Public Private Cooperation Fragile States

Field study report South Sudan

As part of the Country Study South Sudan

Working group: Public Private Cooperation in Fragile States

July 2009

Public Private Cooperation opportunities in Southern Sudan

Report of the field research mission July 2009

Irma Specht & Mark van Dorp (main researchers)

and Washington Okeyo Marjolein C. Groot John Penn de Ngong

Overall coordination /Editor Bert Bosch (TFM Consult)

Table of Contents EXECUTIVE SUMMARY...... 4 INTRODUCTION ...... 12 1. THE POTENTIAL ROLE OF PUBLIC PRIVATE COOPERATION ...... 19 1.1 EXISTING EXPERIENCES WITH PPC IN SOUTHERN SUDAN...... 19 1.2 OPINIONS AND PERSPECT IVES ON PPC ...... 22 1.3 CHALLENGES FOR PPC ...... 24 1.4 POTENTIAL MODALITIES FOR PPC ...... 25 1.5 ENABLING ENVIRONMENT...... 33 2. HOW CAN PPC CONTRIBUTE TO CONFLICT TRANSFORMATION? ...... 35 2.1 KEY CONCERNS FOR ECONOMIC DEVELOPMENT ...... 35 2.1.1 Ensure collaboration with local private sector...... 36 2.1.2 Strengthening capacity of Government and civil society...... 36 2.2 ENSURING CONFLICT SENSITIVITY...... 37 2.2.1 Transformation of war economy...... 38 2.2.2 Include Corporate Social Responsibility in investments...... 40 2.2.3 Gender concerns...... 41 2.2.4 Investing in economic support services...... 43 2.2.4.1 Vocational training...... 43 2.2.4.2 Business Development Services ...... 44 2.2.4.3 Integrating environmental aspects...... 45 3. POTENTIAL FOR FAIR AND SUSTAINABLE ECONOMIC DEVELOPMENT ...... 46 3.1 SPECIFIC SITUATION IN CENTRAL AND WESTERN EQUATORIA STATE...... 46 3.1.1 Ongoing economic activity...... 46 3.1.2 Potential sectors...... 58 3.1.3 Challenges in the abovementioned sectors...... 64 3.2 MAJOR STAKEHOLDERS...... 66 3.2.1 Stakeholder analysis...... 66 4. CONCLUSIONS ...... 72 5. RECOMMENDATIONS FOR PPC...... 76 ANNEX A PEOPLE CONTACTED...... 78 ANNEX B METHODOLOGY...... 83 ANNEX C LEGAL FRAMEWORKS...... 89 ANNEX D LIST OF ABBREVIATIONS...... 91 ANNEX E BIBLIOGRAPHY...... 93 ANNEX F KEY STAKEHOLDERS AND SPECIFIC (SUB)SECTORS IN MORE DETAIL (SEPARATE)...... 95 ANNEXE G: MAP OF SUDAN...... 96

Disclaimer The views expressed and analysis put forward in this report are entirely those of the authors in their professional capacity and cannot be attributed to ICCO and/ or the Peace, Security and Development Network or its working groups and/ or the Dutch Ministry of Foreign Affairs.

Executive summary

The challenges facing Southern Sudan are daunting, but the potential for fair and sustainable economic development is equally significant. Unlike many post-conflict countries, Southern Sudan is richly endowed with natural resources. It starts with considerable wealth from oil, and a broad base of potential export or growth sectors including hydroelectric power, metallic and non-metallic mining, natural gum/resins, cotton, oil seeds, tourism, medicinal plants, fisheries, tobacco, coffee, tea, leather and horticulture. In order to move away from dependency on oil revenues, diversification in economic activit ies is , however, essential in order for development to be sustainable . Southern Sudan must unleash its potential if it is to fully realise the peace dividend.

Objective of this research The main goal of this first-phase field research of the wider research into PPC opportunities for socio- economic development in fragile states was to identify the local needs and possibilities for this development through Public Private Cooperation (PPC) in Southern Sudan. This report therefore concentrates on the local dynamics of PPC between the GoSS, the local private sector and Non- Governmental Organisations (NGOs) in which any future PPC interventions should be embedded, if they are to be effective and sustainable. The outcome of this research feeds into the second phase research, which builds upon these results, and further assesses potential PPC modalities, including the potential involvement of Dutch companies and the Dutch Government. Therefore, this report was not intended to be a stand-alone and final product, as its main purpose was to inform the second phase research team on the realities on the ground in Southern Sudan.

The specific objectives of this Public -Private Cooperation (PPC) field research were 1) to determine the potential for fair and sustainable economic development in Southern Sudan, with Central and Western Equatoria states as research areas, 2) to explore if PPC can play a role in this development and 3) to examine how PPC should be set up in order to contribute to conflict transformation and peace. This report and its main findings summarised below, contain the results of this research which was conducted in February and March 2009.

Economic development in South Sudan There are numerous ongoing economic activities in Southern Sudan and there is enormous potential for (fair and sustainable) economic development in various sectors. However, economic development is challenged by the lack of capital, technology, poor infrastructure, lack of skilled labour and business know-how and in general a weak capacity of all private and public economic actors. Nevertheless, Southern Sudan provides many business opportunities, especially in the production of agricultural products and (semi-)manufactured goods , most of which are currently being imported from Uganda, Kenya and North Sudan. However, the development of these business opportunities should preferably be done in the framework of a PPC in order to safeguard fair and sustainable economic development, with the ultimate aim of contributing to durable peace.

The following sectors have, among others, high potential for economic development in the short and medium term, and are potentially interesting to be developed in a PPC framework:

*Oil and mineral production (mining) In Southern Sudan there are large deposits of petroleum and minerals. At present, large-scale oil drilling is taking place in the regions of Upper Nile, Abyei and Unity State. The oil industry is dominated by Chinese and other Asian interests. Mining has so far been limited in Southern Sudan. Non-hydrocarbon minerals of actual or potential commercial value (for Sudan as a whole) include gold , chrome, copper, iron, manganese, asbestos, gypsum, mica, limestone, marble, and uranium. However, of these, only gold has been mined to a small degree in Southern Sudan.

*Agriculture Agriculture is of major importance to the Southern Sudanese economy with regard to food security and employment. Out of 82 million hectares of land surface in Southern Sudan, about 50 percent is prime agricultural land. Despite this, commercialisation currently only takes place on a very small scale; hence most of agricultural production in the South is at subsistence level. Methods used are often basic and there is a general lack of technology and knowledge to boost production. Some farmer’s associations have been established, some of which are licensed as cooperatives by the government. Additionally, Western and Central Equatoria have huge potential for cash crops through agribusiness. Both states are situated on the border zone between the Green Belt and the Ironstone Plateau, and can therefore accommodate a variety of crops. Given the abundance of uncultivated land, large agro-industrial plantations could be set up that hire local labourers, while at the same time offer a guaranteed price for the products produced by surrounding farmers. It will be crucial for foreign companies to work with local production structures (e.g. cooperatives) in order to enhance their chances of acceptability and success. Agriculture and forestry can also be developed to meet domestic needs, thus reducing dependency on food aid that exists in some areas, as well as producing massive surplus for export.

-Livestock With around 8 million cattle heads in Southern Sudan, livestock also plays a significant role. Other livestock includes goats, sheep and donkeys. So far, livestock has not been commercialised on a large scale as most cattle owners keep them as social capital which is measured by the number of heads of cattle owned and the use of cattle as dowry. The estimated economic value of cattle in Southern Sudan is about United States Dollar (USD) 1 billion, although this has not been put to productive use. Instead, the majority of beef is being imported from neighbouring countries, in particular from Uganda, as well as from North Sudan. There is high potential for (international) investment in cattle rearing, dairy products and slaughterhouses. In addition, veterinary services and training for cattle handlers present opportunities for investment and public private cooperation. Poultry production is currently being commercialized in South Sudan on a very small scale. Similar to beef production, poultry has high potential of replacing imports from neighbouring countries and from North Sudan.

-Fisheries Southern Sudan hosts several rivers, including the Nile River, which contains various species of fish, which are also in demand in (international) markets. However, there is relatively little commercial fishing activity currently taking place; most fish sold in markets in Central and Western Equatoria originates from Uganda. Development of this sector has very high potential, especially because it can compete very well with imported fish.

-Forestry Forestry is important in both timber and non-timber value. It is estimated that natural forests and woodlands cover a total of 192,000 sq. km. or about 29% of the total land area in Southern Sudan. Currently, commercial exploitation is limited to teak (from plantation forests) and mahogany (natural stands). The Government of Southern Sudan (GoSS) urgently needs policies and regulations on the exploitation of forest resources. Timber and logging companies have been in operation for several years, and have caused significant damage to the forests by operating without management plans in logging concessions that were obtained during or after the war, when there was no regulatory framework in place. Gum Arabic is also considered as a potentially interesting area for commercialisation through PPC. Other products such as Shea nut, honey, and medicinal plants can also be further exploited.

*Infrastructure Rehabilitation of roads and buildings has been ongoing in Southern Sudan since the Comprehensive Peace Agreement (CPA) in 2005. Except in Juba, where just about 100 miles of road surface has recently been tar-marked, all other urban, inter-urban, interstate and regional highways are earth surfaced. As for building construction, there is some ongoing construction work to develop more government buildings and hotels. It is envisaged that rehabilitation and the building of new houses,

both for public and private sector use, will go on well into the next five years and beyond. Most of the airports are still largely undeveloped. It is estimated that Juba, Malakal, Wau and Rumbek, the top priority airports, will cost US$45 million while development of six additional state airports is estimated at US$3.5 million each. Water resources in Southern Sudan still remain underdeveloped and underutilized and much of the sparsely existing infrastructure is not efficiently functioning. Currently, there are no commercialised irrigation schemes. However, the demand for both domestic and productive use of water is expected to grow rapidly as peace takes effect in Southern Sudan and as people are returning and looking for means to start, and re-start agricultural production. Concerning railway construction, there was only one line that connected Port Sudan in the North to Wau in Bahr el Ghazal State, but was destroyed during the war. Rehabilitation works on the line are in progress and already about 70 kilometres from Port Sudan has been completed.

Electricity also necessitates investment since there is no national electric grid to supply consumers from a central location. The demand for power is largely unmet despite existing potential to generate over 500 MW, and hence great potential for investment.

The infrastructure sector is, however, facing diverse challenges. The lack of skills, expertise, and equipment are cross-cutting and affect the sector in entirety. Such challenges render the government unable e.g. to adequately supervise construction projects and to ensure accountability and adherence to contractual obligations. The result is sub-standard work, and more often, substantial loss of money invested in such projects.

*Transportation Southern Sudan still lacks established public transportation systems; the sector is dominated by private operators. Road transportation is largely undeveloped mainly due to poor roads and has left huge gaps in business development as transportation costs are extremely high. Air transportation is still largely undeveloped. The services offered by the airlines are both cargo and passenger. Despite the relatively large number of airlines flying the skies of Southern Sudan, air transportation costs still remain relatively high owing to the risks of operating in the territory, and also to the generally high cost of goods and services in Southern Sudan. Lastly, there are a total of 16 ports along White Nile in Southern Sudan, of which seven are major and nine are small. GoSS’s Department of River Transportation is in the process of repossessing and rehabilitating the ports which had been leased by the Northern government to private operators. A Dutch company has been contracted to rehabilitate the Juba port.

*Financial Sector The financial sector in Southern Sudan is largely undeveloped, inhibiting economic activities that require financial services. The regulator, Bank of Southern Sudan (BOSS), has developed prudential guidelines for banks and provides the framework for all financial activities. The main financial services currently available in the two states are banking and microfinance. These are provided by four commercial banks (excluding Islamic banks) of which one is foreign owned, and seven microfinance institutions. Two additional banks are set to launch in 2009. The other main providers of financial services, microfinance, largely target micro scale enterprises and thus were not considered in detail in this research, as these levels of businesses are no potential players in PPC programmes. The financial sector benefits immensely from remittance from Southerners in the Diaspora. Recorded remittances showed an increasing trend from US$ 640 in 2000 to US$1,016 in 2005, or about 2.7% of the Gross Domestic Product (GDP). A major challenge facing the financial sector is the weak legal framework that impacts loan availability. Banks that give loans against land as collateral, usually the most reliable security, cannot be sure that the existing legal framework will guarantee them justice in case of default. The weak legal framework is further exacerbated by an undeveloped land tenure system which cannot clearly determine and authenticate land ownership. Other challenges are U.S. monetary sanctions against Sudan, liquidity problems of banks, inadequate human resources, undeveloped communication networks and poor infrastructure.

*Telecommunications and Information Communication & Technology (ICT) Though telecommunication providers are in operation in Southern Sudan, their services are not widely available (yet). Currently, telecom services provided in Southern Sudan include fixed telephony, Short Messaging Service (SMS), mobile roaming, Internet services and Very Small Aperture Terminal (VSAT) satellite services. Fixed telephone lines and Sudanese televis ion services have only been available in major towns and even then on selective basis. The coverage of telecom services thus far is only in the vicinity of state capitals. However, all major telecom companies are competing for new markets and attempting to extend their services to more remote areas. A few official (and some un-official) internet café’s are in operation. The issue of inter-connectivity between telecom providers is a concern currently being addressed.

