SUDAN: New institutions struggle to get money
JUBA, 11 July 2006 (IRIN) - Emerging from a crippling 21-year civil war that left approximately 2 million people dead, southern Sudan has one important advantage over most other war-torn countries: it has money.
The southern share of Sudan's oil revenue amounts to some
US $750 million per year and accounts for half the $1.3 billion budget of the government of southern Sudan (GOSS) for 2006. With no formal state institutions for decades and most of its economy destroyed, finding ways to spend this money constructively is proving to be a challenge, however.
"The GOSS has no internal capacity to deliver public services so they need to procure it," a finance specialist in Juba said. "But they don't have much procurement capacity, either - it is almost nil."
The predecessor of the GOSS, the South Sudan Coordination Council, effectively functioned as a satellite of the government of Khartoum, he added. "Khartoum would send down companies to carry out its public works - they never had to procure anything."
An additional impediment to the quick disbursement of funds is that the old budgeting system inherited from Khartoum needs to be reformed. "Salaries, operating costs, development costs, they were all budgeted under a limited number of chapters. They were not decentralised per ministry and they were not linked to objectives, making it very hard to track budgets transparently," he added.
International donors find it equally challenging to reconcile their intention to support the nascent institutions with the desire to disburse money quickly and get tangible reconstruction projects under way.
An important priority in south Sudan's reconstruction is rebuilding roads. The war largely destroyed the road infrastructure and what remains is often contaminated with landmines - leaving the region isolated and economically constrained.
Despite available money for this purpose from the European Commission (EC), a comprehensive plan by the United Nations World Food Programme (WFP) to rebuild more than 3,000km of roads had to be scaled down temporarily because of lack of funds.
"The EC pledged $56 million to the GOSS through the MDTF [Multi-Donor Trust Fund, which pools the donations of various donors] so that they can allocate the money on the basis of their own priorities," Emily Oldmeadow, EC representative for southern Sudan, said.
The MDTF, administered by the World Bank, provides donor money to the GOSS, but requires the government to abide by stringent bank procedures.
"The World Bank had to impose its rules and regulations, because there was nothing there. This sometimes leads to delays," the financial specialist said. "Previously, leaders used to receive a suitcase of money and do the work - now you need a proper process that holds people accountable."
Pressed to deliver results and to show the Sudanese population the benefits of peace, the south Sudanese Ministry of Transport and Roads decided not to wait for the disbursement of MDTF funds and donated $30 million in oil revenues to WFP to continue with the reconstruction of the road network.
Supporting an existing road-building programme was not just the fastest way for the ministry to build roads. Given the difficulties in procurement, funding WFP to contract road builders was also the most transparent way to disburse the money.
"When you give them the money, you know where it is going," Rebecca Garang, GOSS Minister of Transport and Roads and widow of the late southern leader John Garang, told reporters in Juba.
"This is a great day for the GOSS. Instead of receiving bilateral aid, the GOSS is now donating money to deliver a peace dividend to our people," she said. "These are the first millions [in the disbursement of government money] I'm signing."
Waheed Lor-Mehdiabadi, senior operations officer of the MDTF, said the World Bank assisted the GOSS to take up accountability measures by funding procurement, accounting and audit firms. International donors had also seconded experts to ministries to enhance their capacity to manage their budgets and implement reconstruction projects.
"It is going to take time. Yes, we have to move quickly but there is a much bigger issue: the ministries have to be strengthened in such a way that they are accountable and transparent and as such establish credibility," Lor-Mehdiabadi said. "Institutions are key."
Despite initial delays, the disbursement of money and the implementation of reconstruction programmes are gathering momentum, Lor-Mehdiabadi said. MDTF-funded rapid impact programmes have delivered emergency medicines, school kits and equipment that enabled the 10 new southern state governments to operate. Additional grant agreements had been signed for health, education and support for the 2007 census; while the $30 million grant agreement for road construction was now ready to be signed.
"But the MDTF is just a funding mechanism, not an implementing agency," Lor-Mehdiabadi added. "The real challenge is implementation - spending the money and getting projects off the ground."
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