A missed African opportunity

By Gregory Simpkins

All too often, the international media and even those considered to be Africa experts focus on the crises that are evident in African countries, but not the opportunities on the continent. That obscures not only chances for entrepreneurs and investors to achieve profits, but also ignores the critical place some African nations play in regional, continental and global economic affairs. One such case is the Republic of South Sudan.

This country is perhaps most known for its tumultuous split from the Republic of Sudan in 2011 and its off-and-on conflict since then. Needless to say, its name doesn’t come up when discussions involve fruitful commercial opportunities on the continent, and I am not arguing that South Sudan’s immediate potential rivals South Africa, Nigeria, Ghana, Kenya, Senegal or others on the continent currently.

According to Transparency International, the most corrupt country in the world is South Sudan. Corruption can come in the form of bribery, nepotism, attacks on the press, bureaucratic red tape, inadequate financial disclosure, exploitation of one’s office, and much more. These improper actions do not just provide an unfair advantage to those in power, but they also hamstring the entire economy and way of life in each area.

The negatives about this country are not untrue, but they overshadow the potential when one looks beyond dealings with its government, which can indeed be problematic.

South Sudan is critically placed in the geopolitical context. For example, waters that form the White Nile River are gathered from tributaries in Uganda, Rwanda, Kenya and Burundi in South Sudan. Joining with the Blue Nile River in Khartoum, Sudan, it forms the mighty Nile River – perhaps the world’s longest river – that enabled the ancient Egyptians to create one of the world’s dominant civilizations millennia ago and which even today powers agriculture and commerce in northeastern Africa.

Resources

South Sudan’s area known as the Sudd is one of the world’s largest wetlands. So, while much of the region is suffering from insufficient water supplies, effective water management resources in South Sudan will provide for enhanced energy and agricultural production.

South Sudan is bordered by Sudan, Uganda, Ethiopia, Kenya, the Democratic Republic of the Congo (DR Congo) and the Central African Republic (CAR). The country produces as much as 170,000 barrels per day of petroleum that currently moves through its northern neighbor to Port Sudan, where it is shipped to refineries in locations such as Mombasa, Kenya, before returning to South Sudan for distribution.

The African Export-Import Bank (Afrexim) leadership met with South Sudan Minister of Finance and Planning Salvatore Garang Mabiordit on the sidelines of the Spring meetings of the World Bank Group and the IMF in April 2019 and discussed ways of strengthening collaboration between the Bank and the South Sudan government to support the country’s economic revival. Within weeks of that meeting, the Bank provided a US$500 million financing facility to fund power transmission, infrastructure and farming projects. South Sudan has some of the largest reserves of crude in sub-Saharan Africa, but only a third of which have been explored so far.

To demonstrate its commitment to the financing provided, the Government of South Sudan pre-sold fifteen-million barrels of crude oil to the Bank for repayment of the Afrexim loan. According to the agreement, millions of South Sudan’s crude oil barrels, allocated to Trinity Energy Limited as the appointed and authorized crude oil off taker to the Bank, are to be lifted by July 2023. Each cargo has 600,000 barrels, representing 5 percent of Dar Blend crude oil, a heavy, acidic crude produced at the Block 3 and Block 7 oil fields in South Sudan’s Upper Nile State.

Afrexim saw the immense potential of commerce in South Sudan when its government became a member in March 2017, and the events in its expanding business sector since that time only confirm the optimism the Bank had from the outset of its relationship.

There has been a tendency for the US government to see only the African government in calculating relations, and that tactic has been followed by the US business community. Unfortunately, this misses opportunities in relating to business communities in countries such as South Sudan.

Uganda and Kenya now supply agricultural products to the South Sudanese markets, but with the country’s land mass of 248,777 square miles, nearly 45 percent of which comprise agricultural land (1,000 square kilometers of which are nearly 49 percent irrigated, with the remaining 51 percent of land being rainfed), the country has the potential to become a breadbasket for the region with effective policies in place.

Economic potential

Its economic potential is only enhanced by the estimated 33 million head of cattle in the country, offering meat, milk and hide production to a significant degree. The underutilization of South Sudan’s natural resources is encapsulated in the saying that South Sudan is “where fish die of old age” for the lack of a more vibrant aquaculture sector utilizing the nation’s waterways.

