Sunday, 28 September 2014

South Sudan: Cry the beloved country

THREE YEARS AGO, South Sudan, then the world's youngest country, was born. It was a nation full of hope and whose prospects were bright. It had functioning oil fields which pumped 375,000 barrels per day, she also enjoyed the good will of the world.

Everything was going for her. Investors trooped into the country seeking for opportunities. Soon, South Sudan was receiving proposals for such mega project as the US$3 billion Juba-Lamu oil pipeline.

 All those prospects evaporated In December last year when a civil war broke out. The civil war pitted the government of President Salva Kiir against Rebels led by Riek Machar, his former vice president.

Oil wells have been damaged while the meagre revenue from the little oil available is being squandered on war. A nation that sits on Sub-Saharan Africa's third biggest reserves of crude is now a beggar nation staring at a potential famine.

Oil Output has declined to 165,000 bpd from 375,000 bpd before the war broke. With it, oil revenue have also shrunk and since oil is for now the only source of revenue for the economy, prospects are also turning grim.

Before the split in 2011, crude oil exports earned the then united Sudan US$20 billion a year. The split gave South Sudan 375,000 of that and thus 75 per cent of the revenue, that is, US$15 billion. For South Sudan, this was a windfall. Previously she used to share Oil revenue 50-50 with the North.

South Sudan, just like her neighbour Sudan, depends on oil revenue to funds 98 per cent of her budget.The fall in Oil revenue caused economic chaos in Sudan. Inflation there now stands at 46 per cent owing to lack of forex. The south is fast treading the same path: Oil Output down to 165,000bpd and still falling, oil revenues have plummeted to almost a third, that is, to US$5 billion a year at the highest. This works to US$417 million a month down from US$1.25 billion before the war.

The result, shortages all round: No forex, which leads to the weakening of the local currency. The official exchange rate for Pound is 2.95 to the US dollar. However, the black market rate is 5:1. This has restricted imports leading to domestic shortages and high prices of consumer goods.

At the last count in March 2014, inflation had crossed the 25 per cent mark. Now it is likely close to her neighbour’s level of  40 per cent. Poverty is becoming endemic as foreigners, who trooped in to south Sudan seeking for opportunities are reviewing their position.Soon they may troop out.

Business has contracted due to lack of funds to expand and also insecurity. Unemployment is high and rising. These pressures weigh heavily on the government which sometimes acts in a disoriented manner.

Last week South Sudan ordered all foreign workers to leave by October 15th. The order was however, modified and mutilated. Now I is not clear whether it shall be enforced. The government also has to cope with pressure to end the conflict, which is characterized by ceasefire agreements that no one obeys.


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