The joy felt by public sector employees as they receive their improved salaries is genuine and well-deserved. And the government owes a huge debt of gratitude for proposing and approving the 400% pay increase, which the Legislative Assembly later enacted as part of Fiscal Budget 2023–2024 in July and later assented into law by the president.
Soldiers, for example, are reportedly celebrating after receiving their better salaries. One soldier reportedly bought soda for the entire family to celebrate his 400% salary increase. Another officer told me that his annual pay before the hike was equal to his one-month salary of SSP 128,000.
My local butcher, where I usually get my meat, sold out his day’s supply by six o’clock on a Sunday. I was puzzled as to why he was closing the shop during a busy period. But, according to him, once soldiers received a 400% salary increase, they bought all the meat.
However, just like a coin with two equal sides, you will agree with me that there are always two sides to a story in the sense that I have heard some lamenting voices about the prices of goods in the market just after people started receiving their new salary. The prices of goods and services have started to go up.
Such changes were expected to happen; some economists and even government officials predicted a possible hike in commodity prices once people began to use their improved salaries. Even the government was concerned and worried about the induced inflation as a result of releasing more money into the market.
Therefore, the hike in prices of goods as a result of increased government spending on employee salaries is an accurate reflection of market forces at work.
Let me explain what I mean with some illustrations:
Say you own a business and sell locally sourced chicken in your area. You witnessed an increase in demand for your chicken, but you have a limited supply of chicken to sell. What will you do? Will you increase the price or reduce it?
Chances are, you will increase the price of your chickens so that you can earn a good profit. What about if it were the reverse? Say you have a sufficient supply of chickens, but there are few buyers for your locally sourced chicken. Will you increase or reduce the price of your chicken? Once again, the chances of you reducing the price of your chicken are high.
That is why when civil servants receive their money, their demand for goods increases because they have enough disposable income to spend. On the supply side, there are not enough goods for everyone to buy as desired. As a result, the traders have no option but to increase the prices of goods and services to counter the high demand. That is why economists posit that the higher the demand for a product, the more expensive it becomes, and the higher the supply of a product when the demand for it is low, the cheaper it becomes.
After civil servants received their improved salary, their demand for goods and services went up because they had disposable income and were willing to spend it. And we rely heavily on imports, where the supply of consumable goods is limited, so the resultant effect is negative.
In other words, the market is flooded with more South Sudanese pounds, which are unmatched by the fewer consumable goods in the market.
Therefore, when we face such an imbalanced scenario and there is a general increase in the prices of goods and services over a period, we describe that as inflation. Inflation is simply an overall rise in prices for all goods and services.
So, what is the problem?
Lack of domestic food production has resulted in excessive reliance on imports from neighboring countries and beyond. And this has no link whatsoever with the coming of the new minister of finance, nor does it have anything to do with the new central bank governor.
It has something to do with the overall policy of the government on peace and development. What is urgently needed now is a state of “total peace” in the country, and that’s easily achievable with political will.
When there is stability in South Sudan, farmers will return to their farms, increasing food production and reducing the country’s dependency on food imports.
We have all witnessed what good development can mean and do. Take, for example, the good road network connecting Bor and Juba; as a result, people’s movement has been opened up. Goods and people are moving freely; that is why there is a high propensity that the fish we are eating today in Juba are likely to be coming from Bor and beyond.
Therefore, peace and development move together. When we have peace, there will be enough food produced here to meet our needs, and the cost of goods such as flour, maize, meat, rice, and oil will level out.
© Stephen Omiri, 2023