*Tourism & Hospitality Southern Sudan has seven National Parks and 12 Game Reserves, some of which still have large numbers of wildlife. However, none of these parks are currently operational. The Wildlife Service is severely hampered by its lack of capacity and materials to effectively control protected areas. Poaching is a major challenge to the sector, which is exacerbated by ownership of small arms among the general population. Insecurity and inaccessibility by road also present major challenges to the development of tourism for wildlife vie wing/ecotourism. At present, very few – if any – tourists are visiting South Sudan, mainly due to insecurity. There are about 20 hotels and lodges at the level of three to four star status in Juba. There are also over 50 restaurants and guest houses in the towns, which are mainly used by NGOs, staff of international organisations and foreign business people . Hospitality is currently in a transitional stage, and more luxury hotels and regulated game-viewing could be developed as a longer-term investment. South Sudan has the potential to develop an upmarket destination for cultural and eco-tourism.

*Education and training Lack of skilled labour is a major constraint in economic development in Southern Sudan. Despite this, there is a serious lack of training providers in Southern Sudan. The vocational training system of South Sudan, as well as the educational system, in no manner meets the demand for training and education. There is only one institution of higher learning in the two states, University of Juba and there are plans to open a second university in Kajo-Keji County. However, this will require significant investment, including from foreign bodies. It will be an enormous stimulus in bringing the “better off” Diaspora back from Kenya and other countries if appropriate schooling would be available in Juba.

*Health The protracted nature of the war has seriously constrained the development of a functioning health system and has damaged the existing health facilities. According to a number of key-informants in the health sector the diminishing interest from donors in supporting health provision and the lack of proper hand-over and training of local staff upon the departure of international NGOs has further declined the current quality and quantity of health services. It is expected to take many years before South Sudan’s public health system will start to meet the high demands for health services at all levels. Yet, in the meantime, services have to be provided while institutions are being built. In addition, Government spends excessive funds on the treatment of civil servants to be treated in public and private hospitals in neighbouring countries. Furthermore, the lack of high quality services is a main restraining factor for Diaspora to return home, as is lack of education, as explained above. Therefore, while the priority for donors and Government should be to develop a functioning public health sector, there is potential for private health providers to complement the public sector.

*Manufacturing There is mainly small-scale manufacturing taking place in Southern Sudan, including carpentry and metal processing. Production of mineral water is already taking place while production of soft drinks and beer is being developed in Juba by foreign investors. Nevertheless, shortage of finance and technology in manufacturing, coupled with high transportation and procurement costs, limits the

growth of this sector. However, local (and possibly international) demand for manufactured goods is high and therefore investment in this sector could be promising.

*Services The services sector is small but growing. Small-scale, local businesses and medium-scale local branches of businesses headquartered elsewhere in Sudan (Khartoum or Juba) are springing up in urban centres. In economic terms, however, this still makes a limited contribution. Lack of access to finance and lack of skilled personnel seem to be the major challenges.

Potential role of Public Private Cooperation (PPC) The overall impression from this research is that both the business community and the relevant ministries in South Sudan are positive towards PPC. They all have high expectations of the different bills that are to be signed by the president, including the Land and Investment bills. However, the overall weak capacity of the new government will make the implementation of the bills difficult and has the potential to lead to conflicts. One potential area for contribution of the Dutch government in the framework of future PPC initiatives is to assist the GoSS with setting up the required mechanisms for the implementation of the relevant bills, and thus making it conducive for Dutch firms to invest in South Sudan via a PPC model. A core function of civil society could be to play their “watch-dog” function and to monitor fairness and transparency in the implementation of the bills (such as the land bill).

Despite this positive attitude towards PPC, during in-depth conversations with the different stakeholders, the lack of trust between the private sector actors and the GoSS also becomes visible. In short, the public sector sees the private sector as a threat, as they have money, and therefore power. GoSS officials feel the power of the government is threatened and the private sector may take over some of the influence the government has over the people. On the other hand, the private sector also sees the government as a threat; the new regulations are seen as potentially having a negative impact on business development. Fortunately, the GoSS is aware of these tensions and has already taken action to develop activities with the objective of building trust between the private and public sector actors. The most important of these is the launch of the Southern Sudan Business Forum, which is a dialogue body that tries to improve relations between the private and public sector, solve problems, and propose solutions. The forum is open to GoSS and business associations, and also to national and international businesses and Governments.

Several GoSS officials stressed the need for Corporate Social Responsibility in investments. Companies might have the tendency to exploit the communities and the environment in which they operate and a core task of the GoSS is to avoid this. The Investment Promotion Bill that is about to be signed by the president includes modalities for doing so. This includes the provision that international companies need to establish partnership with a local private sector actor, and can only enter Southern Sudan on the condition that the community benefits and the profits are re-invested in the community.

This is also where the advocacy role of (I)NGOs should come into play, in order to keep an eye on foreign companies’ behaviour and their compliance with national and international laws. Civil society should also play a role by feeding into companies’ policies to become more sustainable, e.g. by developing capacity to report according to Global Compact or GRI Guidelines. The current capacity of civil society to play that role is, however, limited. In addition civil society can be involved in maximizing spin-offs for the local population of PPC-type investments through existing networks of farmer organisations, water committees, women associations etc. INGOs should continue to strengthen these organisations.

The GoSS has initiated the Southern Sudan Private Sector Development (PSD) Project, which contains many elements of PPC innovations, funded through the Multi-Donor Trust Fund (MTDF). The budget for this project is US$20.2 million, and will be overseen by the Ministry of Commerce and Trade. In addition, The GoSS is currently starting some joint ventures with local private sector

actors, which is a more limited form of PPC. One example is the Juba whole -sale market where the government provides land and infrastructure, while the local business will manage the venture. According to the director of the PSD programme, Dutch companies are very welcome to join these ventures as a third party.

There are, however, some challenges to PPC in Southern Sudan, including: § Southern Sudan’s legal and institutional framework: these are only recently developed, and would benefit from clear articulation of policies in dialogue with representatives of the private sector and civil society; § Unclear and overlapping fees, taxes and customs tariffs; § Land policies have not been established, and thus land acquisition is haphazard and risky; § Strategic direction for medium-term industrial development is absent; § Input and product markets are undeveloped; § There is a lack of skille d labour and training facilities; § There is a perception of an unfavourable investment climate for foreign investors; § Insecurity still exists; § Weak capacities of the stakeholders for effective PPC interventions (e.g. relevant government structures, local pr ivate sector as partners, local NGOs)

How should PPC be set up to contribute to Conflict Transformation? Recent developments in peace building research have demonstrated that political and economic liberalization policies in war-shattered countries have fostered an environment of destabilisation, and have created obstacles towards the consolidation of peace. Because democratic and free-market reform inherently promotes competition in the political and economic sectors as a means towards forming a healthy democratic, free-market society, war torn societies often do not possess the adequate institutions, formal and informal, to mitigate the destabilising affects of this competition. Subsequently, on the economic front, it becomes vital that peace builders strive towards equitable, growth-oriented policies rather than de-stabilising economic “shock therapy” adjustments. Additionally, on the political front, promoting citizen approaches that cut across cleavage lines and erecting the appropriate institutions to mitigate the costs of destabilisation will also help in the conflict transformation process. Private foreign Investment in the framework of PPC (which involves Governments, civil societies, and the private sector ), has these very components, and thus the potential to contribute towards conflict transformation, and to actualise the peace dividend in Southern Sudan.

Stemming from this logic, PPC in a fragile state such as South Sudan requires a complex mix of roles and responsibilities of the different players. While this research has shown that investments by Dutch companies have the potential to make an enormous contribution to economic development in South Sudan, it must be embedded in a PPC framework in order to ensure benefits for a broader part of the population. It must therefore include civil society, local public and private sector actors in order to maximise the spin-offs of these investments and in order to ensure that the development is fair and sustainable.

While the GoSS is working hard to create an enabling environment for PSD, and while economic potential is high in many sectors, the reality is also that there is severe poverty, insecurity, ethnic tension, ongoing war-economy and high levels of corruption and capacities of economic actors and civil society is generally weak. PPC in South Sudan therefore needs to have, to start with, a strong focus on capacity building of all the different actors in order to enable them to play the required roles. To start with, the Dutch government could engage in the initiated Public Private Sector Dialogue. While it is important that the Dutch Government alleviates foreign businesses risks in Sudan, it should simultaneously engage in capacity building of GoSS institutions, and closely work on e.g. SME development through Dutch NGOs in order to ensure that they have a stake in the PPC projects and thus that investment will indeed lead to fair and sustainable economic development, and thereby contribute to building lasting peace.

In addition, the private sector may also be directly involved in the ongoing process of rehabilitation and peace-building in Southern Sudan. Examples are subcontracts from donors, the UN and INGOs for building Demobilisation camps and the provision of supplies to demobilisation and refugee camps, other public construction contracts etc. The advantage of this is that the money stays in the local economy, and through this , the capacity of the private sector will be boosted. Private sector actors, once they are back on their feet, rely less on donor-funding (compared to NGOs) and are able to find other clients. NGOs should play amongst others a watch-dog function, ensuring that private sector actors executing activities in development programmes accept certain (social) conditions in their contracts ( such as a minimum of 25% women in the labour force, providing on-the-job training) and environmental concerns.

Conclusions and Recommendations The main conclusion of this field research is that there is indeed great need and scope for economic development in South Sudan, but that investments need to be embedded in local PPC modalities in order to create fair and sustainable economic development, contributing to the desired effect on building peace in South Sudan. Many sectors are identif ied as having high potential for both foreign companies and the local private sector. However, the risks of further dividing the South Sudanese society are real and imminent. They can be mitigated by a firm commitment of the Dutch Government to assist the GoSS to play their role effectively and to provide funding and guidance to NGOs to safeguard fair and sustainable economic development and to assist maximising spin-offs for the larger population. Also, it is not expected to be easy to attract socially and environmentally responsible Dutch firms to invest in South Sudan in the near future as the business environment is still fragile in terms of security, access to markets, corruption, capacities, costs of doing business and legal frameworks. Encouraging companies to start activities in South Sudan therefore requires serious PPC- type stimulating measures, especially if the companies are required to explicitly contribute to stimulating fair and sustainable economic development and thereby peace.

This field research revealed that the economic actors face a number of challenges most of which emanate from the war effects. Challenges such as insecurity, undeveloped infrastructure, lack of health facilities, low capacity of the newly established Government and inadequate financing, all affect the economic actors adversely. In addition, due to the former dependency on North Sudan, and due to the war, the current capacity level of the local private sector is limited, though dynamic and promising. Finally, the lack of skilled labour, (and absence of a functioning vocational training system) is seriously hindering quick economic development in all sectors. The labour force is almost completely unskilled and investment in human resource development is urgent. In addition, the almost complete absence of BDS providers is one of the most serious lack of capacities required for fair and sustainable economic development. Besides the lack of institutions and premises, the major challenge is to find the required expertise and experience, both of which are also not adequately available. The absence of BDS is directly linked to the limited capacity of the local private sector to develop.

Stimulating a more businesslike spirit and entrepreneurship, combined with increased technical knowledge and an enabling environment for business development are among the most pressing needs. Sudan requires the introduction of appropriate technology and a shift in modes of production towards mechanisation. According to the new investment bill, foreign investors will need to work with local private sector actors which have pressing needs in terms of access to capital, but also technical know-how and management skills. In the framework of this PPC model, the Dutch government and Dutch NGOs can assist in filling in this gap, along with the investments made by Dutch companies.

PPC in a fragile state like South Sudan requires a complex mix of roles and responsibilities of the different players. For the Dutch government, the most important areas of PPC in South Sudan it should concentrate on are:

1. Encouraging Dutch companies to invest in South Sudan by providing subsidies, guarantees and / or insurances; 2. Providing technical expertise to the GoSS in the framework of partnerships between Dutch companies and the GoSS; 3. Engaging and funding Dutch NGOs to maximise cluster-effects and spin-offs of investments made by Dutch companies; 4. Encouraging Dutch companies to invest in corporate social responsibility – type activities to complement their commercial ventures.

The most presssing question is how to ensure that economic development, triggered by foreign investment, will contribute to peace building in South Sudan. A major reason for the current need for foreign assistance (and possibly, for the existing dependency syndrome) is twofold: the lack of income (farmers and other producers cannot sell beyond a very limited range); and secondly, high prices for manufactured goods. Both problems share common causes: the absence of proper infrastructure and continuing nsecurity.i Until proper transport materializes, and security can be guaranteed, economic development in Southern Sudan is going to be extremely difficult. Also, the lack of high level education and health services is restricting the return of the Diaspora who could actually contribute significantly to social and economic development in South Sudan. Until an international school and private hospital is established, the return of higher educated Sudanese will not happen.

