total revenues of focuses on measures to improve infrastructure and to SSP 647 billion (28.8% of GDP) and expenditures of SSP facilitate the emergence of a more conducive investment 621 billion (27.7% of GDP). Nevertheless, the budget has a climate to achieve economic diversification and to reduce financing gap of SSP 40.3 billion (1.8% of GDP), despite an South Sudan’s dependence on oil. In addition, the budget has SDR allocation of SSP 60 billion (2.7% of GDP). The financing increased allocations to the social sectors, with education gap arises out significant debt repayments to Afrexim Bank, and health both receiving nominal increases in proportion QNB, Sahara Energy, Nasdec and China Exim Bank that total to the value of the budget. to SSP 143 billion (6.4% of GDP). The FY2021/22 budget Table 3: Government fiscal operations, % of GDP FY2018/19 FY2019/20 FY2020/21 FY2021/22 FY 2021/22 (Estl) (Estl) (Estl) (Budget) (Proj) Total government revenue 31.8 29.5 31.6 28.8 30.0 Oil revenue 27.9 25.5 26.6 26.2 26.8 Non-oil tax revenue 3.9 4.0 5.0 2.6 3.2 Grants 0.0 0.0 0.0 0.0 0.0 Total government expenditure 32.8 39.4 38.6 27.7 32.5 Recurrent spending 31.9 35.6 33.1 17.4 28.4 Wages and salaries 3.4 4.6 8.0 3.7 4.0 Interest 0.5 2.0 2.4 2.0 2.0 Capital spending 0.9 3.8 5.5 10.3 4.1 Primary balance -0.5 -7.8 -4.5 3.1 -0.5 Overall balance (cash) -1.0 -9.8 -6.9 1.1 -2.5 Variation arrears 2.4 -3.4 0.0 0.0 0.0 Overall balance (accrual) -3.5 -6.5 -6.9 1.1 -2.5 Statistical discrepancy -2.4 18.8 3.8 0.0 0.0 Financing 5.8 25.2 10.7 -2.9 -2.9 Domestic (net) 6.0 3.6 3.0 0.8 0.4 Net credit from the central bank 0.8 5.6 3.0 0.8 0.4 Net credit from commercial banks 2.7 1.3 0.0 0.0 0.0 Foreign (net) -0.1 21.7 7.7 -3.7 -3.4 Disbursement 8.3 33.8 10.7 2.7 3.0 Amortization -8.4 -12.1 -3.0 -6.4 -6.4 Financing gap 0.0 0.0 0.0 1.8 5.4 Source: South Sudan Authorities, International Monetary Fund, World Bank estimates The FY2021/22 budget includes a fiscal surplus equivalent from 31.6 percent in FY2020/21, this will be accompanied by to 1.1 percent of GDP, reflecting a large fiscal adjustment a large fiscal adjustment that will reduce total government from an estimated fiscal deficit of 6.9 percent realized in expenditure to 27.7 percent of GDP in FY2021/22 from 38.6 FY2020/21. While the budget envisages lower revenue in percent in FY2020/21. This adjustment arises out of lower GDP terms, which declines to 28.8 percent in FY2021/22 budgeted transfers to Sudan, which decline to 2.8 percent 19 South Sudan Economic Monitor Fifth Edition of GDP FY2021/22 from 10.6 percent in FY2020/21. At the payroll plays a significant role in maintaining domestic same time, recurrent expenditures are expected to remain market demand and is an important lever to enable the contained, despite a one-off doubling of nominal salaries government to facilitate a recovery in market activity and contained in the FY2021/22 budget. Moreover, the fiscal domestic investment (see Part 2 of this report). position may benefit from under execution of the investment budget, with capital expenditure projected to decline to South Sudan loses significant resources to direct/ 4.1 percent of GDP in FY2021/22 from an estimated 5.5 mandatory transfers, with net resources available for the percent in FY2020/21. Nevertheless, the fiscal outlook budget equivalent to just over one-third of the resource could deteriorate further if the fiscal adjustment does envelop. The FY2021/22 budget estimates that the total not materialize with the overall fiscal deficit reaching 2.5 value of collected revenue will stand at 28.9 percent of percent of GDP, reflecting higher outlays on operating GDP, lower than the estimated 31.7 percent of GDP in expenses. FY2020/21, with revenue from oil exports amounting to 26.3 percent of GDP and non-oil revenue amounting to 2.6 The FY2021/22 budget doubles the nominal wage bill percent of GDP. However, transfers to Sudan, including for relative to FY2020/2021. The increase in the wage bill is oil transportation and transit fees, are budgeted to account intended to mitigate the impact of the erosion in the value for an estimated 2.8 percent of GDP. At the same time, of real wages as a result of years of high inflation. Despite allocations to meet South Sudan’s debt service obligations, this increase, South Sudan’s average wage compensation is including repayment of oil advances (6.4 percent of GDP), lower than in most SSA countries, reflecting its relatively continue to absorb large shares of revenue. Other direct large workforce. To put this in context, it is worth pointing mandatory payments include allocations to the Ministry of out that the average monthly compensation for more than Petroleum (0.7% of GDP) and road projects (8.2% of GDP) half of all government workers prior to the adjustment (see Table 4). While the authorities are intensifying efforts stood at less than 5 US$ /month, considerably lower to diversify non-oil revenue sources, expenditure pressures than the international poverty line. While the president from oil-collateralized loans and off-budget expenditures had announced that the increase would be met through are offsetting the gains made in the mobilization of non-oil an allocation of 5,000 barrels of oil per day, the expected tax revenue. While the Transitional Financial Arrangement nominal wage increase is not expected to have distortionary (TFA) with Sudan continues to exert significant pressure effects. However, future salary increments of such a on the budget (see Table 4), the agreement is set to end in magnitude should be considered very carefully to ensure FY2022, which will increase the government’s fiscal space. budget congruence. It should be noted that the public Table 4: Distribution of revenue SSP Billions (budget) % Total revenue % of GDP Total Revenue 647.4 100.00 28.9 Gross oil revenue 589.1 91.0 26.3 Non-oil revenue 58.2 9.0 2.6 Less Direct/Mandatory Transfers Financial transfer to Sudan 63.8 9.9 2.8 Transfer to Ministry of Petroleum (3%) 15.8 2.4 0.7 Oil for Roads 184.0 28.4 8.2 Debt service (including repayment of oil advances) 143.2 22.1 6.4 Net revenue to GoSS Treasury 240.6 37.2 8.1 Source: South Sudan Authorities, World Bank estimates South Sudan Economic Monitor Fifth Edition 20 With mandatory or direct transfers consuming a large for a number of other sectors have been reduced, including proportion of the budget, the remaining available resources health (4.4 percent of total expenditure), agriculture, for social service delivery and human capital development natural resources and rural development (1.4 percent), and are limited. Direct transfers are expected to absorb close to infrastructure - excluding oil-for-road projects (1.6 percent). two-thirds of available budgetary revenue (62.8 percent), While capital spending is expected to account for 10.3 severely limiting the resources available for expenditure on percent of budgetary expenditure, South Sudan continues critical service delivery and human development needs. A to underinvest in sectors that would have the largest impact number of sectors have been allocated increased resources on poverty reduction, building resilience, and human capital under the most recent budget, including education (10.9% development, all of which are vitally necessary to create of total expenditure), public administration (7.6 percent) conducive conditions for long-term growth and greater job and security (7.1 percent). At the same time, the resources Figure 12: Distribution of government revenues, % Figure 13: Sector expenditure shares, % of total Education 10.9 Public Administration 7.6 28.2% Security 7.1 Health 4.4 Transfers to States 2.8 Peace Bu dget 2.4 62.8% Ru le of Law 2.4 Economic Functions 2.1 Infrastructure 1.6 9.0% Salary Arrears 1.4 Nat Res & Ru ral Devt 1.4 Contigency 1.0 Social & Humanitarian Affairs 0.5 Accountability 0.3 Net oil revenue Non oil revenue Mandatory Transfers 0.0 2.0 4.0 6.0 8.0 10.0 12.0 Source: South Sudan Authorities Over the past year, financing has been driven by external South Sudan projected to decline from 3 percent of GDP in borrowing, with a commitment to reduce monetary FY2020/21 to about 0.4 percent in FY2021/22. financing despite increased budgetary pressures. With limited access to external concessional financing, the South Sudan’s total public debt stock was estimated authorities have often relied on short-term, oil-backed to stand at US$ 2,958 million (59.5% of GDP) at the end advances and monetary financing to close the financing of June 2021. With limited public data, it is difficult to gap. With the ongoing public financial management (PFM) estimate South Sudan’s exact debt situation. The latest and economic management reform process, the authorities joint IMF-World Bank Debt Sustainability Analysis update have committed to reduce reliance on these two sources (October 2021) estimated South Sudan’s external public of financing and to modernize general fiscal management. debt, including arrears, to stand at US$ 2,958 million While the budget includes a primary surplus equivalent to (59.5% of GDP) at the end of June 2021. Debt to multilateral 3.1 percent of GDP, the financing gap is estimated at SSP creditors amounted to US$ 327 million, with debt to bilateral 40.3 billion (1.8 percent of GDP), despite an SDR allocation creditors standing at around US$ 150 million and debt to of SSP 60 billion (2.7 percent of GDP). At the same time, the commercial creditors at around US$ 1,853 million. The authorities have committed to gradually reduce reliance Bank of South Sudan (BSS) has an outstanding liability to on central bank advances, with net credit from the Bank of the QNB of US$ 627 million. As shown in Table 4, relatively 21 South Sudan Economic Monitor Fifth Edition few counterparts account for most of South Sudan’s gross external debt. In FY2020/21, around 63 percent of total loans (QNB: 18%; Afrexim: 22%; oil advances: 23%) were highly non-concessional. South Sudan’s debt to commercial creditors is collateralized against oil revenue receipts. Commercial debt amounted to US$ 1,853 million (37.3% of GDP), of which US$ 525 million was owed to AFREXIM bank, US$ 652 million to Qatar National Bank, and US$ 676 to oil companies. Debt is collateralized when the creditor has rights over an asset or revenue stream in cases where the borrower defaults on payment obligations. This entails a borrower granting liens over specific existing assets or future receivables to a lender as security against payment of the loan. Collateral is “unrelated” when it has no relationship to a project financed by the loan. In South Sudan, commercial oil- collateralized debt is usually contracted through off budget and non-transparent deals that complicate budget management. Domestic debt is mostly in the form of loans from the central bank. The total value of domestic debt was estimated to stand at US$ 627 million (12.6% of GDP) at the end of FY2020/21. Prior to the COVID-19 crisis, South Sudan’s domestic debt was low, at less than 10 percent of GDP. The government ceased monetary financing in late 2017, which helped to lower inflation and to stabilize the exchange rate. However, the COVID-19 crisis triggered a decision to reengage in some monetary financing, resulting in domestic debt increasing by around 5 percentage points in FY2019/20. Following a resolution by the cabinet, there has been no further monetary financing of the budget since September 2020. While there are no arrears on domestic debt instruments, the authorities are faced with domestic arrears related to salaries and goods and services2. The authorities’ PFM reform strategy includes the review, verification, and clearance of all other arrears. Domestic debt South Sudan remains at high risk of debt distress for both external and overall public is mostly in debt. Since the last assessment conducted in March 2021, the risk of debt distress the form of has increased, despite the new SDR allocation partly used for debt management. This loans from the increased risk reflects the discovery of higher outstanding oil advances that were contracted in 2018 but not reported to the Ministry of Finance and Planning (MOFP) central bank. and thus not included in the March 2021 debt sustainability analysis (DSA). The latest The total value DSA conducted in October 2021 identified temporary breaches in three out of seven of domestic debt debt indicators (debt service-to-revenues ratio of external public debt; debt service-to- was estimated exports ratio of external public debt; and present value of debt-to-GDP ratio of overall to stand at US$ public debt) under the baseline scenario, which assumes positive developments in the 627 million macro-fiscal framework. These breaches suggest a high risk of external and overall public debt distress. However, external and overall public debt indicators are expected (12.6% of GDP) to return to levels below respective thresholds from 2026/27 onwards, contingent on at the end of robust oil prices; the authorities’ continued commitment to the policy adjustments FY2020/21. necessary to cap the deficit over the medium term together; and increased concessional financing. 