Kris Mbaya, the managing director of UAP Old Mutual South Sudan,
who was posted to the country in early 2013, is among business managers
who have seen the good, the bad and the ugly of South Sudan’s business
landscape in its short history of 11 years as an independent state.
Indeed,
UAP Equatorial Tower, the tallest building in the country at 15 storeys
high, is a fitting analogy of how businesses that flocked into South
Sudan following the signing of the Comprehensive Peace Accord in 2006
have crashed.
UAP was among the first companies to
venture into South Sudan at Independence, and invested $30 million in
putting up the building in 2011 to provide foreign investors with
ultra-modern office space.
But the breakout of
violence in 2013, following the fallout between President Salva Kiir and
his then deputy Riek Machar meant that the building could not be
completed on time and as such had no tenants for a long time.
The tower — with only 23 per cent occupancy —is a painful reminder of a strategic investment decision that went awry.
Occupancy will rise to 35 per cent when the Kenyan embassy in Juba relocates to the building by end of the year.
Although it generates minimum revenue, the building generates
costs. Every month, UAP spends $15,000 for diesel to power the
generator, which is the only source of power, and $5,000 for satellite
Internet. In Kenya, it would cost only $400 for the same Internet
capacity.
However, the building also represents the long term view of South Sudan opportunities.
“We
believe in the long term potential of South Sudan. This country
represents the mantra of high risks, high returns for us as a business,”
said James Wambugu, UAP Old Mutual Group managing director in charge of
general business.
While UAP believes in the potential
of South Sudan, other companies have fled because of insecurity,
political uncertainty and a struggling economy.
Sme's close down
Several
small and medium enterprises owned by foreigners have also closed down,
while traders bringing goods into the country, particularly foodstuffs
and other consumer products, are operating in a difficult environment.
“Business
in Juba used to boom, but things have been tough since the crisis,”
said Peter Kaikara, a Uganda national who supplies alcoholic beverages
to several outlets in Juba.
Considering that South
Sudan largely depends on imports, the cost of living and of basic
commodities is high due to the poor state of roads and lack of
electricity. The country has only 400 km of paved road.
A
bottle of 500ml Kenyan beer brand Tusker that costs $1.9 in Kenya is
$3.3 in Juba. Rent for a one-bedroomed apartment ranges from $1,500 to
$2,000 per month.
Juba has one mall, City Mall, which is a pale shadow of those found in other East African capitals.
Unemployed
young people crowd the streets in Juba, idling away and drinking strong
tea; motorcycles (boda bodas) are the main source of earning a living
for many.
The unemployment crisis has been exacerbated
by the exit of numerous foreign companies while others have scaled down
their operations after experiencing losses.
Kenyan
multinationals like KCB Group, Stanbic Holdings, Equity Group, Co-op
Bank and CIC Insurance are some of the businesses that have
significantly reduced their operations in the country.
The hopes of prosperity and opportunities that came with the signing of the Peace Accord in 2006 have been diminished.
Three
years of political instability and prolonged fighting between
government forces and rebels, particularly in the oilfield states of
Paloch, Upper Nile and Maiwut, have crippled the economy that is highly
dependent on oil.
Cash crunch
The
cash crunch from oil earnings has made it impossible for the government
to meet even basic financial obligations, including paying salaries of
civil servants, teachers and the police, some of whom are earning $20
per month.
The government has no money to finance key programmes like health, education and agriculture to secure food production.
Despite
its huge tracts of fertile soil and water resources, South Sudan
remains largely a subsistence agriculture state. Currently the country
imports 70 per cent of food from Kenya and Uganda, and humanitarian
organisations say that about half of the population is food insecure.
“Food
security continues to deteriorate across South Sudan with
life-threatening hunger spreading in scale and scope, making 2017 the
most food-insecure year in the country’s history,” states a report by
the United States Agency for International Development.
By
July, approximately six million people were experiencing crises or
higher levels of acute food insecurity and were in urgent need of
emergency aid.
Despite being a significant oil
producer, South Sudan depends on imports of petroleum products for local
use, with diesel in the country being among the most expensive in East
Africa at $1.05 per litre, compared with $0.95 in Kenya.
The government has established a fuel subsidy programme to ensure fuel trades at $0.2 per litre.
No comments :
Post a Comment