Overview

Economic Overview

The Republic of South Sudan became the world’s newest nation and Africa’s 55th country on July 9, 2011, following a peaceful secession from the Sudan through a referendum in January 2011. As a new nation, South Sudan has the dual challenge of dealing with the legacy of more than 50 years of conflict and continued instability, along with huge development needs. Formal institutions are being built from a very low base and the capacity of government to formulate policy and implement programs is limited, but growing. South Sudan also has significant oil wealth, which if effectively used to drive development, could provide the basis for progress in the coming years.

Unfortunately, the nearly two-year long conflict, which broke out in Juba on December 15, 2013 and later engulfed three of the 10 states of the country, deteriorated development gains achieved since independence and worsened the humanitarian situation.  It is now expected that the implementation of the Compromise Agreement on the Resolution of the Conflict in the Republic of South Sudan, signed by the President and the Opposition in August 2015, will put in place the necessary framework for peace and security, and lead to longer-term development and prosperity.

Although South Sudan has vast and largely untapped natural resources, beyond a few oil enclaves, it remains relatively undeveloped, characterized by a subsistence economy. South Sudan is the most oil-dependent country in the world, with oil accounting for almost the totality of exports, and around 60% of its gross domestic product (GDP). On current reserve estimates, oil production is expected to reduce steadily in future years and to become negligible by 2035.

The country’s growth domestic product (GDP) per capita in 2014 was $1,111. Outside the oil sector, livelihoods are concentrated in low productive, unpaid agriculture and pastoralists work, accounting for around 15% of GDP. In fact, 85% of the working population is engaged in non-wage work, chiefly in agriculture (78%).

The current conflict, has had a significant financial impact on South Sudan with 2014 GDP coming in at 15% less than projected. Furthermore, military expenditure has increased, further reducing the availability of resources for service delivery and capital spending on much needed infrastructure.

South Sudan’s discounted Dar blend oil prices decreased by 40% from $29.75 per barrel in December 2015 to $18 per barrel in January 2016. Production also significantly declined over the same period, cutting gross oil revenue by more than half from $29.7 million in December to $10.8 million in January. The decline in oil revenue, has also had a negative impact on macro-budgetary indicators, requiring austere fiscal adjustments. The current account has deteriorated considerably leading to depreciation of the parallel exchange rate and fueling inflation. The low level of foreign reserves could negatively affect food imports with further knock on effects on food intakes, notably during the “lean season,” which runs between April and October. The incidence of poverty has also worsened, from 44.7% in 2011 to more than 58.5% in 2015, with a corresponding increase in the depth of poverty.

Last Updated: Apr 09, 2016

Given the fluid and challenging environment in South Sudan, the World Bank Group’s (WBG) first Interim Strategy Note (ISN) FY13-FY14 was approved by the WBG on February 28, 2013. The recent crisis prompted the WBG and other development partners to reevaluate how to best respond. Accordingly, the WBG formulated the following principles for engagement: protecting core functions of government, protecting the vulnerable by supporting livelihoods and ensuring the delivery of basic services, investing in knowledge; and protecting development gains.

In developing the South Sudan strategy, the WBG has built primarily on the experiences gained during the Comprehensive Peace Agreement period and the priorities identified in the South Sudan Development Plan 2011-2013. The ISN has drawn inspiration from the extensive research and policy guidance provided by the World Bank’s 2011 World Development Report on Conflict, Security, and Development, from South Sudan’s membership in the “g7+” Group of Fragile and Conflict-affected States, and the “New Deal” initiative announced in November 2011 at the High-Level Forum on Aid Effectiveness. 

Last Updated: Apr 09, 2016

Before the outbreak of the conflict in December 2013, the World Bank Group (WBG) administered the Multi-Donor Trust Fund (MDTF-SS), which laid a framework for national development with tangible results across all major sectors of the economy. The MDTF-SS was mandated by the 2005 Comprehensive Peace Agreement (CPA) and closed in June 2013, having disbursed almost $780 million on 21 projects across the country. During this time, the WBG also undertook knowledge and analytical work across key areas of the economy.