2 While the authorities had made progress on clearance of salary arrears by using part of the IMF RCF financing, the estimate of salary arrears was four months of salaries by 31 December 2021. South Sudan Economic Monitor Fifth Edition 22 Table 5: Decomposition of public debt by creditors (millions of US Dollars) FY2018/19 FY2019/20 FY2020/21 Amount Share (%) Amount Share (%) Amount Share (%) Multilateral IDA 53 3.7 79 4.0 82 2.8 AfDB 28 2.0 28 1.4 19 0.6 IMF 0.0 0.0 0.0 0.0 227 7.7 Bilateral China EXIM Bank 150 10.5 143 7.3 150 5.1 Commercial QNB 627 44.0 627 32.7 652 17.7 AFREXIM 0 0.0 379 19.4 525 22.0 Oil advances 338 23.7 99 5.1 676 22.9 Domestic 229 16.2 596 30.5 627 21.2 Total debt outstanding 1,424 100 1952 100 2,958 100 External debt to GDP ratio 1,196 26.7 1,355 28.3 2,330 47 Domestic debt to GDP ratio 229 6.0 596 12.5 627 13 Total Public debt to GDP ratio 1,424 32.7 1,952 40.8 2,958 60 Source: South Sudan Authorities, IMF, and World Bank South Sudan’s external and overall debt levels are and the use of a portion of the new SDR allocation to reduce sustainable, despite the increased risk of debt distress. the fiscal financing gap, the higher stock of oil advances Under the new baseline, South Sudan’s debt remains breach the threshold in terms of the debt-service-to- assessed as sustainable, albeit with a high risk of debt revenue ratio and the overall public debt to FY25/26. Risks distress in the case of both external and overall public debt. to this assessment are tilted to the downside, including in In the baseline of the previous DSA, there are temporary relation to the implementation of the government’s policy breaches in terms of two out of seven debt indicators adjustment initiative; limited access to concessional loans; (debt service-to-revenues ratio of external public debt and oil price volatility. Another major risk relates to the in FY2020/21 to FY2023/24; and present value of debt- sustainability of the relative peace and security in the to-GDP ratio of overall public debt in FY2020/21). These country, with the situation in South Sudan remaining fluid breaches lead to a high risk of debt distress. In the baseline and with conflict persisting across the country, despite of the current DSA, despite significantly higher oil prices recent positive political developments. 23 South Sudan Economic Monitor Fifth Edition Figure 14: Indicators of Public and Publicly Guaranteed External Debt under Alternatives Scenarios Joint IMF-World Bank Debt Sustainability Analysis (update, October 2021) 1.6 Trade and external sector developments transfers to Sudan declined to an estimated US$ 169 million in FY2020/21, down from US$ 492 million in FY2019/20. The current account deficit is estimated to have narrowed Gross international reserves increased to US$ 172.5 million to 5.5 percent of GDP in FY2020/21, down from 20.3 (equivalent to about 0.5 months of imports) at the end of percent in FY2019/20, reflecting weaker import demand. FY2020/21, up from US$ 47.9 million (equivalent to about The trade deficit narrowed to an estimated US$ 333 million 0.1 months of imports) at the end of FY2019/20. Going in FY2020/21, down from US$ 602 million in FY2019/20. forward, the current account is expected to benefit from the These developments reflect a decline in import demand, completion of financial transfers to Sudan in FY2022/23. with merchandise imports going down by 8.3 percent from US$ 3.690 billion in FY2019/20 to an estimated US$ Trade between Uganda and South Sudan has continued its 3.383 billion in FY2020/21, largely due to pandemic-related strong recovery, following an earlier collapse due to COVID- disruptions to government consumption and investment 19-related cross-border movement restrictions, which and to delayed private sector investment, particularly affected both formal and informal cross-border trade. in the oil sector. Oil exports declined by an estimated 1.3 South Sudan’s informal imports from Uganda collapsed in percent, going down from US$ 3.061 billion in FY2019/20 the first half of 2020, with traders struggling to comply to US$ 3.021 billion in FY2020/21. The strong recovery in oil with COVID-19 guidelines, including requirements to obtain prices in the second half of the FY, following their collapse and present a negative COVID-19 test certificate. However, following the advent of the pandemic, played a strong data from the Bank of Uganda show that the recovery that role in averting an even steeper decline. At the same time, commenced in the second half of 2020 has continued into South Sudan Economic Monitor Fifth Edition 24 2021. In the six months to September 2021, the total value Sudan announced the abolition of entry visa requirements of imports from Uganda was estimated to stand at US$ 272 for Ugandan citizens effective as of 4 October 2021, million, 22 percent higher than the figure of US$ 224 millionreciprocating Uganda’s decision to waive visa requirements recorded during the six-month period to March 2021, and 54 for South Sudanese nationals. These developments percent higher than the figure of US$ 174 million realized inare consistent with the provisions of the East Africa the six-month period to September 2020. During this time, Community Treaty and follow an earlier easing of visa the value of formal imports increased by 20 percent, going requirements between South Sudan and Kenya which came up from US$ 192 million during the six-month period to into effect in July 2021. At the same time, the South Sudan March 2021 from US$ 230 million during a six-month period authorities reached an agreement with Sudan regarding the to September 2021. At the same time, the value of informal reopening of border crossings between both countries at imports, which account for about 15 percent of South the beginning of October 2021. The two sides also agreed to Sudan’s total imports from Uganda, increased by 31 percent continue discussions related to trade, economic free zones, from the US$ 32 million recorded in the six-month period banking, and transit arrangements, building on the 2012 to March 2021 to US$ 42 million in the six-month period bilateral agreement that covers a range of issues, including to September 2021. Despite these developments, however, oil transit fees, trade and movement over the border, and trade between the two countries continues to be affected border delineation. Despite these developments, however, by sporadic disruptions, with security concerns along major South Sudan is one of few African countries that, as of trade routes continuing to affect the movement of persons 31 December 2021, had not yet ratified the protocol for and goods. the establishment of the African Continental Free Trade Area (AfCFTA), the largest free trade area in the world, South Sudan’s exports to Uganda, which surged during connecting 55 countries and 1.3 billion people (see Box 2). the pandemic in FY2019/20, moderated in FY2020/2021. South Sudan’s exports to Uganda increased dramatically 1.7 Financial sector developments during the pandemic, going up from US$ 7 million in FY2018/2019 (July 2018-June 2019) to US$ 83 million in In South Sudan, financial intermediation is weak, with FY2019/2020 (July 2019-June 2020). This surge reflected limited access to finance remaining as a major constraint an increase in monthly exports from US$ 0.16 million in on firm-level competitiveness, resilience to shocks, April 2020 to US$ 54 million in May, before declining to US$ and economic growth. The National Bureau of Statistics’ 22 million in June. Thereafter, Sudan’s exports to Uganda Integrated Business and Enterprise Survey (2019) indicate started to decline more steeply, going down to US$ 5.5 that 44 percent of sampled firms reported having an million in July and to US$ 2.5 million in August, with the SSP checking account, with 10 percent having a foreign average level standing at US$ 0.76 million in the 12-month currency account. However, in general, businesses do not period to September 2021. Overall, South Sudan’s exports use the formal system to access finance, with very few to Uganda totaled US$ 14.92 million in FY2021, more than of them taking out formal loans, even in the case of large double the figure recorded in the pre-pandemic period (see firms. At the time of the survey, only about 3 percent of Figure 16). Pearls, precious stones, metals, and iron and firms had taken a bank loan over the previous three years, steel together accounted for 97 percent of South Sudan’s with this proportion increasing to only 6% in the case of exports to Uganda in 2020. large businesses. A large proportion of survey respondents stated that they covered losses from shocks through loans South Sudan has deepened its commitment to regional or gifts from family and friends (67%) or by using earnings collaboration, with the government entering into or cutting salaries (30%). A mere 7 percent said they agreements related to the free movement of persons had borrowed from a bank, with the proportion not being with Kenya, Sudan, and Uganda. The government of South significantly higher in the case of large firms. 25 South Sudan Economic Monitor Fifth Edition While credit to the private sector rebounded strongly in percent in real terms over the same period. Over the same 2021 after the pandemic-related disruptions in 2020, the period, credit to the transport and household sectors grew level of financial intermediation remains very limited. by 116 percent. These three sectors, which accounted for Lending to the private sector increased in real terms by 55 51 percent of total nominal private sector credit to the percent in September 2021 compared to the same period private sector, have been driving the recovery in private in the previous year. However, private sector credit growth sector credit growth. By contrast, combined private sector tends to be volatile, with a high degree of reluctance by credit to both domestic and foreign trade declined by 14 banks to lend in a risky and uncertain environment. While percent, highlighting the potential persistence of supply the South Sudan banking sector is generally small, with chain disruptions in the context of subnational conflict and limited financial intermediation, discussions with industry recurrent flooding3. representatives indicate that macroeconomic stabilisation, with a reduced spread between the official and parallel The banking sector in South Sudan appears to face exchange rates and with lower inflation, has been critical significant risks around solvency, liquidity, asset in driving private investment and demand for credit over quality and FX and sovereign exposure. The key source the past few months. of risk arises from very high exposure to FX loans to the government; loans which do not appear to be serviced for Loans for building and construction, transport and long, even while interest income continues to be shown as household services, and real estate sectors are driving accrued thereby artificially boosting income and capital. A the recovery in private sector credit growth, albeit vast majority of the assets (almost 80%) are concentrated from very low levels. Outstanding credit to the building in FX loans to the Government and FX balances at the and construction sector increased by 103 percent in real BSS. All exposures to the Government are classified as terms in September 2021 compared to the same period performing, although the exposures have not decreased the previous year, reflecting growth in the construction in the past years, which indicates that no repayments of sector, albeit from very low levels. Consistent with these principal were made. developments, credit to the real estate sector grew by 55 Figure 15: South Sudan imports from Uganda Figure 16: South Sudan exports to Uganda 60 12 90 83 Informal imports (US $ millions) 80 10 Formal imports (US$ Millions) 50 Exports to Uganda, US$ millions 70 40 8 60 30 6 50 20 4 40 30 10 2 20 15 - - 8 7 7 10 5 1 Sep- 18 Jan-1 9 Sep- 19 Jan-20 Sep- 20 May -19 May -20 May -21 Jan-21 Sep- 21 0 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 Formal Imports (LHS) Inf ormal Imports (RHS) Source: Bank of Uganda 3 Trade has been disrupted by persistence of subnational conflict, including roadside ambushes, as well as the impact of flooding on transport and market access. South Sudan Economic Monitor Fifth Edition 26 Table 6: The current account (Millions of dollars, % GDP in parentheses) (Millions of dollars) 2017/18 2018/19 2019/20 2020/21 Estimate Estimate Current account balance (% GDP) -343 -294 -994 275 (-9.8) (-6.3) (-20.3) (-5.5) Balance of goods (% GDP) 150 226 -602 -333 (4.3) (4.8) (-12.3) (-6.7) Exports of goods 2,568 3,103 3,088 3,050 o/w Oil 2,552 3,086 3,061 3,021 Imports of goods -2,418 -2,877 -3,690 -3,383 Balance of services (% GDP) -675 -707 -648 -660 (-19.3) (-15.1) (-13.2) (-13.2) Income (% GDP) -594 -719 -576 -566 (-17.0 (-15.4) (-11.7) (-11.3) Current transfers (% GDP) 776 906 832 1,284 (22.2) (19.4) (17.0) (25.7) General government 0.0 0.0 0.0 0.0 Workers’ remittances 53 58 77 81 Financial transfers to Sudan -409 -335 -492 -169 Other sectors 1,132 1,183 1,247 1,372 Memoranda items Nominal GDP (USD millions) 3,491 4,665 4,900 5,000 Gross foreign reserves (USD millions) 33 31 48 173 In months of imports 0.2 0.1 0.1 0.5 Source: International Monetary Fund, World Bank Estimates 27 South Sudan Economic Monitor Fifth Edition Box 2 The African Continental Free Trade Area (AfCFTA) offers opportunities for diversification and growth With African leaders launching leaders the African Continental Free Trade Area (AfCFTA) in May 2019, the corresponding agreement provides a framework for the liberalization of trade in goods and services. Once it is fully implemented, it is expected to cover all 55 African countries, which together account for a GDP of an estimated US$ 3.4 trillion and a population of more than 1.3 billion. In terms of population, the AfCFTA will be the largest free-trade area in the world. Trade under the AfCFTA commenced on 1 January 2021. The scope of AfCFTA is large, with the potential to lift 30 million people out of extreme poverty (World Bank (2020b). The agreement will reduce tariffs between member countries and cover policy areas such as trade facilitation and services, as well as regulatory measures such as sanitary standards and technical barriers to trade. The full implementation of AfCFTA would reshape markets and economies