Secondly, Dutch PPCs efforts must be embedded in Sudanese PPC efforts. The capacities of GoSS, NGOs, employment organisations, CBOs and the local private sector need to be strengthened in order to have effective partnerships with them. Without doing so, abusive situations are more likely to occur and the investments made will not lead to sustainable economic development, or at worst cause more conflict. INGOs are the most indicated actors to build the capacities of Sudanese NGOs in playing a watch dog role and they should be provided with funding to do their job.

Another important issue in South Sudan is gender inequality. Affirmative action has been established where at least 25% of government positions need to be filled with females. This could also be adopted in the Dutch companies investing in South Sudan and the NGOs working there.

Also, ethnic tensions exist in South Sudan and are, according to many, likely to increase in the future if South Sudan would vote for independence. Even if Sudan would remain one country local conflicts might emerge again and ethnic tensions could increase. Conflict sensitive foreign investments should be spread among the different regions in order to avoid working with and benefitting only one ethnic group.

Finally, it is important to understand the current political dynamics in terms of the future of South Sudan. After the referendum of 2011, the political but also the economic situation might change significantly.

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Introduction

Background to this report The Netherlands Ministry of Foreign Affairs (MFA) has indicated that its overall objective in Southern Sudan is to promote peace, security and development. It recognises that poverty reduction contributes to the creation of peace dividends. The Security and Development in Fragile States policy document of the MFA also explicitly identifies the importance of private sector development in fragile situations in general1. This PPC (Public Private Cooperation) study ultimately aims to (in)directly contribute to achieving the strategic objective of building peace through the promotion of sustainable and fair economic development.

The ToR for this first phase field research as part of a wider research into the possibilities for PPC in South Sudan provided the following definition of PPC: “Public private cooperation (PPC) can best be described as a government service or private business venture which is funded to operate through a partnership with a government and one or more private sector companies.2 Public private cooperation in the context of fragile states’ policy has not been clearly defined in the Dutch Development Cooperation policy framework. The policy note ‘Our Common Concern’ describes the need for public private cooperation as follows: “Civil society partners and the private sector will also be in volved (…) The Millennium Development Goals cannot be achieved without the private sector. It is important that the experience, knowledge and skills of private actors can be exploited and deployed to promote sustainable development and poverty reduction. That is why the Dutch government is working to get the private sector more closely involved.” Recent public -private partnerships in development cooperation have basically been collaborative development activities between the Dutch and the recipient governments, local and Dutch private companies and local and Dutch civil society organisations. Common development goals, contributions by each partner, and win-win situations that make use of each partners’ strong points and cater to each partners’ interests are characteristic 3.

The main goal of this first-phase field-research, the results of which are described in this document, was to identify the local needs and possibilities for fair and sustainable economic development through Public Private Cooperation (PPC). This report therefore concentrates on the local dynamics of PPC between the GoSS, the local private sector and NGOs, in which any future PPC interventions should be embedded, if they are to be fair and sustainable.

The outcome of this field research feeds into the second phase fact finding research, which builds upon the results of the first phase, to further assess potential PPC modalities including Dutch companies and the Dutch Government. The second phase research team links these insights on the local potential, challenges and risks to the potential and dynamics of the Dutch Government, Dutch private firms and Dutch NGOs in future modalities for potential PPCs in Southern Sudan.

While the first-phase field research has been very broad in terms of looking at all potential economic sectors for PPC, the second-phase fact finding mission selects a number of the economic sectors that are likely to be most interesting for the Dutch companies. Within the limited timeframe of this field research, it is obvious that no sub-sectors could be studied in detail but a broad impression across the economy of Southern Sudan is provided. Further assessments are required in selected sub-sectors.

The field research team used several methodologies such as economic opportunity mapping and stakeholder analyses of the local/national private sector, government and civil society actors, including their potential role in PPC. For a selected number of subsectors, a sectoral analysis has been carried out. The research firstly identifie d potential economic sectors in Southern Sudan. It then

1 Netherlands Ministry of Foreign Affairs, November 2008. 2 Others rather emphasise that the PPC concept is introduced to show how a PPC differs from a government service or private business venture, by being a blurred organisational set-up that includes these different actors, to achieve a mix of public and private goals. 3 Terms of Reference first phase mission

provided preliminary insights on whether, and if so, how cooperation between the Dutch government, the Dutch private sector and NGOs can contribute to equitable socio-economic development in Southern Sudan, in cooperation with the Government of Southern Sudan (GoSS), local (national) private sector and NGOs. In this report answers to the following three research questions are given:

· What is the potential for fair and sustainable economic development in the study areas as seen from a local and regional perspective?

· Can public-private cooperation (PPC) play a role in fair and sustainable economic development in the study areas?

· How should PPC be set up in these areas in order to contribute to conflict transformation and peace and not to function as dividers?

The research concentrated on sectors that have the potential to contribute to reconstruction and rehabilitation, which is critical for short term, but will also be crucial for longer-term economic development in Southern Sudan. By identifying the roles and relations of different economic actors, local needs, challenges and potential risks, the field research identifie d entry points for PPC and ways to overcome possible challenges to cooperation. The research focused on Western and Central Equatorial States. Based upon field research in these two states, the study provides recommendations for possible PPCs, to stimulate both the rural and urban economies in Southern Sudan. Throughout the study, the issue of conflict-sensitivity and social, environmental and economic sustainability is integrated. The study also looked at some of the roles of economic actors from neighbouring countries such as Democratic Republic of Congo (DRC), Uganda and Kenya.

While a wealth of information has been collected, the field research was sincerely hampered by a number of limitations:

§ Insecurity: Due to insecurity, some field visits to different parts of Central and Western Equatoria were cancelled mainly as a result of military operations against the Ugandan Lords Resistance Army (LRA) in the border zone between Southern Sudan, Democratic Republic of Congo and Uganda. In Western Equatoria, only the state capital of Yambio could be visited, while an important centre of economic activity, the nearby Nzara, was inaccessible. § Lack of infrastructure: throughout Southern Sudan, there is a lack of good roads and reliable means of transport. This restricted the number of locations and economic centres that could be visited within the given time frame. § The field visits confirmed that the Southern Sudanese economy is predominantly rural based and at subsistence level. The result is that mostly micro-economic data could be collected. § Lack of reliable data: at all levels, there is a lack of structured and computerized data collection systems, both at GoSS and local levels. Wherever figures are given, this is mostly based on estimates from secondary sources. § Timeframe: a preparatory fact finding mission was planned but not fully executed, which resulted in a weak report to start off with and a few days of additional work in the field to get the team to a start-up level. The ToR and guidance provided to the team specifically stressed the need not to select certain sectors of the economy but to provide a broad overview of all sectors and to answer on that basis the three main research questions (see above). Therefore, within the limited time-schedule not all sectors have been analysed to the desired level of details, neither did time allow for talking to all actors.

The economy of Sudan as a whole Sudan’s per capita income grew from $340 in 2001 to $810 in 2006, spurred by oil revenues4. With its vast geographic area and varied natural resources, the country holds great economic potential. Because of its size, the country embraces many climatic and ecological zones. According to the World Bank, the total population of Sudan amounted to 37 million in 2006, the large majority of which (about 70 per cent according to the 1993 census) live in rural areas. Estimates of Southern Sudan’s population vary widely between 4 and 15 million people, but according to experts it is probably less than 10 million. Given Sudan's size to population ratio, the country is sparsely populated. Furthermore, the mostly arid climate and unpredictable weather conditions leave vast stretches of the country subject to episodes of extreme drought and/or substantial flooding5.

Sudan’s real growth of trade of 25 percent in 2007 represents the second highest growth in the world for that year and the oil boom has helped foster a 700 percent increase in total exports over the last decade.6 The country is now the third largest oil producer in Sub-Saharan Africa with output at about 500,000 barrels per day in 2007. The oil sector has added to the economy through associated investment boom in services such as transportation and construction. Despite the huge export earnings from oil, the current account balance has been in deficit at eight percent of GDP on average during 1999-2005. The impact of these expenses is subdued by the influx of foreign direct investment (FDI), which totalled $3.5 billion in 2006.

However, with forecasts pointing to a peak in oil-sector production in the near term, the economic policy dialogue is turning to the need for balanced growth and strengthening of the non-oil sectors which are key for sustainable development and addressing inequalities. In 2004, Sudan’s energy consumption mix was dominated by oil (93%), with the remainder coming from hydroelectricity (7%)7, which is currently limited to North Sudan, but there is significant potential in Southern Sudan as well.

The effects of war have left large parts of the population in poor living conditions. While data constraints in Sudan have been severe, recent household survey data8 shows that poverty in Sudan is widespread and deep, and the level of inequality is high in terms of income and other socio-economic indicators (access to health and education). Khartoum and some Northern States along the Nile River have development indicators similar to Middle Income Countries, whereas Darfur, Southern Sudan and the Three Areas (Abyei, the Nuba mountains, and Blue Nile ) are comparable to the lowest in the world. The disparities in human development are also remarkable across rural-urban space and genders. Services specific to women, such as prenatal and antenatal care, remain underprovided, and maternal mortality is persistent.

The labour market in Sudan Agriculture (80%) dominates the labour market, followed by government (13%) and industry and commerce (7%).9 The International Labour Organisation (ILO) database, where these statistics are derived from, reports on economically active population by age group and sex. For 2007, the economically active population was around 11.6 million out of a total estimated population of 30 million (activity rate of 30.5%). In 2007, the number of people officially employed was about 9.3 million, leaving 2.3 million people unemployed.

4 World Bank, 2008. 5 UNDP, 2007. 6 GoSS, 2008. 7 EIA, 2007. 8 The Sudan Household Health Survey (SHHS) was completed in 2006. This is the first household survey covering the whole of Sudan in two decades. 9 LABORSTA, International Labour Office database on labour statistics operated by the ILO Bureau of Statistics, http://laborsta.ilo.org/

Table 1: Estimates of Economically Active Men and Women in Sudan (’000) Both 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 sexes Total 9225 9474 9665 9804 10288 10515 10761 11022 11293 11570 Men 6905 7116 7277 7384 7737 7906 8088 8279 8481 8686 Women 2320 2358 2388 2420 2551 2609 2674 2743 2813 2884 Source: ILO

However, the true size of Sudan's economically active labour force has been difficult to estimate because of different definitions of participation in economic activity, and the absence of accurate data from official sources. In rural areas, large numbers of women and girls are engaged in traditional productive occupations, but many have not been included in counts of the active work force. In urban centres too, those who are engaged in home-based enterprises are not usually documented. Sudan's population consists of mainly young people; 44% of people are less than 15 years old and only 2% of the people are over 65 years of age. Women are more severely affected by poverty than men in Sudan. Literacy among women stands at 43.4 percent, compared to 68 percent among men; women have less than one third of men’s income; one in five women is unemployed as opposed to one in eight men. The 1993 census showed that 22.3 percent of all households in northern states were female headed. The proportion of Southern households headed by females is now at least 35%, as a result of the heavy displacement and conflict. With pronounced double burdens of productive and reproductive responsibility falling on the women, these households are amongst the poorest in Sudan.

The economy of Southern Sudan Southern Sudan is among the poorest regions in the world, with 90% of the population earning less than US$ 1 per day. Agriculture continues to be dominant part of the Southern Sudanese economy and accounts for around 80% of employment, including that in agro-industries. There are very few large scale economic activities, with the exception of Juba, the capital of Southern Sudan and Central- Equatoria State. Throughout the two states included in this study, large-scale, agro-industrial or other formal economic activit ies are virtually absent. The field visits confirmed that the Southern Sudanese economy is predominantly rural-based and at subsistence level. The war has destroyed physical capital, institutions and the opportunity to learn. It prevented the emergence of entrepreneurs, and only a few formal businesses owned by Southern Sudanese exist even four years after the end of war. In the two decades of war in the South there have been dramatic changes in the global economy, in technologies, in firm strategies, and in the approaches governments employ to support the private sector. This presents GoSS with a dramatic challenge, requiring action on a number of fronts simultaneously – whilst also learning. It includes action on the enabling environment, financing, building skills and infrastructure10.

The GoSS, which derives most of its revenues from oil revenues transferred from the Government of National Unity (GNU) as per the Comprehensive Peace Agreement (CPA), is extremely vulnerable to oil sector volatility. Its non-oil revenue base is insignificant, though there is considerable tax and customs potential. In 2006, GoSS expenditures exceeded revenues by about $370 million, and exhausted its strategic reserves. Oil revenue transfers from the federal government were about $400 million less than budgeted, due largely to delays in expected new oil production. At the same time, payroll costs have swollen due to weak administrative controls, wage increases, and the absence of safety nets for war veterans and returnees. According to the Ministry of Finance and National Economy, oil revenues amounted to $582 million in January 2008, out of which $223 million were transferred to the GoSS11.

10 World Bank, 2008. 11 ibid

In Southern Sudan, trade flows are mainly going in one direction: from DRC, Uganda or Kenya to the major urban centres of Southern Sudan (Juba, Yei, and Yambio). The majority of traded goods consist of imports from these countries, while very little export is taking place. The major trade routes are the Kaya-Yei-Juba road and the Nimule -Juba road. Figure 1 below details some figures on the international trade with Uganda and Kenya.