The MDTF-SS achieved significant progress in providing development benefits to the people and building basic project management capacity in line ministries. Tangible results were achieved in providing clean water and hygiene training, building schools and delivering textbooks, supporting farmer groups, providing vocational training and assistance to micro-enterprises, and rehabilitating government buildings. The MDTF-SS also specifically promoted the economic empowerment of women in all 10 states by providing start-up grants to women entrepreneurs and community organizations working with women. As revealed in a stakeholder survey, the most appreciated contribution of the MDTF-SS was building supervision and implementation capacities in core government bodies and line ministries. This capacity was built through the MDTF-SS financed Core Fiduciary Systems Support Project, the External Audit Agent Project, and the Procurement Project.

In addition to the MDTF, South Sudan Transitional Trust Fund (SSTTF) was established following South Sudan’s independence in 2011, and pending its membership in the WBG. Administered by the International Development Association (IDA), the SSTTF approved and funded three operations in 2012 aimed at delivering quick impact and building institutions. These were the South Sudan Rapid Results Health Project, the South Sudan Private Sector Development Project, and the South Sudan Rural Roads Project, as well as the South Sudan Emergency Food Crisis Response Project, funded by the Global Food Crisis Response Fund. The following year, two International Development Association (IDA) projects, the Local Governance and Service Delivery Project and Safety Net and Skills Development Project, were approved.

In 2014, the WBG Board of Directors approved two additional financing projects for the Rapid Results Health ($35 million) and the Emergency Food Crisis Response ($9 million). The Rapid Results Health Project responds to the humanitarian crisis in the most conflict-affected states of Jonglei and Upper Nile, providing emergency care for internally displaced persons (IDPs), women, and children. The WBG Board of Directors within the same year approved the South Sudan Eastern Africa Regional Transport, Trade and Development Facilitation Project and Statistical Capacity Building Project. At present, there are eight active investment projects in South Sudan with a total commitment amount of $303.70 million. 

  1. South Sudan Health Rapid Results Project and Additional Financing ($63 million)
  2. South Sudan Private Sector Development Project ($9 million)
  3. South Sudan Rural Roads Project ($38 million)
  4. Food Crisis and Response Project and Additional Financing($26.73 million)
  5. Local Governance and Service Delivery Project ($56.97 million)
  6. Safety Net and Skills Development Project ($21 million)
  7. Statistical Capacity Building Project ($9 million)
  8. South Sudan Eastern Africa Regional Transport, Trade and Development Facilitation Project ($80 million)

Last Updated: Apr 09, 2016

Development partners have played a major role in South Sudan over the past seven years. Their commitments have totaled about $4.5 billion, excluding $4 billion in contributions to United Nations Mission in the Sudan (UNMISS) peacekeeping for the same period. Funding modalities have varied, with 19% of donor funding allocated to pooled funds through 2011. The World Bank Group (WBG) has been working closely with development partners through the WBG-administered Multi-Donor Trust Fund – South Sudan (MDTF-SS), the largest of five pooled funds.

With the closing of the MDTF-SS in 2013, majority of the assistance took the form of bilateral aid. More recently, due to the outbreak of the conflict, international assistance from development partners has focused primarily on humanitarian aid and peace building and reconciliation efforts, while continuing with delivery of essential social services at the community level, implemented primarily through multilateral institutions and non-governmental organizations. Following the Compromise Peace Agreement (CPA), development partners are now reevaluating their engagement in the country to explore the best ways in which they can support the effective implementation of the CPA, while continuing with humanitarian assistance and essential services to the people of South Sudan.

A Systematic Country Diagnostic (SCD) was approved in October 2015 and the Country Partnership Framework is scheduled for discussion in late FY16. The newly-introduced SCD seeks to identify the key constraints and opportunities facing the country in achieving adequate progress toward the World Bank Group’s twin goals of ending extreme poverty and promoting shared prosperity in a sustainable way. The SCD was conducted in consultation with the government authorities, main development partners, and other key local stakeholders.  Following the SCD, CMU embarked on preparation of a Country Engagement Note (CEN) which will replace the current ISN. 

Last Updated: Apr 09, 2016


LENDING

South Sudan: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments