The Republic of South Sudan became the world’s newest nation and Africa’s 55th country on July 9, 2011, following a peaceful Referendum in January 2011. The referendum was foreseen as part of the 2005 Comprehensive Peace Agreement (CPA) signed by the Government of the Republic of the Sudan and the then southern-based rebel group, the Sudan People’s Liberation Movement, after decades of conflict.
As a new nation without a history of formal institutions, rules or administration accepted as legitimate by its society, South Sudan must build its institutions from scratch. Core administrative structures and mechanisms of political representation are only beginning to emerge, and the government still struggles to provide basic services to the population. Outside a few oil enclaves, South Sudan remains a relatively undeveloped, subsistence economy.
South Sudan has vast and largely untapped natural resources and opportunities abound for visible improvements in the quality of peoples’ lives, but there are also many challenges. Geographically large (about the size of France), South Sudan is sparsely populated with more than 200 ethnic groups and little sense of shared nationhood. South Sudan is the most oil dependent country in the world, with oil exports accounting for almost the totality of exports, and for around 80% of gross domestic product (GDP), directly and indirectly. GDP per capita of South Sudan in 2010 was equivalent to US$1,505, while the preliminary estimates for 2011 indicate a GDP per capita of US$1,858, which is much higher than its East African neighbors, mainly due to oil production. Sudden suspension of oil production in January 2012 is expected to reduce a GDP per capita at US$785.
Gross National Income (GNI) per capita was much lower at US$984 in 2010, reflecting the large income outflows to oil companies. On current reserve estimates, production is expected to reduce steadily in future years and to become negligible by 2035. Prior to the oil shutdown in January, 98% of fiscal revenue came from oil. The budget for 2012-2013 was SSP 9bn (around $3bn), supplemented by $1bn of development assistance, and another US$ 300 million of humanitarian assistance. Outside the oil sector, livelihoods are concentrated in low-productivity, unpaid agriculture and pastoralists work, which accounts for around 15% of GDP. Eighty-five percent of the working population is engaged in non-wage work, chiefly in agriculture (78%).
The South Sudanese economy has been plagued with high inflation in the 12 months following independence, reaching 80% during the year, but price increases are expected to be moderate in the end of 2012 at 17%. Over the past year, inflation has been driven mostly by increases in food prices. Limited local food production and a high reliance on imported foods, in combination with depreciation of the South Sudanese Pound (SSP) and the border closure in the North, have driven price increases in the past year. All economic issues now focused on the decision by the Government of South Sudan (GoSS), on January 20, 2012, to shut down all its oil fields as part of its dispute with Sudan over a range of post-secession issues. The GoSS has adopted ‘austerity measures’ in response, involving cut of around 30%, mainly to government consumption, transfers to the states, development budget and 50% cut to housing allowance but without touching the wages and salaries. In Addis Ababa on September 27, 2012, an agreement was reached between Juba and Khartoum on the mechanism to market oil, which had raised the hope that the oil production may resume early 2013. However, a disagreement on the manner of implementation of the agreement stalled the agreement until mid-March 2013, when the two countries agreed on the matrix of implementing the agreement. This matrix has renewed the hope that oil from South Sudan may flow again by mid-2013.
South Sudan, with an estimated population of 8.3 million, is bordered by Ethiopia to the east, Kenya, Uganda, and the Democratic Republic of the Congo to the south, and the Central African Republic to the west. At 644,329 sq. km, it is roughly the size of France, but with just under 1/3 of the population, giving it a population density that is less than one tenth of neighboring Uganda. The population is very young, with 16% under the age of five-years-old, 32% under the age of 10-years-old, 51% under the age of 18-years-old and 72% under the age of 30.3 years old. The population is largely rural with 83% residing in rural areas.
The Government of Southern Sudan began earnestly working on the development of Southern Sudan (as it was then known) after the signing of the CPA in July 2005, with the support of development partners. However, the task was extremely challenging. It had virtually no road or water infrastructure then, and no paved roads in and outside of its capital of Juba. Structures for service delivery were practically nonexistent.
