The economy of South Sudan is one of the world’s most underdeveloped with South Sudan having little existing infrastructure and the highest maternal mortality and female illiteracy rates in the world as of 2011. South Sudan exports timber to the international market. The region also contains many natural resources such as petroleum, iron ore, copper, chromium ore, zinc, tungsten, mica, silver, gold, diamonds, hardwoods, limestone and hydropower. The country’s economy, as in many other developing countries, is heavily dependent on agriculture.
Other than natural resources-based companies, other such organisations include Southern Sudan Beverages Limited, a subsidiary of SABMiller.
The oilfields in the south have been significant to the economy since the latter part of the 20th century. South Sudan has the third-largest oil reserves in Sub-Saharan Africa. However, after South Sudan became an independent nation in July 2011, southern and northern negotiators were not immediately able to reach an agreement on how to split the revenue from these southern oilfields.
Oil and gas concessions in Sudan – 2004
It is estimated that South Sudan has around 4 times the oil deposits of Sudan. The oil revenues, according to the Comprehensive Peace Agreement (CPA), were split equally for the duration of the agreement period. Since South Sudan relies on pipelines, refineries, and Port Sudan’s facilities in Red Sea state in Sudan, the agreement stated that the government of Sudan in Khartoum would receive a 50% share of all oil revenues. This arrangement was maintained during the second period of autonomy from 2005 to 2011.
In the run up to independence, northern negotiators reportedly pressed for a deal maintaining the 50–50 split of oil revenues, while the South Sudanese were holding out for more favorable terms. Oil revenues constitute more than 98% of the government of South Sudan’s budget according to the southern government’s Ministry of Finance and Economic Planning and this has amounted to more than $8 billion in revenue since the signing of the peace agreement.
After independence, South Sudan objected to Sudan charging US$34 per barrel to transport oil through the pipeline to the oil terminal at Port Sudan. With production of around 30,000 barrels per day, this was costing over a million dollars per day. In January 2012, South Sudan suspended oil production, causing a dramatic reduction in revenue and food costs to rise by 120%.
China National Petroleum Corporation (CNPC) is a major investor in South Sudan’s oil sector. South Sudan’s economy is under pressure to diversify away from oil as oil reserves will likely halve by 2020 if no new finds are made, according to the International Monetary Fund (IMF).
In terms of South Sudan’s external debt, Sudan and South Sudan maintain a shared debt of approximately 38 billion dollars, all of which has accumulated throughout the past five decades. Though a small portion of this debt is owed to such international institutions as the World Bank and the International Monetary Fund (approximately 5.3 billion according to a 2009 report provided by the Bank of Sudan), the bulk of its debt load is actually owed to numerous foreign actors that have provided the nation with financial loans, including the Paris Club (over 11 billion dollars) and also non-Paris Club bilateral creditors (over 13 billion dollars).
The Paris Club refers to an informal group of financial officials from 19 of the world’s most influential economies, including such member nations as the United States, the United Kingdom, Germany, France and Canada, while non-Paris Club bilateral creditors refers to any entity that does not enjoy permanent/associated status as a Paris Club member. Private bilateral creditors (i.e. private commercial banks and private credit suppliers) account for the majority of the remainder (approximately 6 billion of the total debt).
While it is possible to arrive at a relatively accurate determination of the region’s total debt accumulation, it is not yet possible to determine precisely how much debt the newly formed nation of South Sudan independently carries, as an agreement has not yet been reached between Sudan and South Sudan regarding this highly contentious issue.
East African Community
The presidents of Kenya and Rwanda invited the Autonomous Government of Southern Sudan to apply for membership upon the independence of South Sudan in 2011, and South Sudan was reportedly an applicant country as of mid-July 2011. Analysts suggested that South Sudan’s early efforts to integrate infrastructure, including rail links and oil pipelines, with systems in Kenya and Uganda indicated intention on the part of Juba to pivot away from dependence on Sudan and toward the EAC. Reuters considered South Sudan the likeliest candidate for EAC expansion in the short term, and an article in Tanzanian daily The Citizen that reported East African Legislative Assembly Speaker Abdirahin Haithar Abdi said South Sudan was “free to join the EAC” asserted that analysts believe the country will soon become a full member of the regional body.
On 17 September 2011, the Daily Nation quoted a South Sudanese MP as saying that while his government was eager to join the EAC, it would likely delay its membership over concerns that its economy was not sufficiently developed to compete with EAC member states and could become a “dumping ground” for Kenyan, Tanzanian, and Ugandan exports. This was contradicted by President Salva Kiir, who announced South Sudan had officially embarked on the application process one month later. The application was initially deferred by the EAC in December 2012 however incidents with Ugandan boda-boda operators in South Sudan have created political tension and may delay the process.
In December 2012, Tanzania officially agreed to South Sudan’s bid to join the EAC, clearing the way for the world’s newest state to become the regional bloc’s sixth member. In May 2013 The EAC set aside $82,000 for the admission of South Sudan into the bloc even though admission may not happen until 2016. The process, to start after the EAC Council of Ministers meeting in August 2013, was projected to take at least four years. At the 14th Ordinary Summit held in Nairobi in 2012, EAC heads of state approved the verification report that was presented by the Council of Ministers, then directed it to start the negotiation process with South Sudan.
A team was formed to assess South Sudan’s bid; however, in April 2014, the nation requested a delay in the admissions process, presumably due to South Sudanese Civil War.
South Sudan’s Minister of Foreign Affairs, Barnaba Marial Benjamin, claimed publicly in October 2015 that, following evaluations and meetings of a special technical committee in May, June, August, September and October, the committee has recommended that South Sudan be allowed to join the East African Community. Those recommendations, however, had not been officially released to the public. It was reported that South Sudan could be admitted as early as November 2015 when the heads of East African States had their summit meeting.
South Sudan was eventually approved for membership in East African Community on March 2016, and formally acceded with the signature of the treaty in April 2016.
South Sudan and the Commonwealth of Nations
South Sudan has applied to join the Commonwealth of Nations, considering that South Sudan was part of the British Empire, and has 2 Commonwealth republics, Kenya and Uganda as neighbouring countries.