Public Private Cooperation Fragile States Annexe F to the Field study report South Sudan As part of the Country Study South Sudan Working group: Public Private Cooperation in Fragile States July 2009 1 Supplementary Document (annex F) to the Field Research Report on Public Private Cooperation opportunities in Southern Sudan, Nov 2009 by Irma Specht & Mark van Dorp (main researchers) and Washington Okeyo, Marjolein C. Groot and John Penn de Ngong 1. Specific (sub) sectors in more detail This annex provides, in more detail, the ongoing and potential sectors relevant for economic development and PPC in South Sudan. These are details found during the field research and are to complement the overview provided in the overall report. Oil and mineral production The most important economic activity in Southern Sudan is oil production, which is currently taking place in the oil rich regions of Upper Nile, Abyei and Unity State. Oil was discovered in Sudan in the mid-1970s, but production did not start until 1999. The pioneer companies Chevron and Shell were forced to leave in 1984, after the outbreak of civil war. They eventually sold their rights in 1990, booking a $1 billion loss. Major players that have controlled the oil industry in Sudan since the mid-nineties include the Chinese National Petroleum Company (CNPC) and Petronas Caligary from Malaysia, Lundin Petroleum from Sweden and ONGC Videsh from India. While, at a global level, Sudan is a minor oil exporting country, China, India and Malaysia have invested billions of dollars in the country, including outside the oil industry. They consider their relations with the country not only as economic, but also geostrategic and energy-strategic successes that are worth defending. The only two (partially) Dutch companies involved as subcontractors in the oil industry are Royal Dutch/Shell and Trafigura. Figure 4: Sudan’s oil production and consumption Source: ECOS (2007) 2 The country is divided into 23 prospective blocks that have all been awarded, with the exception of Blocks 10 and 12B (See Oil map of Sudan in Annex). So far, the oil exploration has been limited to the central and south central regions, but the country may also have commercial reserves in the east and northwest; Sudan remains largely unexplored. The country’s oil production will probably peak in 2008, but revenues may be maintained for another 10 years at current levels, depending on the development of oil prices (ECOS 2007). In the past, gold has been mined along the borders between Sudan and Uganda and DRC, but not in commercially profitable amounts. Illegal gold mining took place in Eastern Equatoria during the 1990s, mainly to finance SPLA’s war efforts1. Uranium ores have been discovered in the area of the Nuba Mountains and in southern Kordofan. Minex Company, a U.S. firm, obtained a 36,000-square-kilometer exploratory concession in the Kordofan area in 1977, and the concession was increased to 48,000 square kilometres in 1979. Uranium reserves are also believed to exist near the western borders with Chad and Central African Republic. Agriculture In both West and Central Equatoria, local agriculturalists are the key players since the majority of production is for subsistence only. This is the case for both livestock and farming. Farmers may sell their excess harvest if the rains have been abundant. There are no large, commercial farms producing for the market. A number of farmers in Yei County, Central-Equatoria, have started upland rice farming but still at a very small scale. In theory, farmers can produce up to 2 tonnes of rice per year. The improved rice variety is of high quality and can easily compete with imported rice. At GOSS and state level, the Ministry of Agriculture and Forestry is responsible for agricultural development. The County Administration is also playing a role, both in agriculture and livestock, in terms of extension services, provision of agricultural inputs and tax collection. However, it depends on the capacity of the County Departments. In Terekeka County (Central-Equatoria), farmers have indicated that the government provides no extension services or training. On the other hand, in Yei County, extension workers are trained to support farmers in introducing new agricultural techniques, provision of seeds and tools and other agricultural inputs. Some of these extension workers are paid while others are volunteers. Trade of agricultural products is taking place in two ways: 1) Farmers going to the market from their village (on foot, carrying heavy bags of produce on their heads or – in case of abundant harvest – by hired pickup or truck); and 2) Traders coming to the villages and buying from individual farmers, to sell in local or national markets (e.g. Juba). The majority of trade is taking place in this way because of bad road conditions and the high cost of transport to farmers. Throughout Southern Sudan, there are a growing number of farmers’ cooperatives. In Yei County, there are 11 cooperatives of which 9 are functional. One purpose of the cooperatives is to decide which crop to grow. They are licensed by the government and hence are different from farmer’s associations and self help groups, which are not licensed. 