In July 2021, Afrexim announced its support for the first-ever memorandum of understanding (MoU) on trade collaboration between the Governments of Malawi and South Sudan. The Bank provides financial backing and payment instruments to facilitate trade of agricultural commodities and essential consumer goods between the two nations. The five-year agreement allows Malawi to export grain and other agricultural products to South Sudan.

Malawi currently has a surplus of grain totaling 1.2 million metric tons, which when exported would generate additional jobs for Malawian workers and benefit consumers in South Sudan. Meanwhile. South Sudan would be able to supply commodities such as petroleum products and bitumen to Malawi, supporting development and wealth creation in the South Sudanese economy.

As an example of the critical role South Sudan has played in the region despite its own internal conflicts, people from Sudan’s Darfur region and CAR have often come to the country’s Western Equatoria region for medical treatment they could not receive at home.

The world’s youngest nation has a population estimated at 11.5 million people. Nearly 62 percent of the country’s population is younger than 25 years old. These young South Sudanese represent a growing entrepreneurial class, along with young immigrants from countries such as Eritrea, Somalia, Ethiopia, Kenya and Uganda. Collectively, these young people are innovating and seeking to meet the challenges they face.

Is the country’s road network currently inadequate? They created local airlines to ferry people and cargo across the country. From bankers to hoteliers to technicians of various kinds in their 30s to even younger people looking to make their mark on society, South Sudan is the favored destination of choice for people in the region seeking to achieve success and build a better life for themselves and their families.

Business potential

One such immigrant is a man from Eritrea who came to the country with only US$10,000 in his pocket, and through entrepreneurial skill and determination through various ventures, he is now a multimillionaire. His example has inspired many others to seek to follow his model through arduous work and innovation.

When the Prosper Africa initiative was launched in 2018, one of its tenets was that presenting valid, quantifiable economic ventures to governments, it would incentivize regulatory and other reforms. For example, a planned 1,100-megawatt hydroelectric dam in South Sudan would further a connection to the East Africa power grid, providing surplus electricity to neighboring countries who are now power deficient. The proposed construction of 14,000 kilometers (8,700 miles) of paved roads would connect ports from the Indian Ocean to ports on the Red Sea and even the Mediterranean Sea.

Such regional connections and other developments are envisioned through the LAPSSET, East Africa’s largest and most ambitious infrastructure project, bringing together Kenya, Ethiopia and South Sudan. Its projects include envisioned highways, railways, ports, airports, pipelines and even resort cities. Such infrastructure upgrades will make South Sudan and the region a base for economic activity reaching other areas of Africa.

The potential of vastly increased business had led to a rise in the number of premier hotels in the capital city of Juba, which once had a dearth of quality places to stay for visitors. I have experienced the before and after of that. In 2022, the Radisson Blu Hotel opened, demonstrating confidence in the South Sudanese economy. As it happens, that new international hotel sits right next to a premier locally-owned hotel – the Pyramid, owned by Eritrean immigrant entrepreneurs.

There has been a tendency for the US government to see only the African government in calculating relations, and that tactic has been followed by the US business community. Unfortunately, this misses opportunities in relating to business communities in countries such as South Sudan. Certainly, it matters whether governments frustrate or facilitate commercial relations inside its borders but looking past African business opportunities risks missing opportunities for both mutual profit and beneficial development that create further opportunities.

The Chinese symbol for crisis embodies both danger and opportunity. The sooner the rest of the world moves its focus from the danger in South Sudan and other countries with troubling issues to the private sector opportunities they offer, the sooner these countries and their people can emerge as the new economic engines in Africa.

Gregory Simpkins, a longtime specialist in African policy development, is the Principal of 21st Century Solutions. He consults with organizations on African policy issues generally, especially in relating to the U.S. Government. He also serves as Managing Director for the Morganthau Stirling consulting firm, where he oversees program development and implementation. He further acts as a consultant to the African Merchants Association, where he advises the Association in its efforts to stimulate an increase in trade between several hundred African Diaspora small and medium enterprises and their African partners.