South Sudan’s independence aftermath barricades foreign investors
11 min readBy Mawut Ayii Anyieth, Australia
October 17, 2017 (SSB) — The government of South Sudan has faced prime disruption because of the conflict that following the country’s independence in July 2011. Since then, relations with Sudan from foreign countries has inexorably changed, and thus increasingly driving away foreign investors. However, considering South Sudan’s historical footprint calls for peace have solidified liveability and improved security upon the admission into the United Nations and upholding to the Comprehensive Peace Agreement (CPA).
While countries like Israel supported South Sudan, the remainder of the world remained in silence. As South Sudan endured the perpetual societal damage, the United States extended a lending hand and continued their long-standing sanctions for a country that was continuously encountering conflict. Many countries recognised the ramification caused by South Sudan’s independence, nevertheless, despite the efforts of the Israeli government to protect and revive the South Sudanese economy, thousands of refugees had faced deportation.
As South Sudan is one of Africa’s least developed countries, with outbreaks in famine, a lack of infrastructure and an economy that is suffering despite its advantage of potential oil production wealth. However, the 2005 peace consensus steered in an economic revitalization and investment in utilities and other infrastructure, with further developments slowly taking place. ‘South Sudan is in many ways an American creation, carved out of war-torn Sudan in a referendum largely orchestrated by the United States, its fragile institutions nurtured with billions of dollars in American aid,’ said the New York Times.
South Sudan has endured internal war after its independence, with the first civil war which occurred in 2013 and again in 2016 where the wars were between the government and the opposition forces BBC, South Sudan: What is the fighting about? May 2014. Some foreign workers and soldiers were killed which allowed foreign countries to withdraw from the country. The internal war, which people called political struggle, is still slowly continuing within the country, and therefore, results into famine and killings.
The ongoing mass conflict lured an upsurge in the reception South Sudan was receiving, particularly to the United States – the political police of the world. The U.S. government’s sanctions against the Sudan were formally removed from operation to the newly independent South Sudan in December 2011 where senior RSS officials participated in an engagement conference in Washington, D.C., to help connect foreign investors with the RSS and South Sudanese private sector representatives. While the Republic of South Sudan and the Republic of Sudan shared an interdependence between certain sectors of the diminishing economy, there were specific actions that required OFAC authorisation.
There is an absence in licence in the Sudanese sanction regulations, excluding any U.S involvement due to their forged gains in the property sector and assets and interests that may have benefited the Government of Sudan. In Ted Dagne’s report, The Republic of South Sudan: Opportunities and Challenges for Africa’s Newest Country, he identifies unresolved political and humanitarian issues as the country hearths its future for economic growth in the dire conditions South Sudan continues to endure, exclusively to its affiliation with foreign investors. The unresolved conflict between South Sudan and Sudan could spark a threat to harmony and stability of the overall economy and sovereign countries dealing with both governments. South Sudan lacks various resources as a country suffering from poverty, with disturbances to a lack of infrastructure, and organizations necessary for governance or the transportation of basic facilities.
The unresolved conflict between South Sudan and Sudan could spark a threat to harmony and stability of the overall economy and sovereign countries dealing with both governments. South Sudan lacks various resources as a country suffering from poverty, with disturbances to a lack of infrastructure, and organizations necessary for governance or the transportation of basic facilities.
With the immediate aftermath of the country’s independence and the mass atrocities of the Holocaust, South Sudan’s foreign policy was observed as a challenge in a bid to relinquished tensions between the West and the other African States to parallel the relations and spell a constancy for a promising economic future. One of the earliest signs of foreign investment derived from a kin and neighbouring country Sudan, where their recognition of the Republic of South Sudan on 9 July 2011, set aside conflict and exposed scope for post-modernity. In a world free of conflict, it was transparent that the new and refurbished South Sudan was recognised in the world at large. There were over 25 countries that participated in South Sudan’s provision, including all permanent members of the United Nations Security Council, where talks for peace and to improve security were had.
