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South Sudan: Land of opportunity, if you don’t mind risk
Entrepreneurs eye farming, banking and telecoms; Hurdles to business include lack of roads, laws; Oil still dominates war-ravaged economy
December 10, 2011 12:24 by Reuters
Road travel is arduous. Some vehicles might pass through as many as four checkpoints every 100 km, the finance minister said in a speech last week. Much of the country becomes inaccessible by road during the rainy season.
Businesses have learned to work around the hurdles.
KCB has opened branches in each of the country’s 10 states and has even built a small loan portfolio, getting around the lack of collateral or other guarantees with a system whereby government employees can arrange for a portion of their salaries to go straight to the bank for loan repayments.
John Carvalho, a Ugandan businessman making furniture, said he saw his opportunity in South Sudan’s dependence on imports, which drives up prices for goods as varied as cement and tomatoes.
He now hopes to compete with the flimsy imported Asian furniture that dominates the market by making sturdier fittings out of local wood.
“It has become like a dumping market for furniture products from Southeast Asia here in South Sudan. Almost every office you go to and hotel you go to is made of well-designed but non-durable furniture,” he said, sitting by an array of desks and chairs.
Carvalho said he sees his business expanding into a variety of “sustainable forest products” and predicts that eventually South Sudan’s natural grandeur will draw enough tourists to make ventures like setting up campsites for sightseers viable.
Executives also see cell phone sales booming. The managing director of Zain Sudan, a unit of Kuwait’s Zain estimated in July that the number of South Sudanese mobile phone owners would treble within two years.
Gal, the Israeli businessman, said his company has been enjoying an active business selling satellite Internet connections. Like others, he said South Sudan’s economic future is likely to be in agriculture — another field he works in, along with telecoms and security.
“They have good land, they have a lot of water, good weather, good people, a lot of resources,” Gal said. “There is no reason they will not succeed soon.”
For now, oil is still king. South Sudan took about three-quarters of the united country’s crude output with it when it seceded. Indian, Chinese and Malaysian firms are active in the sector.
US officials hope American firms will soon be able to join them, and are drawing up new guidelines to permit U.S. oil companies to operate in South Sudan — which still depends on its northern neighbour’s pipelines to export crude — without running afoul of U.S. sanctions on Khartoum.
Juba’s tense relations with Sudan and a lack of resolution on key issues related to the split including oil, debt and the position of the shared boundary have unnerved some investors.
Fighting between rebels and government troops has flared on both sides of the border, and disputes over cattle — a vital part of the indigenous economy — often erupt into clashes.
South Sudan’s Ministry of Commerce, Industry and Investment Undersecretary Elizabeth Manoa Majok dismissed security worries.
“Cattle raiding has nothing to do with investors, and it is in particular pocket areas in South Sudan,” she said. “Security is not a big, big thing.”
A LOPSIDED BOOM
By and large, South Sudanese share Gal’s optimism. Many saw secession as the end of a long struggle against political and economic marginalisation and are now eager for the long-deferred chance to control their own economy.
“The resources of the south were being used to develop the north. That was a fact,” Majok said.
“Independence surely will provide a more conducive environment for us. Just to have peace of mind you are in control of your own affairs and destiny – that in itself adds an advantage.”
Still, many complain that the peacetime investment boom has been lopsided so far. Development workers point out that many businesses are owned by foreigners, employ mostly foreigners, and send much of their earnings abroad.
Imposing a rule that requires companies to hire a certain percentage of South Sudanese workers could help, they suggest, although the war-battered education system is a hindrance.
The government is also pushing initiatives such as one to revamp textile, cement and food factories shuttered during the civil war, some of which date back to British colonial rule, to make more jobs for South Sudanese.
It’s too early to say how such ventures will turn out, but diplomats and analysts say the country’s leaders must show their people results soon if they are to forestall unrest.
South Sudanese are keenly aware that while oil revenues make the new nation one of the region’s wealthiest per capita on paper, few have the income to show for it yet. (By Alexander Dziadosz)
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