Jul 3, 2011

Reverse Immigration to South Sudan

Last week, on 17 June 20, 2011 a simple crash between two buses in Sudan-Uganda border in Nemule killed 29 people, 23 were Ugandans.
Checking the facts, I remember the famous streamlines of immigration, from Mexico to United States, From Africa to Europe and from South East Asia to Australia. All from poor countries to developed countries. People choose to be poor in developed country not rich in poor one.
What I see in South Sudan is something not less than a phenomenon; after years of South Sudanese refugees in Kenya, Uganda, Ethiopia, Eritrea, and Egypt, now we see a sheer inflow of immigrants. I really cannot say illegal because there is no enforceable law of immigration. They come and live in horrible conditions and wait to find a job here. Their income is more than their own countries; and their demanded wage is less than the South Sudanese equivalents.
I propose the following explanations for this phenomenon:
(1) After long civil war, the country is left with low number of skillful people. A part of these immigrants are skilled workers that fill this gap.
(2) For certain reasons, the service sector of urban economy (hotelling, transportation, education) has higher prices than neighbors. Here workers can earn much more than what it is in neighboring countries.
(3) Usually immigrants arrive alone, but local workers have a family. Therefore, by the fact that South Sudan has higher living cost the demanded wage is higher for local families. If this is important we might be able to see an increase in age of marriage, working women and less fertility in future. Now family size is 5-6 in South Sudan.
(4) Immigrants have better sense of entrepreneurship. They have seen how their countrymen start a business.
(5) With the big community of immigrants in urban area, it is easier to get a job for immigrants. An Eritrean hotel manager usually hires Eritrean or Ethiopian waiters.
“Lebanese in Africa (through Social networks and through French colonization), chinese in Africa” Madalina thinks of these immigration streamlines, ” through government loans that help the start of overseas businesses, and then through social networks.” For me, not being funded by their governments, it is more like European flow to new continent in 1600′sto1800′s, finding new opportunities for entrepreneurship. Still in each case I am not sure about capital outflow to their homes. After all, Europeans tend to live much longer in America by reinvestment of their income.
Why this is important? Although by classical theories this is not important fact, and competition in open market brings efficiency, I think the reverse immigration is going both ways for growth.
As a driving force, it brings new income for the economy and attracts new foreign investments; however, most of these workers save most of their income to send it back to their homes. This way usually they don’t invest to extend their own business here. Maybe this is because of (a) constraints of the nature of residence here, (2) lack of enforceability of contracts between principles and workers. Usually they can trust in personal trust between workers and principles.
In general, 70% of investment is reinvestment; we should facilitate these reinvestments, but how? That’s another story.

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