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South Sudan Set to Showcase Its Foreign Investment Potential

December 14, 2011

Frederika Whitehead and Claire Provost


Government leaders and investors are gathering in Washington DC on Wednesday for a two-day conference to discuss development and investment priorities in South Sudan, the latest in a succession of international trade conferences as the world's newest country seeks to open itself up to foreign investments.

Hillary Clinton, the US secretary of state, World Bank president Robert Zoellick, Mo Ibrahim, and the president of South Sudan, Salva Kiir, are among those expected to speak at the gathering. The event will also be attended by officials from the UK, Norway, Turkey, the EU, the UN, the African Union, the International Finance Corporation, the Corporate Council on Africa, and dozens of government officials.

President Kiir is due to outline his development and investment priorities at the conference, aimed at wooing foreign firms.

Rajiv Shah, head of the US aid agency USAid, said the conference is an opportunity for the government of South Sudan to lay out its vision for the future of its economy. The event, he said, would allow for "direct dialogue and engagement with the private sector here in the United States and around the world" and will "help private companies and investors see the Republic of Southern Sudan as a place where they want to increase their investments, thereby enabling significant economic development and economic growth".

Shah stressed the need for effective co-ordination between regional partners to help the country develop, adding that he "hopes that the private sector will be a major feature of the Southern Sudanese presentation and of our partnership with them".

There has been a surge of investor interest in South Sudan since the country became formally independent in July this year. This week's conference is the latest in a stream of events organised by the Government of South Sudan and foreign aid agencies to promote foreign investment in South Sudan.

It has been argued that South Sudan should move quickly to diversify its economy and reduce its reliance on oil – a primary source of contention with Khartoum.

Last month, USAid supported the country's first agricultural trade fair to showcase investment opportunities in agriculture, fisheries, livestock and forestry. USAid will use this week's conference to launch a $7m agricultural fund, in partnership with Equity Bank and Kenya Commercial Bank, which will be made available to South Sudanese farmers.

Britain's international development minister, Stephen O'Brien, will represent the UK at the Washington meeting. The UK has been vocal in its support for the new country, pledging £89m in aid to South Sudan this year, an amount that will rise to £99m by 2014-15. The money will support education, poverty alleviation, governance and security projects.

Ahead of the meeting, O'Brien said: "Britain is committed to improving the lives of South Sudan's poorest by providing hundreds of thousands of people with basic services such as education, healthcare and access to clean water.

"But the new country faces huge challenges and I am in Washington DC … to discuss how best to help South Sudan achieve a stable and prosperous future."

The minister is chairing a panel session on accountability, transparency and governance and is "seeking commitments from South Sudan's finance minister on how they will build an accountable, inclusive and transparent government".

Norway's development minister will lead a session on managing oil revenue, while USAid's chief economist will run a session on attracting investors.

Dana Wilkins, from Global Witness, who is attending a session on managing the country's oil revenue, said the NGO had been asked to provide recommendations for oil governance in South Sudan based on international best practice. She expressed concern that "despite strong commitments to publishing oil data and contracts, the role of oversight institutions like the audit chamber and parliament will continue to be overlooked by the government and donors. This would be a terrible omission and risk undermining the accountability of the entire sector."

Some observers say judgement should be withheld until more information comes out about exactly what types of investment are being promoted.

Researchers at the California-based Oakland Institute, for example, are warning against large-scale foreign land investments that are promoted as development solutions for the new nation.

"Competition over land and natural resources was among the root causes of the civil war in South Sudan. The war has now ended, but land issues continue to plague the new nation," said David Deng, author of a recent Oakland Institute report that looked at land deals in South Sudan covering an estimated 5.15m hectares.

"As South Sudan opens for business, foreign companies are flocking to invest in the new country and buy up land. For a school, a health centre, some vague promises of employment opportunities, or a couple of thousand dollars in annual lease payments, companies are given long-term leasehold rights of up to 99-years, often without the knowledge of the local populations living on the land."