Figure 1: Southern Sudan’s International Trade (Source: GoSS (2008)). Sudan’s officia l statistics do not include data on international trade crossing the land borders into the South, and Sudan’s trade partners do not publish data on trade by customs post, so there is no official data on Southern Sudan’s international trade transactions. Casual observations suggest that exports from Southern Sudan have been minimal, but imports into the South have grown substantially since the signing of the CPA. One can obtain a rough idea of the magnitude of this trade by comparing Sudan’s official imports from Uganda and Kenya with those countries’ reported exports.

Ugandan exports of coffee and Kenyan exports of tea – these countries’ largest exports to Sudan – are reported in roughly the same amounts by both trade partners. Sudan’s official trade statistics show only around $6-7 million entering from these countries outside of coffee (Uganda) and tea (Kenya), while Kenya reports $81 million in other exports and Uganda reports $56 million. Differences in values reported at the product level for these goods are too great to be explained as typical disparities between importer and exporter reports. It is highly unlikely that some of these products would be imported into the North in the first place, notably alcoholic beverages. One can have some confidence that most of the difference between Sudan’s official import statistics and its partners’ export statistics represents imports into Southern Sudan.

Kenyan exports Ugandan exports Data reporter Sudan Kenya Sudan Uganda Total imports into Sudan $39.6 $110.2 $39.9 $91.7 o/w coffee and tea $32.7 $29.2 $34.2 35.4 non-coffee / tea $6.9 $81.0 $5.7 56.4

Kenyan exports Ugandan exports Data reporter Sudan Kenya Data reporter Sudan Uganda Electrical equipment $0.2 $7.3 Motor vehicles $2.9 $8.5 Tobacco products $0.1 $7.1 Alcoholic beverages - $8.1 Machinery and boilers $1.4 $7.0 Sugar - $6.5 Textiles $0.7 $6.2 Cereals - $3.9 Furniture and bedding $0.3 $5.0 Flour, malt, starches - $3.3 Articles of iron and steel $0.0 $4.8 Vegetables - $3.2 Pharmaceutical products $0.7 $4.8 Ce ment, plaster, stone - $2.9 motor vehicles $0.1 $3.7 Edible oils and fats - $2.9

Supplementing these official statistics an annual survey on informal cross-border trade is conducted by the Ugandan government. The latest survey finds that informal exports to Sudan were around $7.8 million in 2006, made up mostly of manufactured products such as soft drinks, mattresses, and wheat flour. Informal imports were estimated at $517,000 and consisted of beans, maize, millet and sorghum.

A rough estimate based on these data is that the South imported around $75 million from Kenya in 2006 and around $55 million from Uganda.

The challenges are daunting, but the potential is equally significant. Unlike many post-conflict countries, Southern Sudan starts with considerable wealth from oil, and a broad base of potential export or growth sectors including hydroelectric power, metallic and non-metallic mining, natural gum/resins, cotton, oil seeds, tourism, medicinal plants, fisheries, tobacco, coffee, tea, leather and horticulture. Southern Sudan must unleash this potential if the country is to fully realise the peace dividend. As infrastructure is developed, and security increases, a major asset of Southern Sudan that could open up possibilities for tourism is its vast national parks. These have a large variety of attractions, which at present are hardly being discussed.

The financial and economic crisis of late 2008 is seriously impacting the Sudanese economy. Due to a drop in oil prices from about 155 to 34 USD, state revenues have significantly fallen over the last couple of months. This has especially hit the Southern Sudanese economy, as the Government of Southern Sudan’s (GoSS) budget is 98 percent dependent on oil revenues. As the budget for 2009 was calculated on the basis of the higher oil price, it will now have to be reduced by about one third. This will inevitably lead to a slowdown in the reconstruction of the Southern Sudanese economy. Another factor at stake are the delays in transferring weekly remittances by the national government in Khartoum. It was reported by GoSS that these delays have led to a delay in salary payments to civil servants in Southern Sudan in the month of January 2009. This is said to be further related to the anticipated issuance of an arrest warrant for the President of Sudan by the International Criminal Court (ICC)12, and whether or not the Southern Sudanese government will back the President on this matter.

Southern Sudan is endowed with an extremely rich natural resource base. It can be divided into seven broad zones: Eastern flood plains, Western flood plains, Nile -Sobat Corridor, Ironstone plateau, Hills and Mountains, Greenbelt and Arid Zone (see Figure 2). Each zone has specific potential for different agricultural use and natural resource exploitation13:

· Greenbelt Zone: Households in the wetter south-western areas of this zone rely almost exclusively on agriculture to meet their food needs. Surplus production is common. · Arid Zone: In the south-eastern tip of the country, a nearly pure form of pastoralism is common and there is almost exclusive reliance on livestock and livestock trade for food. There are seasonal migrations in this area for water and pasture. · The Hills and Mountains Zone: The main livelihood here is a combination of agriculture and pastoralism, and reliance on cattle, trade and root crops increases in difficult years. · Western and Eastern Flood Plain Zones: In the Western Flood Plain Zone, livestock and agriculture, supplemented by fish and wild foods, are the main food sources. The Eastern Flood Plain Zone is similar, but with an additional option of game hunting. · Ironstone Plateau Zone: Households in this zone are heavily dependent on crop production and are well placed to access surpluses in the neighbouring Greenbelt. · Nile and Sobat Rivers Zone: Apart from crops and livestock, wild foods and fish contribute significantly here. Fish and wild foods are collected in varying quantities depending on the season and the location.

12 At the time of writing (March/April 2009) this arrest warrant was still due 13 USAID, 2007.

Figure 2: Agro-climatic zoning of Southern Sudan

Source: Odero (2007).

1. The potential role of Public Private Cooperation

1.1 Existing experiences with PPC in Southern Sudan Southern Sudan has taken serious steps in developing an enabling environment for PPC, the details of which can be found below. In addition, the Investment Climate Team of the World Bank is operating in close collaboration with the GoSS Ministry of Commerce and Trade.

The GoSS has initiated the Southern Sudan Private Sector Development (PSD) Project, which contains elements of cooperation with the private sector, and is undertaken in conjunction with the Multi-Donor Trust Fund (MTDF). An amount of about US$20.2 million has been put into the pool and the GoSS Ministry of Commerce and Trade is responsible for overseeing its usage In order to spur economic growth through a vibrant private sector, the GoSS Ministry of Commerce and Trade has established a Private Sector Development Department. This step was taken following paragraph 40 (2) of the Interim Constitution, stating that “All levels of government in Southern Sudan shall:

(a) Develop and regulate the economy of Southern Sudan in order to achieve prosperity through policies aimed at increasing production, creating an efficient and self-reliant economy and encouraging free market and prohibition of monopoly; (b) Protect and ensure the sustainable management and utilization of natural resources including land, water, petroleum, minerals, fauna and flora for the benefit of the people of Southern Sudan; (c) Facilitate the development of the private sector, particularly indigenous entrepreneurs to establish and develop a viable private sector capable of participating effectively in reconstruction and development of Southern Sudan; (d) Encourage private initiative and self-reliance and take all necessary steps to involve the people in the formulation and implementation of development plans and programs that affect them and to enhance as well their right to equal opportunities in development ...”

While in this field research the potential role of NGOs in PPC is explicitly looked for, it must be noted that most ongoing PPC projects and initiatives do not involve NGOs. They are mainly around Government – Private sector whereas in this study we are looking for modalities in which also civil society has a role to play. However, the absence of NGOs is not a surprise as very few NGOs are involved in PPC, or PSD in general.

Below are some of the more important PPC-related initiatives listed:

The PSD Initiative: laying the ground for PPC

The Private Sector Development (PSD) Department within the Ministry of Commerce and Trade – recently (29.01.2009) launched a PSD initiative, consisting of four components:

1. Establishing an enabling policy, legal and regulatory environment for trade and investment. The PSD initiative aims to work with private sector players to promote the investment and trade policies and various legal frameworks. Already some trade policies and laws have been formulated that affect the business environment, hence the need for the ministry and private sector to work together. To achieve this, the project has included the private sector in various initiatives: representation of the private sector in the ministry’s board; making legal obligations for the government to support the private sector; involvement of the chairperson of the chamber of commerce in CPA; investment authority is represented in the board; private sector is fully involved in project preparation and during implementation; membership of the board is half public and half private.

2. Access to finance. The PSD initiative is handling access to finance through a senior policy advisor. The main strategy is to reach the small private business community through a network of

MFIs. Already an apex institution from Germany has been selected to manage South Sudan Micro- finance Development Facility. Four MFIs have been selected to disburse the funds to eligible private sector organisations.

3. Industrial capacity building. The PSD initiative aims to increase the capacity in the private sector to improve its competitiveness. A business directory has already been developed through partnership with United Nations Industrial Development Organisation (UNIDO). PSD is also running business plan competition with assistance from WB and IFC. WB is administering a Micro-finance Development Trust Fund (MTDF) whose procurement component is monitored by PWC while KPMG monitors the financial component.

4. Wholesale market development. The PSD initiative is undertaking a number of market development initiatives. It aims to construct a one-stop wholesale market in Juba town where all agricultural products may be found. Developing an information system to facilitate access to this and other markets is already on course through the development of the business directory mentioned above. Additionally, development of two other major markets in Eastern and Western Equatoria states is planned. The aim is to build these markets through PPC initiative arrangements.

In addition, the South Sudan Business Forum is bringing together relevant ministries (mainly Ministry of Commerce), the Chambers of Commerce, businesses and donors etc.

South Sudan Business Forum The Ministry of Commerce and Trade has recently established the South Sudan Business Forum, whose aim is to engage in a Public – Private Partnership Dialogue (PPD). The main objectives of the Forum are: - To identify and discuss obstacles to private sector development; - To suggest and advocate for solutions; - To follow-up on implementation of agreed reforms; - To accelerate the implementation of reforms conducive to improvement of the business climate in Southern Sudan; - To contribute to and enhance locally operating enterprises’ competitiveness. The forum is a new initiative and started recently with their first meetings.

The Minister of Agriculture in particular is extremely interested in PPC as a modality to boost the agricultural production of Southern Sudan, and has argued for a more precise definition of the concept of partnerships than currently exist. It now proposes a PPC model with 50/50 partnership with international companies in join ventures. In this model, the Ministry would provide land, security and other services, whereas the private enterprise is to be responsible for the (full) provision of the investment required capital. However, “thus far private enterprises have not accepted this partnership model and disregard the value of these in-kind investments”14.

Some of the old (and non-functioning) government farms (set-up by the national government) have been re-appropriated and are currently run by the GoSS. As expressed by the Minister of Agriculture, the current level of development of the Sudanese private sector does not allow them to enter joint ventures on these farms. The restarting of these farms requires major investments, which will probably not come from GoSS. In the near future it is envisaged that (elements) of these farms will begin to be privatised. In case foreign investors are interested in investing in these government farms, this could be set up by using a PPC model, involving farmer’s cooperatives, private sector and government.

14 Interview Minister of Agriculture, March 2009

Ministry of Agriculture, NGOs and local farmers: boosting agricultural production For almost a decade, AAH-I, a Nairobi-based NGO, has supported County Agricultural Departments in Western and Central Equatoria . Farming techniques and new crops are promoted through community-based extension workers, or “contact farmers”. This includes new techniques on timely planting, row planting, different sites for different crops, fertilisation by compost and manure, and agroforestry. Special attention has been given to the introduction of animal traction, notably ox- ploughing. Beside fruit trees (avocado, citrus fruits, passion fruit, mango, papaya), trees for agroforestry (fertilisation) and for wood are introduced, and tree nurseries have been set up. Farmers are assisted to access small loans and market information to organize themselves to exploit local sales opportunities. At the same time, capacity is built at all levels: - Ministry of Agriculture and County Agricultural Departments are strengthened through logistics, training and technical support. - Payam extension staff are provided with logistic, training and technical support. - Farmers are trained at community level to promote change of knowledge attitude and practice towards improved agronomic practices. - Boma Development Councils and farmers’ groups are trained to empower them to perform their duties.

Other examples of ongoing PPC initiatives include:

South Sudan War Veterans Association This association which is operating under GoSS, is providing support to ex-combatants. Their target group consists of 43,000 ex-soldiers who have been recently demobilised. The Association offers two programs: 1) Peace building and conflict resolution and 2) Support in education and small business development. Examples include the set-up of a Veteran’s Restaurant and a Petroleum Station in Juba. The Association is setting up training centres and providing skills development. They also intend to start a micro-finance program. The Association is working in partnership with the United Nations Disarmament Demobilisation Reintegration (UNDDR) Commission and the GoSS and is looking for additional partners from the private sector.

