Oil Transparency Would Start South Sudan Off on Right Foot

In the past months, the South Sudan government has been receiving substantial pressure from the international community to institute greater transparency in its oil industry. This involves full publication of royalties and oil revenue transactions between companies and oil extracting countries. Transparency helps ordinary citizens see exactly how their natural resources are being managed. It helps to prevent corruption, and assist with the avoidance of the resource curse, which is the depreciation of the extractive country’s currency.

Yet, does transparency ensure that South Sudan’s oil assets will be used for advancement? Will transparency initiatives take a back seat to precedence issues like security and violence?

Transparency does not guarantee that the government will use oil revenues for the benefit of the many; however, it will allow publication of oil revenues to be speculated and will hold the government accountable. Transparency is a stepping-stone to supportive governance. South Sudan has already been carrying out the necessary measures to guarantee it does not fall victim to the resource curse. South Sudan plans on becoming a candidate for the Extractive Industries Transparency Initiative (EITI), which increases transparency over payments by companies to governments and to government-linked entities; as well as transparency over revenues by those host country governments. Before South Sudan seeks candidacy for EITI, it first has to establish a Freedom of Information Law, which ensures public access to government records. Providentially, South Sudan has already composed such a proposal.

The world has already seen countries fall victim to absent transparency initiatives. The Republic of Equatorial Guinea is a prime example of a country that relies heavily upon its natural resources for revenue, but counterproductively spends funds much needed in the development of the country. According to EG Justice and Human Rights Watch, the Republic of Equatorial Guinea’s oil revenues makes the country’s per-capita wealth in 2010 equivalent to that of Germany, Japan, or the United Kingdom; however, poor governance and a lack of transparency has caused the country to remain poor and be ranked as the world’s 14th worst country on UNICEF 2009 indicator.

With the amount of pressure and press that South Sudan has been receiving, it should not be long before South Sudan implements the Freedom of Information Bill and applies for compliance under EITI. On June 16, 2011, the Subcommittee on Africa, Global Health, and Human Rights held a hearing concerning Africa’s newest nation. During the hearing, Dana L. Wilkins, who is the Sudan campaigner for Global Witness, talked about actions that the South Sudan and U.S. governments should take to ensure successful transparency and accountability of South Sudan’s oil revenue. Ninety-eight percent of the nation’s budget is derived from oil, and South Sudan is in line to be the most oil dependent country in the world when it officially becomes a country on July 9. Transparency initiatives are being heavily pushed from civil society watchdog organizations like Global Witness and Publish What You Pay.

Despite the possible long-term implementation, extractive regulations can benefit the country if enforced correctly. Global Witness’ recommendation of an independently monitored oil sector takes into account the possible mishandling and inaccuracy of production information. According to Wilkins, an office should be established separately from the Ministry of Energy and Mining that should report directly to the Legislative Assembly. This office’s sole responsibility would be to monitor and verify the petroleum sector. So that this office can acquire funding, be independent from the government and gain, the United States should provide this independent office with training and political support to make sure that it does an effective and efficient job of getting the necessary, accurate information published to the public.

Unfortunately, an office independent from the government to monitor and publish revenue data will not be enough to provide security for South Sudan. One essential piece to ensuring a strong nation is focus on sectors that the revenue will be able to benefit. Oil revenues should provide a platform for diversification of the region’s economy through development of the private sector and the agricultural sector. According to the Sudan Tribune, Riek Machar, the future vice president of South Sudan, appealed to international partners to prioritize agriculture and livestock in the private sector program. South Sudan has the most fertile land for agriculture in Africa, which he said could turn the region into a breadbasket on the continent, if not, the world.

A key partner for South Sudan on agricultural development is Malawi. The president of the Republic of Malawi, Bingu Wa Mutharika, proposed a partnership with developing nations, like Southern Sudan, to join together and focus on agriculture and food security as the key for growth. This proposal is known as the African Food Basket Project. This growth involves investments in transport infrastructures, energy development, and climate change mitigation through innovative interventions such as subsidies, increased budgetary allocations, private sector investments, and communication technology. Aside from private sector and agricultural development, South Sudan has already been attracting big time investors into their territory. The international brewery company, SAB Miller, established Southern Sudan Beverages Ltd and developed a brewery in Juba in 2009 with a $37 million dollar investment.

Transparency and accountability initiatives are vital. Yet, these initiatives will take a back seat to other priorities, such as security and violence. Transparency is not the only solution, but it is a major step in the direction of securing a government that earns the support of the South Sudan community.

Simone D’Abreu is an intern at Foreign Policy in Focus.