In two and a half years of war, South Sudan has experienced its worst. Prices of its main income earner, oil, have tumbled on the global markets from nearly $100 in December 2013 to about $40 per barrel today.

As result of war, Unity and Tharjath regions were shut down reducing oil production by nearly 55 per cent, yet over 90 per cent of the country’s budget draws its revenue from oil. Fall in prices, reduction in volumes and war were key tragedies on South Sudan’s economy for the past two years.

The country has also seen its currency, the Sudanese pound, depreciate, prompting the government to liberalise currency exchange in December 2015, from SSP3.16 to nearly SSP30 to the dollar today. Its inflation rose above 100 per cent on monthly basis; its 2015/2016 budget suffered a 70 per cent deficit; while insecurity and and humanitarian crisis worsened.

The economy has been on a contraction mode with investors such as SAB Miller and East African Breweries Ltd pulling out. Banks reported losses from currency devaluation. With contraction, non-oil revenues reduced, increasing fiscal gap for the government.

In Juba all seems well but in the outskirts, the true picture of the war plays out. It is common to see women begging on the streets while carrying children in their arms. In neighbouring states, parents cannot afford rent, fees and food. It has indeed been a sorry state.

In his brief address in Juba when he arrived on Tuesday, Dr Riek Machar identified three key challenges: Stabilise the economy, security, and mobilise resources for humanitarian assistance.

After Dr Machar was sworn in, President Salva Kiir gave a reconciliatory speech, calling for forgiveness and co-operation with the transitional government. He thanked the international community for their genuine support for peace in South Sudan. A day after Dr Riek landed in Juba, Basokoro, former governor of Western Equatoria who was in prison was released. This seems to demonstrate the genuineness of the peace process.

As the South Sudan economy is under stress, there is little fiscal space to carry out its activities. The financial sector is shallow for domestic borrowing — and even if it wasn’t, government credit worthiness is in question. It is probable that huge advance payments from oil companies to the government have already been accumulated.

The transitional government needs to embark on reforms to enhance government institutions. The Agreement on Resolution of Conflict in South Sudan has identified reforms in central bank, audit chamber, treasury, the petroleum sector and anti-corruption agencies. There are also calls for the creation of some institutions. These are critical to get the country back on track.

Funding

On the humanitarian front, US State Department has just announced additional funding to the tune of $86 million. Utilising these funds efficiently and effectively will be key in resolving challenges facing refugees and internally displaced persons.

In the past, the budget has been mismanaged with some agencies overspending, while government borrowing is not properly vetted. It will be important to consolidate prudent and transparent public resource management.

South Sudan has recently joined the East African Community. Now the transitional government has to give meaning to this by matching accession to EAC with relevant policies.

For the past three decades, South Sudan has been at war, thus the leaders and the people should reconcile. There is no time for political fighting, else healing and reconciliation will slow down. Space for discussing national issues should be open.

To achieve this, a national plan needs to be put together and priorities on how they will be implemented identified.

Development is not by chance but a well thought-process — sequenced and followed up diligently.

Former Kenyan president Daniel Arap Moi formed the famous “Dream Team” in 1990s while his predecessor Mwai Kibaki formed a team to develop the country’s Economic Recovery Strategy. South Sudan requires such a strategy that will guide its activities.

Garang Atem Ayiik is an independent economic commentator who lives in South Sudan; [email protected]