across the region and boost output in the services, manufacturing, and natural resources sectors. Increased intraregional trade would add about US$ 60 billion to African exports and support ongoing diversification efforts (IMF, 2020). With the disruptions to the global economy resulting from the COVID-19 pandemic, the creation of this fast regional market is a major opportunity to enable African countries to diversify their exports, to attract foreign direct investment, and to accelerate economic growth. As of December 2021, South Sudan was one of few African countries that had not yet ratified the protocol for the establishment of the AfCFTA, potentially resulting in it missing out on some of the expected benefits from increased trade liberalization. While South Sudan is already a member of the East African Community (EAC), ratifying the AfCFTA would facilitate access to larger, diversified, and more sophisticated markets, thereby promoting its own diversification efforts and increasing its resilience to terms of trade and global supply chain shocks. Outside the oil sector, South Sudan has a limited range of readily exploitable assets that could enable it to achieve greater diversification. A reconstruction of South Sudan’s trade data shows that the total estimated value of its exports stood at US$ 1.6 billion in 2019, with oil accounting for 96 percent of this value. Consequently, South Sudan is one of the least diversified and most oil-dependent countries in the world. However, among South Sudan’s official non-oil exports, a number of commodities and products stand out as having the potential to play a strong role in the achievement of diversification, particularly live animals, meats, hides, edible vegetables and fruit, oil seeds, wood and wood products, cotton, and non-oil minerals. In 2019, South Sudan exported live animals worth US$ 107,000; oil seeds (US$ 294,000); and wood products (US$ 9.6 million). Other exports included meats, fish, dairy, and articles of apparel and textiles. The government could promote these products to build a more diversified and competitive export sector. Deepening regional trade arrangements, including with the EAC, and the AfCFTA would support the achievement of greater diversification, job creation, and improved resilience, thus sustaining future growth. However, to realize these benefits, reforms are needed to improve the business environment, to reduce bureaucratic barriers, and to strengthen regulations in key sectors. South Sudan Economic Monitor Fifth Edition 28 Figure 17: Bank lending to the private sector, million SSP 30000 25000 20000 15000 10000 5000 0 Jan- 21 Feb- 21 Mar- 21 Apr- 21 May- 21 Jun- 21 Jul-21 Aug- 21 Sep- 21 Buildi ng and construction Real Estate Transport and household Services Others Total Private Sector Credit Source: Bank of South Sudan Figure 18: Real Private Sector Credit Growth, % (y/y real terms) 1 60 1 20 80 40 0 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Jul-21 Aug-21 Sep-21 -40 -80 Buildi ng and construction Real estate Transport and household Services Total priv ate sector credit Source: Bank of South Sudan: Note: Nominal credit growth is deflated by CPI 29 South Sudan Economic Monitor Fifth Edition ECONOMIC OUTLOOK AND RISKS 1.8 The economic outlook is cautiously positive South Sudan’s economy is forecast to grow by 1.2 percent total value of imports from Uganda was estimated to stand in FY2021/22, with challenges in the oil sector and the at US$ 272 million, 22 percent higher than the figure of US$ impact of floods constraining a more rapid recovery. This 224 million realized during the six-month period to March projected growth rate represents a 1.6 percentage point 2021 and 54 percent higher than that of US$ 174 million reduction from the forecast presented in the June 2021 realized during the six-month period to September 2020. Economic Update, reflecting the impact of flooding on both the oil and non-oil sectors. In the oil sector, production is Beyond FY2021/22, South Sudan’s economy is expected projected to decline by 2.5 percent from 160,000 bpd in to grow by an average annual rate in the range of 3.5 - FY2020/21 to 156,000 bpd during FY2021/22, with floods 5.0 percent, supported by recovery in the non-oil sector, continuing to disrupt economic activity. At the same time, higher oil prices, and strong global recovery. If successful, oil production has peaked in some blocks, requiring new the ongoing PFM reforms could create opportunities investment to ramp up production. Consequently, prospects for the achievement of more rapid and inclusive growth for increasing oil production to pre-war levels depend on going forward. Inflation is expected to decline gradually, the use of enhanced oil recovery techniques both with benefiting from improved fiscal and monetary discipline, existing oil wells and with those developed in the future. exchange rate market liberalization, and deepening PFM The authorities are actively seeking new investments, reforms. At the same time, a strong global recovery would with the Ministry of Petroleum recently launching its first support inward FDI and remittances. South Sudan will oil licensing round in 2021, placing up to 14 blocks up for also benefit from higher oil prices, which will support exploration. In the agricultural sector, floods have inundated stronger export growth and increased expenditure revenue. agricultural fields; destroyed livestock, infrastructure, and Increased oil revenues could be used to support economic transport routes; reduced market functionality; and caused diversification, leading to a more inclusive and resilient the loss of human lives in affected areas. The FAO estimates recovery. Consequently, the economy could grow by 3.8 losses in the order of 38,000 tons of cereals and 800,000 percentage points in FY2022/23. Over the medium-term, livestock in the period from May to December 2021 (FAO, growth may average around 5 percent, with developments 2021b). in the non-oil sectors and a recovery in consumption being the main contributing factors. High-frequency indicators point to the gradual recovery of South Sudan’s non-oil economy. Private sector credit The fiscal deficit is expected to narrow to about 2.5 rebounded strongly in 2021, recovering from the pandemic- percent of GDP, reflecting higher than budgeted non-oil related disruptions in 2020. In particular, loans to the building revenue and the impact of fiscal consolidation efforts. and construction, transport and household services, and The fiscal deficit may improve to 2.5 percent of GDP in real estate sectors are driving the recovery in private sector FY2021/22 from an estimated 6.9 percent in FY2020/21, credit growth. However, private sector credit growth to both reflecting the authorities’ efforts to expand the non-oil domestic and foreign trade remains weak, highlighting the tax base and a fiscal adjustment that may lead to lower potential persistence of supply chain disruptions related to current spending. Non-oil tax revenue is performance is subnational conflict, incessant flooding, and the pandemic. projected at 3.2 percent of GDP in FY2021/22, higher than At the same time, trade between Uganda and South Sudan the 2.6 percent of GDP contained in the FY2021/22 budget, has continued its strong recovery, following an earlier reflecting the National Revenue Authorities’ efforts to collapse due to pandemic-related cross-border movement expand the tax base and the implementation of a range of restrictions. In the six-month period to September 2021, the measures to reform its tax revenue collection functions. South Sudan Economic Monitor Fifth Edition 30 In addition, oil revenue is expected to increase to 26.9 The current account is expected to narrow to -3.5 percent percent of GDP in FY2021/22, higher than the 26.3 percent of GDP in FY2021/22, from -5.5 percent in FY2020/21. envisaged in the budget. Expenditures are expected to The trade balance is expected to narrow to an estimated remain contained, despite a one-off doubling of nominal deficit of -0.2 percent of GDP (US$ 11 million) in FY2021/22, salaries mandated in the FY2021/22 budget. At the same from -6.7 percent of GDP (US$ 333 million) in FY2020/21. time, fiscal consolidation will benefit from lower than These developments reflect lower import demand growth planned investment expenditures, with outturns of about for capital projects and reduced investment in key sectors 4.1 percent of GDP, lower than the 10.3 percent projected by as the economy struggles to recover. At the same time, the authorities at the start of the fiscal year. Going forward, the export sector will benefit from higher oil revenues, the fiscal situation is expected to gradually improve as following a strong recovery of oil prices in international South Sudan completes the payment of financial transfers markets during FY2021/22. In addition, the current account to Sudan in FY2022/23, with these projected to absorb a will benefit from the completion of the financial transfer large share of revenue, estimated at 10.3 percent of GDP to Sudan by FY2022/23. Over the medium term, the in FY2021/2022. Nevertheless, the impact of the ongoing trade balance will deteriorate as import demand recovers flooding may alter the fiscal outlook if the decrease in oil and with the anticipated slow recovery of domestic oil production is not offset by higher oil prices. production. Table 7: Economic Outlook (annual percentage changes unless stated otherwise) FY2018/19 FY2019/20 FY2020/21 FY2021/22 FY2022/23 (Est) (Est) (Proj) (Proj) GDP at constant market prices 3.2 9.5 -5.4 1.2 3.8 Oil 10.7 27.5 -5.9 -2.5 2.6 Non-oil 0.0 0.8 -5.0 3.5 4.4 Agriculture 9.9 6.0 3.9 -1.3 2.1 Non-oil industry and services -1.5 0.0 -6.6 4.4 4.9 Inflation (average) 121.6 33.3 43.1 16.0 8.0 Exchange rate, official (SSP /US$ , Avg) 152.4 161.0 190.2 415.0 464.6 Exchange rate, market (SSP /US$ , Avg) 251.1 310.2 517.7 425.0 -- Memorandum items Oil production (millions of barrels) 49.1 62.1 58.4 56.9 58.4 Nominal GDP (SSP billions) 711.1 789.0 951.0 2,241.2 2,553.5 Source: South Sudanese Authorities; World Bank staff estimates 31 South Sudan Economic Monitor Fifth Edition Box 3 The Impact of Flooding on South Sudan South Sudan has experienced persistent flooding due to heavy rainfalls that commenced in May 2021 and that have continued through to December 2021. Flooding is a regular occurrence during the rainy season, with this season typically lasting April until October/November. However, seasonal rainfall patterns have become increasingly erratic in recent years, with South Sudan experiencing more prolonged and intense rainy seasons. As a result, since 2019, South Sudan has been affected by three consecutive years of severe flooding, with devasting impacts on physical assets and on peoples’ lives and livelihoods. In some areas, the extent of the population affected and the destruction and damage experienced is reportedly the worst since 1962. Nine out of ten States of the country have been affected, including low-lying areas of the National capital, Juba, in Central Equatoria. The number of individuals affected has continued to increase throughout this period, going up from around 31,000 affected as of 11 June to between 800,000 and 1.2 million as of 15 December (around 7 to 10% of the country’s population). The most severely affected state is the Upper Nile, followed by Warrap, Eastern Equatoria, and Jonglei. The number of people affected is greatest in the States of Jonglei, at between 278,000 and 456,000, and Unity at between 176,000 and 188,000, followed by Northern Bahr el Ghazal and Upper Nile. In terms of the ratio of those affected to total population, the states of Jonglei (28% of the population) and Unity (21%), where damage to agricultural crops was also particularly severe. Across the country, floods have claimed the lives of more than 30 people, with about 10 deaths resulting from snake bites associated with the flooding. The value of the damage caused directly by the floods is estimated at US$ 671 million, according to analysis based on a World Bank Global Rapid Post Disaster Damage Estimation (GRADE)4. The most severely impacted states in terms of damages are Jonglei (US$ 256.4 million) and Unity (US$ 117.8 million), which together account for more than half of total damages, followed by Warrap (US$ 94.2 million) and Upper Nile (US$ 64.8 million). Approximately 210,000 buildings have been affected by flooding, with the value of this damage estimated to stand at US$ 312 million, accounting for nearly half (46.5%) of the total. Just under half of these buildings (101,000) are estimated to have experienced severe damage. Damages to the agriculture sector5 are estimated at US$ 233.5 million, or 34.8 percent of total damages. Production damages occurred due to the inundation of rainfed and irrigated cropland used to the cultivation of cereal, sorghum, and of land for mixed agricultural use. It is also estimated that floods killed or displaced more than four million livestock (cattle, sheep, goats). Infrastructure-related damages are estimated to stand at US$ 125.4, or 18.7 percent of the total. In total, 3,464 km of primary, secondary, and tertiary roads were affected by floods, severely disrupting accessibility, connectivity, and the delivery of much needed humanitarian aid to flood-affected areas. Seventy health facilities have been affected by the floods, with 20 storage facilities reportedly damaged. In addition, extensive flood damage has been reported to water, sanitation, and hygiene-related community infrastructure, including boreholes and water points. Flooding has also affected oil production, altering the fiscal and growth outlook. Oil production is estimated to have declined by 5.9 percent in FY2021 and is projected to decline by a further 2.5 percent in FY2022 due to the impact of floods on production and to that of the pandemic on new investments to replace exhausted wells. Consequently, GDP growth estimates have been revised downwards, from -4.1 percent to -5.4 percent for FY2020/21, and from 2.6 percent to 1.2 percent in FY201/2022. At the same time, the fiscal deficit could deteriorate to 2.5 percent of GDP in FY2021/2022 if these risks fully materialize, significantly diverging from the budgeted 1.9 percent, reflecting lower budgetary revenue and higher expenditure due to the authorities’ need to implement and oversee a response to the crisis. 