Cooperative movements The government is encouraging cooperative movements to mobilise savings and facilitate loan applications for small-scale businesses and individuals who may not have the collateral required by commercial banks. Before the war, the cooperative movement was very strong in Sudan. After 1983, this collapsed completely because the Islamist government in Khartoum banned such practices. In 2005, after the signing of the CPA, a new Ministry of Cooperatives and Rural Development was created. It is supporting groups of farmers and entrepreneurs to organise themselves at the County and State level. Cooperatives are mainly operating in agriculture, handicraft, fisheries, and dairy (Upper Nile). Unfortunately, no data could be obtained on the number of cooperatives in Southern Sudan. A new Cooperative Law is currently under preparation. Savings and Credit Cooperatives are also being created for salaried staff in Juba.

Example of a ne w PPC project under Ministry of Commerce The Ministry made a call for applications for funding business proposals from local private sector actors. After private sector actors sent in business plans, a jury chose the 60 best proposals. These selected proposals received business training and were asked to resubmit their proposals, incorporating their training. The jury then selected the 20 proposals , which received US$20,000 funding for their business plans. The money was given in the form of a loan through a bank, which served as collateral for a business loan. At the end, when they have paid back their loan, they can cash the US$20,000. The MoC is currently seeking ways to upscale this successful approach.

PPC initiatives in the field of infrastructure:

Building construction GOSS has entered into a PPC initiative with Kenya Commercial Bank (KCB) to develop housing units for the government. In this arrangement, the government has provided guarantee and waived taxes and duties on materials for the construction. The state (Central Equatoria) has provided the land on which the units are to be developed and KCB is providing funding, technical skills and labour required for construction. When completed, KCB will hand over to the government who will then repay the capital that was required for the development.

PPC in the Financial Sector:

World Bank – PSD – MFI project In this project, the WB has developed a framework to stimulate the creation of a sustainable microfinance sector across Southern Sudan that provides banking services to the currently unbanked, but economically active poor. In this framework, WB provides financial aid and technical support to MFIs through the establishment of the Southern Sudan Microfinance Development Facility (SMDF), a Juba based non-profit organisation. In turn, a seven-member board (including public sector, private sector and civil society) representatives supervises the facility. The management is done by an external firm (Frankfurt Business School), which was selected through international tender.

Results are being achieved through the technical facilitation by GoSS’s Ministry of Commerce, the industry, BoSS, and WB. Funding is being provided by Multi-Donor Trust Fund (MDTF), the GoSS and BoSS. Due to its success, the WB is in the process of handing out additional funding.

Additionally, the Ministry of Finance and Economic Planning is developing a policy to guide investors in determining what proportion of capital is to be deposited with the GoSS, before being allowed to start investing.

1.2 Opinions and perspectives on PPC The impression gained is that both the business community and the relevant ministries are positive towards PPC. They all have high expectations of the different bills that are to be signed by the president, including the Land Bill and the Investment Bill. However, this remains to be seen, as legislation alone will not put the regulations into practice. The overall weak capacity of the new government will make enforcement difficult and this has the potential to lead to new conflicts. One potential area for contribution of the Dutch government is to assist the GoSS with setting up the required mechanism for the implementation of the relevant bills.

However, when talking in more depth with the different stakeholders the lack of trust between the PS actors and the GoSS becomes visible. GoSS sees the public sector as a threat, as it has money and therefore power, and is therefore a potential threat to the power and influence of the Government. On the other hand, the private sector also sees the government as a threat, as the new regulations are seen as potentially having a negative impact on business development.

Fortunately, the GoSS is aware of these tensions and has already taken action to build trust between the private and public sector actors, most notably through the South Sudan Business Forum which was mentioned above. Moreover, the Director of Private Sector Development in the Ministry of Commerce has explicitly invited the Dutch Government to take part in this forum in the framework of future PPC development.

Several Government officials have also stressed the need for more Cooperate Social Responsibility in investments. Companies have tendencies to exploit the communities in which they operate and a core

task of the GoSS and civil society is to avoid this. The Investment Bill, that is about to be signed by the president, includes modalities for this.

Some actors expressed their concern over the pace of development; the Government is developing at a much higher speed than the private sector. “No healthy economy has a very heavy government as compared to the private sector, the question always remains, what added value does the Government have in Economic Development”15

According to a Bank director, heavy Government involvement is necessary in this part of the world. He referred to the success story of the Kenya Commercial Bank, of which 23.1 % are Kenya Government shares16. In fact, the Government can have up to 50% of the shares, and then put their deposits through these banks. Without this, some fear it will not work since the government has the majority of capital, at least presently.

Opinions of traders and farmers in Central-Equatoria Some traders interviewed in Central-Equatoria state that “the government will not be able to respond to their needs given the previous promises that have not been fulfilled”. The government has indicated that it will build feeder roads, but this is yet to happen. Moreover, tractors that were purchased for Yei County nearly one year ago, have still not been delivered to farmers, delaying the productive use of farmers and their lands.

Mixed reactions were found in Southern Sudan concerning peoples’ attitudes and perceptions on PPC. While some senior government officials found it easy to invite foreign investors to enter into PPC arrangements, they were also quick to put caveats and say that “due to some past experiences, GOSS would require a guarantee from the government of the foreign investor to underwrite them against loss or non conformance17.”

In other perceptions, some 18 intimated that external private investors only aim was to exploit the resources of Southern Sudan and repatriate the proceeds, therefore enriching themselves at the expense of Southern Sudanese citizens. Other perceptions viewed PPC as constraining open trade principles and hindering competition. They suggest that there is no need for PPC since it only serves to cultivate corruption. In this case, some people sighted cases where some senior government officials have enriched themselves through bribes to award and sign contracts and even diverted some projects to their individual areas of interest.

For example, according to officials in Yei, corrupt government officials have the potential to manipulate the investor for their personal gains: “The government is the custodian of all the land in South Sudan and hence corrupt officials are already using it to solicit for bribes before allocating to a potential investor. Western Equatoria Teak Company, an organization with interests in exporting teak timber has looked for an export license for over two years now and are yet to be granted one. There is high possibility that the government authority responsible requires a bribe”.

On the same case, another official notes, “foreign logging companies may not always be abiding by the law because they may not be officially registered. They work in close collaboration with the government, which means that they can do whatever they please.”

15 Owner of a local Bank. 16 http://www.kcbbankgroup.com/ke/index.php?option=com_content&task=view&id=44&Itemid=314 17 Interviews with senior officials in the Ministry of Transport and Roads, GoSS. 18 Commissioner, Yei County when referring to the PPC estate development initiative which aborted when the developer took off after receiving 50% down payment.

1.3 Challenges for PPC There are a number of challenges in establishing Public Private Cooperation:

· Lack of clear legal and institutional framework Southern Sudan’s legal and institutional framework is under development, and would benefit from a much clearer articulation of polic ies in dialogue with representatives of the private sector. The Foreign Investment Advisory Service (FIAS) conducted a diagnostic assessment of the investment climate in May 2006. The study found that the current legal system is based on multiple sources of authority which causes confusion. The CPA provides for new laws and institutions, but also clearly directs that “existing laws” should be used to govern Southern Sudan until such a time that GoSS has developed its legal framework. Some Ministries argue that the laws of the New Sudan should guide, but other ministries tend to accept national laws. It is clear that these frameworks together do not yet provide the basis for investment. This has led to an unfavourable investment climate, especially in relation to laws concerning foreign investors coming to the country. For example, laws on partnership, land, and taxation policies are the most important ingredients for attracting foreign investors, but they are not clearly articulated. To solve this problem, the GoSS has formed the Southern Sudan Investment Authority, which will become operational once the Investment Promotion Bill has passed in parliament. Annex D provides an overview of the recent developments in terms of creating a legal framework.

· Strategic direction for medium-term industrial development is absent Southern Sudan has a very wide range of potential resources on which industrial sectors may be built, including mining, hydropower, tourism, oilseeds, cotton, leather, livestock, logistics, and food processing. Developing any of these sectors would entail a significant investment in institution building, strategic choice and public -private partnerships. Yet, there has been no analysis of the competitiveness of these potential sectors in domestic and regional markets as a basis for prioritising efforts.

· Input and product outlets are undeveloped There can be no investment in scaling up production without improved outlets in the form of markets. The period of civil disorder has largely destroyed the traditional trade linkages and channels – including the complex set of social and economic relationship between intermediaries necessary for markets to work. The present system of fresh supplies to retail markets in urban areas is dominated by imports – in the case of Juba by supplies from Uganda. Apart from these imports, inter-regional trade flows only really exist at present for livestock trade. There are efforts to re-establish former production levels of fruits and vegetables. New or improved assembly market centres in key production areas will be required to supply the evolving wholesaling system. Three types of food markets exist in Southern Sudan: rural primary markets (located in villages and small towns and often held on a periodic basis); rural assembly markets (located in agricultural surplus areas); and urban retail markets (serving consumers in main towns and cities). Terminal wholesale markets near major cities have yet to evolve in Southern Sudan. As a result of the underdeveloped outlet arrangements, post-harvest losses at the farm level and within markets are very high, as are food prices. No market pricing system exists19.

· Lack of Skilled Labour “The future of the majority of Southern Sudanese lies increasingly in labour force participation within and outside of rural agriculture. Capability enhancement through human capital investment is therefore critical. They need literacy and various occupational skills that will give them the means to command sufficient income for themselves and their families, as well as to raise the overall level of labour productivity in their respective sectors and regions. Technical assistance is needed in this respect20.”

19 GOSS / MDTF, 2007. 20 Bertel, 2009.

The short period (only four years) since the end of the war is not enough to produce the skilled manpower necessary for economic development. Most of its labour force comes from its neighbouring countries especially Kenya, Uganda and Ethiopia . Availability of vocational training here is the lowest in the region, and if at all, it is only attained in Uganda and Kenya and therefore skilled labour is limited to the returnees from those areas.

· Insecurity and political instability Following the signing of the Comprehensive Peace Agreement that ended the long civil war in Sudan, militias such as Uganda’s Lord's Resistance Army (LRA) and other armed groups, have not ceased fire in the south. This has discouraged many investors from entering Southern Sudan as the continuing insecurity hampers necessary steps in investment. For instance, the PPC team was restricted to carry out their study only within Yambio town in Western Equatoria due to LRA presence there. Besides this , the political climate is unpredictable in Sudan. Many foreign investors are playing the 'wait-and-see' game in their decisions to bring in their investments. Some are also anxiously awaiting the results of the Southern referendum on independence in 2011. Due to negative media on the security situation in Sudan in general, and Southern Sudan in particular, the international business community is put in a dilemma.

1.4 Potential modalities for PPC “There appear to be four main types of partnerships: commercial, professional, administrative, and democratic partnerships. Commercial partnerships are based on exchange and on the negotiation of performance contracts between customer and suppliers. Often this type of partnership utilises or simulates competitive market processes in order to secure best value on price, quality and delivery. Professional partnerships are based on know-how and expertise rather than exchange. The basic relationship here is service provided by a professional to client rather than a product/service provided by a supplier to the customer as in the commercial one. Administrative partnerships are based on the extension of hierarchical authorities, between levels of government or from the state to an NGO or to a business. They have much in common with traditional forms of bureaucratic organisation but, instead of being integrated in a chain of command within one organisation, principal and agent are in different organizations. Finally, democratic partnerships are based on consensus and participative processes both for joint decision-making and for joint implementation. Three factors are common to any partnership: a division of labour among organisations, management processes between the partners to cope with interdependence and a framework of governance to regulate their mutual relationships. It is important to pinpoint that partnerships are based on the premise that there is added value in cooperation and joint action.”. 21

PPC in a fragile state such as Southern Sudan requires a complex mix of roles and responsibilities of the different players. While this research shows that investments by Dutch companies have the potential to make an enormous contribution to (socio-) economic development, it must be embedded in a PPC framework in order to maximise the spin-offs of these investments and to ensure that the development is fair and sustainable ; or said differently, that it helps to connect people instead of contributing to further divisions.

PPC can have several dimensions. First of all, Government (both donor and domestic), in consultation with private sector actors, can provide an ‘enabling environment’ to spur private sector development, and to facilitate and encourage existing private sector activities to extend. Important features of an enabling environment include a strong legal framework (such as property rights), a sound financial system (banks and opportunities to obtain finance), infrastructure (roads, telecom) and a highly skilled labour force. Furthermore, in order to attract private sector investment, government can provide a set of incentives, such as subsidies and insurances for investment in uncertain areas, and ensure

21 Metcalfe, 2002.

favourable export conditions within the region. Finally, through a linking of ‘development’ and ‘trade’ agendas of donor governments, the international private sector is encouraged to invest in regions and sectors that will boost local economic development in a fair and sustainable manner. A second and more direct form of PPC is for GoSS (possibly with support from Dutch government) to award public works contracts to foreign investors. In doing so, GoSS would need to ensure certain conditionalities, (such as the need to employ a certain number of Southern Sudanese in the workforce, or requiring the use of a certain percentage of locally produced materials), or allow joint ventures on the basis of cooperation with a domestic company, for example, in order to ensure that the Southern Sudanese economy benefits and grows out of such cooperation.

