Blog: Practical suggestions to support the resumption of reliable payment to basic service delivery workers in South Sudan

By Imke van der Honing and Charlie Goldsmith

JUBA AND LUSAKA, 6th JANUARY 2021

Introduction

A number of international partners have rightly exhorted the Government of the Republic of South Sudan (GRSS) to resume reliably paying basic service delivery workers, like teachers and nurses, as a good thing in itself and as a way to leverage their continued support.

This blog offers practical suggestions, and specific encouragement, for how to turn exhortation into practical reality for the good of South Sudanese citizens, particularly women and girls.

Executive Summary

Paying basic service delivery workers reliably and decently builds state legitimacy and helps get services delivered. South Sudan has done this before and can do it again.

Transparent, efficient exchange rates and other currency arrangements make life simple for host government and partners.

This is not Year Zero for GRSS payroll systems and operations. Officials have strong ‘muscle memory’ from the South Sudan Electronic Payroll System (SSEPS), and systems progress has been made in the last decade.

Partners can get the sustainability and efficiency benefits of shared systems without having to put money On Treasury.

Mobile Money and other developments in financial services now make the assurance of transparent, real-time recorded payment execution to a consistent KYC standard available nationally.

Straight-through payments will help improve accountability but are not a substitute for empowered, efficient States and Counties being transparently accountable to the centre.

The lower payment execution costs of new financial services now enable shared funding arrangements that can be to the sustainable interests of GRSS, partners and citizens.

If GRSS and its partners have the will and funds are found, basic service delivery workers could be paid with real-time assurance from March 2021.

  1. Paying basic service delivery workers reliably and decently builds state legitimacy and helps get services delivered: South Sudan has done this before, and can do it again

For most of the period from 2006 to 2013, the Government of Southern Sudan, and then the Government of the Republic of South Sudan, was able to pay more than 100,000 public servants broadly on time, in amounts that were in line with or somewhat above regional comparators. Rank-and-file skilled personnel like teachers and nurses could expect to be paid around $100 a month. From 2014 onwards, economic and conflict shocks saw the SSP lose value, and payments become less frequent and worth less.

A government paying basic service delivery workers reliably has at least four considerable merits:

  • It demonstrates the State’s commitment to citizens across the country – both directly to those paid and also to those receiving the services – and as such, it makes the road of state legitimacy by walking it.
  • It is an investment in the human capital of the citizens that has a specific track record of impact in South Sudan, where reported school enrolment tripled from 0.9m in 2014 to 2.7m in 2020, and girls’ share in that, from <40% to >45%.
  • It distributes the income of the State – particularly relevant when the central State receives material revenues, as the GRSS does, that are generated at some local cost (environmental etc)
  • Delivery, and accountability for delivery, of basic services have proven to be a socially uniting action and discourse in fragile and conflict-affected states (FCAS) like South Sudan, where despite opportunities for social fracturing, discourse of public accountability around education finance has sometimes been more acceptable than discourse around some other forms of social accountability.
  1. Transparent, efficient exchange rates and other currency arrangements make life simple for host government and partners.

When official and effective exchange rates diverge, to the disadvantage of those exchanging funds at the official rate, this can lead directly to worse value for money for the host government, which receives key elements of its income in hard currency, and for partners. As a consequence of that loss of value, the knowledge that the arbitrage between the rates is going to someone other than whom the funder expected to fund, and restrictions on funders’ options, it can also result in the quantity and types of partner support reducing.

When South Sudan previously liberalised its exchange rate in 2014, this resulted in materially improved leverage of donor resources, but the reimposition of a fixed rate in 2017 has resulted in major inefficiencies and delays. GRSS and partners should work together to ensure that funds can flow freely and without loss of value for money into South Sudan – in whatever combination of South Sudanese currency and international currencies work most effectively in the present context.

  1. This is not Year Zero for GRSS payroll systems and operations. Officials have strong muscle memory from SSEPS, and systems progress has been made in the last decade.

Partner officials working on South Sudan change frequently. Ambassador Trott was exceptional in doing four years on this docket – two as Envoy and two as Ambassador. Many just do one year, and, sometimes not all of that in country. Intellectual and social capital as well as institutional memory easily gets lost.

By contrast, most of the key officials involved in the successful implementation of the SSEPS in 2008-2012, at both senior and working level, are still active in the PFM sector in South Sudan – in government, like Hon. Rebecca Joshua, Hon. Moses Mabior Deu, Martin Luther Lukudu and Darius Okidi, or in NGOs or consultancies, like a number of former State Payroll Coordinators on our CGA team as well as the authors of this blog.

In many States, the SSEPS system has been sustained in use. In others, derivatives of it, or third party systems have been put in place.

The www.hrisrss.org system we designed and implemented for the EU IMPACT programme 2017-2020 to pay roundly 690,000 monthly incentives to over 30,000 teachers across more than 3,000 schools is familiar across the education and health sectors in government. It expanded on SSEPS’ basic payroll processing functionality, ‘upstream’ to HR assurance and ‘downstream’ to support biometric assurance at payment. A wide range of GRSS and commercial bank officials are experienced in using it.

So there is muscle memory and systems progress that should enable South Sudan, in that much-abused phrase, to ‘build back better’ quickly if government and partners work together and don’t start from Year Zero.

  1. Partners can get the sustainability and efficiency benefits of shared systems without having to put money On Treasury.

The use of the www.sssams.org system for school capitation grants, some funded by partners, some by GRSS, gives an example of the sustainability and efficiency benefits of shared systems – substantially operated by officials and thus properly sustainable – without partners having to put money On Treasury.

The same approach could readily be taken with the www.hrisrss.org system – using it for onboarding, attendance, payment execution, and assurance execution for multiple-payers – without commingling of funds.

