The conventional explanation for South Sudan’s weak performance is that it lacked capacity. That was the premise on which international donors began major capacity-building programs immediately after the 2005 Comprehensive Peace Agreement. But how public money is actually spent suggests something else.
The following figure, from the World Bank, “Public expenditures in South Sudan: Are they delivering?” compares budgets and actual spending in 2011—six years after these programs began. While health, education, social services, and block transfers to states, were all under-budget, security and the public sector payroll were vastly over-spent. Investment was declining. And taking all sectors together, wages constituted 60% of all expenditure… an amount that was an increase on all previous years.
And the following two figures give a clue to how spending decisions are made:
It is clear that the South Sudanese government was spending on a “cash in hand” basis: whatever was available, was spent, and those claimants with the most leverage got the most money. Budgeting is largely a charade.
In 2009, when the oil price crashed and South Sudan suddenly found itself out of money, the Ministry of Finance and Economic Planning and foreign donors got together to work out the “Juba Compact” for improved financial management. But as soon as the revenue stream resumed—when oil prices climbed—the government returned to its old ways.
One donor representative complained, “The technical advisers help prepare budget allocations but then army generals wheel into the minister’s office, and they make the real allocations.”
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