Some elements of PPC might be especially appropriate in Southern Sudan:

- GoSS creates an ‘enabling environment’ for businesses (regulations, infrastructure and laws), supported by the Dutch Government, in order to attract foreign investment and operations. Conditions are given that Dutch companies must enter partnership with local firms, and ensure use of domestically produced goods. - Dutch government provides additional guarantees and insurances for Dutch companies to invest in Southern Sudan. - Dutch government provides funding through NGOs to increase the benefits of these investments for Southern Sudanese communities, and to support watch-dog and lobbying functions. - GoSS, domestic private sector and international companies operate as joint shareholders. In these joint-ventures in both GoSS and private sector actors have shares. - Investment facilitated by GoSS, in which it has no shares, but provides the land and security. - GoSS can consider allowing special concessions or incentives for development in key specific areas, such as a round ports.

According to GoSS, PPC currently is currently given three priority dimensions: 1. The legal regulatory system, detailing actions of the GoSS vis-à-vis PSD and trade. 2. Investments, with potentials for joint ventures between the GoSS and local private sector actors. 3. Public Private Sector Dialogue

The process for negotiating PPC in Southern Sudan: Once a potential investor expresses an interest in a particular sector of the economy or public asset, the investor can then work with the appropriate authority to acquire the necessary clearance to carry out a feasibility study. During this discussion, the government also provides the policy guidelines governing the development or investment at stake. Upon approval, a feasibility study is executed by the private investor to identify costs, timeframes, bill of quantities, raw materials, and other relevant information. If the feasibility study is able to demonstrate the viability of the project, the investor can then discuss with the relevant ministry the available PPC options. Upon agreement of an appropriate PPC framework, a memorandum of understanding (MOU) is signed, followed by the drafting and signing of a legally binding contract. Access to land is provided through GoSS in all instances.

In Southern Sudan, the most regular PPC modality identified is one in which GoSS provides the guarantee for the investment and secures part of the costs involved. GoSS waives taxes and import duties on machines and other items required for the venture, and provides the land on which the planned activities are to take place. Furthermore, it may also waive land levies and rates. The investor on his part provides part of the funding, expertise, technical skills and the machinery required in the process. The investor is also responsible for developing the project, until it is handed over to the government. There is no involvement of NGOs so far.

An alternative option is where the private investor is allowed to operate the investment and recoup the invested capital after completion of the project. This sort of PPC model was used in the development of railway and river transportation through concessionaire arrangements. In addition, divestiture

options are also possible. However, currently GoSS can only divest its interests in NCB and transfer its ownership to a suitable investor.

While all the above mentioned dimensions of PPC should be explored, the most important ways the Dutch government can help in stimulating economic development in Southern Sudan is by encouraging Dutch private sector to invest in Southern Sudan:

· By providing subsidies, guarantees and / or insurances. In addition, in order to ensure that these investments genuinely lead to fair and sustainable economic development the Dutch Government should engage in the local PPC dynamics. · By providing technical expertise to the GoSS in a framework of partnership between Dutch companies and the GoSS, to develop a legal framework, and perhaps to facilitate regional cooperation in order to develop potential export markets. · By engaging and funding Dutch NGOs to maximise cluster-effects and spin-offs of investments made by Dutch companies. · By encouraging Dutch companies to invest in corporate social responsibility activities to complement their commercial ventures. · By assisting in advisory services to Dutch companies on how to operate in the Southern Sudanese context.

Furthermore, PPC can also be implemented in peace-building development projects by the local private sector, for example, through subcontracts for building demobilisation camps and the provision of necessary supplies. Advantages of this PPC modality are twofold: the qua lity delivered is often higher than in cases where NGOs would carry out the activity, since a specialised firm has more technical expertise than most NGOs; and the money that is spent on the project remains in the local economy. Private sector actors, once they are back on their feet, rely less on future donor funding than NGOs and find other clients. NGOs can still play a watch-dog function in this. Moreover, this model can also increase local participation and responsibility in the overarching peacebuilding process, while simultaneously stimulating sustainable economic growth. Private sector actors executing activities in development programmes usually do accept certain (social) conditions in their contract such as minimum 30% women in the labour force and provid ing on the job training.

While the GoSS is working hard to create an enabling environment for private sector development, and since economic potential is high in many sectors, reality is also that there is severe poverty, insecurity, ethnic hatred, an ongoing war-economy and high levels of corruption. PPC in Southern Sudan therefore needs support to address and facilitate operation around these issues. “Do no harm” assessments should be undertaken at each possible moment of a new PPC project.

The Dutch government should first fully engage in the Public Private Sector Dialogue. While it is important that the Dutch Government makes it easier for businesses to take risks in Sudan, it should simultaneously engage in capacity-building of GoSS to reduce these risks, support smaller scale development and also closely on Small and Medium Enterprise (SME)-related development through Dutch NGOs.

According to ICCO Southern Sudan, “If the development component of these PPC initiatives is not strongly developed, th en they will fail. You need to look at capacity of government and local organisations because the levels are extremely low. NGOs can play an important role in building these capacities”.

Various officials stated that NGOs should take up the watchdog role to monitor the role of private companies and the transparency of governance and revenue collection and distribution. At present, there are only a few international NGOs in Southern Sudan that are playing a watchdog role (Save, NRC), and hardly any local NGOs.

The Minister of Agriculture identified the following specific areas in requesting support from the Dutch Government in the framework of a PPC, combined with direct investment of Dutch companies in agriculture. o Assistance to design and start agro-processing in different sub-sectors o Development of a food-reserve strategy, including technical assistance in food-storage o Technical assistance in techniques of plant protection o Technical assistance in Control of diseases in import and export o Assistance in irrigation o Agricultural research to map soil conditions and options for diversifications. This is necessary information to give to potential investors in the sector.

In agriculture, two models in which (I)NGOs and IOs can operate are particularly promis ing. Each is detailed in the boxes below.

Potential PPC in Agriculture, model 1: Cash crops from large farming estates Big cash-crop farms have high potential for spin offs through food, transport, infrastructure, and local labour hires. One way to utilise its benefits would be to provide famers a plot of land just outside the larger farm, with guaranteed purchases by the principal farm. If the government provides the land, international businesses (in partnership with local businesses), can operate the farm and bring in expertise and skills. Banks can provide loans for equipment, while the NGOs provide social services for workers. Additionally, the local government can provide extension services to smaller, surrounding farms.

The second model concerns cooperatives. Sudan has a strong history of cooperatives, although their success has been limited, according to some officials. There are a few cooperatives currently operational which are being supported by the ILO/UNIDO project on youth employment. The project aims to increase the production capacity, and thus employment opportunities within the cooperatives. Cooperatives allow sellers to increase bargaining power towards larger companies, with which they would not be able to cooperate effectively if working in isolation.

Potential PPC in Agriculture model 2: Cooperatives - With the support of Dutch banks, and a guarantee from the Dutch government, microcredit facilities for farmers can be established in partnership with specialised NGOs (e.g. AAH). This venture can train government staff in the sector. - Large-scale plantations for cereals (sorghum, maize, rice), fruits, vegetables and ingredients for the production of cooking oil (sesame, groundnuts, sunflower) can be setup by Dutch companies. Local partners (farmer cooperatives) would then ensure day-to-day management, while GoSS assists in building feeder roads and infrastructure, thus creating enabling environment. At first, domestic markets should be targeted to replace imports from Uganda. At a later stage, when infrastructure has improved, export markets could be explored. In the long run, there is high potential for organic farming and fair trade of fruit, vegetables and flowers.

Further potential models for PPC in other sectors are suggested below:

Potential PPC in tourism, environmental conservation & education A Sudanese professor in Australia, Mr. Ben Yengi, is currently setting up a Chimpanzee Sanctuary (for orphaned baby chimps) in combination with a Research and Education Centre in Kajo Keji County, close to Nimule National park. Potentially, this could be extended into an eco-lodge for wildlife viewing and bird watching. This private initiative is set-up in close collaboration with the local government with support of an Australia n NGO, Kajo-Keji Australian Development Initiative (ADI)22. Dutch NGOs could provide support in setting up of the sanctuary while education institutions and NGOs could provide support in setting up the Education Centre.

Similar initiatives could be set up in the other national parks and reserves of Southern Sudan, involving the Dutch business community in setting up hotels and eco-lodges. Huge potential for wildlife viewing, bird watching, community-based/cultural tourism and Nile river cruises should also be explored. Dutch tour operators could work in collaboration with community-based organisations. Currently, various Western NGOs are working on the reconstruction of Southern Sudan’s wildlife infrastructure, including Wildlife Conservation Society and Fauna and Flora International.

Potential PPC in Livestock: Dutch investments in meat processing factories and dairy industries can play a crucial role in the livestock sector. Dutch research institutes can provide technical know-how and introduce improved cow breeds (e.g. dual purpose breeds). Additionally, Dutch investors can develop meat factories and dairy farms in collaboration with the Sudanese government.

There is also robust potential for PPCs in road construction. Apart from Juba town, where there is some ongoing tar-marking, all urban, intra-urban, state and inter-state roads are gravel. The total road distance may add up to several thousands of miles. Although the government has plans to upgrade these roads, the sheer magnitude of mileage to be covered is overwhelming. Needless to say, the ultimate aim of the government is to upgrade all roads, particularly the main artery roads connecting states and neighbouring countries to bitumen or cement surface. Several PPC options may be negotiated depending on the interest of a specific investor.

Ptential PPC in road construction The role of the GoSS in this form of PPC is to provide goodwill through a bilateral agreement with the Dutch Government, facilitate registration of Dutch companies in Southern Sudan and waive any foreign investment specific requirements (i.e. minimal deposit of US$500,000 requirement), some taxes and duties on imported items like machines to be used during the construction. The Dutch Government will then provide the guarantee to GOSS that the work will be done according to the contract specifications. In addition, the Dutch government will also provide guarantee to the Dutch private sector against risks such as losses occasioned by exchange rate fluctuations. The role of INGOs would be to provide a watch-dog function on issues such as environment, labour conditions and transparency. Additionally, INGOs could also invest in SME development in the areas where the road has now opened new markets.

Potential PPC in railway construction Railway construction is still in its infancy, and presents a great opportunity to foreign investors. A PPC tripartite arrangement involving GoSS, Dutch government and Dutch private sector is envisaged. The role of Dutch private sector would be to undertake a feasibility study and determine the best and most economical option. Dutch private sector actors would also provide the technical expertise and capacity needed to construct the lines. The GoSS, on the other hand, would secure the funding needed from various options at its disposal and provide the various guarantees like waiver of some taxes and

22 See: http://www.kadiaustralia.org/

duties. The role of the Dutch government would be to ensure goodwill exists in the process and to enable the Dutch private sector to deliver the project.

Since railway construction demands colossal amounts of money, part of the condition from GoSS could be to give the Dutch private sector a concessionaire to operate the system for a number of years to recover the costs incurred during the construction

Potential PPC in airport construction In an endeavour to construct new airports, GoSS would need to provide some funding for the construction, with the possibility of financing from other investors. Additionally, waiver of some import duties, taxes and other levies will be provided by GoSS. GoSS will also guarantee the Dutch company on security and payment related matters. On the other side of the partnership, the Dutch government will provide a guarantee to Dutch companies, as well as waive export duties on machines and other materials to be exported from Netherlands for this project. Dutch companies could also expect guarantees from the Dutch government against certain risks and potential losses. GoSS should discuss landing fees and other revenue collected from the usage of constructed airports and airfields.

Potential PPC in setting up a cement factory A survey of a few construction companies and hardware dealers revealed that a substantial amount of building cost come from the purchase of materials. All the cement used in Southern Sudan is imported from either Kenya or Uganda. Conversations with several cement traders and building contractors revealed that the cost of a bag of export quality cement in Kenya is about US$12. Transportation and taxation costs to Juba amount to US$11. The retail price in Juba is US$24. In comparison, the retail price of local quality cement in Kenya is about US$8 while in Uganda it is about US$6. A local shop owner, interviewed in this study, operates in a semi permanent premise measuring about 24’x48’ rented at US$1,500 per month and sells an average of 4,000 bags of cement in one month.

This presents a great opportunity for a PPC to start a cement factory in Southern Sudan. Already, credible reports23 indicate that there are huge deposits of lime, a key ingredient in cement production, in the country. If manufactured domestically , even after factoring in the high costs of power, labour, and resources, it is still possible to decrease the retail price of cement by a minimum of 50%. This will lead to a multiplier effect in several other areas where cement is used especially in building construction and thus spur economic growth. PPC in this project would entail a joint venture between Dutch companies and GoSS. GoSS together with the state authorities would provide the land for constructing the factory and give the guarantee and waive taxes and duties on imported materials required to put up the factory. The Dutch companies would provide the capital and technical expertise required in the investment. The Dutch government would then provide a guarantee to the Dutch companies against losses on investment. Additionally Dutch government can provide tax reductions to Dutch companies.