Despite the substantial achievements of the last seven years, the development challenges facing the new nation remain significant. The civil war that lasted over 20 years took an enormous toll and left South Sudan impoverished. Over half of the population lives below the poverty line, and human development indicators are among the worst in the world.
Only 27% of the population 15-years-old and above is literate. In 2009 there were 129 students per classroom. The literacy rate for males is 40% compared to 16% for females. The infant mortality rate is 105 (per 1,000 live births), maternal mortality rate is 2,054 (per 100,000 live births), and only 17% of children were fully immunized. Fifty-five percent of the population has access to improved sources of drinking water but 38% of the population has to walk for more than 30 minutes one way to collect drinking water. Eighty percent of the population does not have access to any toilet facility. Meanwhile, 15% of households own a phone (59% in urban areas compared to eight percent in rural areas.) South Sudanese want to see marked improvements in these indicators, and in job opportunities and economic prosperity, and have high expectations that independence will deliver them.
Last updated April, 2013
Given the fluid and challenging environment in South Sudan, the World Bank Group’s first strategy for the country has taken the form of an Interim Strategy Note (ISN). The ISN was approved by the Board in March 2013, and covers a period of three years, but this does not mean the strategy will be short-term in nature. Although achieving stability in South Sudan is of paramount importance, consolidating the state, connecting it with its citizens and consolidating legitimacy will require many years of institutional and economic growth. In developing the South Sudan strategy, the Bank has built on the experiences gained during the Comprehensive Peace Agreement (CPA) period. The strategy is also aligned to the priorities identified by the South Sudan government in the South Sudan Development Plan 2011-2013.
The strategy is also informed by the World Bank's 2011 strategy in Africa, Africa's Future and the World Bank's Support to It, which calls for the Bank to help cushion countries’ conflict, natural disasters and socio-economic shocks while assisting them in building economic resilience and competitiveness through diversification, job creation and skills training (especially for youth) and improved, more open, public sector governance. This dual emphasis on attention to the immediate impacts and the longer-term structural changes is consistent with the approach of the South Sudan Development Plan. The strategy has also drawn inspiration from the extensive research and policy guidance provided by the World Bank’s 2011 World Development Report on Conflict, Security and Development (WDR), from South Sudan’s membership in the “g7+” group of fragile and conflict-affected states (FCS), and the “New Deal” initiative announced in November 2011 at the High-Level Forum on Aid Effectiveness.
Development partners have played a major role in South Sudan over the past seven years. Their commitments have totaled about $4.5 billion, excluding assessed $4 billion in contributions to United Nations Mission in the Sudan (UNMIS) peacekeeping for the same period. Actual expenditures have been less, averaging about 80% for the most recent years.
Funding modalities have varied, with 19% of donor funding allocated to pooled funds through 2011. The Bank has been working closely with development partners through the Bank administered Multi-Donor Trust Fund - South Sudan (MDTF-SS), which is the largest of five pooled funds. With the closing of the MDTF-SS, in 2013, most assistance is expected to be bilateral.
Last updated April 2013
Sudan's 2005 Comprehensive Peace Agreement (CPA) mandated a Multi-Donor Trust Fund for Southern Sudan (MDTF-SS). The World Bank was asked to administer this trust fund at a Donor Conference in Oslo, April 2005, By February 28, 2013, more than US$534 million had been disbursed from the US$540 million paid into the fund by 14 donors and the World Bank. The Bank has also undertaken a robust program of knowledge and analytical products.
The MDTF-SS achieved significant progress in building basic project management capacity in ministries, which it worked with to design and implement projects addressing the welfare of the population. Tangible progress was achieved in providing access to clean water and hygiene training, building schools and delivering textbooks, supporting farmer groups, and providing vocational training and assistance to microenterprises, and rehabilitating government buildings. Essential drugs are now available in more than 70% of supervised health care facilities and the foundations for systematic national health coverage are being laid. A program to train teachers for the regular school system and for alternative educational programs is underway. Over 1000 kilometers of all-weather road have been constructed. Diversification of the economy and private sector development were advanced through pilot projects to entrepreneurs. Introduction of improved technologies and training supported improvements in agricultural productivity. MDTF-SS programming promoted the economic empowerment of women in all 10 states by providing start-up grants to women entrepreneurs and community organizations working with women to expand their economic opportunities.