Despite the vast amount of insecurities caused by the war, South Sudan was receiving an abundance of backing. South Sudan was admitted as a member of the United Nations without a vote in 2011, or any kind of objections raised by its members. During and after South Sudan’s admission into the UN, multiple states have delivered formal explicit statements regarding diplomatic recognition and some have recognised political relations with it. Within a year, the number of recognitions topped over 115 and a number of relations established over 50 – setting the ultimate benchmark for foreign governments.
Africa is said to have an abundance of land, yet foreign investors are not consistent. Cotula’s Land Grab or Development Opportunity? he states how Africa has the world’s underutilized land with a perceived abundance to outside investors. So why are foreign investors not pursuing this precious asset? Even though land values are extremely inexpensive, it is proposed that the systematic empirical data remains limited. Although, if net worth is displaying positive data frequencies in places like Sudan, the availability of land should not be tampered with like a bag of evidence. Through Cotula’s book, it is evident that investors are more likely to select valuable lands for their agriculture investments. Despite this concept benefiting investors, it is possible that this investment could be seen as an oil and water, particularly when foreign investors are bargaining land to compensate people for the loss of land. This prospect could be why investors are avoiding large-scale land allocations as it could be detrimental
Through Cotula’s book, it is evident that investors are more likely to select valuable lands for their agriculture investments. Despite this concept benefiting investors, it is possible that this investment could be seen as an oil and water, particularly when foreign investors are bargaining land to compensate people for the loss of land. This prospect could be why investors are avoiding large-scale land allocations as it could be detrimental
Through Cotula’s book, it is evident that investors are more likely to select valuable lands for their agriculture investments. Despite this concept benefiting investors, it is possible that this investment could be seen as an oil and water, particularly when foreign investors are bargaining land to compensate people for the loss of land. This prospect could be why investors are avoiding large-scale land allocations as it could be detrimental to local land rights.
Commitments to infrastructure could have dire effects on the land and the people. A key problem is the ‘commitments on investment, jobs, and infrastructure are legally enforceable in the same way government commitments to provide and maintain access to land’. The potential to invest in large-scale farms could be detrimental in small doses. How people adapt to market opportunities is contingent on various factors including environmental conditions, extensive farms with few workers, low wages and deprived productivity. Agriculture is perceived as a prominent and strategic sector in South Sudan, where the government allows business to thrive on income and profit tax providing they deliver an economic equilibrium with the country.
The methodology that the South Sudanese government utilized to extensive land investments during the short-term period had portrayed many of the same mistakes that the national government in aggregation to Jonglei Canal. By arranging the interests of the private sector over the development needs of South Sudan, the government risks skewing development patterns to the detriment of local populations. According to the Land Act (2009), ‘The Land Act does not envisage the acquisition of community land for investment purposes as an expropriation. The root interest remains with the host community and the lessee company only enjoys rights for the duration of the lease, at which point the land reverts to the community’. The lands investors choose could, in fact, be in possession of the community as they renowned Sudanese mantra goes, ‘Land Belongs to the Community’. John Garang’s slogan depicts the struggle in South Sudan during and after the civil war, where the land is like a valuable asset where sacrifices were made in the heart of the community.
There are many challenges in operating in a post-conflict context. The numerous obstacles in trying to get to their plantations operational are overseen and intimidated by the Ugandan Lord’s Resistance Army (LRA) and other South Sudan rebels operating in the country. In many instances, companies would need to hire soldiers to protect their workers from encountering insecurities or any conflict. The fundamental challenges for foreign investors is the environment in which they work in, particularly having to fend off intruders all while inspecting heritage grounds – a project that is deterring future investors. For instance, according to SGC Qualifor report, 1,000 people reside in the forest reserves where investors must show respect for their land and ensure the forest is not harmed.
Unless the South Sudanese government is contentious to prioritize the development requirements for the community while adhering to local laws, land investments may well become a source of social unrest and ongoing conflict. South Sudan has seen a history of violence related to land-based development projects, and if the government continues to allocate large land areas to foreign companies and investors in direct infringement to communities’ ownership rights, it will begin to undermine peacebuilding efforts and therefore continue to be in the crossfire. South Sudan urgently needs private investment. If foreign investors can appreciate its country’s offerings, agricultural investments can help to spur the economy, by providing food and consumables for fraught communities, and develop building and road infrastructure in rural areas. By implementing distinctive business models that maximise employment opportunities, investments can create jobs for rural communities and provide young people with an alternative for opportunities in education.