Potential PPC in Electricity There is huge potential for hydro-electric power. There are some three falls along river Nile at different distances from Juba town upstream towards the border town of Nimule. Two of these falls, situated within a distance of approximately 12 miles from Juba, are small and have a combined output capacity of 80 MW. The third which is located about 90 miles upstream from Juba has a capacity of over 500 MW. GOSS has plans to construct hydro power plants at these points to boost its power supply, not only to Juba and Yei, but also to other towns. These efforts are likely to drive down the cost of power in the country, which currently stands at 23 SDP (Sudanese Pounds) for domestic consumers, 26 SDP for government and 70 SDP for industrial consumers in Juba. GOSS is currently looking for private investors to partner with.

23 Interview with Director General, Energy and Mining, GoSS.

Potential PPC in the Energy sector In this PPC, GoSS will provide part of the funding and guarantees required by Dutch companies. GoSS will also provide waiver of taxes and duties on the materials to be imported for constructing the power generation plant. GOSS will also grant access rights to the Dutch companies to land and routes to be used in the process. In addition, GoSS will provide funding for distributing power to various central destinations from the generating plant. The Dutch government, on the other hand, shall guarantee to GoSS that Dutch companies will deliver according to the contractual agreement. Additionally, the Dutch government will commit to underwrite the risks for Dutch companies. Also, the Dutch government provides export subsidies on materials exported from the Netherlands by Dutch companies for the purposes of the project. The Dutch government should also provide tax breaks to Dutch companies for some time to allow Dutch companies to recoup capital invested in the project. The role of Dutch companies is to undertake a study of the project and develop specifications. Ultimately, the Dutch companies will construct the power plant and finally distribute the power to identified places.

There is furthermore a huge potential for PPC partnerships to develop the entire financial sector in the areas of structured financial management systems, capacity building of staff, and audit systems. This will require robust and elaborate ICT systems as compliment products, enablers and facilitators in the process. Local banks such as NCB are in place and have the potential for PPC. The lack of deposits continues to be the biggest problem. It should be discussed with the GoSS if part of the deposits can go through these banks. Options to channel development budgets through NCB should be explored. Medium-size loans are most needed, in the range of USD 10.000-30.000. Modalities are in place but problems with lack of cash and liquidity, caused by lack of deposits should be addressed, potentially through PPC. Possible PPC arrangements revolve around attracting a third party to further develop this bank.

Potential for PPC in ICT sector Since the ICT sector in Southern Sudan is still in an early-development phase, there seem to be numerous PPC opportunities to further develop the sector. Unfortunately, since telecom operators taken into account during the study were unwilling to elaborate on the specific conditions and regulations of their licenses, a more informed insight into this issue cannot be given for now. Nevertheless, a few examples of possible modalities for PPC in this sector - thus far not practiced in Southern Sudan - are described below.

In addition to the interventions in existing ICT infrastructure, the numerous “spin-offs” (such as phone repair shops, air time sellers and internet kiosks) created by the sector may also further be boosted. A possible modality for this is the establishment of “business development training centres” set up by (I)NGOs and run by Dutch ICT entrepreneurs, in which new or existing entrepreneurs are taught how to become (further) engaged in the ICT sector and / or expand their services, with inclusion of donated equipment from INGOs. To make this option feasible, the Dutch ICT entrepreneurs will obtain a fee from the customers of the training centres (which may be topped up with a subsidy from the Dutch government to secure access to entrepreneurs unable to pay for the entire fee initially).

Example to boost ICT spin-offs as a job-opportunity for local women ‘Village phones’ could be provided by a telecom company to groups of rural women, to enable them to run their own phone shop (and gain an additional income after having repaid the initial costs made for the provision of the phones). The Grameen Bank of Bangladesh is already offering this type of service in several (African) countries, and its model can also be applied in the Southern Sudanese context. The same would go for the provision of computers and internet facilities (in addition to a training on how to use and repair the equipment), to allow people to set up a business in this field.

Potential for PPC in the Health sector There is an enormous need for health services in Southern Sudan and this is also a promising sector for private investment. PPC in the health sector can take a variety of forms with differing degrees of public and private sector responsibility and risk. The PPC must be characterised by the sharing of common objectives. The private sector partner may be responsible for all or some project operations, and financing can come from either the public or private sector partner or both. Since PPC in the health sector is very complex, further in-depth research is required to consider all potential options in this field, in case a Dutch company would be interested.

PPC in the Health sector Many people in Southern Sudan would be able to pay for private hospital services. However, PPC in this sector is complex and needs much deeper analyses. One potential modality for PPC can be that, after the establishment of a private hospital, training and internship places would be offered by this private institution to the public health service providers. Especially training for midwifes, laboratory assistants and clinical offic ers is very much needed. Many NGOs are currently constructing medical centres and the private health sector could transfer their skills and knowledge to the staff of these facilities. In addition, the GoSS is interested to provide land and possibly the building of the hospital, in order for a third party to run the institution on a private basis.

Education and Training To fill the vacuum of educational and training gaps resulting from the two decades of war, and lack of public and private learning institutions, several areas in which vocational training has potential are identified during the research.

PPC Modalities in Education The Dutch Government and its private sector could set up a higher education institution or vocational training centres, to be run either by an NGO or a Dutch private firm in partnership with the GoSS or the domestic private sector. These can also enrol students from the diaspora which will encourage them to come back to Southern Sudan. Dutch companies can further provide sponsorship or scholarship to employees (such as trainees) on the request of GoSS, or use the institutions for training for staff, for example in accounting or management. Centres should also provide teaching through the Accelerated Learning System, now being carried out by the Directorate of Alternative Education System (AES) of the Ministry of Education, Science and Technology (GoSS).

In addition, the Dutch Government and its private sector should establish exchange programs between their universities and those of Southern Sudan. For example, Dutch students and lecturers can come to study and undertake research in Southern Sudan and vice versa. This will not only upgrade Sudanese skill development, but also strengthen economic ties between the two communities. The Dutch community should also open up opportunities for Southern Sudanese students to pursue their Masters and PhD degrees in the Netherlands, for the furtherance and strengthening of PPC ties between the two countries.

1.5 Enabling environment The complex issues relating to creation of a more conducive environment for PSD and PPC will be the core issue to analyse for the centralised mission. However, during this research the following issues were identified as important. A. The socio-economic profiling and opportunity mapping of 2007 24, identified an urgent need for capacity development of business development services. In Southern Sudan, this essential services for economic development needs to basically start from scratch. The Government, with help of private sector actors, should set-up a PPC-network of partners for business development, training business advisors, and creating a system for referral, under the coordination of the relevant ministries (Labour and Commerce). B. Concerning trade and commerce, the constitution provides for free interstate trade and commerce and expressly states that there shall be no levies or fees on interstate trade and commerce activities in Southern Sudan. Visits to two main border towns of Nimule and Kaya however revealed that this right is being violated. According to reports received from officials and traders, there is multiple taxation of goods at GNU, GoSS, State, County and sometimes at Payam levels. This makes it rather expensive for traders who are then forced to pass on the cost of these taxes to the consumer thereby significantly raising the prices of goods and services. In addition, there are other unofficial levies demanded by the police and other state actors from traders at diverse points along the road to their destinations. C. Southern Sudan has enormous problems with unreliable rainfall. Investment in large, medium and small-scale irrigation would increase production enormously. Irrigation has the potential to seriously boost the local economies of Southern Sudan and this would also contribute to poverty reduction and food security, especially when combined with improved facilities for food storage. D. The arrival of telecom companies has boosted local economic activities. The availability of telecommunication has enabled information gathering on prices of products. Clients and service providers are much better connected and the latest information on the security situation can be exchanged easily. A number of businesses have been set up as spinoffs from the boom in the telecom sector, including airtime selling shops, small shops selling and repairing new or used mobile phones and / or offering phone charging services. E. The significance of river transport can be viewed in light of factors like economic advantage, availability of great potential for river transport, limited capacity of roads and rail networks and absence of other links, relative need for less investment capital before use, enabling access to beneficiaries residing along the river and its potential to be used immediately makes the river transport more significant for Southern Sudan than other modes of transport. F. There is enormous need, and therefore potential, for all types of infrastructure investments. While the most obvious are road construction, buildings, airport and electricity, infrastructure on communication systems and clean water are also essential. G. Generally, one of the challenges is to create or stimulate a much more aggressive business spirit and entrepreneurship combined with increased technical knowledge. Southern Sudan needs appropriate technology and shifts in modes of production towards mechanisation. According to the new investment bill, investors will need to work with the local private sector actors who have pressing needs in terms of access to capital but also technical know-how and management skills. H. Moreover, rural electrification has not been developed in all parts of Southern Sudan, whereas alternative sources of power to enable ICT applications are not very well developed yet.

24 Economic opportunity mapping UNDDR, 2007.

I. Security issues and the bad condition of roads and lack of transport form a further constraint for many service-oriented companies and spin-offs to extend their services to more rural remote areas. J. Furthermore, it seems that the affirmative action to guarantee 25% access for women to governmental jobs is not fully being implemented. According to several women organisations, a possible reason given is that men are afraid that they will lose their jobs. Further enforcement of this action will create a more equal and just conductive environment, and could also be applied to other sectors. K. The limited capacity of civil society actors prohibits them from playing any watch-dog function. This is an important dimension of development for INGOs to work on. L. Another important area for continuous support from the Dutch Government is its investment in SSR and DDR, in order to contribute to improving the security situation. M. According to some businessmen, Southern Sudan is now off the banking “blacklist. This might refer to the international blacklist of unreliable banks; 3 years ago ABN AMRO Netherlands could not receive money transfers from a Sudanese bank. Once the money would reach the Netherlands it would then be returned. More investigation is required on the status of this and other sanctions and blacklists, in cooperation with Dutch government.

2. How can PPC contribute to Conflict Transformation?

“Peace building exposes the inherently conflictual character of democracy and capitalism, both of which paradoxically encourage societal competition as a means of achieving political stability and economic stability. War-shattered states are typically ill equipped to manage societal competition induced by political and economic liberalisation, not only because these states have a history of violence, but because they typically lack the institutional structures capable of peacefully resolving internal disputes. In these circumstances, efforts to transform war-shattered states into market democracies can serve to exacerbate rather than moderate societal conflicts…[P]romoting equitable, growth-oriented adjustment policies rather than de-stabilizing austerity measures [and] promoting citizen approaches that cut across cleavage lines [will be key to the consolidation of peace].”25

This chapter examines the role that PPC modalities can play in the conflict transformation process in Southern Sudan. Firstly, it is important to understand that because a primary factor of Sudan’s North- South conflict was seated in the economic marginalisation of the South, ensuring sustainable and equitable economic growth (through PPC modalities) will play a deterministic role in the consolidation of peace in Southern Sudan. The second issues, for which more details are provided below , is that social, economic and political factors will need to be considered during the design and implementation of PPC modalities, in order to ensure that such initiatives are conflict sensitive.

2.1 Key concerns for economic development One of the root causes of the conflict between North and South Sudan is the economic marginalisation of the South, therefore fair and sustainable economic development is in itself a core element of conflict transformation of Southern Sudan. To make this happen, the economic development of the South should go hand in hand with the political process of implementing the CPA.

However, it must be understood that in post-conflict states economic inputs do not automatically lead to fair and sustainable development and peace. Careful analysis is required and conflict sensitivity will make or break the PPC interventions in terms of their contribution to peace, or indeed more conflict.

Additionally, the ethnic division and tensions in the South are worrisome. Therefore, for the PPC initiatives not to contribute to (local as well as regional) conflict, spreading of investments over the different locations will for example be important. Economic centres are dominated by a specific ethnic group and over concentration in one area might increase existing tensions.

There are also many IDPs and returnees who are currently settled in temporary places and hence pose high potential to cause conflict. These citizens are likely to feel some form of invasion by foreign companies if they are not included in the process. It is crucial to consider the plight of IDPs and returnees.

Furthermore, there is a need to design investments that have the interest of the communities at heart. Social and environmental matters are important issues that most communities want to see addressed. Moreover, the government needs to not only pass but, more importantly, effectively implement laws that can efficiently diffuse conflicts within communities when they arise. Sponsoring programs like sports, cultural events, plays, and drama that depict positive images of reconciliation can assist in mitigating underlying tensions. These can partly be met through CSR.

25 Paris, 1997.

2.1.1 Ensure collaboration with local private sector PPC may be used to facilitate conflict transformation by ensuring collaboration with the local private sector. The involvement of the Chambers of Commerce and farmers associations in the field of agriculture can be used as these bodies draw memberships from a critical base of the business community and farmers and can reach out to a large population to cultivate harmony.

