On July 9, after decades of civil war and the loss of more than 2 million lives, South Sudan seceded from Sudan and became the world’s newest nation—a peaceful and democratic breaking-in-two of what was Africa’s largest country.
The event brought joy to the streets and dusty roads of South Sudan, where nearly 99 percent of citizens who voted in the USAID-assisted referendum on self-determination chose secession last January. The mood was more somber in Khartoum, where the feeling among many was uncertainty about their suddenly smaller country’s economic future, since most of Sudan’s oil—the lifeblood of the economy—is in the south.
Because of the severe human toll and destabilizing consequences of conflict in Sudan—not only the north-south conflict, but also the tragedy of the Darfur conflict that began in 2003—Sudan has for years been the U.S. Government’s highest priority in Africa.
The division of Sudan has brought changes for the U.S. Government as well. USAID’s Sudan mission, which was reopened in 2006—14 years after USAID’s international staff had evacuated Juba and four Sudanese USAID staff were executed by Sudanese military intelligence—became the USAID mission in South Sudan on July 9, and the U.S. Consulate became a U.S. Embassy.
Despite the pride and exhilaration Southern Sudanese felt in achieving independence, the challenges their new nation faces are daunting. A landlocked country with oil resources but without its own pipeline to transport and export the oil, South Sudan is still negotiating with Sudan on revenue sharing or fees Juba would pay Khartoum to enable export of oil through Port Sudan.
More than Oil
South Sudan’s economy is exceedingly oil-dependent. As the country approached independence, 98 percent of Government of South Sudan revenues came from oil, as part of revenue sharing agreed to in the 2005 Comprehensive Peace Agreement (CPA) that ended the north-south civil war. This almost total reliance on a single revenue stream makes the country vulnerable to economic shock from fluctuations in the price of oil or any disruptions in production.
Additionally, the severe lack of infrastructure in South Sudan has hindered economic growth.
“In most developing countries that come out of conflict, you talk about reconstruction, but in South Sudan, you’re really talking about construction. They had very little to start with,” said William Hammink, who was USAID mission director in Sudan from 2009 to 2011.
“In 2005, Juba was still a garrison town that armed forces of the north controlled. All the various infrastructure, such as sewers, electricity, roads—dated to the British colonial days of the 1950s. So not only is South Sudan starting from scratch in terms of government institutions, but also its infrastructure,” he said.
South Sudan also faces a severe challenge in terms of human capital—shortfalls in the number of educated and trained workers needed to run the government of the new country, where the literacy rate is only 27 percent, one of the world’s lowest. The rate is even lower among women, so USAID is providing scholarships to help girls enroll and remain in school, and training opportunities for women, including teacher training.
South Sudan also faces the challenge of integrating into productive employment hundreds of thousands of recent returnees who have come back to their ancestral home areas after years or decades living in northern Sudan. Since October 30, 2010, more than 370,000 Sudanese have returned to South Sudan and the Three Areas—the Abyei Area and Southern Kordofan and Blue Nile states.
When the CPA was signed in 2005, it created the autonomous sub-national Government of Southern Sudan—an institution on paper only—with no buildings, equipment, or personnel. USAID helped transform the concept of this institution into a functioning government, with ministries, transparent budget systems, a tax administration, and a central bank.
Population: 30.9 million
(Source: 2008 Sudan Population and Housing Census)
Land size: 1,861,484 square kilometers – 16th largest in the world
Literacy: 77.5 percent of adults
Population 8.26 million
(Source: 2008 Sudan Population and Housing Census)
Land size: 644,329 square kilometers - 42nd largest in the world
Literacy: 27 percent of adults
(Source: South Sudan Center for Census, Statistics, and Evaluation
A Strategy for Transition
Since 2005, USAID’s strategy for assisting Sudan had been based on implementing the CPA, which expired with South Sudan’s independence. In June, USAID released a two-year transition strategy for the new nation with the overall goal of making it more stable in the post-CPA period.
“In developing our strategy for assistance to South Sudan during this critical transitional period, we built on four key objectives—mitigating the whole range of potential conflicts in South Sudan; building a sound system of governance for the new state; ensuring the provision and further development of basic services; and helping South Sudan expand its opportunities in agriculture,” said Jim Parys, supervisory program officer, who led the team that drafted the strategy.
One of USAID's key efforts to help South Sudan engage with the international community, including the private sector, on its development priorities is an International Engagement Conference to be held in Washington later this year.
The U.S. Government will sponsor the conference with the African Union and Turkey, and with the participation of bilateral and multilateral government partners, including the European Union, United Nations, African Development Bank, and World Bank, as well as private sector organizations including Citibank and the Corporate Council on Africa.
One of USAID's key efforts to help South Sudan engage with the international community, including the private sector, on its development priorities is an International Engagement Conference to be held in Washington later this year. The U.S. Government will sponsor the conference with the African Union and Turkey, and with the participation of bilateral and multilateral government partners, including the European Union, United Nations, African Development Bank, and World Bank, as well as private sector organizations including Citibank and the Corporate Council on Africa. The conference will allow the new nation to present its development vision to the international community and to present its key policy commitments over the next two years while reaching consensus with the international community on a framework for coordination of development initiatives.
The conference will allow the new nation to present its development vision to the international community and to present its key policy commitments over the next two years while reaching consensus with the international community on a framework for coordination of development initiatives.
One of the goals of agriculture development is to reduce the vulnerability that comes with overreliance on oil by diversifying the economy and tapping one of South Sudan’s most valuable resources—fertile land.
While the new strategy guides how U.S. Government funding will be invested to help stabilize South Sudan, USAID is also providing leadership in the international community by securing commitments from the Republic of South Sudan in four key pillar areas critical to the new nation’s long-term viability—creating an environment that enables promotion of private investment; bolstering the agriculture sector to become the engine for South Sudan’s economic growth; developing a common platform and institutional structure for the international community to invest in South Sudan; and building the human capital necessary to govern and deliver services.
“South Sudan is unusual among our development partners,” explained Deputy Assistant Administrator for Africa Raja Jandhyala. “In the short term, it will be financially vulnerable as it puts in place macroeconomic systems and reaches agreement with the Government of Sudan on sharing of oil revenues or user fee arrangements. In the medium-to-long term, it will have national revenue from oil that exceeds development resources, as the foreign assistance funding levels for the United States and other major donors are under significant pressure. Considering this new economic dynamic, our role is to use our leadership, political capital, and experience to help the Republic of South Sudan, as well as the Government of Sudan, to make sound choices in the public interest with the resources they have, and to help facilitate investments from others, particularly the private sector.”
Last updated: October 14, 2014