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Blogs.WorldBank.org: How conflict and economic crises exacerbate poverty in South Sudan

Posted by: Berhane.Habtemariam59@web.de

Date: Wednesday, 24 April 2019

Arden Finn's picture

South Sudan became independent in 2011 after a prolonged conflict. Although the new country was blessed with international good will, considerable foreign aid, and vast oil wealth, it nevertheless faced formidable development challenges, with 51% of the population living poverty. Soon after independence, the country encountered successive crises, which resulted in a large-scale conflict combined with a severe macroeconomic crisis.

By the end of 2017, almost 4.5 million people had been forced from their homes, more than a third of the country’s population. Protracted insecurity and large-scale displacement have taken a huge toll on livelihoods, and private consumption has been consistently falling since the onset of the civil war. Against this backdrop of ongoing violence, the South Sudanese economy is experiencing a severe contraction, driven by falling oil revenues and conflict-related disruptions of economic production.

To understand the impact on poverty — and to inform policies and programs — new data were needed. Therefore, the World Bank launched the South Sudan High Frequency Survey (HFS), in collaboration with the National Bureau of Statistics (NBS) and with funding from the U.K. Department for International Development (DFID). Teams of trained enumerators have interviewed household heads in all accessible regions of the country since 2015, while tracking real-time prices and giving voice to the poor by capturing video testimonials. These efforts have produced a series of rich, publicly available datasets, designed to facilitate comparisons and to allow for a detailed analysis of welfare and livelihoods, published in the South Sudan Poverty Assessment, with additional materials available at www.thepulseofsouthsudan.com.

The poverty headcount jumped from 51% to 82% between 2009 and 2016, meaning that the vast majority of the population was living under the international poverty line of $1.90 (PPP 2011) per day in 2016. This number includes a massive single-year jump of 16 percentage points from 2015 to 2016 due to the combined shocks of conflict and near hyperinflationary conditions. The poverty gap—the average deficit in consumption for poor households relative to the poverty line—doubled from 23% in 2009 to 47% in 2016.

Poverty in South Sudan is primarily rural, characterized by a general lack of access to services, infrastructure, and economic opportunity. More than 85% of the 12 million South Sudanese reside in sparsely populated rural areas with very poor amenities. Little economic activity is conducted outside of the agricultural sector, and farming remains the primary source of livelihood for more than 8 out of 10 households. Contributing to the lack of economic opportunity is the fact that decades of conflict have had a devastating impact on the national education system. South Sudan consequently has one of the lowest literacy rates in Africa, with only 4 out of 10 people being able to read. Infrastructure is also sorely lacking, and only about one in 8 people have access to adequate water and sanitation services.

Inflation has been rampant. The South Sudanese pound underwent a process of rapid depreciation after it was floated in 2015, making food imports more expensive in a country that is heavily dependent on them. Conflict-related market closures and disruptions to trade routes also put pressure on prices. The sharp drop in oil revenues resulted in the government financing its deficit by borrowing from the Central Bank and by printing money, which further contributed to inflation. Overall, in the two-year period between December 2015 and December 2017, the official consumer price index rose by a staggering 1,100%.

Households that were more exposed to conflict had their consumption reduced by 32% on average when compared with households that were less exposed to conflict. Further analysis shows that a 10% increase in inflation increased the incidence of poverty by 3.5%. A large proportion of people in South Sudan that live just above the poverty line and are in danger of falling below it should they experience even a small shock. In states covered by the HFS, a modest 10% consumption shock would risk pushing about 160,000 people into poverty. Being able to analyze causes and effects more precisely in this way creates an opportunity for better-designed and better-targeted policy interventions.

Achieving meaningful poverty alleviation in South Sudan will require breaking the cycle of armed violence and mitigating the political and macroeconomic risks. In addition to the enormous toll of human suffering, the ongoing fighting and high inflation is creating uncertainty and stifling the long-term planning necessary for promoting economic recovery. Once preliminary peace holds, the government should demonstrate a credible commitment to development objectives as a means of restoring institutional legitimacy. A strong first step would be to implement the ambitious program of macroeconomic reforms declared in the FY2017/18 budget, aimed at curbing inflation and maintaining price stability.

In parallel to these broader efforts, there is significant scope for targeted interventions that are likely to generate large marginal benefits. Programs to improve food security can help avoid further deaths and reduce malnutrition and its often-lifelong impacts on children. Schools should be rebuilt, opened, and staffed, to mitigate the risk of an entire generation falling short of its productive potential. Opportunities for youth must be created to prevent idleness and relapses into violence. Public works programs could be combined with social safety nets to create opportunities and foster resilience against future shocks.

By understanding the data made available through the HFS, the government of South Sudan now has a stronger foundation on which to make policy decisions that will help put their country on the path to economic stability and sustainable growth.

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