By Nungari Mwangi, Julia Shen, and Greg Snyders
In July 2011, the people of South Sudan voted overwhelmingly for independence from Sudan, creating the world’s newest country. Since then, one of the greatest challenges facing South Sudan has been diversifying its nascent economy; oil revenues accounted for 80 percent of the country’s GDP and 98 percent of the government’s budget in 2011.
The need to address this challenge escalated in January 2012, when South Sudan shut down oil production after a dispute with Sudan over pipeline transit fees. During the shutdown, which lasted over a year, the country’s GDP fell by a staggering 55 percent, creating an acute food security crisis affecting 4.7 million people and renewing the specter of conflict with Sudan. Yet, South Sudan survived the year without ‘doomsday’ scenarios coming to pass—and with an invigorated focus on agriculture-led growth.
South Sudan has a wealth of untapped agricultural assets. With 30 million hectares of arable land – an area 20 percent larger than the entire land area of the UK – across six agro-ecological zones, South Sudan can produce an array of agricultural products, from cereals to oil seeds, horticulture, and specialty products such as shea butter and gum arabic. Only five percent of this land is cultivated. Moreover, South Sudan also offers abundant water resources in the Nile basin, and forestry assets are plentiful, with tens of thousands of hectares of teak and other high-value hardwoods available for sustainable harvesting.
Companies like SABMiller have already tapped into South Sudan’s potential. The beverage giant has invested over $50 million since 2009 in its subsidiary South Sudan Beverages Limited (SSBL), capturing 75 percent market share with beers such as White Bull, branded as the “taste of independence,” and extending production to bottled water, soft drinks and other beverages. Another bold investor is Concord Agriculture. With 1,000 hectares of primarily sorghum already under cultivation and plans to utilize over 50,000 hectares of land, Concord has demonstrated that it is possible to obtain world-class yields in South Sudan while creating jobs and training opportunities for South Sudanese people. Concord has also found South Sudan’s domestic market to be surprisingly lucrative.
Others may soon follow suit, as several steps to catalyze agriculture-led growth are underway. In 2012, President Salva Kiir announced a goal to achieve food self-sufficiency by 2014. The Ministry of Agriculture launched a National Effort for Agricultural Transformation (NEAT), and recently, the Minister of Agriculture, Betty Achan Ogwaro, asked Dalberg to identify agricultural opportunities for foreign investors and agribusinesses. Earlier this week, representatives from South Sudan participated in discussions happening at the World Economic Forum (WEF) on Africa and at the Grow Africa Agricultural Investment Forum. Their participation, combined with investor dialogues facilitated by Dalberg, has stimulated interest in opportunities in the world’s newest nation.
South Sudan’s agricultural potential is evident, but challenges to operating in the country remain. As in other post-conflict countries, some investment-related policies and regulations – and the capacity and systems to implement such policies – are nascent. Infrastructure presents challenges, with poor roads and limited power generation capacity. As in many parts of Africa, rights over use of land and, specifically, leases for agricultural land can be unclear, requiring time and patience to navigate processes such as direct negotiations with the communities involved. The government of South Sudan is providing leadership to address these challenges, but, as is true elsewhere, the process of nation-building will be a long undertaking.
Nonetheless, with an economy forecasted to be among the world’s fastest-growing this year, South Sudan’s vast potential is already being realized. The country remains a high risk/high reward environment that demands commitment and patient capital, but the path of economic diversification through agriculture is likely to yield sweet fruits for years to come to those who seize the opportunities of that transition today.