South Sudan: Development required

JUBA, Sudan — Southern Sudanese are already celebrating the birth of their new nation after official results showed more than 99 percent of voters chose secession from the north, but once the jubilation subsides the tricky task of building a viable state will begin.

That might take decades.

An independent South Sudan will be one of the world’s poorest countries, a place where lack of health facilities means that one in seven women who get pregnant will die before giving birth, where the same number of newborns will not reach their fifth birthday and where 85 percent of the population is illiterate.

Economically, southern Sudan is almost completely reliant on crude oil exports for its income and imports almost everything else.

“This is state-building from scratch,” said Alex Vines, head of the Africa program at London's Royal Institute for International Affairs. “It is a long-term project and it will be decades before we see a successful, sustainable state emerge. In the near term southern Sudan will become a major aid recipient.”

Donor countries such as the United States, which played a key role in securing the 2005 peace deal that ended 22 years of destructive civil war paving the way for the January referendum on secession, say they are committed to southern Sudan and they are expected to increase foreign aid and investment.

How the North and South will divide up a combined international debt millstone of close to $38 billion is one of a whole range of issues on which the two sides have not yet decided.

“This is a country that is desperately poor, landlocked, extraordinarily reliant on oil and will have tense relations with the North, all of which raises questions about the viability of the state,” said Philippe de Pontet, Africa director at Eurasia Group, a political risk consultancy based in New York.

Juba offers a glimpse of a possible future with restaurants, hotels and small businesses springing up all over the rapidly expanding town. At the markets, trade is frenetic and long lines of trucks bearing goods from Uganda line up at the customs checkpoint on the far side of the Nile River.

But the nascent capital is not the country writ small. The city’s tarred roads are not found elsewhere in southern Sudan and in regional towns such Rumbek, Bor or Malakal, development remains embryonic. In these outposts the dividends of six years of peace are hard to discern.

Roads are made of dirt, shops are sparsely stocked, markets sell little piles of cassava dug from nearby fields or locally grown mangos. Electricity and piped water are rare and torrential seasonal rains regularly cut off entire regions of the Texas-sized territory, washing away mud roads and airstrips.

“There are no roads, they are building from nothing and large chunks of the country are inaccessible for parts of the year,” said Joanna Michler, an aid worker with Save The Children.

Yet it is estimated that the government of Southern Sudan has earned perhaps as much as $2 billion in oil revenues every year since the 2005 peace deal.

“They have sufficient money but they lack the capacity to spend it well,” said one analyst.

Corruption is rife and perhaps a third of the oil windfall has been spent on the army.

The vast majority of Sudan’s estimated 6 billion barrels of oil is in the South but even this bounty will run out in the years ahead so South Sudan must try to diversify its economy. Agricultural land is one under-exploited resource. Sudan’s population is about 9 million people but it is possible to fly for hours across the landscape without seeing a settlement.

So far the biggest investment in southern Sudan outside the oil and telecoms sectors is a $50 million brewery opened by SAB Miller in May 2009 which provides 150,000 bottles of beer a day for local consumption.

As northern Arab traders dominate the economies of border towns, so foreigners dominate Juba’s booming economy.

Kenyans, Ugandans and others foreigners are making the money: Southern Sudan benefits little from foreign businesses and foreign staff who return their profits to a foreign land.

“The majority of those in the private sector here are foreigners,” said Melody Atil, a former World Bank official who now runs an organization called Peace Dividend that seeks to plug local entrepreneurs into the emerging local market.

Atil said getting a loan is almost impossible because the legal structures and the court system are weak. Land ownership remains largely customary and without a functioning register there is little that potential borrowers can offer as collateral, so the majority poor are cut out of the market.

As in many post-conflict states the fast money is to be made in construction, hotels and restaurants.

“Hardly anything is produced in southern Sudan, everything is imported,” said Atil. “The market right now is government procurement and the aid industry.”

That looks unlikely to change anytime soon.

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