Invest in South Sudan

Picture: Juba 2011 Reuters

Two and a half months ago, the Southern Sudan became officially independent. The political situation is far from providing an enabling environment for state-building and the much-needed private investment. But "the Wild West of East Africa" ​​is very important geo-politically, so the country still has a real chance to get on their feet. (I know, the Congo has said the same thing.)

Wanted: Private, foreign investors

This week in the capital Juba on the White Nile a conference is taking place: "Blue Spring International, Business Symposium and Trade Fair".  The aim of this "economic summit" is, according to the organizers, "the government decision-makers meet with investors from home and abroad to exchange information and networking together".

But investors would be really careful never to put a foot in the country in the heart of Africa, approximately 15-times larger than Switzerland.


Poor investment conditions:

Source: Doing Business IFC

"With its political instability, the precarious security situation and rampant corruption of South Sudan, for many international companies it is not an attractive investment location."

The verdict of the prestigious Institute for International and Security Affairs (SWP) in their study "Statebuilding in South Sudan" is devastating. 

The statistical data for the World Bank in its report "Doing Business in Juba" is no better.
"Compared to the 183 business locations, Doing Business previously evaluated the former occupied Juba as the 159th rank in terms of business friendliness." 

For the World Bank Group  "International Finance Corporation" (IFC) lists 10 criteria designed to help international investors to assess their risk to invest in its intended location:

Quelle: Doing Business IFC

The criterion of "cross-border trade" Juba, for example, lies in third last place in the world. In practice this means for example: If a company wants to import a container in Juba via the 1300 kilometers from the port of Mombasa in Kenya, it needs to fill 11 documents, wait 60 days and pay 9'460 U.S. dollars. Half the time loss occurs because of bureaucratic paperwork. In order to transfer funds abroad, it needs a certificate from the Bank of Southern Sudan - which takes about 22 days.

As depressing as this analysis fails any test - the very fact that the International Finance Corporation World Bank rated Juba, shows the interest and its importance. "Ranking is not what matters most" stressed "Doing Business" in their report. It is a starting point for the Government of Southern Sudan for improvement measures. The World Bank is making concrete recommendations. Of course, according to the rules of the West, but to orient them to the investors .

They next weigh the risks and opportunities. And "the price is hot." There is the risk of losing big money in South Sudan - but also the chance to earn lots of money - not only in the oil business, which today accounts for 98% of the revenues of the state budget.


Geo strategic significance: Not just oil - and water

Juba White Nile Aerial View

Of course, almost everything revolves around oil. 75% of known oil reserves lie within the boundaries of the new South Sudan - and one suspects more rich oil resources and further south. The oil brings money into the country and thus generate new business.

But South Sudan has more Gold for example, especially the "blue gold" of water.

90% of the land is fertile. Only a fraction of it is used today in a very sparsely populated country. South Sudan has therefore the potential to become the "Breadbasket" of Africa to be. Water and food has become one of the world's most sought after "commodities". And foreign speculators have long cast an eye on the great water and land resources in South Sudan.

It is therefore hardly surprising that next week will bring very powerful investors to the trade fair in Juba, at least to build relationships, identify potential competitors and to explore the opportunities. Of course, the trade fair in Juba this week is not the only platform in the "Race for South Sudan". Important Chinese, Indian, American, and European players - not to be underestimated - African investors - create and use other platforms in the background.

Und weil der Südsudan so wichtig ist, geht es nicht zuletzt auch um "Einflusssphären", um die Konkurrenz zwischen den alten Wirtschaftsmächten im "Westen" und den aufstrebenden, rohstoffhungrigen neuen Mächten in Asien.

By the way: Reassuring for all expats who venture in the coming weeks and months to Juba: One of the first companies to produce already in Juba, is a brewer, Southern Sudan Beverages Limited, which is owned by the U.S. American beer giant SABMiller. The beer is called "White Bull".