Road infrastructure or investment could reduce the internal conflicts among the rivalry tribes and offer trade relationships. The main vision of sub-regional organizations in Africa has for many years been endorsing and simplifying sub-regional and regional trade and economic integration to encourage foreign exchange respectively. However, partial advancements have been conceived in practice to date, due to reasons such as poor infrastructure, detrimental economic governance, regulations and overall conflict. Moreover, the scope in African trade provides more on direct trade in commodities with developed countries abroad, and it is equally noteworthy to enable fair partaking in the global trade – in particular to the sovereign entities (Helsinki 2006).
Due to the South Sudan being on the verge of famine, the current conflict has had reports that it will likely have continuing effects on the development sector. Therefore, this has the significant impact on the foreign trade between South Sudan and sovereign outsiders wanting to deliver direct investment. A range of agricultural development programmes has been neglected or placed on hold due to dire circumstances such as insecurity, thus resulting in foreign investors withdrawing from projects and returning to their home countries.
South Sudan has been re-building its communities from scratch since the civil war annihilated the region. Since South Sudan is an emerging market, foreign investors must be patient as the government and other stakeholders prepare the necessary infrastructure and systems in keeping with the Comprehensive Peace Agreement (CPA).
With the oil industry running poorly in South Sudan, it is vital that foreign investors to pause for thought. Not only has the insecurity shifted the clause for prospective investors, but the financial and governance risk also played a role in limiting investment opportunity. Since security is low, and regulation is not always accurately enforced, a scarce economic policy designed to reject work equipment and trade devices. Nevertheless, since the state’s financial security is reliant on oil, South Sudan’s macroeconomic performance will be impacted to the point where there are closures in oil production causing detrimental ramification for foreign investors. There is a considerable amount of risk involved to investors within the financial scheme during the time inactivity of the oil production, which could entail high levels of inflation and prices to skyrocket.
Impact investors face multiple obstacles in South Sudan, which have ultimately hindered foreign exchange and deploying capital. The ongoing conflict has made it difficult for foreign investors to enter the market, and be surrounded by a regulatory environment, especially given only a finite talent pool to South Sudanese business’ exclusively. With South Sudan’s poorly developed institutions and regulations, this also creates a challenging platform for impact investors to function. Constraints include limited government data, poorly enforced regulations, lack of a credit reference bureau, and minimal documentation to prove land ownership. The government of South Sudan has not yet instituted regulations to deliver adequate fortification for investors, making financiers reluctant to extend loans. Not only is there insufficient regulatory milieu in South Sudan to upkeep the private sector, it is also often challenging for entrepreneurs and investors to grasp a full understanding of current legislature.
With the absence of human capital consistent throughout East Africa, particularly acute in South Sudan, times have shown that the monetary data indicates a slope in the market. Following the decades of conflict and instability, South Sudan’s education system has conspicuously suffered. South Sudan has one of the world’s lowest literacy rankings, making it difficult to source qualified staff to scale. Additionally, businesses’ access to foreign talent is restricted due to an unofficial and unprecedented expectation that 70-90% of employee roles in all industries are to be held by South Sudanese citizens, “South Sudan Profile”, BBC (6 August, 2014).
Despite the negative stigma associated with insecurities revolving South Sudan, there are many different perspectives to consider. With the introduction of oil production and the unification of worldwide sanctions to South Sudan to better the economy and trade, such the United Nations Security Council, some of the positives are still some time away before they can outweigh the negatives. South Sudan continues to remain a third world country, and although there is hope for future developments and foreign exchange, the country must first restore humanitarian disadvantaged communities in order to sustain a liveable lifestyle in accordance with the support from foreign investors.
You can reach the author via his email: Mawut Ayii<mawayiiaj@hotmail.com>
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