South Sudan is not only the world’s youngest nation but in 2014 the burgeoning East African country is expected to have one of the world’s fastest growing economies.
Its vast natural resources and urgent need for wide ranging investment attracted foreign investors to its capital, Juba, last week for the country’s first major investment conference.
According to forecasts from the Economist Intelligence Unit, South Sudan’s gross domestic product will grow by 35 percent next year. This positive outlook is based on oil exports and the economy’s vast potential to expand after decades of civil war and neglect.
A six-year peace process led to South Sudan’s independence from Khartoum in July 2011. The region took with it 75 percent of oil production but only six months later a transit fee dispute left the landlocked nation with no way to export its crude to international markets.
Relations between Juba and Khartoum have since thawed and production resumed in April but is still 60,000 barrels a day short of the 300,000 that were exported through Sudan before the January 2012 shutdown.
Oil money and entrepreneurs from East Africa and returning South Sudanese, have transformed the capital from a sleepy garrison town at the time of the 2005 north-south peace deal into a "boom town". Its rampant development and population growth give it a similarly vibrant feel to towns in the region’s more established economies.
With the idea of building an alternative capital near the geographical centre of the country pushed aside, Juba, with its relatively good connections to neighbouring Uganda and Kenya, continues to be a political, cultural and economic magnet.
Although efforts are being made to decentralise public funds, with an additional $145m transferred to South Sudan’s ten states this financial year, Juba’s growth has outstripped the rest of the country.
Trade and freedom of movement in many areas are hampered by environmental factor and periodic violent raids between rival pastoralist groups, and in the case of Jonglei, South Sudan’s largest state, a localised rebellion.
Bor, Jonglei’s capital, is only 120km from Juba but is largely cut off from the rest of the country for much of the year due to flooding and notoriously poor transport connections, much to the frustration of business owners.
Joseph Majur Akoi, the Chief Executive Officer of Sudd Bottling Limited, which started producing distilled bottled water just over a year ago, says he is yet to turn a profit, despite high local demand.
"South Sudan imports everything," he says, "even food" but the scarcity and cost of hard currency means he struggles to import the materials his factory needs.
Akoi, like many other business owners, is forced to buy dollars on the black market, which trade at 4.5 South Sudanese pounds, a considerable increase from 3.16 SSP at private banks or the 2.96 SSP offered by the Central Bank.
Corrupt bank officials are inflating the price of dollars by selling them on the black market, Akoi alleged, expressing a commonly held belief among South Sudanese.
Perceptions of corruption are high in South Sudan, with at least four billion dollars of oil revenue unaccounted for since former rebels - the Sudan People's Liberation Movement (SPLM) - came to power. So far, no official has been successfully prosecuted but some officials accused of financial improprieties were removed earlier this year, a sign, according to Chantal Uwimana, the Regional Director for Africa for Transparency International, that "there is a willingness to address the issue".
Considering South Sudan’s mineral wealth, rich natural resources and nascent institutions, a more comprehensive approach is needed for the system, and people’s perceptions of it, to change, Uwimana told Al Jazeera.
Transparency International’s recently published annual Corruption Perceptions Index found that only four of the 177 countries analysed had performed worse than South Sudan.
The Index, Uwimana said, is not meant to discourage investment or aid but to highlight that all actors, including investors, should support "developing transparency and accountability mechanisms".
"If an investor was to ask my opinion," she said, "why not invest but at the same time also support anti-corruption and broader governance work?"
The SPLM'S External Relations Secretary, Suzanne Jambo, told Al Jazeera that South Sudan’s low ranking was "unfair" considering the country is not even three years old and is trying to cope with a legacy of civil war and some of the world’s worst levels of illiteracy, maternal health and other development indicators.
Last month, parliament reversed the decision of the central bank to devalue the South Sudanese pound. Jambo said this demonstrated that South Sudan’s institutions are democratic as the legislature quickly responded to public concern that the move would triple the price of basic goods and decrease the worth of people’s salaries overnight.
Sometimes there are "too many cooks" when it comes to developing policy in South Sudan, Jambo stated, referring to the plethora of advisers in each ministry from organisations including the IMF, World Bank and other international consultants.
The parliament’s reaction to the proposed devaluation of the pound, which is advocated by international financial institutions and some donor countries, shows how politically difficult the measure could be for the public and government officials to follow.
Meanwhile, South Sudan’s Finance Minister, Aggrey Tisa Sabuni, has been assuring investors at the conference that the currency will eventually be devalued.
"In the long run the foreign exchange regime will have to be rationalised," he told Al Jazeera.
"The macro-economic regime of South Sudan will have to reflect efficiency and good practices," Sabuni said, while admitting that that the "benefits" of a change in monetary policy needed to be better articulated.
Clearly frustrated at the negative headlines surrounding press freedom, corruption, insecurity, humanitarian and human rights issues the finance minister hopes that the conference will show the world’s youngest nation in a more positive light.
With inflation now back in single digits and his plans to establish a stable monetary environment, Sabuni is confident that "there is money to make in South Sudan."
As well as oil, the conference programme covers agriculture, energy, telecommunications and mining, signalling South Sudan’s attempts to diversify its economy.
Before the shutdown, oil revenues accounted for 98 percent of government income. Sabuni expects this to fall to 88 percent by the end of the financial year with non-oil revenue increasing to $1.5bn through a renewed focus on customs and tax collection.
Some of the expected $10.6bn in oil revenue has already been committed to repaying loans taken out during the financial crisis triggered by the oil shutdown. Sabuni forecasts that with over half of the $650m in foreign loans already repaid, the last of the debt repayments will be made within three months.
The country’s domestic loans, worth four billion SSP ($1.33bn on the official exchange rate), "will be restructured so that they do not affect the normal execution of the budget" so that austerity measures can be fazed-out at the turn of the year.
After what has been a tough couple of years, South Sudan’s economy looks to be turning a corner. The challenge now, as elsewhere in Africa, is to ensure that next year’s growth figures have a real impact on the prospects of its people.
Source: Al Jazeera