South Sudan: Peace dividends paying off
9 min read
A special investigative journalism assignment fully supported by the Taco Kuiper Grant for Investigative Journalism
A new nation has emerged defined by its bustling 10 states Warrap, Lakes, Jonglei, Upper Nile, Western Equatoria, Northern Bah el Ghazal, Unity, Western Bah el Ghazal, Eastern Equatoria and Central Equatoria out to host the world.
A few years ago it wouldn’t have been easy to imagine such a boon amidst the sweltering heat of Southern Sudan and especially its heart in Juba.
Thanks for the vast reserves of oil.
The pull of Juba or is it the Southern Sudanese Pound is exerting a pull on all to the banks of the Nile to get the promise of a better life. It is here in Juba that economic dreams of a better life from home are being nurtured and realized. When South Sudan took its place in the global community of nations, it did so with much aplomb economically. Currently, South Sudan’s Pound (SSP) is the strongest currency in the continent and this explains why all kinds of investors are streaming into this new nation.
The allure of the South Sudanese Pound (currently exchanging at US$1 = 3.50SSP) is hard to resist despite the fact that the new nation lacks basic amenities.
“In the next 20 years, South Sudan will be a booming economy. This is the right time to be here.” Paul Gitahi, Equity Bank South Sudan Executive Director says.
Long before the river port city of Juba, attracted all and sundry, it resembled a typical hinterland Payam (village) with thatched houses all around. “There were only six vehicles in all of Juba.” George Conway, United Nations Development Programme (UNDP) says.
Today Juba which is the latest capital in the world, brimming with immense bounties is far from the six vehicles on gravel road of six years ago. Like most cities in the world Juba is no exception, it experiences traffic jams at peak hours too on its 67km tarmacked roads out of 350kilometres.
The signing of the Comprehensive Peace Agreement (CPA) in January 2005 in Nairobi, Kenya, the eventual peaceful secession referendum and the coming of independence thatched houses are fast disappearing and mansions, maisonettes, villas, flats and multi storeyed buildings are springing up. From one telecommunications tower in the country, there are over 500 today making mobile phone coverage possible to much of the country.
Geographically South Sudan may appear disadvantaged as it is landlocked but this may only be for a time as the new country has much to offer. Daily flights from major world capitals further buttress this belief of a land full of bounties as are the daily long interstate bus rides from the neighbouring countries with skills or wares for sale.
In 2009 SAB Miller became the first multinational manufacturer to venture into South Sudan with the establishment of its subsidiary the $37 million South Sudan Beverages Limited in Juba.
With the coming of independence SAB Miller invested a further $15 million in the Juba facility so as to boost production capacity and meet increasing local demands. In simple parlance business is good to warrant more capital injection.
“Our investment in South Sudan continues to bear fruit due to the country’s improving economic outlook and a continued positive consumer response to our brand portfolio.” Ian Alsworth-Elvey SSBL Managing Director says. “Increasing our brewing capacity takes the business to the next level. Supporting growth in our key mainstream segments and helps us to build market share.”
Demand for White Bull and the locally brewed Nile Special Brand have been the main motivators for the increase in SSBL production. By November this year the Juba facility is expected to increase production to 500,000 hectolitres. SSBL not only produces beer but has also ventured into non-alcoholic beverages such as soft drinks and bottled water brands.
The fact that South Sudan is still in infancy and is a net importer has proved to be a major challenge to investors. According to data from the Ministry of Commerce and Industry, South Sudan is a net importing country and its largest trading partners are Uganda, Northern Sudan, Kenya and Ethiopia in that order. Uganda’s main export market at present is South Sudan. In 2009 Uganda exported goods worth $184 million.
“The cost of doing business in South Sudan is significantly higher than in other places and part of that is the fact that we have exceptionally higher transport costs from Mombasa port in Kenya. To bring a container from Europe to Mombasa by ship costs about $2000. It then costs you close to $8000 to move it from Mombasa to Juba.” Alsworth-Elvey says.
Providing direct employment to over 300 South Sudan nationals SSBL has endeared itself to the psyche of the new nation. Alsworth-Elvey however sees the cost of doing business in South Sudan changing and the future offering brighter prospects.