1 D. Scroggins (2002) 3 Example: Savannah Farmer’s Cooperative The Savannah Farmer’s Cooperative is a private initiative of a number of individuals from Kajo Keji, Central-Equatoria. The Cooperative produces various goods (e.g. groundnuts and maize) on four farms, and owns 20 tractors (some of which are in broken state). It also buys Shea nut (lulu) from local collectors (women) at a price of 1 SP per kg. (Grade A) or 0,5 SP per kg (Grade B). Grade A is used for body lotion, Grade B for cooking oil, while Grade C is used locally to produce soap. The Cooperative has bought a Shea nut-processing machine, but it is not functioning due to the lack of funds to purchase a generator or power source. So, at present the oil is processed in a traditional way by women’s groups, and then sold at very low prices to traders from Uganda, who then sells to Uganda or Kenya. “The traders take advantage of the ignorance of the lulu collectors”, as one informant says. Local markets visited in Central-Equatoria contained the following products: Product name Local name Origin Leguminous Groundnut Choromondi Local Simsim Simsim Local Beans Local (black/white) Beans (red) Janjaro Uganda Beans (white) Ful-abugewi Khartoum Cowpea Local Cereals Sorghum Durra Local (coloured) Sorghum (white) Durra Khartoum Millet Khartoum Maize Guaya Local Rice Rus Khartoum Roots Cassava Local/Uganda Vegetables Onion Basol Khartoum/Uganda/local Okra Weka Khartoum/local Amaranthus and Kudra, Rajila, Local other green Tamaleka, leaves Kropa Cassava leave Bafra Local Okra leave Weka Local Tomatoes Timatim Local/Uganda Hibiscus Kerkade Khartoum/local Fruits Bananas Uganda (some local) Pineapples Uganda Passion fruit Uganda Papaya Local/Uganda Orange Uganda Lemon Uganda/local Melon Uganda Apples South-Africa 4 Example: An early adopter in agriculture Central and Western Equatoria have a fertile soil and conducive equatorial climate that suits a great range of crops. One of the farmers visited, Mr. Bullen is a good example of an early adopter in agriculture. His enterprise illustrates the high potential for introducing new crops for commercialisation. He has been a refugee in Uganda for almost a decade, and decided to return to his ancestral land in 2003, when peace had come to this part of Southern Sudan. Mr. Bullen cultivates a medium size farm, divided into several blocks on which he rotates maize, sorghum, upland rice, sesame (simsim), beans, onions, cabbages, green leafy vegetables, sweet potatoes, tomatoes, yams, cassava and coffee, and fruit trees and pineapples. In the swampy stream that demarcates his garden is a fishpond. The pond hosts about 1,000 Tilapia nilotica. Some of his customers include NGOs and individual farmers as well as international organisations. Inspired by his success, other farmers have also created fishponds. Currently, he uses local tools for digging his fields, but he is being trained by AAH-I in ox-ploughing. Bullen is also rearing goats and chickens for subsistence. His farm provides him with sufficient income to feed his family and relatives, to pay school fees for his children and enough extra money for family needs. However, as much as he has succeeded in cultivating his farm, he is faced by two major challenges, which also apply to his colleagues. - Pests and diseases: porcupines from the nearby caves come and dig up his cassava field at night. Unlike goats which are controlled by thorn fencing, porcupines and rats make a burrow under the fence and sneak into the garden. - Soil exhaustion: the soil has been exhausted by repeated cultivation and soil erosion from the mountainside. Due to lack of microfinance services in Southern Sudan, farmers such as this have no means to buy pesticides, fertilisers and better tools for improving their yields. Example of value chain for Groundnuts – Terekeka County · Input suppliers: seeds are produced by the farmers (from the previous year’s harvest); no external inputs such as fertilizer · Producers: small-scale, subsistence farmers living scattered across Terekeka County with very limited access to the future highway between Juba-Aweil. Local feeder roads are sand or dirt roads that have not been maintained. Harvest is stored in small, thatch-grass roofed granaries which can store up to 20 bags of 90 kg. · Processors: no groundnut processing is taking place, and thus they are sold in raw form. · Traders: Traders come to buy the groundnuts in bags or buckets. A large bucket will sell at 40 SP (20 USD) at the beginning of the season, dropping towards 20 SP (10 USD) when supply becomes abundant.