Institute for War and Peace Reporting | Giving Voice, Driving Change

South Sudan Reaping Peace Dividend

Business is booming in the region, as foreign investment and international aid flows in.
By IWPR ICC
A peace dividend is becoming clearly visible in the region following the signing of a peace deal two years ago that ended the 23-year civil war between northern and southern Sudan.



Few anticipated such positive developments in the wake of the Comprehensive Peace Agreement, CPA, signed on January 9, 2005 between the Arab-dominated national government based in Khartoum, in the north, and the southern-based, black-dominated Sudan People’s Revolutionary Movement/Army, SPLM/A.



The passing months have, however, seen unprecedented developments in southern Sudan itself and neighbouring northern Uganda.



In southern Sudan, largely Christian and animist, business is booming. Roads, hospitals, schools, the first hotels and modern residential houses are under construction in what was until recently a war zone.



Dr Alfred Driwale, district medical officer of Koboko District in northwestern Uganda on the border with southern Sudan, described as "unprecedented" the scale of cross-border movements of people for business and social reasons.



“Never in the history of northern Uganda, south Sudan and also northeastern Congo has there been such heavy cross border movement,” Dr Driwale told IWPR.



The peaceful southern Sudanese environment has proved a big encouragement and psychological boost to Sudanese from that region, including those who were in the diaspora and now feel they have a homeland worth returning to.



“It’s very difficult to live somewhere else, even if you can meet your [needs], [knowing] that you cannot go back home any time," said Dr Driwale. "I think this peace is such a good thing for the Sudanese.”



An estimated three million southern Sudanese became refugees, in East Africa, Europe, North America and Australia. Those still living away from Sudan are remitting hundreds of millions of dollars to their kinsmen for food, education and health needs and to enable them to build businesses and homes.



In addition, there have been foreign aid pledges totaling more than 6 billion US dollars for post-war reconstruction, making Juba, southern Sudan's capital, the world's most unlikely boomtown.



Entrepreneurs hoping to get rich quick pay 150 to 250 dollars a night to stay in tented camps with names like Da Vinci, Oasis and Mango on the banks of the Nile. They hope to exploit unexplored oil fields, gold, diamonds, rich soil for farmland, huge teak forests and untapped fish stocks.



"I imagine when they found gold in America's Wild West this is how it must have been," said Anis Pringle, a partner at the international audit company KPMG in Kenya who performs treasury services for the South Sudan government's finance ministry.



"We do their books. We are also a travel agent, a bag carrier and a messenger service. But lately, we mostly carry large bags of cash into Juba."



The money flow is so abundant that it is slowly but surely changing the shape of towns and communities in southern Sudan. As well as Juba, a town of more than 250,000, centres like Yei, Torit, Kajo-Keji, Nimule are urbanising at a fast rate. Tiled and corrugated iron sheet houses are replacing grass and mud huts.



The disposable incomes of some southern Sudanese families are also rising, although the truth is that the majority of the people still wallow in abject poverty, lacking basic necessities like food, water and medicines.

The massive flow of money is largely concentrated in the hands of a few politicians and public officials.



But with peace, the direction of trade flow has been completely reversed.



During the civil war, Juba was a garrison town controlled by the Arab-dominated army of the north. Goods came from Khartoum, Sudan's capital 1600 kilometres to the north, on military barges and aircraft.



Guns and ammunition shared cargo space with crates of Coca-Cola. Arab military officers controlled the trade and made huge profits, a source of deep and lasting bitterness among southerners.



"It was not our food, not African food," said Grace Okello, a lay worker at a Juba church. "It was Jallaba [Arab trader] food, lentils and what have you, much of it so rotten you had to pick out the bugs."



Now the flow of goods is from Kenya and Uganda to the south, with the United Nations' World Food Programme and a German development organisation GTZ constructing some 3,000 km of roads at a cost of more than 200 million dollars to sustain the new trade flow direction.



But the goods flowing in from Uganda and Kenya come at a high price for the time being. With massive demand difficult to satisfy, prices of most things have shot through the roof. A bottle of mineral water costs the equivalent of 2 dollars, ten times the price in Uganda. All prices are at least triple those across the border.



These developments anticipate the likely decision by the people of southern Sudan to vote in a referendum in 2011 to separate from Khartoum and establish the independent state of South Sudan. The referendum is one of the key clauses guaranteed in the CPA.



Already, the Juba government is forcing the pace in advance of the compulsory withdrawal of Sudan army soldiers from the south in July this year. Much to the annoyance of Khartoum, the South Sudan government has banned four northern banks - Omdurman National Bank, Bank of Khartoum, Faisal Islamic Bank and Farmers Bank - from practicing Islamic banking in Juba and other southern centres.



Unable to conform with the Juba administration's demand that they conduct only conventional banking, the northern banks have withdrawn completely from the south.