4 For more on GRADE, see: https://www.gfdrr.org/en/publication/methodology-note-global-rapid-post-disaster-damage-estimation-grade-approach 5 Agriculture includes crop, livestock and agricultural capital. South Sudan Economic Monitor Fifth Edition 32 1.9 Risks to the outlook remain heavily tilted to the downside The economic outlook is clouded by a high level of food insecurity in affected areas. At the same time, floods uncertainty. Risks to the outlook are tilted to the downside, have contributed to a new wave of displacements, with with these downside risks including those related to adverse households in affected areas often needing to seek safety climatic shocks, the slow rollout of the COVID-19 vaccination on higher ground. In the oil sector, floods have precipitated program, oil price volatility, the implementation of reforms, a 2.5 percent reduction in production, potentially leading to the escalation of hostilities and subnational violence, and a loss of revenue to the order 0.6-1.0 percent of GDP. At a weaker global economic context, all of which could exert the same time, despite its significant agricultural potential, negative pressure on the projected recovery. In an adverse South Sudan has not achieved food self-sufficiency since scenario in which these downside risks manifest, growth 2009, resulting in high levels of food insecurity that have could be as low as 2.5 percent in FY2022/23 (Figure 19). frequently reached crisis levels in a number of sub-national jurisdictions. Thus, a renewed focus on building resilience, Climatic shocks continue to pose downside risks to including through measures to support better water livelihoods, living standards, and export earnings, with management, the implementation of climate-smart farming these having the potential to derail a nascent economic practices, and the use of more resilient seed varieties, is recovery. As recent events show, South Sudan’s economy vitally necessary. With the security situation improving, is particularly vulnerable to extreme climatic events, the authorities should also focus on facilitating the including flooding and drought. In recent months, floods in achievement of a year-round agricultural cycle that could parts of the country have disrupted agricultural livelihoods, result in improved household production and productivity. with the destruction of crops and livestock exacerbating Figure 19: Real GDP growth rate (percent) Figure 20: Overall fiscal balance (percent of GDP) 2 9 0 4 -2 -4 -1 -6 -6 -8 FY2019 FY2020 FY2021 FY2022f FY2023f -10 -12 GDP growth baseline scenario GDP growth downside scenario FY2019 FY2020 FY2021 FY2022f FY2023f June 2021 December 2020 Primary deficit Interest payments Fiscal deficit Source: World Bank estimates 33 South Sudan Economic Monitor Fifth Edition Developments in the oil sector could also undermine South Sudan’s economic recovery. South Sudan has benefited from the current surge in international oil prices, which have helped to offset revenue losses related to reduced output. However, South Sudan’s heavy reliance on the oil sector, which is estimated to account for more than 90 percent of central government revenue and 95 percent of the country’s exports, exposes the country to undesirable terms-of-trade shocks. Thus, a decline in oil export revenues would have a severe negative impact on the government’s resources, potentially derailing its investment program, which is already grossly underfunded. In addition, lower oil prices may affect sector investment plans, requiring South Sudan to quickly locate alternative sources of growth. In the absence of major new oil discoveries, the known oil reserves could face rapid depletion in the coming years. The slow rollout of the national vaccination program and the future path of the pandemic adds an additional layer of uncertainty to the outlook. Given its weak health system and inadequate financing and supplies, South Sudan continues to face significant threats related to the COVID-19 pandemic. As of 3 January 2022, the number of confirmed cases in the country stood at 15,152, with 135 deaths, representing a 21 percent increase over a two-month period. With the country’s limited testing capacities, it is likely that the actual situation is significantly worse than suggested by the official figures. By 31 December 2021, South Sudan had administered only 269,000 vaccines, with 182,000 full vaccinations (1.6 percent of the population), making it one of the least vaccinated countries in the world. Thus, there is an urgent need to support the national vaccination program, even in the context of dire financing needs and pressure on the budget to implement the peace agreement. This will be critical to avoid resurgences and additional waves of the pandemic, with associated lockdown measures, especially as new variants of the COVID-19 virus continue to emerge on the continent. The sustainability of the relative peace and security in the country represents a major risk to the outlook, with the situation in South Sudan remaining unsettled and with Climatic shocks conflict persisting across the country, despite recent positive political developments. continue to pose Despite the formation of the national Unity Government in February 2020, the security downside risks to situation in South Sudan remains highly volatile. A flareup of violence in parts of the livelihoods, living country and the slow implementation of key aspects of the peace agreement raise concerns regarding the sustainability of the peace process. The formation of a new, standards, and more inclusive parliament more than a year after the Unity Government was established export earnings, represents the formal fulfillment of a key pending aspect of this process. However, its with these having practical impact on peaceful modes of governance remains uncertain, with a number of the potential to critical issues outlined in the peace agreement, including the completion of transitional security arrangements related to the reunification of the armed forces and the DDR, derail a nascent remaining unresolved. A resurgence in the conflict would likely reverse the gains made economic towards economic recovery and exacerbate the dire macroeconomic and humanitarian recovery. situation. South Sudan Economic Monitor Fifth Edition 34 Greater support for employment creation is vitally important for the achievement of peace and a resilient and inclusive economic recovery in South Sudan. As the economy recovers from multiple shocks, sustaining the momentum into the medium-term will depend on the government’s ability to stimulate the creation of a sufficient number of quality jobs to absorb a young and expanding labor force. However, it must be recognized that progress toward peace is rarely linear, and it is likely that there will be significant variation across the country. Given the toll of conflict, the authorities may need to consider second-best policies that result in only gradual change. Even so, the authorities could take a number of actions to support job creation at different stages of progress, to stabilize the status quo, to boost local recovery, or to facilitate the transition to broader recovery. While the pandemic has affected coping capacities and strained resources, policy actions to mitigate the economic impact of the crisis essentially overlap with those needed to support recovery. The second part of the Economic Monitor discusses the jobs landscape in urban South Sudan and discusses the practical actions necessary for the authorities to facilitate a job-focused economic recovery and peacebuilding process.  35 South Sudan Economic Monitor Fifth Edition South Sudan Economic Monitor Fifth Edition 36 PART 2: TOWARDS A JOBS AGENDA FOR RECOVERY AND PEACEBUILDING 37 South Sudan Economic Monitor Fifth Edition As South Sudan looks to build stability, better jobs should includes oil revenue management, and a realignment take center stage. Armed conflict, natural disasters, of spending priorities toward investment. If successful, and the COVID-19 pandemic have profoundly disrupted the ongoing dialogue on public financial management livelihoods at all levels in South Sudan. As the authorities reforms will support macroeconomic stabilization and seek to consolidate the peace process and as COVID-19 strengthen institutions. Such progress is vital in improving becomes a more familiar and manageable challenge, there the environment for growth, diversification, and better jobs. is an opportunity now to continue on the road to a recovery Yet, while the longer-term reform agenda must be engaged, that creates better job opportunities for the poor. Paying there are specific challenges and opportunities that relate attention to jobs is key in peace and recovery transitions: to the first steps out of an economy shaped by conflict. economies that create opportunities are more stable, and They relate, for instance, to the process of re-building investment projects that create jobs can also succeeded the confidence of small investors, or the transition from at changing the attitudes of beneficiaries toward their purely humanitarian policy toward policy for development society. For details see von der Goltz and Mavridis (2020) and jobs. This chapter analyzes such first steps toward for a good summary of the literature; Miguel et al. (2004) promoting better jobs. for discussions of relationships at the economy-wide level; and Blattman and Annan (2016) for a successful example Early recovery should focus on broad-based improvements at the project level. in the lives of South Sudanese workers and must find ways to leverage public investment to crowd-in domestic With enormous investment needs and limited resources, investment. As the following discussion will establish, it is crucial to understand what the most important with pervasive poverty, the key goal at the early stages of opportunities are for supporting better jobs. South Sudan recovery must be to broadly raise the productivity of the kind benefits from important oil revenue streams, with their of jobs most South Sudanese hold. In setting out actions value estimated at US$ 1.4 billion, or 26.6 percent of GDP, toward this goal, it must be acknowledged that attracting in FY2020/21. While development assistance has declined even modest foreign investment to South Sudan will be somewhat, as long anticipated, development partners also challenging, except in the case of certain niche high-rent continue to provide significant funding, amounting to some industries such as mining that typically provide few jobs. US$ 1.4 billion in 2021, or 18 percent of the annual poverty- Recovery must instead rely on a gradual recovery of small line income. However, the investment needs far exceed investments by domestic businesses and households. In a available resources, with an annual poverty gap of US$ 618 high risk, high cost, and low demand business environment, million in urban communities and US$ 2.8 billion in rural public investment has a key role to play in encouraging communities6, which together amount to nearly half of such a recovery. These public investments can lower costs GDP (von der Goltz & Harborne, 2020). Much work remains (notably in transport), raise returns (notably in agriculture), to be done for the government’s budget to adequately and sustain demand by ensuring public-sector salaries are harness the country’s resources, even while international paid. assistance is likely to decrease further. In order to deploy these limited resources well, it is essential to understand Even in a depleted economy, towns are centers of which investments are most likely to make a real difference economic activity; they offer opportunities to mobilize in the lives of South Sudanese workers. some resources as well as linkages to rural markets. While South Sudan is still primarily a rural economy, there While there is an important longer-term reform agenda, the are good reasons to pay attention to jobs in urban areas. first steps toward recovery deserve attention, too. After While the long conflict and recurrent natural disasters in conflict and food insecurity as prolonged and pervasive as South Sudan have affected both urban and rural livelihoods, South Sudan has suffered, the road of recovery is long. Key diversified activities are concentrated in towns, while among reforms that must begin now is the establishment rural households remain highly dependent on subsistence of an effective and transparent budget process that agriculture. Thus, the towns of South Sudan should be 6 The estimate is based on rural and urban population estimates for 2020 as well as the average per capita poverty gap under the $1.90 poverty line in 2017 South Sudan Economic Monitor Fifth Edition 38 the points of entry to revive value chains that go beyond however, the key challenge is that the jobs that provide subsistence needs and to crowd-in modest local resources. livelihoods to most workers are characterized by very low Further, the country’s towns, which together account for productivity. In this context, the most compelling goal for 1.3 million workers, or 28 percent of the country’s