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. South Sudan also has significant oil wealth, which if effectively used to drive development, could provide the basis for progress in the coming years. When conflict broke out December 2013, core administrative structures and mechanisms of political representation were emerging, and the government was beginning to provide basic services to the population. A peaceful resolution to the conflict has not yet been achieved.

Although South Sudan has vast and largely untapped natural resources, beyond a few oil enclaves it remains relatively undeveloped, characterized by subsistence economy. South Sudan is the most oil-dependent country in the world, with oil accounting for almost the totality of exports, and for 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 GDP per capita in 2013 was $1081. 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%). Since late 2014, the decline in the oil price has further exacerbated the economic hardship of South Sudan.

It is estimated that the current conflict has cost up to 15% of the potential GDP in 2014. Military expenditure has increased, jeopardizing the availability of resources for service delivery and capital spending on much needed infrastructure. A more prolonged conflict would also impact negatively on the 2015 harvest, further reducing non-oil GDP in 2015. Oil production has fallen by around 20% due to the conflict. The recent decline in oil prices from $110 per barrel to $55 per barrel has further aggravated the losses of oil revenue and has had a negative impact on macro-budgetary indicators, requiring painful fiscal adjustments. The lower oil prices and reduced output creates a fiscal deficit of 4.5 bn SSP (1.5 bn or 10% of GDP) from a budget plan surplus of SSP 443 million. The current account has deteriorated considerably leading to depreciation of the parallel exchange rate and fueling inflation. The low level of foreign reserves can 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 57.2% in 2015, with a corresponding increase in the depth of poverty.

Development Challenges

South Sudan, with an estimated population of 10.9 million and an area covering 644,329 sq. km, is roughly the size of France, but with just under one-third of the population, giving it a population density that is less than one tenth of neighboring Uganda. The country is very young with two-thirds of the population under the age of 30. Almost 83% of South Sudanese resided in rural areas before the outbreak of the recent conflict, which has displaced nearly 2 million people.   

Only 27% of the population aged 15 years and above is literate, with significant gender disparities: 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 are fully immunized. Fifty-five percent of the population has access to improved sources of drinking water. Around 38% of the population has to walk for more than 30 minutes one way to collect drinking water. Some 80% of South Sudanese do not have access to any toilet facility.

The government began earnestly working on the development of Southern Sudan (as it was then known) after the signing of the Comprehensive Peace Agreement (CPA) in July 2005, with the support of development partners. However, the task was extremely challenging with large parts of the country remaining isolated for up to six months of the year due to the rainy season and poor road conditions which made access close to impossible. Nevertheless, the country had begun to post improved results, particularly in health and primary education in the years following the 2005 CPA, and the resumption of oil flows in 2013 was expected to boost economic growth significantly. However, the impact of the conflict on the population and the breakdown in services has deep economic and social consequences for a country where human development is already among the worst in the world.

Last Updated: Mar 05, 2015

Given the fluid and challenging environment in South Sudan, the World Bank Group’s (WBG) first strategy for the country has taken the form of an Interim Strategy Note (ISN). The ISN was approved by the WBG on February 28, 2013. The current crisis, which erupted in Juba on December 15, 2013 and later engulfed six of the 10 states of the country, prompted the WBG and other development partners to a reevaluate how to best respond. The WBG has formulated the following principles for engagement in the light of the current crisis; 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 (CPA) period and the priorities identified in the South Sudan Development Plan 2011-2013. The ISN 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 organization to help cushion countries’ conflict, natural disasters and socio-economic shocks by 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 the immediate impacts and the longer-term structural changes is consistent with the approach of the current South Sudan Development Plan.

The ISN 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, 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: Mar 05, 2015

Before the outbreak of the civil war in December 2013, the World Bank Group (WBG) administered Multi-Donor Trust Fund (MDTF-SS), 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 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.

Following South Sudan’s independence in 2011, and pending its membership in the WBG, the South Sudan Transitional Trust Fund (SSTTF) was established. Administered by the International Development Association (IDA), the SSTTF funded three operations 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. In the same year, a South Sudan Emergency Food Crisis Response Project, funded by the Global Food Crisis Response Fund, was approved. The following year, two IDA projects, the Local Governance and Service Delivery Project and Safety Net and Skills Development Project, were approved.

More recently, 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 Result 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 also recently 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 $229.23 million and one regional project with $80 million for the first phase:

  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 ($62.5 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)

The WBG has developed a strategic response to the current crisis focusing on 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. As part of this exercise, it has produced notes on the impact of the crisis on the economy, food security and poverty.

Under the WBG’s South Sudan Interim Strategy Note (ISN) and International Finance Corporation’s (IFC) South Sudan country strategy, the IFC is undertaking efforts to improve the investment climate and financial institutions necessary for creating a better enabling environment for non-oil growth and jobs. Together with improvement in the business environment, the IFC is seeking to invest in infrastructure, financial markets, agribusiness, and services. The IFC has supported the preparation of a compendium of laws (22 laws enacted) which have promoted investment and general trade in South Sudan. A second business registry outside of Juba was opened in Malakal and a third one in Wau in 2013.

The IFC’s Conflict Affected States in Africa initiative (CASA) conducted a study in May 2013 to investigate the potential for leasing in South Sudan. The report guided the drafting of a Leasing Bill which, if enacted, will go a long way in facilitating access to finance by businesses. The IFC continues to work with the Bank of South Sudan and has supported four out of six planned training modules for Central Bank staff to date. It also continues to support 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 is improving business management capacity of SMEs in partnership with corporate institutions through the flagship Business Edge training programs, in partnership with the Equity Bank in South Sudan. A Health in Africa Initiative (HiA) program is supporting Policy and Regulatory Reforms at the Ministry of Health and private training institutions have also been supported to train health workers.

Last Updated: Mar 05, 2015

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 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, implemented primarily through multilateral institutions and non-governmental organizations.

A Systematic Country Diagnostic (SCD) is under preparation and the Country Partnership Framework is scheduled for discussion in 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 is conducted in consultation with the main development partners and key local stakeholders.

Last Updated: Mar 05, 2015


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

*Amounts include IBRD and IDA commitments