MDTF-SS has also made some progress in building supervision and implementation capacities in core government bodies and line ministries. The result was a better operational environment that has enhanced the improved performance of the MDTF-SS portfolio over time. This capacity was built through the MDTF-SS financed Core Fiduciary Systems Support Project, the External Audit Agent Project and the Procurement Project, all of which supported the Ministry of Finance and Economic Planning (MoFEP). The capacity that was built, however, has not been fully consolidated, and the MDTF-SS closure could trigger a setback.
Public policy and sector strategy were enhanced by a Country Economic Memorandum, a Public Expenditure Review, a Poverty Profile, and several sector reports. Of particular note have been the Poverty Study and support provided to the South Sudan National Bureau of Statistics, statistical capacity and the use of innovative techniques for opinion polling. In the recent Country Integrated Fiduciary Assessment, the Bank is working with the government and other donors to build public finance management systems. Some progress has been made in “upstream” areas such as planning and budgeting, underpinned by multi-stakeholder Budget Working Groups. The Education Status Report and studies in health, transport, water and agriculture, hotel industry will be supported jointly with the World Bank and MIGA.
Under the World Bank Group’s Interim Strategy Note (ISN) and International Finance Corporation’s (IFC) South Sudan country strategy (The New Tablet for the New Deal - TNT), the IFC will continue their efforts to improve investment climate and financial institutions, to create a better enabling environment for non-oil growth and jobs. Together with the improvement in the business environment, the IFC is seeking to invest in infrastructure, financial markets, agribusiness and services.
To date, the IFC has supported preparation of a compendium of laws (22 laws since enacted) which were launched by the former EVP during his visit in May 2012. These laws have eased investment and general trade in South Sudan. A second business registry is being opened outside Juba (in Malakal). This infrastructure will reduce cost of doing business for small to medium size enterprises (SMEs).
The IFC’s Conflict Affected States in Africa initiative (CASA), conducted agribusiness/financial scoping services in June 2012. The report has guided new business development in South Sudan. To date tailored products have been designed in agribusiness/value chain support including inputs suppliers and linkages with smallholder farmers, financial infrastructure (payment systems/collateral registry), leasing/micro leasing, Banking in More Women (BMW), a gender-finance program, is under implementation through the South Sudan Chamber of Commerce and Agriculture. The program has supported the creation of Women’s Chamber of Commerce (CoWE) and is supporting governance training and business plan preparation.
Financial sector strengthening program is under implementation through the Central Bank and Bankers Association. The IFC is implementing a year-long program to strengthen bank supervision capacity through training of bank supervisors. A sector-wide training program targeting bankers is also under implementation through a series of tailored courses (trade finance, new product development/marketing, etc). The IFC is improving capacity of SMEs in partnership with corporate institutions. The aim is to reach 300 SMEs in one year through banks and corporate Business Edge training programs, in partnership with the Equity Bank in South Sudan. Health in Africa Initiative (HiA program is supporting Policy and Regulatory Reforms – six health law reforms are being finalized. The IFC is also supporting the Drug and Food Control authority including training of the board and secretariat to ensure quality of drugs and food items in South Sudan. Partnerships with private training institutions (Kijabe School of Nursing in Kenya) have been created to train Health workers – the first 15 students are attending anesthesia course since January 2013.
The IFC continues to support sector level institutions to promote advocacy including through Bankers Association, Chamber of commerce, and other Public Dialogue forums like the South Sudan Business Forum to champion and monitor development of private sector related laws and policies. The IFC will support institutions for accessing finance, skills, and markets that can be scaled up by the private sector and the government. The IFC’s investment service is pursuing an aggressive business development targeting SMEs. In addition, through the IFC’s public/private partnership (PPP) agenda, investments in infrastructure in sectors such as Information and Communications Technology (ICT), agriculture, hotel industry will be supported jointly with the World Bank and the Multilateral Investment Guarantee Agency (MIGA).