JUBA, February 23, 2022 — Driven by improving macroeconomic conditions and relative peace that have supported a rebound of growth in services and trade, South Sudan’s economy is projected to grow by 1.2% in FY2021/22 after contracting by an estimated 5.4% in FY2020/21, according to the World Bank’s latest South Sudan Economic Monitor (SSEM). The report finds that the unrelenting floods in 2021 affected both oil production and agricultural sector performance and constrained the country’s ability to achieve higher growth.
The fifth edition of the South Sudan Economic Monitor (SSEM), Towards a Jobs Agenda, projects that South Sudan’s economy could grow by 3.5-5.0% over the medium-term if the peace process holds, the economic management reform program succeeds, and global and regional economic recovery does not falter. The economy would also have to navigate additional challenges arising out of the COVID-19 pandemic and climatic shocks.
“As the South Sudanese economy recovers and stability takes holds, there is an opportunity now to promote macroeconomic conditions that create better job opportunities for the poor,” said Firas Raad, World Bank Country Manager for South Sudan. “As oil continues to provide a large income stream, effective management of this revenue is vital for the transition to a more development-oriented policy towards job creation in the country.”
According to the SSEM, the government has already taken positive steps to address some of the challenges in the country. Efforts to stabilize the economy and to follow through with an ambitious Public Finance Management (PFM) reform program have helped to reduce inflation and to eliminate the gap between the official and parallel exchange rates.
In the SSEM, the World Bank highlights that sustained economic recovery in the medium-term will depend crucially on the government’s ability to generate a sufficiently large number of quality jobs for the country’s young and expanding labor force. In the context of a fragile post-conflict economy, the World Bank also points out that it is vitally important for the government to prioritize policies that: (i) invest in immediate livelihood support; (ii) promote the recovery of modest business activities, and (iii) foster the revival of key markets.
“Supporting the emergence of a formal, high-productivity private sector will be critical for jobs in South Sudan. With greater stability and effective policies, agricultural sector value chains could provide many productive jobs,” said James Hoth Mai, South Sudanese Minister of Labor. “A renewed focus on vocational training for our youth will help to close important skills gaps.”
Looking ahead, the SSEM provides three policy recommendations to support job recovery and creation in South Sudan:
- First, the government and development partners should support the recovery of production in agriculture through: (i) the provision of inputs and assistance to producer groups and (ii) temporary income support through Labor Intensive Public Works (LIPW) programs or cash transfers.
- Secondly, following progress towards achieving greater achievement and local stability, the government and supporting stakeholders 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 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 should be a high priority, together with measures to promote local procurement.
The South Sudan Economic Monitor (SSEM) is a World Bank knowledge product that is published twice a year and provides up-to-date analysis of the South Sudanese economy. It also shines a spotlight on a special topic that is relevant for the country’s development. The fifth edition focuses on policy options necessary to deliver an inclusive economic recovery capable of creating enough quality jobs to absorb a young and expanding labor force. The SSEM is intended for a wide audience of policymakers, analysts, business leaders, development partners, and members of the private sector, media and civil society.