Juba has also thumbed its nose at Khartoum, which theoretically controls all Sudan's burgeoning crude oil production industry, by permitting the British oil company White Nile to begin drilling in a disputed 67,000 square kilometre concession. The concession lies in a region where the final boundary between North Sudan and South Sudan has yet to be delimited under the CPA. Khartoum has allocated the exploration block to the French oil company Total.



Juba has also laid down strict conditions for one of Khartoum's favourite oil investors, the Malaysian company Petronas, to continue exploration in the south. South Sudan vice-president Riek Machar said Petronas must employ more southerners; fund an independent study on the environmental impact of its work; change the way it handles community development; and abandon using central government soldiers for security.



Traders in northern Uganda are cashing in on the southern Sudan recovery. A trucker here in Arua, near the Sudan and Democratic Republic of Congo borders, can take a truckload of cement, gasoline and other goods the 400 km to Juba and make a net profit of 5,000 dollars per trip.



One of the mysteries in southern Sudan is that while everything else is expensive, satellite phones seem to be cheaper than anywhere else in Africa. In Juba, Yei and other major towns, you see lots of people walking around with a state-of-the-art Thuraya satellite phone handsets, costing locally about 700 dollar. Some own two or three sets.



Ugandans, Kenyans and Ethiopians have established all sorts of business in southern Sudan's towns, like makeshift hotels, boutiques and building firms. They are reaping huge profits, but little of the money gets ploughed back into the local economy: it is repatriated home.



In Juba, Ugandan taxi-drivers are making good money, leading to complaints by commuters in Kampala, Uganda's capital, that there is a shortage of taxis because so many drivers have taken their vehicles to Sudan.



Viola Sanko, a former school headmistress in Kampala, is making a small fortune from the white Isuzu tanker truck into which she invested all her savings.



With a 12-year-old boy whom she pays 5 dollars per trip, she drives to the banks of the River Nile, pumps 700 litres of water into the tank and drives into Juba to deliver water to various homes and establishments before returning to the Nile to fill up again.



With an estimated 950 per cent profit margin for each trip, Sanko laughs that business is good. "In Kampala you have to steal if you want to make 100 dollars a day. Here I'm making twice that," she said.



Ugandan businessman Baker Kakondah, who deals in wines and spirits, said southern Sudan is such a vast market that he and fellow traders are unable to meet all the demands. He said Sudanese clients pay cash in advance, exerting tremendous pressure on him to deliver.



Despite the supply pressure, Kakondah said his company has been able to develop and position itself so that its product visibility is strong not only in southern Sudan but also in the neighbouring Congo and more than 1000 km away in the Central African Republic.



Just like Kakondah’s company, most foreign businesses are simply overwhelmed by the demand for goods and services in southern Sudan. One consequence is that northern Uganda itself is suffering a shortage of products like sugar, building materials, foodstuffs and fuel, which go across the border, leading to steep increases in Ugandan prices.



Richard Edemacu, the Arua chairman of Uganda Chamber of Commerce and Industry, said the boom means that his officials are luring to the town investors who have southern Sudan as their target.



However, it is not all simple. Security is a major problem. Since the signing of the CPA, there has been no attempt to disarm the ex-combatants. As a result, the region is awash with illegal guns. Trigger-happy Sudanese soldiers have killed dozens of foreigners, and ambushes by armed gangs are frequent on the major roads.



Emmanuel Chaku Joseph, a 28-year-old Sudanese driver with the World Food Programme, was one of the unlucky ones. Driving a German engineer hired to work on the WFP's road building programme between Juba and Torit, 135 km to the east of the southern capital, his vehicle was ambushed by unknown gunmen.



The German national survived unhurt, but Joseph died and three others in the vehicle were wounded. The WFP employs 420 people in southern Sudan, most of whom are Sudanese nationals. WFP is currently feeding two million of southern Sudan's six million people.



Hundreds of other foreigners have either been arrested or disappeared without a trace.



And while foreigners are welcome for the goods and services they provide, there is strong anti-foreigner atmosphere. More than 100 Kenyans, for example, were deported last year. And foreign businesses are sometimes arbitrarily closed down.



Dr Driwale said the devolved Government of South Sudan needs to move fast to instill discipline in military and public officials who have adopted “larger-than-life” lifestyles.



“They are investing in business, human resources and social services, but I don’t know how much they are investing in good governance and politics,” he said. Without good governance, he warned, new problems are inevitable in the future.



However, for the time being the flow of traffic from Kampala, Uganda's capital, through Arua to Juba, is heavy in a way that would have been thought impossible a year or two ago since it has to move through areas where there was a heavy Ugandan insurgency.



Dr Driwale and others predict that in coming years northern Uganda, South Sudan, the nearby northeastern Congo and northwestern Kenya, will grow into an economic hub that will propel unprecedented development across a huge swathe of underdeveloped Africa.



“This area across four borders will turn into a common market and a common place for us all," said Dr Driwale. "They [the Sudanese, Congolese and Kenyans] will come here and we will go there and there will be development.”



David Rupiny is an IWPR contributor in Uganda.