8 July 2011 saw raucous celebrations in Juba as South Sudan celebrated is split from Sudan after decades of civil war. Independence made South Sudan the world’s youngest country and also one of it’s poorest. However, independence from Khartoum, its abundance of oil and a fresh start appeared to offer hope to the young nation.
However it is fair to say that the country has faced a rocky birth. The country has faced multiple armed rebellions led by various factions who accuse the government of ignoring their need. The threat of a famine has already affected 100,000 in the region and now endangers many more. The ongoing conflict has also made it much harder to supply food to affected areas. All these problems come to a country already languishing at the bottom of all international socioeconomic indicators.
The government has suffered as global oil prices have fallen, as exporting oil makes up the vast majority of its revenues. At the same time much of the nation’s oil production infrastructure has fallen under the control of the rebels or been destroyed, leaving the government poorly positioned to take advantage of any untick in oil prices.
The most immediate solutions to South Sudan’s problems would be that the government works with the rebels to maintain a ceasefire and then a lasting peace. International donors top up the supply of aid to avert famine and for the authorities in the country ensure it gets to the needy without being diverted for political reasons. This could all lay the ground for long term development, but unfortunately this scenario is looking increasingly unlikely, at least in the short term.
The UN has sent a deployment to help with the peacekeeping and stop South Sudan sliding into a failed state. Arguably it is already has. The peacekeepers have been largely ineffective, unable to stop the fighting, that said if they were not present, the conflict would be even worse. With the collapse of the oil industry the country remains propped up by NGOs and overseas grant aid.
In the long term South Sudan will need help in developing its extremely poor economy, much of the country suffers from food insecurity in country dependent on subsistence agriculture.
China’s Interest
China has taken a huge interest in the country, starting in 2012 to send peacekeeping troops to be part of the UN detachment which now numbers a thousand men, a cynic would be to say that it is there to protect its oil interests in a country. China has built up oil wells, refinery and pipelines, some of which has been lost to rebellions, but the rest it has an interest in preserving.
However China’s intervention in South Sudan goes beyond oil. Chinese leaders saw an opportunity to increase its influence and become a more important global diplomatic player and South Sudan was an ideal testing ground. Zhong Jianhua Beijing’s special representative in Africa spends a significant amount of his time (along with Angolan affairs) dealing with the crisis. China is genuinely trying to help the country, but it is also a laboratory for its troops and diplomatic corps. In its drive for independence South Sudan was heavily backed by the US, but interest from Washington has fallen away in recent years, leaving the door open for China.
It might seem crazy to think about investing in the country now, but if the political and security situation improves then it will be the perfect time to enjoy the rebound in economic fortunes that often follows the end of a conflict.
The lack of infrastructure in South Sudan means that are ample opportunities in renewable energy, the country’s grid is non-existent and so the supply of solar panels would be essential in providing electricity to the population of an extremely sunny country.
Technological Change
Mobile telephone coverage looks set to increase from a paltry 13% of the country covered to 36% in the next two years, this will open the door for services like mobile money services which have taken off in a big way in neighbouring Somalia and Kenya. This will help the country leapfrog the need for physical banks and provide a basic financial network to an otherwise under banked nation.
Infrastructure – the country has virtually no paved roads or rail and what has been built is often severely neglected the nation is crying out for connectivity. The Chinese are usually the leaders at developing infrastructure in fragile states but others can be involved as well. There are plans to connect Juba to the expanding East African rail network, but this looks unrealistic until the security situation improves.
Another untapped sector which is dependent on improved security is eco-tourism. The nation’s still relatively abundant wildlife, including elephants, lions and hippos would be a major draw for safari fans.
For now South Sudan’s future looks bleak, but if things change and there is an unexpected turnaround in its fortunes, then the country holds numerous opportunities for daring investors.