entire jobs policy is to broadly raise the incomes derived from labor force, have significant potential to play a role in these common activities to improve the living standards of reviving markets and stimulating agricultural demand, and the working poor. thus will be a critical asset to supporting recovery in rural Rural livelihoods remain highly dependent on agriculture areas. Finally, from a practical point of view, towns are the areas where government agencies, civil society, and private and other food sector activities. In rural areas, some 88 businesses have the greatest capacity, and where they can percent of all households rely on activities in the food most securely operate. sector for most of their livelihood. While crop agriculture is the largest source of income, about 60 percent of This chapter discusses jobs in recovery, based on World the population also depend on raising livestock for food Bank studies related to jobs in urban South Sudan, security and income generation (FAO, 2020). Other sources investment options in agriculture, and other related of rural livelihoods are precarious, including brewing and analyses. In setting out the case for a jobs-led recovery, selling firewood (each reported by eight percent of the this chapter largely draws upon an ambitious assessment households), food aid (seven percent), and hunting and of jobs in urban South Sudan published in 2021. The gathering (five percent). assessment includes studies of jobs outcomes in urban South Sudan (Finn et al., 2020a), the macro environment With greater stability, agricultural value chains have for jobs (Mawejje, 2020), businesses (Finn & von der Goltz, significant potential for growth. Due to the economic 2020), and agriculture and markets (von der Goltz et al., legacy of war and disasters, South Sudan’s agricultural 2020) all of which have been synthesized in an overview land productivity stood at only US$ 67 per hectare in 2016, report (von der Goltz & Harborne,2020). Where no other amongst the lowest levels in the world and well below sources are indicated in this chapter, statistics are drawn the average figure of US$ 103 per hectare recorded by from these studies. In addition, this chapter draws from a other FCV countries in sub-Saharan Africa (World Bank, number of surveys conducted to monitor the impact of the 2021). However, with its highly favorable agri-climatic COVID-19 pandemic in 2020 (Finn et al. 2020b), as well as endowments, South Sudan has a proud history of producing insights collected in a study of investment scenarios for a wide range of plant and animal crops both for domestic agriculture (World Bank, 2021). consumption and export. With greater stability and effective policies, food-sector value chains could provide 2.1 What does a job look like in South Sudan? many productive jobs, both on-farm and off-farm. Initiatives to support job creation must begin with a Few urban job activities are sufficiently productive to realistic understanding of what a job means to most provide a livelihood above the poverty level. In urban South workers. Jobs policy is never a matter of ‘one size fits all.’ Sudan, more than 70 percent of non-displaced residents, In any given case, the priority challenges and investment and 90 percent of IDPs in PoC sites live in poverty (under the opportunities will depend on the structure of the economy. I$ 1.90 per day poverty line). In none of the towns included For instance, in economies that provide a significant number in this analysis is the poverty rate below 60 percent. These of waged jobs with decent pay but leave large groups very high levels of poverty reflect the low productivity of unemployed, the focus is on providing new employment for the job activities available to most South Sudanese. In these idle groups. Other economies provide many good job 2019, median incomes and wages in household and market opportunities, but exclude specific groups such as youth activities stood at around SSP 500-600, or about US$ 2 or women, so that the goal is to level the playing field and per day. Likewise, established businesses report a similar enable broader participation. For South Sudan’s economy, median income per worker and day. Low productivity is also 39 South Sudan Economic Monitor Fifth Edition reflected in the inability of households to diversify activities and the difficulties youth face in finding work beyond contributing unpaid help to household activities. For most urban workers, a job is own-account or household work. Most workers are self-employed (46 percent) or support household-run business activities (27 percent). Paid labor accounts for one in four jobs, but not all of these jobs are the kind of salaried work that is often viewed as particularly attractive. Rather, across rural and urban areas, as many as two in three of them are daily labor under difficult conditions (World Bank, 2020a). As is the case in most low-income countries, there is little unemployment for the simple reason that few workers can afford to remain idle. Thus, narrowly defined, the unemployment rate stands at around two percent, increasing to six percent if the definition is broadened to include inactivity due to discouragement. Most jobs are in commerce, basic personal services, and agriculture, even in urban areas. Agriculture is a major source of employment in towns (37 percent of all jobs), second only to services, which employ about half of all workers, mostly in commerce and personal services such as hairdressing, tailoring, repairs, or carrying loads (Figure 21). While comparisons over time are difficult, it is evident that the role of public employment as a source of jobs for urban residents has declined strongly during the conflict, while agriculture has become far more important – but not for the displaced, few of whom have access to land. Half of all urban households rely on agriculture for most of their income, and more derive their livelihood from work for NGOs and the public sector than are employed in businesses. For those households that engage in agriculture, it is usually their primary source of income (90%). Therefore, while about one in three workers are active in agriculture, half of all urban households rely on agriculture as their primary source of income (50%). Work in commerce and personal services employs the most workers but is more rarely the main source of income (13 percent and 10 percent of households). Finally, a far greater proportion of households rely on the public sector and NGOs (16%) than on waged work at for-profit companies Agriculture is (5%). a major source of employment There is significant variation between different towns in terms of the composition of job activities, particularly as regards the level of reliance on agriculture rather in towns (37 than commerce and services. Variations in job activities between towns relate percent of all largely to local constraints, but also to their respective comparative advantage and the potential – if stability increases – for trade between towns. While the degree jobs), second of dependence of workers on waged employment is roughly similar across towns, only to services, the level of reliance on agriculture varies strongly. Thus, while many workers which employ are actively engaged in agriculture in towns such as Yambio and Rumbek, the proportion is far smaller in Aweil, Juba, or Wau. In towns where agriculture plays about half of all a less significant role, casual business activities and services provide more jobs. workers. South Sudan Economic Monitor Fifth Edition 40 Figure 21: Type of employment and sector of activity among urban workers Source: von der Goltz, J. and B. Harborne (2020). Jobs, Recovery, and Peacebuilding in Urban South Sudan. World Bank. Figure 22: The role different job activities play in livelihoods varies by town Primary activity Juba Bor Malakal .8 0.62 0.50 .6 Share of households 0.39 0.34 0.32 .4 0.21 0.21 0.13 0.16 0.10 .2 0.01 0.01 0 Rumbek Wau 0.87 .8 .6 0.48 0.37 .4 0.12 0.10 .2 0.06 0.01 0.00 0 Agriculture (subsistence, market-linked, and processing) Any wage work (including public sector and armed forces) Business activity (artisanal, commerce, services) Odd jobs/casual daily labor Source : Finn et al. (2020a) 41 South Sudan Economic Monitor Fifth Edition 2.2 What has been the impact of conflict, displacement, macroeconomic stress, and disaster on markets and jobs? Conflict and natural disasters have left deep traces. Since have lost their primary activity. Among 4,000 businesses December 2013, South Sudan has been beset by armed surveyed in 2019, precisely two reported that they had not conflict, and a recent study estimates that 380,000 people been affected by the conflict in some way. Real wages have died between December 2013 and April 2018 due to it fallen for half of all urban workers (52 percent), as has time (Checchi et. al., 2018). Years of conflict, drought, and floods at work, and a greater proportion of workers now report have taken a dire toll on agricultural production, despite that they would like to work longer hours than before the the country’s significant agricultural potential. About conflict. Among market traders, 44 percent had not been 7.2 million people experience crisis levels of acute food in business for more than one year in 2019, reflecting the insecurity or worse (IPC, 2020). These people are among degree of disruption to the economy in general and to the least resilient and are the most vulnerable to climate agricultural value chains in particular, caused by violence, shocks. Indeed, in 2019 and 2020, South Sudan experienced loss of assets, and risk. both floods and infestations of desert locusts, with severe impacts on the main planting seasons. It is estimated that The COVID-19 pandemic led to a widespread and often in 2019, floods led to the loss of 15 percent of agricultural dramatic drop in incomes. While the pandemic has output in affected areas, impacting some 856,000 people disrupted the working lives of urban South Sudanese, it has and resulting in the displacement of 389,000. In addition, rarely caused them to end or pause their job activities (Finn desert locust are reported to have destroyed 20 percent of et al., 2020b). Thus, fewer than one percent of established production outputs on affected lands (World Bank, 2021). businesses (0.3 percent) and about one in seven market Long years of conflict have created a turbulent macro-fiscal traders (15 percent) explained that they had stopped their environment, with profound implications for jobs. Since activities during the early months of the pandemic. At the the beginning of the conflict, real non-oil GDP has fallen same time, however, most businesses (81 percent), and by more than a third (37%). At the same time, prices have about half of all market traders (59 percent) and urban increased 60-fold, with annualized inflation rates reaching households (50 percent) explained that they had lost to as high as 550 percent. The currency has depreciated income through the pandemic. The declines in revenue nearly one hundred-fold, and with little access to US$ , were often substantial. More than half of all businesses currency has been traded for years in the parallel market. (59%) reported having lost at least half of their income, South Sudan’s oil wealth still accounts for most revenue while among households that rely on non-farm business and nearly all exports, and with spending oriented toward income for their livelihoods, 20 percent said that they security management, there is no transparency on revenue, had lost all of their income. With the multitude of shocks and the budget process remains weak. South Sudan has experienced, it is difficult to discern through which mechanisms the pandemic has affected Most urban job activities have been affected by conflict. livelihoods. It is likely that it has exerted its impact through Even among urban households that have not suffered a combination of the drop in oil revenue and remittances displacement, around half (47 percent) have lost at least early in the pandemic, a temporary decline in demand from one important job activity since the beginning of conflict in market closures and movement restrictions, and supply 2013. In a large proportion of cases (29 percent), households chain disruptions due to border closures. South Sudan Economic Monitor Fifth Edition 42 Figure 23: Conflict has had a pervasive impact on jobs in towns Source: World Bank staff calculations based on Youth Jobs Survey (2019). Reintegrating South Sudan’s two million IDPs, some 2.3 continue to be internally displaced within South Sudan, an million refugees, and members of armed groups into the increase from the figure of 1.7 million recorded in March labor market will pose a major challenge. As of November 2021, with the increase reflecting the impact of both 2021, nearly 4.3 million people had been forcibly displaced, conflict and flooding.8 The displaced have suffered much, representing about a third of the country’s population, and lost networks, funds, land, and tools. A large proportion with women and children accounting for 85 percent of have also lost their connection to the labor market: fewer the total.7 Many of those affected have suffered repeated than half of IDPs of working age and fewer than one in five displacements. While about 2.3 million have fled to refugees work (42 percent and 19 percent. neighboring countries in search of safety, two million 7 United Nations Population Fund (UNFPA), 2019 figures. 8 UN OCHA, South Sudan Humanitarian Snapshot, November 2021. Also see: UNHCR, South Sudan data portal. Sudan and Uganda host the majority of South Sudanese refugees, with 811,452 and 857,268 registered in each country, respectively. IOM, Displacement Tracking Matrix: Mobility Tracking Round 6 (November 2019). 