“The return of our investment has been successful and we expect to grow. I think the economy of South Sudan has grown and will continue to do so in the next decade. The parliament has passed what I think is the best Investment Promotion Acts in Africa if not the world. It has boosted this with a ministry solely dedicated to investments. This demonstrates the commitment in attracting more investments.” Alsworth-Elvey says.
According to South Sudan’s Vice President Riak Machar, in the next five years, the SPLM government intends to mobilise $500 billion from the private sector to bolster infrastructure development.
In every corner and all buildings in Juba there is a generator not only showcasing the need for urgent investments in electricity generation, transmission and supply but also revealing how Khartoum underdeveloped Juba. The South Sudan Electricity Corporation (SSEC) produces 10mega watts daily against a demand of 50MW. Most businesses, government ministries, NGOs generate their own power through acquisition of generators. As it stands now SSEC uses 48,000litres of diesel daily to generate for its customers as the government paves the way for heavier investments in the power sector to bring energy costs to manageable levels. High demand for power in Juba is currently being pushed by the hospitality industry which is placing a huge demand on the national grid. Independent estimates show that South Sudan can harness close to 1400MW along the River Nile.
But as South Sudan seeks to catch up with the rest of the world in terms of development a major set back has already reared its ugly head in the form of the seat of South Sudan’s government. It is now official that the capital Juba will perhaps get a world first as the “metropolis” which had the shortest history as a capital city. This move comes after the new South Sudan cabinet unveiled in late August decided to relocate its capital to Ramciel in the Lakes state after an unending dispute over Juba which apart from being the capital city of South Sudan also serves as the seat of Central Equatoria’s government.
A bitter dispute between the government and the indigenous Juba inhabitants, the Bari community over access to land is what has caused this costly move by the government.
“Juba is like a slum. You have nowhere to build roads. You have to quarrel to get land. Where do you put government institutions and investors? We need a large parcel of land to accommodate development projects.” Barnaba Marial Benjamin, information minister says. “The government has not succeeded to persuade and allay the fears of the local community and so the cabinet decided to relocate the capital to a better area.”
This move by the South Sudan government will no doubt have serious ramifications on the country’s oil dependent economy as it is bound to affect the current infrastructure estimates upwards. It is an open secret that the new nation is which controls 75% of all the oil in Sudan and is wholly dependent on oil which foots 98% of the Juba’s $2.8 billion annual budget.
Competing to get this oil from the ground are China National Oil Petroleum, Malaysian oil giant Petronas, Moldovian oil Company Ascom Group, India’s Oil and Natural Gas Corporation (ONGC) Videsh and Sweden’s Lundin. All these business deals are courtesy of the peace dividends and business confidence pegged on Juba.
RYCE MOTORS: THE KENYA COMPANY THAT DARED
INTERVIEW WITH A.S SELVARAJAH, DIRECTOR, RYCE MOTORS
1. When did Ryce Southern Sudan venture into South Sudan?
SELVARAJAH: We have been doing business for the last 5 years in South Sudan from Nairobi, we are now based in Juba since May 2011. A part of our regional expansion to meet our hinterland customer needs.
2. What was the reason for this move?
SELVARAJAH: I attended the first ever South Sudan Business Development Conference in 2006 in Nairobi and realized the great business opportunities and started to make plans to set up base in Juba. Five years later and the plans have been realised.
3. How have the locals taken to your services considering they just got their independence?
SELVARAJAH: The locals are very happy that we have brought our services to their doorstep and are very welcoming.
4. What have been the challenges so far?
SEELVARAJAH: Sincerely we have no complaints, the only challenge we face is lack of skilled and educated local labour, but we understand why, we have employed five Sudanese already and hope to increase to 50 within one year when we start the After Sales Services. As the country stabilizes it will only grow as the leaders are determined to see it growing.
5. How is the private sector coming up in this new nation?
SELVARAJAH: There are not many Corporate Investors due to the wait and see attitude. However lately this has changed and interest in this country has grown very fast.
6. Have your clients grown with time?
SELVARAJAH: Yes our clientele base is steadily growing, we are happy with the progress being made here in South Sudan and the operational environment. In our case we have both corporate and individual customers. Representatives from a number of Corporates have visited even our showroom exploring the opportunities since independence came to Juba. We look forward to brighter prospects in future.
7. What products do you seek to roll out in future?
SELVARAJAH: Agricultural machinery and implements, Construction machinery, Construction and Water supply projects. Service, repairs and spare parts.
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