The context of new transparent, real-time payment execution methods also simplifies further – see next section.

  1. Mobile Money and other developments in financial services now make the assurance of transparent, real-time recorded payment execution to a consistent KYC standard available nationally.

Two major developments in the last two years have been:

  • First, the GRSS’ approval of Mobile Money services (M-Gurush and NilePay operating at the moment on the Zain network), with agent numbers in the 1,000s, and subscribers in the 100,000s, and with expansion of mobile banking and money transfer operations alongside, the latter extending reach
  • Now, as the value of the currency has declined, the GRSS is strongly pushing for payments to be made using M-Money rather than with physical specie.

These services offer a consistent standard of KYC (as required by the conditions of their licence). They enable bulk payers to have efficient real-time access to information on payment execution. There are also now options for international payments to be cashed out in USD and growing options for direct remittance operations (“one stop” transaction from Global North payer to South Sudanese individual recipient) at low execution costs.

This is a significant improvement on the nature and speed of assurance compared to when SSEPS was rolled out in 2010 (cash funds signed for on triplicate carbon copies and physically returned), or when IMPACT began in 2017 (cash paid out by travelling cashiers against photo and biometric checks with real-time feed and geo-location).

  1. Straight-through payments will help improve accountability but are not a substitute for empowered, efficient states and counties being transparently accountable to the centre

“Straight-through” payments (from MoFP-GRSS direct to, for example, sub-national Ministry, County or school) reduce the risk of funds getting held up at SMoFs as has from time to time been an issue over the last decade.

But there will still be a need for state MDAs for secondary services and counties for primary services, consistent with their respective constitutional mandates, to prepare payrolls, and, in the interest of time and ‘subsidiarity’/local responsiveness, instruct payments.

The structures put in place ten years ago, and recently reinvigorated with the support of UNICEF, of the State Transfers Monitoring Committee at the national level, reviewing, in month 1, reports of how funds were used in month 0, before sending, or holding back, intergovernmental transfers for month 2, remain key proportionate tools.

  1. The lower payment execution costs of new financial services now enable shared funding arrangements that can be to the sustainable interests of GRSS, partners and citizens.

Some arrangements for funding basic services have proved more durable than others in South Sudan. In the education sector, DFID/GESS’ initial investment in secondary school capitation grants in 2014 leveraged several multiples of host government funding. Later, GRSS endeavoured to broadly match, for secondary and pre-school teachers, EU-funded IMPACT teacher incentives for primary teachers.

On the other hand, arrangements where international partners were due to begin funding, and then anticipated to transition the burden to GRSS, have not consistently achieved that transition. Fifteen years from the establishment of GoSS, most basic health services are still externally funded. Some international partners can end up fearing ‘moral hazard.’

The financial services changes described above enable new, more sustainable ways of working: if payment execution costs are as low as Mobile Money and similar systems can offer, there is room for international partners and GRSS to share burdens by both taking a portion of paying the same payees – which also makes them accountable to the payees, who can directly see which funder has paid what, when.

  1. Next steps: if GRSS and its partners have the will and funds are found, basic service delivery workers could be paid with real-time assurance from March 2021.

The accountability structures, notably the State Transfers Monitoring Committee at the national level and its counterparts in major sectors and the trajectory for CTMCs at the State level, already exist.

The core elements of the necessary treasury, HR, payroll and attendance accountability/assurance systems are in place.

The financial services for real-time assurance of payment to individual recipients exist.

There is no reason why, if partners and GRSS demonstrate strong will, and if funds are found to pay at least a basic level of remuneration, these systems cannot be used for monthly payments from March 2021 to the benefit of South Sudanese citizens and of peace in the Sudans.

And we would be delighted to work with anyone of good will to make that happen, so that schools, clinics and citizens can have a much better 2021.

Background

Imke and Charlie have spent much of the last fifteen years working on enabling funds to flow for basic services in South Sudan. We supported the establishment of the first electronic payroll systems for the then Southern Sudan, in Eastern Equatoria State and for MoGEI (then MoEST) and their development to become the South Sudan Electronic Payroll System, through which payroll for >150,000 public servants, across >300 Ministries, Departments and Agencies, at national and subnational levels, was processed.

Over the last decade, we designed and supported the roll-out of the school capitation grants and girls’ education cash transfers under DFID’s GESS 1 project that leveraged major new GRSS investment in schools and the www.sssams.org system that delivers assurance on them. Then, as GRSS teacher pay became less reliable and less valuable, we worked on the EU-funded IMPACT teacher incentives and the www.hrisrss.org system that provides assurance on them. The results were a tripling of school enrolment 2014 to 2020 – from 0.9m to 2.7m and an increase in girls’ share of enrolment from <40% to >45%. We also supported the Ministry of Health to introduce facility grants and to streamline health worker remuneration. We and our colleagues have also been busy on at-scale reform and service delivery and finance programmes in Somalia, Sierra Leone, Malawi, Lesotho ++.

For the last ten years, Charlie has been Managing Director, and Imke, South Sudan Country Coordinator, of Charlie Goldsmith Associates Ltd (CGA), a specialist consultancy firm with a particular focus on South Sudan. CGA is, with Lutheran World Relief and IMA World Health, part of the Corus International family, an ensemble of faith-based organizations working together in the world’s most fragile settings to deliver the holistic, lasting solutions needed to overcome the interconnected challenges of poverty, health care access and climate change.

We are currently working on a range of assignments in the education and PFM sectors in South Sudan, but this blog is written as our own opinion and does not necessarily reflect the views of any current or past funding, implementing or recipient client.

We are very happy to discuss the ideas set out in this document: please email enquiries@charliegoldsmithassociates.co.uk to reach us.