43 South Sudan Economic Monitor Fifth Edition Figure 24: business income declined steeply with the COVID pandemic and measures to contain it Source: World Bank staff calculations based on Business Monitoring Survey (2020). More than one million currently displaced workers may around one in four young soldiers state that they hoped eventually hope to rejoin the urban job market. Many to remain in the armed forces. Enabling these individuals factors may influence the number of the displaced that to seek work in towns or rural communities will present a may eventually look for jobs in South Sudan’s labor market, major development challenge. including the high share of IDPs already settled in towns outside of PoC sites, the unusual age structure of the The work experience and expectations of the displaced displaced, and the fact that a majority are uncertain about do not necessarily match well with the most common whether they intend to return to their home communities. activities in their host communities. Returnees seeking to However, the majority of those surveyed state that they rejoin the work force may have profiles and expectations would like to resume their pre-displacement employment. that are not an easy match for the labor markets open to Accounting for these considerations, it was estimated that them. For instance, 43 percent of IDPs at the Juba PoC as of 2020, between 1.1 million and 1.3 million of displaced camp report that before their displacement, they were people who do not currently work in South Sudan may heavily dependent on wage and salaried work for their eventually look for jobs. In addition, there are currently incomes. This is well above the proportion among the non- 400,000 soldiers and police on the government’s payroll displaced urban population in Central Equatoria (25%). and among former opposition armed groups, and only Thus, meeting their expectations or providing acceptable South Sudan Economic Monitor Fifth Edition 44 alternatives may not be easy. Conversely, 45 percent of models suggest an average annual growth rate of about IDPs in Wau have a background of work in agriculture, a far 1.7 percent over the past decade. This is a moderate rate higher proportion than among urban residents in the state of increase, well below the rates of around three percent of Bahr el Ghazal (11%). While these different backgrounds recorded in both Ethiopia and Kenya (Farole et al., 2021). and expectations may enable the new entrants to find work While South Sudan’s growth would translate to an increase that is complementary to that of the established workforce, in the number of workers by nearly 80,000 workers each it could also be an obstacle to them in finding jobs. With year, the return of displaced groups could have a far greater these as yet unanswered questions, further analysis is impact on the labor force. However, it is still worth noting needed. that the projected annual increase in the number of workers, even without factoring in the return of displaced workers, is Labor force growth is moderate but adds to the challenge greater than the total number of urban workers currently of providing productive-enough opportunities. With employed by established businesses and NGOs. This will scarce data and with the high rate of forced displacement, exacerbate the challenges related to providing a sufficient it is difficult to meaningfully project labor force growth. ILO number of productive job opportunities. Figure 25: A significant challenge and opportunity could result from pressure to re-integrate displaced workers and some members of the security forces. Source: Finn et al. (2020a) 45 South Sudan Economic Monitor Fifth Edition 2.3 What do young South Sudanese expect of a job? Young workers know what incomes they can expect than can ever realistically hope to be hired. However, only from available activities, and expectations of public eight percent now expect such a job to materialize within sector employment have reduced. In the short term, most a year, compared to 42 percent of survey respondents in workers in South Sudan will be limited to low-productivity, 2014. low-income job activities. The extent to which young workers, in particular, are willing to build from such limited Youth are reasonably open-minded regarding the modest opportunities will be important not only for economic job activities available. Most young workers have at least recovery, but also for political stability. In survey responses, a mildly favorable view of common job activities, such young workers show realistic expectations regarding the as work in agriculture, in the market, in construction, or incomes they can expect (around US$ 2-3 per day) from in casual services. Indeed, most say they would like to commonly available job activities. This contrasts with the do better in their current activities. The exceptions are situation before the most recent wave of conflict, when the lucky few who already hold wage jobs, with a large unrealistic wage expectations were viewed as a significant proportion of these stating that they hope to resume their obstacle to competitiveness.9 Far more young workers (59 education. Similarly, a large proportion of those currently percent) still expect to someday work for the government serving in the armed forces stated that they hoped to shift to other professions. Figure 26: Attitudes of young workers toward common activities Source : Finn et al. (2020a) Despite the promise food sector value chains hold, jobs in crops that we were cultivating.” However, the respondent processing are currently seen as a last resort or a source of added that after many had been displaced from their lands small cash revenues. Focus group respondents vividly recall into towns due to conflict: “we were unable to cultivate the diverse food sector value chains that existed in South enough food crops because there was a shortage of land, Sudan before conflict broke out. However, with the reduced so we resorted to brewing alcohol for survival” (von der and impoverished range of products in the market today Goltz et al., 2020). Only one in four surveyed households and with the low purchasing power of consumers, those active in processing states that they derive most of their who remain active in processing tend to view their work income from these activities. These disillusioned views either as a last resort in the absence of better opportunities of a sector with significant potential to provide good jobs or as a means to earn some cash income to complement vividly illustrate the challenges related to reviving markets subsistence agriculture. As one survey respondent in Torit in South Sudan to enable broad groups of workers to raise stated: “at that time before the conflict, we were cultivating their incomes. every crop like sesame, sorghum, and many more other 9 World Bank, 2014. Republic of South Sudan: Jobs and Livelihoods. South Sudan Economic Monitor Fifth Edition 46 With stabilization and investment, the production The majority of young workers engaged in agriculture and processing of both staple crops and higher-value would rather do better in their current activity than commodities have significant potential to expand and shift to another job. Among young urban workers, three to provide productive job opportunities. A recent World in five (60 percent) of those who are currently active in Bank analysis assessed the investment options to support agriculture would like to improve the results of their current a recovery of agriculture (World Bank, 2021. It points out activities, rather than switching to alternative activities or that there is significant potential not only in staple crop resuming education. This is a higher proportion than among production (sorghum, maize, cassava, beans, groundnuts), those engaged in any other activities. Similarly, half of all but also in cash crops such as fruit and vegetables, shea young workers (51 percent) agree with the statement that butter, sesame and sunflower seeds, coffee, tea, gum “Agriculture is as good or better a job than others,” with Arabic, and honey. The cultivation of these has significant the respondents being particularly likely to agree if they job creation potential, both in primary production and in had experience in agriculture (58%) and in working with processing, without the need for large capital investment at draught animals or machinery (64%). While these figures least in the early recovery stages. Opportunities also exist do not indicate a universal interest in agriculture, they in fisheries and livestock, although focus group respondents give some cause to hope that even in towns, a significant point to the security concerns related to owning even a proportion of urban youths would be interested in working modest number of livestock. in this sector and could hence benefit from a recovery in food sector activities. 2.4 What opportunities are there to rebuild the weakened entrepreneurial sector? With few thriving firms, jobs programs must seek out Established businesses and NGOs employ only about six unconventional ways to support productive employment, percent of the urban labor force. Together with NGOs, including in household businesses active in promising businesses that are at least modestly established10 employ value chains. South Sudan’s established business sector about six percent of the labor force in towns, accounting for is far from what one would with it to be. It provides little around 72,000 workers in total. The one partial exception employment and has little engagement in value chains from this limited role is Juba, which accounts for two- that have strong potential for growth. However, there are thirds of all workers in businesses (66 percent), and where some unconventional entry points to support job growth. established businesses and NGOs provide about one in Firstly, attention could be paid to the potential of household four jobs. At 57,000, the number of workers employed by level businesses involved in artisanal work and food sector established businesses is only slightly greater than the processing. Household workers in these activities have number of civil servants, which is reported to be about valuable skills, and even small investments could result in 50,000 (excluding the security services). significant productivity gains. Secondly, given that foreign- owned businesses are already integrated into both labor While it is difficult to assess the extent of non-household and product markets, they could be encouraged to play employment in casual household business activities, a greater role. Finally, while businesses cannot rely on it is likely to contribute significantly more jobs than demand from UN agencies and NGOs in the longer term, established businesses. While there are no reliable in the short term, these actors could play a role in reviving estimates of the extent of employment in more casual market demand and encouraging investment through local business activities, a back-of-the-envelope calculation procurement. illustrates the importance of its role. Around 26 percent of urban workers say they engage in some paid work for 10 Whether a business is ‘established’ is expressed in survey data as the business having a separate place of business from the owner’s household and a business name. 47 South Sudan Economic Monitor Fifth Edition others outside the household, of whom around six percent are employed by NGOs and established businesses, with an additional 5 percent working as public servants or in the security services (Finn et al., 2020). Thus, up to 15 percent of urban workers may be employed by casual businesses, substantially more than work for established businesses. A recent analysis in Somalia similarly found that household businesses provide ten percent of all jobs, more than the seven percent employed in established businesses. Similarly, in South Sudan, an important category of casual employers, market traders, employ on average between each three of them two workers from outside their families, in addition to family helpers. Nor do these jobs appear to be less productive than many in established businesses: workers in the market can expect to be paid about SSP 600 (US$ 2) per day, which is roughly similar to the going rate for unskilled workers and with revenue per worker reported by established businesses. Most of the largest established employers are NGOs or cater to the international presence, while a ‘missing middle’ of medium-sized businesses reflects the risks attached to investment. A closer look at the largest established employers in South Sudan reveals the extent to which conflict has shaped the economy. The top ten employers provide between them 15 percent of all jobs in established businesses and organizations; the two largest are security firms, while the other eight are NGOs. Of the 47 employers with at least 100 workers (which together account for 23 percent of all jobs in established businesses and organizations), approximately half are NGOs. The commercial businesses among these relatively large employers include five security firms and five banks or money transfer companies, with three hotels, three medical providers, and three trading companies. The great majority (72%) of established businesses are microenterprises with no more than three workers, with the median business employing three. Thus, there is Commerce and a ‘missing middle,’ with a lack of medium-sized businesses, a recognized indication of limited growth opportunities. basic services account for 88 Even by the standards of a low-income, fragile country, South Sudan’s established percent of jobs businesses include very few involved in manufacturing. Commerce and basic services in established account for 88 percent of jobs in established businesses (see Figure 27). By contrast, only about eight percent of workers are active in manufacturing, processing of agricultural businesses. goods, or construction. Juba is home to the largest community of manufacturing By contrast, businesses. Beyond the capital, there are sizeable communities of agribusiness workers only about in Renk, with its long tradition of commercial and mechanized agriculture, and of eight percent manufacturing workers in Wau and Rumbek. of workers Household activities in processing and artisanship provide far more manufacturing are active in employment than do established businesses. Due to the small size of the established manufacturing, manufacturing and processing sector, there is a much larger base of jobs in productive processing of activities in household-based employment. Thus, there are an estimated 4,000 jobs in established businesses active in manufacturing and agribusiness throughout South agricultural Sudan. Manufacturing accounts for an estimated 1,625 of these jobs, and agribusiness and goods, or forestry activities, for the balance. By comparison, we estimate that household activities construction. employ about 76,000 family workers in processing, and 10,000 in artisan production (full- South Sudan Economic Monitor Fifth Edition 48 time equivalent). While the available business income data established businesses. Therefore, NGOs account for an does not enable a comparison of the levels of productivity estimated 15,000 jobs, compared to 57,000 in for-profit between these different types of businesses at the sector businesses. level, it bears repeating that overall revenue per worker in established businesses (across activity types) is very similar Foreign-owned enterprises provide nearly half of all to revenue in household-based activities. Jobs support jobs in established businesses, employing far more initiatives should thus take note of the fact that household South Sudanese than foreign nationals. Foreign-owned activities currently involve an order of magnitude more businesses, which are nearly always operated by nationals workers in value chains with a potential for productivity of South Sudan’s neighboring countries, provide nearly half increases. (47%) of all jobs in established businesses. Out of the foreign business owners interviewed in a 2019 survey, 80 percent With the profound disruptions to the economy resulting employed South Sudanese workers, employing three times from decades of conflict and instability in South Sudan, as many South Sudanese workers (about 15,000) as foreign NGOs have taken on an important role as employers. There nationals (about 4,500, excluding owners) (Finn and von are an estimated 400 NGOs or other aid organizations der Goltz, 2020). It is particularly noteworthy that so many operating in the country, compared to nearly 14,000 foreign-owned businesses hire local workers, given how established businesses. However, these entities typically small the typical foreign-owned business is. At the median, are much larger than for-profit businesses. They employ they employ just one worker in addition to the owner, as 18 workers at the median and 37 workers on average. This compared to two workers in addition to the owner in the compares to two at the median and four at the mean for case of South Sudanese-owned firms. Figure 27: Established businesses offer few jobs in production. Jobs in businesses active in production 800 Number of workers 200 400 0 600 Tonj Bor Kuacjok Renk Juba Wau Maridi Torit Nimule Yambio Aweil Rumbek Centre Manufacturing Agribusiness Source: Finn and von der Goltz (2020). 49 South Sudan Economic Monitor Fifth Edition Foreign-owned businesses and aid agencies contribute cumulative years of price hikes have eroded purchasing significantly to the demand for goods and services, power and hence demand. Oil revenue has recovered with especially outside of Juba. Since aid agencies and foreign the increase in global prices after Covid, but continues businesses have a large presence in South Sudan, it is to be diverted as well as poorly invested, with little welcome news that the data show that they contribute expenditure on infrastructure or human capital, both of significantly to demand for goods and services from South which could support jobs. While public sector salaries have Sudanese suppliers, rather than remaining insulated from been doubled in nominal terms since the beginning of the local value chains. Thus, foreign businesses and NGOs FY2021/22 budget year, they remain low in real terms, with are estimated to account for around two thirds of all an accumulation of arrears further depressing demand.11 spending on non-capital goods and services by established businesses. Perhaps even more importantly, about half of In a high-risk, low-demand environment, very few foreign businesses that use agricultural inputs source them households or businesses can consider taking loans. It locally (54 percent), although those who re-sell consumer should be emphasized that when entrepreneurs say they goods are (unsurprisingly) less likely to source them from face ‘poor access to funding,’ this is not the same as ‘poor South Sudan (22%). access to finance.’ In South Sudan’s difficult economic environment, even small investments that have good 2.5 There are many business obstacles, but there prospects for a strong pay-off face considerable risks. In is also a clear hierarchy consequence, almost all businesses rely on their limited own and family funds for their activities, and hardly Surveyed households, market traders, and businesses anyone takes loans. This is true even for established consistently report that insecurity, a lack of funding, low businesses: while two in five (44 percent) have a bank demand, and poor roads are the key factors constraining account, barely any take out formal loans, even among their activities. With the poor state of South Sudan’s large firms. Specifically, only three percent of established economy, people face a wide range of challenges in their businesses have taken out a bank loan over the past three endeavors to make a living, regardless of whether they years, with the proportion rising to 6 percent in the case work in their households, casual businesses, or more of large established businesses (see Figure 28). Instead, established businesses. Despite the panoply of obstacles, the majority of businesses state that they cover losses however, businesses, traders, and households all tend to from shocks through loans or gifts from family and friends agree that the most significant challenges they face relate (67%) or by using their earnings or cutting salaries (30%) to lack of funding for their activities, low demand (including (see Figure 29). Similarly, few market traders (11 percent) as a result of inflation), bad and dangerous roads, and the say they would finance large purchases through formal direct impact of insecurity. While there was a variation loans. Rather, most would rely on their own savings (81%) between responses in different towns in terms of the extent or borrow from family, friends, neighbors, or colleagues to which they emphasized each of these four constraints, (31%). The implication of this understandable reluctance to they consistently ranked them above other obstacles. take on debt for the design of jobs support programs is that in the short term, the most credible means to encourage Poor macroeconomic and fiscal management is one of investment may be to offer grant funding, rather than the main root causes for all of these key constraints. The through measures to encourage borrowing. macroeconomic and fiscal environment is not kind to the large majority of workers striving to make a living through With few opportunities to access funding, young workers small business activities and self-employment. In terms of are often forced to defer their own income-generating the World Bank’s CPIA index of governance, South Sudan activities until they have saved sufficient funds. As is often receives a score of 1.5 for governance and 1.24 economic the case in low-income, fragile economies, poor access management, both among the lowest scores in sub- to funding means that it is difficult for young workers to Saharan Africa. Despite the recent slow-down in inflation, commence their own income-generating activities. Thus, 11 Arrears are estimated at 5 months of salaries as of November 2021 South Sudan Economic Monitor Fifth Edition 50 in the case of market stall owners, older operators tend reflect the benefits of greater experience, it is likely that to generate far greater revenues, with those older than the older operators’ ability to invest in their businesses is the median earning on average nearly twice the returns of an important factor. those below the median. While this discrepancy may in part Figure 28: Business access to banking and loans Business access to banking and loans South Sudanese-owned Foreign-owned 0.83 0.86 Large (10 or more) 0.32 0.60 0.05 0.07 0.66 0.69 Medium (6-9) 0.19 0.41 0.05 0.11 0.57 0.58 Small (4-5) 0.10 0.24 0.05 0.05 0.39 0.34 Micro (3 or fewer) 0.03 0.10 0.02 0.01 0 .2 .4 .6 .8 0 .2 .4 .6 .8 Has any bank account Has account in foreign currency Loan in past three years Figure 29: How businesses cope with shocks Approaches used to cope with losses due to shocks During year preceding survey 0.67 0.07 0.30 0.08 0 .2 .4 .6 .8 Loan/gift from family or friends Loan from bank or insurance Own earnings or cut salaries Use assets 51 South Sudan Economic Monitor Fifth Edition Constrained market demand exacerbates the risks related are aggregators who are active in procuring the products to investment decisions. The activities of household they sell. However, most market stalls sell a mix of local business, market traders and established businesses alike and imported goods, and traders tend to argue that while suffer from weak demand. Thus, when surveyed during a local products can compete in terms of transport cost and period of greater stability in the autumn of 2019, market price, their poor quality and limited availability constrains traders explained that while the increased stability had local sourcing. Similarly, while many farmers who lack resulted in a rebound in supply in the market, consumer aggregation opportunities do take their own goods to demand had not increased commensurately. Among market, they report concerns related to the physical those who sell agricultural products, around one in four dangers they face on the road, point to the difficulty of said they made few or no sales on a typical day, with an moving goods in an economy in which only one in seven additional 42 percent stating that they sold less than half rural residents live within 2km of an all-season road, as of what they could offer. At the same time, almost all of the well as the risk of investing in transporting goods and being surveyed market traders stated that they faced many direct unable to find customers to sell to (World Bank, 2021). competitors, as is to be expected given the low degree of product diversification. In this context, the pandemic has tended to exacerbate already severe market obstacles, rather than creating Low purchasing power, high inflation, and the large new ones. Follow-ups were conducted with previously public salary arrears are all factors contributing to the surveyed businesses and traders in June 2020, after the depressed market demand. Conflict has driven many first peak of the pandemic. While businesses and traders households into poverty and eroded the purchasing power flagged the same constraints that they had earlier, they of most customers in the markets. Indeed, most businesses stated that they had become more difficult to navigate. (73 percent) reported that the decline in demand had been For example, the pandemic resulted in a further decline to the most significant of the adverse consequences resulting already depressed demand due to a resurgence of inflation, from inflation for them. In addition, surveyed market traders the downturn in overall business activity, and reduced stated that the public sector salary arrears have limited the purchases from Government, NGOs, and the UN. In June contribution the government payroll makes to demand for 2020, 73 percent of surveyed business owners stated that goods and services. For instance, in 2019, a trader in Aweil since the advent of the pandemic, this further decline in argued in 2019 that “… the government doesn’t even give demand had negatively impacted their businesses, as did out salaries. No salaries, but [public servants] need salaries 58 percent of market traders. On a positive note, a greater for the market. […] The government is the salaries, so the proportion of respondents (44%) stated that there had been market cannot work.” A processor in Bor agreed: “… yes, an improvement in the security situation than those that customers are always available, but some do not have cash stated that there had been a deterioration (28%). due to the delay in salaries for months. The issue of money delay is also hindering our businesses.” 2.6 A feasible agenda for jobs in early recovery Limited market integration further constrains possibilities South Sudan’s critical development challenge remains to to find customers. Even while customers in their local consolidate peace and find a way to use its oil revenue to markets are cash-strapped, producers at all levels also develop a sustainable economy. In addition to consolidating struggle to access broader markets. With a large proportion peace and building stability, South Sudan’s fundamental of productive activity centered on food sector value chains, development challenge is to transition from taking economic the aggregation of agricultural products is a particularly policy decisions with a view to managing conflict to making important case in point. While some aggregation continues, policy for development and good job opportunities. Greater it remains limited by the difficulty, cost, and risk of taking security is the single most important condition for a recovery products to market. Thus, between three and four in in job opportunities. At the local level, improved security every five traders of agricultural products say that there would relieve many of the constraints facing workers and South Sudan Economic Monitor Fifth Edition 52 businesses. Secondly, oil revenues continue to provide a (ii) clearing domestic arrears to rebuild market demand large income stream, accounting for 27 percent of GDP, 90 and redirecting some resource revenue toward percent of government revenue, and nearly all exports. The domestic consumption; and effective management of these revenues is vital for the (iii) easing fees in markets and at checkpoints and paying transition to development-oriented policy. The Government security forces transparently through the payroll. has formulated a clear reform agenda, and it must be engaged. This process must begin by managing budgets Short-term priorities for program-level jobs support must more transparently and reorienting public spending away take into account the kind of jobs most workers hold, from crisis response and towards investments that support the opportunities in the economy to increase incomes, the emergence of productive sectors and value chains. and the obstacles workers face. Effective jobs support in recovery must ask what is a worthwhile and feasible goal Given the pervasive toll of conflict, second-best measures to aim for, given what a job currently means for South and gradual changes have a role to play during the Sudanese workers. Based on the evidence discussed in this early stages of recovery, aligned with a peacebuilding chapter, this goal should be to broadly raise the currently process. Conflict has taken a heavy toll on household job very low productivity of the self-employed and household- activities, value chains, markets, and businesses, with based jobs on which most South Sudanese rely. Secondly, macro-economic management in a very poor state. Little support must consider opportunities for investment to in the economy today is as it should be, and the level of spur broad-based productivity growth. Here, the evidence capacity and resources is very low. In their endeavors suggests that public investment should lead in encouraging to support jobs, it is therefore particularly important for small domestic investment, with a focus on agriculture the Government and development partners to maintain a and broader household business activities in food sector realistic view of the measures that are both possible and value chains and artisanal production. Thirdly, measures effective in the immediate term, and to allow for some to support jobs must be based on a full understanding of second-best measures until more sustainable approaches the key constraints affecting jobs in South Sudan. As the become viable. The remainder of this section outlines a surveys cited earlier in this chapter make clear, the most set of modest policy and programmatic actions to promote important of these constraints are insecurity and poor early recovery. Despite their short time horizon, the goal roads, access to funding, and low and uncertain market of these proposed actions is to lay the groundwork for demand. increasingly ambitious reforms, spanning the arc toward a sustainable policy framework. An effective jobs support program would invest in immediate livelihood support, the recovery of modest business The government could implement a number of policy activities, and the revival of markets Based on the jobs measures to curb inflation, revive demand and ease fees, challenges in South Sudan and international experience all of which could make a real difference for jobs in the short in providing jobs support, an effective program for jobs in term. The transformation of macro-fiscal management recovery should operate on three levels (Figure 30). that is required to set South Sudan on the path toward sustainable growth and better jobs will take political will (i) Immediate livelihood support: Firstly, jobs support and effort, sustained over a long period of time. Yet, there should encourage the recovery of production are significant opportunities to take first reform steps that, in agriculture through the provision of inputs while far from perfect, can make a concrete difference in and assistance to producer groups and provide improving the conditions of South Sudan’s workers. Key temporary income support through LIPW or cash short-term measures to create better conditions for local transfers. As noted, support for agriculture can build markets, small business and livelihoods include: on a broad base, with many young urban workers (i) continuing efforts to limit the monetization of the active in the sector and open towards remaining in. deficit and curbing inflation pressure, 53 South Sudan Economic Monitor Fifth Edition (ii) Recovery of business activities: Assuming some worth considering that good returns can reasonably progress toward local stability, jobs support should be expected even in areas such as personal services invest significantly in areas where there is the and other activities where productivity gains are most potential for broad-based productivity gains usually difficult to achieve. in business activities, by supporting individual, household, and co-operative productive activities (iii) Market revival: To facilitate the recovery of markets through cash grants and complementary psycho- and rural-urban linkages, investments in rural social support. At the current early stages of feeder roads are a high priority. An ongoing World recovery, the market environment for producers Bank assessment examines the manner in which and the operating environment for development such investments could be prioritized to address partners are likely to remain exceptionally difficult. particularly binding transport constraints, while maintaining the goal of broadly investing, in line In support modalities, global experience suggests with peacebuilding goals. Further, given that only that simplicity is important. Thus, it may be better very few farmers and traders currently sell at to provide small unconditional grants rather than capacity, it is worth asking whether UN agencies and subsidized loans or larger matching grants, with humanitarian organizations could further increase the requirements for beneficiaries to conduct a their emphasis on local procurement, following simple ‘reality check’ on business ideas, rather than pathbreaking early investments by WFP. This could to devise and submit elaborate plans. Cash grant play an important role in reviving production. By support could emphasize food sector and artisanal engaging with aggregators of agriculture products value chains. These areas offer a key opportunity for such local procurement efforts can also play a recovery, given that they already provide meaningful positive role in reinvigorating market intermediation. employment; they have the potential for productivity However, in an inflation-prone environment, it is growth; and there are opportunities to crowd-in important to ensure that they do not inadvertently some small investments. However, given the general promote unsustainable price rises. dearth of investment in business activities, it is also Figure 30: There are effective fiscal policy and investment options for jobs support Source: World Bank staff, based on von der Goltz and Harborne (2020). South Sudan Economic Monitor Fifth Edition 54 Important investment opportunities and needs remain, especially in grant support to household business activities and in psycho-social support. A costing of program-level support suggests that an investment of about US$ 0.5 billion could significantly advance urban recovery (von der Goltz and Harborne, 2020). Such an investment could result in sustainable increases to the incomes of around 250,000 households, thereby encouraging additional investments from households and businesses and opening markets for rural producers. This sum is equivalent to ten percent of South Sudan’s expected oil revenue plus a seven percent increase in ODA, sustained for three years. While development partners are already providing significant support, some priority investments for jobs in recovery remain unfunded. With partners seeking to move away from the provision of purely humanitarian assistance to development support, greater investments are needed to support household market activities and other casual businesses. This investment opportunity deserves attention, especially given the encouraging international evidence related to the effectiveness of cash grants to households and to the potential of psycho-social support to enable households to build their abilities to improve their livelihoods in the market. 55 South Sudan Economic Monitor Fifth Edition South Sudan Economic Monitor Fifth Edition 56 REFERENCES Blattman, C., & Annan, J. (2016). Can employment reduce lawlessness and rebellion? A field experiment with high-risk men in a fragile state. American Political Science Review, 110(1), 1-17. FAO (2021a). Special Report - 2020 FAO/WFP Crop and Food Security Assessment Mission (CFSAM) to the Republic of South Sudan. Rome. https://doi.org/10.4060/cb4498en FAO (2021b). South Sudan: Impact of floods on crop production, livestock, and food security. Juba, December 2021 Farole, T., von der Goltz, J., Sahr, T., Viollaz, M. (2021). Jobs in the Horn of Africa: Synoptic Brief. Horn of Africa Regional Economic Memorandum Background Paper; No. 2. World Bank: Washington, DC Finn, A. and von der Goltz, J. (2020). Insights from Surveys on Business and Enterprises in South Sudan : Jobs, Recovery, and Peacebuilding in Urban South Sudan – Technical Report IV. Jobs Working Paper; No. 53. World Bank: Washington, DC Finn, A., von der Goltz, J., Saidi, M., Sharma, A. (2020a). Job Outcomes in the Towns of South Sudan : Jobs, Recovery, and Peacebuilding in Urban South Sudan - Technical Report I. Jobs Working Paper; No. 50. World Bank: Washington, DC Finn, A., von der Goltz, J., Fatima, F., Nichanametla, R.R.G. (2020b). Monitoring COVID-19 Impacts on Households in South Sudan, Report No. 1 : Results from a High-Frequency Phone Survey of Households. World Bank: Washington, DC. IMF (2020). The African Continental Free Trade Area: Potential economic impact and challenges. Staff Discussion Note, SDN/20/04. International Monetary Fund: Washington DC IMF (2021). Republic of South Sudan – First Review Under the Staff Monitored Program. Country Report No. 21/246, International Monetary Fund: Washington, DC IPC (2020). South Sudan IPC Technical Working Group: IPC Acute Food Insecurity & Acute Malnutrition. October 2020 - July 2021 Mawejje, J. (2020). The Macroeconomic Environment for Jobs in South Sudan: Jobs, Recovery, and Peacebuilding in Urban South Sudan - Technical Report II. Jobs Working Paper; No. 51. World Bank, Washington, DC Miguel, E., Satyanath, S., & Sergenti, E. (2004). Economic shocks and civil conflict: An instrumental variables approach. Journal of political Economy, 112(4), 725-753 57 South Sudan Economic Monitor Fifth Edition REACH (2021a). South Sudan Joint Market Monitoring Initiative (JMMI). October 2021 REACH (2021b). South Sudan: Flooding trends in counties of particular concern of food insecurity. December 2021 REACH (2021c), September 2021. Tonj South & East Rapid Assessment: Warrap State, South Sudan, September 2021 REACH (2021d). Pibor Rapid Markets Assessment: Markets in Crisis. February 2021. REACH Initiative UNHCR (2021). UNHCR position on returns to South Sudan – update III. October 2021 UNOCHA (2021). South Sudan: Humanitarian Snapshot (November 2021). https://reliefweb.int/report/south-sudan/ south-sudan-humanitarian-snapshot-november-2021 USAID (2021) – South Sudan – Complex Emergency November 2021 von der Goltz, J. and B. Harborne (2020). Jobs, Recovery, and Peacebuilding in Urban South Sudan. World Bank: Washington, DC. von der Goltz, J., Saidi, M., Mayai, A.T., and Williams, M. (2020). Reviving Markets and Market-Linked Agriculture in South Sudan : Jobs, Recovery, and Peacebuilding in Urban South Sudan - Technical Report III. Jobs Working Paper No. 52. World Bank, Washington, DC von der Goltz, J and Mavridis, D. (2020). Supporting Jobs in Fragility, Conflict, and Violence Situations. Jobs Notes; No. 11. World Bank: Washington, DC WHO (2021). COVID-19 Update for South Sudan – December 30, 2021. Available at: https://www.humanitarianresponse. info/en/operations/south-sudan/Covid-19 World Bank (2020a). Economic Update, Poverty and Vulnerability in a Fragile Environment, February 2020: World Bank World Bank (2020b). The African Continental Free Trade Area: Economic and Distributional Effects. World Bank: Washington, DC World Bank (2021). South Sudan: Transforming Agriculture: from Humanitarian Aid to a Development Oriented Growth Path. South Sudan Economic Monitor Fifth Edition 58 59 South Sudan Economic Monitor Fifth Edition South Sudan Economic Monitor Fifth Edition 60 For more information a bout the World Bank’s work in South Sudan visit: www.worldbank.org/en/country/southsudan For more information about IDA, please visit: www.worldbank.org/ida Facebook: http://www.facebook.com/worldbankafrica Twitter: https://twitter.com/WorldBankAfrica YouTube: http://www.worldbank.org/africa/youtube Afronomics Podcasts: https: //www.worldbank.org/en/news/video/2020/04/03/afronomics-a-podcast-series 61 South Sudan Economic Monitor Fifth Edition