At the same time there is also a need to develop SMEs in order to create stronger partners and to maximise use of spin-offs of investments. This may be extended to cover new small enterprises which can focus on the following three areas of attention: The need to diversify economic activities; the availability of a wide variety of raw materials; and conditions to sustain new businesses, both in terms of demand for products which are currently imported, and the conditions required for local businesses to succeed (such as fertile soil and irrigation for agricultural production). Micro-business opportunities in Juba could include the production of alcoholic drinks, building material, carpentry/furniture, sustainable charcoal/firewood, cooking oil, dairy/cattle, fishing, fruit, juice bars, leather goods, maize, metalwork, poultry, simsim (sesame), sorghum, tailoring, taxi/bus services, timber production, and vegetable growing etc. Further areas where businesses would be successful include: Information Technology (IT) services; computer and office equipment maintenance; honey production; sugar cane cultivation and sugar refining; medical clinics/pharmacies; mobile phone sales, services and repairs; soft drinks/beer factory; a drinking water factory; and rural cinemas. Food processing is both an opportunity in itself and a sector whose development has subsequent benefits for the profitability of other food-producing enterprises26. Collaborating with the players in these economic activities through partnerships and inclusion in the supply chains is likely to create harmonious relations which are crucial for investment. With the assistance of NGOs, cross-ethnic economic relations can be built as a conflict transformation approach which has proven to be effective in many other countries.

2.1.2 Strengthening capacity of Government and civil society “In fragile states, donors have often made commitments to fund the delivery of basic services, and in situations where the public sector is weak the vehicle of choice is usually non-state delivery. The pressures for a quick response in post-conflict states where much public service capacity is weak and destroyed drive interveners to look to alternative sources of capacity. These include foreign experts, private sector firms, NGOs (local and international), or international donors themselves. On the other side of the equation is the need to rebuild sustainable public-sector capacity. The trade-off concerns what some have termed the “two-track problem” of service delivery and public sector capacity building, where the two tracks have fundamentally different strategies, resource levels, and timeframes. However, donors should cooperate with local governments on policy, resource allocation, and service planning, even when the majority of services are delivered by non-state providers27.”

Government and civil society organisations may not currently be able to respond adequately to the challenges that PPC with foreign investments may cause. This may have a negative impact where issues linking the investors and the community are concerned. Concerns can be raised for both the foreign companies but also for the “receiving” communities. One of the critical issues that concerns investors is the safety of their investments. Investors want to be assured that their investment will be free of risks such as corruption, nationalisation, and appropriation. On the other hand, the communities need to be assured that the PPC investment will actually improve their lives, show the peace dividend etc. Other challenges include developing the

26 UNDDR opportunity mapping, 2007. 27 EU, n.d.

literacy levels of the citizens hence allowing them to make informed decisions, in which NGOs can play a role .

PPC comes with several demands which require focused management to achieve the economic benefits intended. If local actors are weakened, economic development will not be achieved. The government needs improved capacity to respond to the needs of the business community such as ensuring security and developing access roads to move goods from farms to the markets and interstate roads for long distance purposes. A lot more needs to be done in setting up institutions in diverse social and economic sectors to respond to the current and future challenges and needs of the communities.

Civil society is a crucial stakeholder in issues pertaining to public and private sector investments. A vibrant civil society can play an important watch-dog role and check government to ensure that the services are delivered appropriately. Civil society in Southern Sudan is currently suffering from serious lack of skills and technical knowledge, in addition to structural issues, such as lack of office space and access to technology. In addition, most INGOs engage NGOs in service delivery instead of building their critical watch-dog function capacity. It is crucial that civil society is enhanced to equip actors with the necessary skills and knowledge to play their watch-dog role effectively.

Backward linkages between foreign affiliates and domestic firms represent an important channel through which intangible and tangible assets can be passed on from the former to the latter. Therefore, they can be of particular significance to the Southern Sudan, providing a means of disseminating valuable knowledge throughout the economy and increasing the dynamism and competitiveness of the domestic enterprise sector28.

2.2 Ensuring conflict sensitivity PPC initiatives should ensure not only that their investments are not exacerbating conflicts, but that they are instead aimed at promoting peaceful co-existence, return and reintegration. In fact, any PPC intervention should be based upon the vision that economic development is a key factor in creating a peaceful society, and that this requires a conflict sensitive approach, which is directed at creating stability as a conditio sine qua non for economic development. As many people return home as demobilized soldiers, IDPs and refugees, there is increasing demand for basic services and resources, leading e.g. to new tensions such as the increased competition over land. This includes facilities relevant to provision of water, shelter, health care, education and food commodities. With increasing urbanisation and return of refugees, modern cultures and practices that conflict with traditional practices are also emerging. Recognising the existing and emerging conflict tensions in society, it is generally recommended to work closely with religious institutions, traditional leaders, local government and community institutions. One tool that is normally used by humanitarian and development NGOs is the “Do No Harm” (DNH) approach. This approach is based on the premise that conflicts are never simple. Instead, war settings are complicated, multi-faceted, and unique (each having its own special characteristics, personalities, and histories). DNH does not, and cannot, make things simple r. Rather, DNH helps us to understand more clearly the complexity of the conflict environments in which we work. It helps us to see how decisions we make affect intergroup relationships and to anticipate the likely interactions of assistance with a context. The aim of DNH is to help people deal with the real complexities of providing assistance in conflicts with less frustration and more clarity and, it is hoped, with better outcomes for the societies where assistance is provided29. This is the most important reason for NGOs, who possess such knowledge, to be involved from the beginning.

28 Bertel, 2009. 29 See: http://www.cdainc.com/cdawww/project_profile.php?pid=DNH&pname=Do%20No%20Harm

2.2.1 Transformation of war economy During the war, the sector that was most dominated by the war economy was cross-border trade in the border zone with Uganda and DRC. The SPLA was heavily involved in natural resource exploitation, especially timber and gold, and they also had an important stake in the import of goods from Uganda into Southern Sudan. One of the major benefits to the war economy was the relatively high profit margins, because the traders were operating in a monopoly situation. This might be one of the explanatory factors for the lack of progress in the development of infrastructure between Juba and the Ugandan border, as some political actors may have an interest in sustaining the current lack of infrastructure as well as lack of security.

Related to the above and the lack of a functional credit system, another group of war-entrepreneurs that are fully operational is the private money lenders.

Case: Private money lending schemes If one requires a loan say of US$10,000, an agreement is drawn and witnessed. The amount in the agreement is usually higher than the loan amount since it includes interest. In this case the contract amount would read US$15,000. The interest rates vary from 25%-50% per month which translates to 300%-600% per annum. A combination of forms of security is used in this system. The first and foremost is trust. Money can only be loaned to those who are known and trusted or are introduced by someone who is known and trusted. The second form of security is coercion. It is known that borrowers who are unable to honour the repayment obligations for any reason are coerced usually by force, and may be harmed or sometimes even killed. The third form of security is the upfront interest which is retained by the loan provider. While hard to prove, it is likely that the large amounts of cash available to the money lenders is directly linked to illegal activities such as logging and gold mining. These financial services are informal and uncontrolled, which makes it very difficult to obtain any credible information. Our source, a broker who is paid a minimal commission informed us that the business community is involved in this and is the source of some of the money used in this system. He could, however, neither disclose his name nor the names of the loan providers for obvious security reasons. It is therefore not possible to estimate how much money changes hands in the process but it is suspected that hundreds of thousands, perhaps millions of US dollars are involved. One Sudanese company is providing the SPLA with food supplies. The one-person business travels to North Sudan to buy food and transports the supplies by hiring containers on one of the few very expensive river transport boats. He easily obtains US$ 800.000 loans per transaction and claims to be one of the smaller clients.

Political manipulation of natural resources According to many observers, the second war between North and Southern Sudan (1983-2005) has been caused to a large extent by the discovery of oil in the late 1970s. The majority of the currently proven oil reserves are located in Southern Sudan, not far from the divide between North and South. The upstream oil business in Sudan has been at the centre of warfare and gross human rights violations for many years, as described in detail in various reports. This has not changed after the signing of the CPA. In the year 2000, a high-profile Canadian government-commissioned investigation into the link between oil development and human rights violations stated that “oil is exacerbating conflict in Sudan”30. Nine months later, the Petrodar Company was awarded a large oil concession in Upper Nile State (see Box below).

30 Cited in Wesselink and Weller, 2006.

Case: Petrodar Operating Company Ltd - a history of oil, violence and poverty in Sudan Petrodar is a joint venture of companies from China, Malaysia, United Arab Emirates and Sudan, and was awarded blocs 3 and 7 of the oil concession formerly awarded to Chevron. Chevron, who operated a consortium in which Shell took a 25% interest, was the company that made the first oil discoveries in Southern Sudan (Upper Nile) in the late 1970s and early 1980s. Chevron was forced to depart after kidnappings of its staff and attacks on its installations by SPLA soldiers. The Sudanese government forced Chevron to either continue its operations or cease its operations in the country. Chevron decided to quit.

When Petrodar took over in 2000, a wave of destruction and displacement came to Renk County, Northern Upper Nile. According to reports of local church leaders, numerous villages were destroyed by the Sudanese army and government-supported Dinka militias, at times backed by helicopter gunships and high-altitude bomber aircrafts. In total, 168 villages were razed. The wave of destruction peaked between 1999 and 2002, preceding and coinciding with the development of the oil fields. When villagers complained about damage done to their farming lands, Chinese management called in the army, who arrested many people , killing several. Moreover, the hundreds of kilometers of all- weather roads constructed by Petrodar have hurt agricultural production and led to flooding and droughts by damming of rivers.

The Chinese/Malaysian dominated Petrodar has served as a loyal partner of the Sudanese government. It has never raised its voice against the government’s use of violence to clear the way for oil development, and the company has evidenced no concern for the people or environment of Northern Upper Nile. Even after the CPA was signed, which contains a range of principles and measures that offer a coherent framework for reforming Sudan’s oil sector, this remained a dead letter. As a result, the development of the Melut Basin has brought no substantial social benefits, but has rather taken the area even further backwards, with a complete lack of basic services and compensation or redress to resettled villagers. In despair, local chiefs and civilians have asked the SPLA to arm them to return to their homes. One paramount chief expressed that “We want to go back to our villages. If we are not helped to do so, we will fight the militia to settle in our villages”. Source: Wesselink and Weller (2006).

It can be concluded that the oil industry has not contributed to local development in Sudan. On the contrary, it has led to more conflict and poverty. The oil industry will have to thoroughly rethink the way it operates. To adapt itself to Sudan's new realities, it will have to start acting in accordance with the principles underlying international law, the provisions and purpose of the Peace Agreement, and authoritative voluntary standards for business behavior. To this end, The European Coalition for Oil in Sudan (ECOS) developed benchmarks for Oil Exploitation as well as Business Principles for the Interim Period that provides companies with a framework with which they can maximize both their own and the society's benefits of Sudan's oil wealth31. At the same time, it can serve as a measurement of oil companies' commitment to peaceful and sustainable development. Oil companies have a chance to play a positive role in post-war Sudan, provided the benchmarks are met, and it is the responsibility of GoSS to enforce this.

It is crucial to closely watch the investors entering Southern Sudan, and monitor the potential effects of their activities in terms of creating new conflicts or exacerbating existing conflict. This is especially the case for mining and agro-business companies. A striking example is the story of a US investor who has concluded a questionable deal with a former rebel leader (see Box below). It is clear that these sorts of investments will not work according to a conflict-sensitive approach, and will probably be fuelling new conflicts by working alongside the legal system of Southern Sudan. There is need for more capacity to monitor these “freewheeling” companies’ activities and to lobby their shareholders in engaging in transparent consultations with the GoSS and local communities.

31 See: http://www.ecosonline.org/index.cfm?event=showtext&page=benchmarks

Example : US investor leases land from former warlord32 In January 2009, the Financial Times reported that Philippe Heilberg, a former Wall Street banker, has gained leasehold rights to 400,000 hectares of land in Unity State, Southern Sudan. The deal was concluded with a son of Paulino Matip, the former rebel commander who switched sides between Khartoum and the SPLA and whose rebel army is still not fully integrated in the new Southern Sudanese armed forces.

Mr. Heilberg is the chairman of the New York-based Jarch Capital and intends to grow food crops and biofuels in Sudan. His company has no expertise in agricultural development but is seeking a joint venture partnership to cultivate the land. Some foreign experts and Southern Sudanese officials doubted that Mr Heilberg could assert legal rights over such a vast tract of land. To Mr Heilberg, this is not a problem as he counts on the continued control by Matip of the region where his militia operated during the war. “You have to go to the guns, this is Africa”, he declared. He is also in contact with rebels in Darfur and in neighbouring countries, looking for untapped opportunities in rebel held territories.

2.2.2 Include Corporate Social Responsibility in investments According to the Minister of Commerce, under the new investment bill, international companies can only enter Southern Sudan under the agreements that the community benefits and the profits are re- invested in the community. One example is the Central Equatoria Teak Company.

Example: Central-Equatoria Teak Company Recently the Ministry of Agriculture and Forestry (GOSS) has signed a Memorandum of Understanding with the Central-Equatoria Teak Company, a subsidiary of the foreign company Equatoria Teak Company. They will be entitled to a 32-year logging licence in Central-Equatoria State. This licence includes the obligation to set up tree nurseries, to replant all trees removed and to support local development, for which a Social Development Fund of 200,000 USD will be created. A Management Steering Committee will manage this Fund. Upon approval of a community development project, such as schools or boreholes, a local company will be subcontracted. The County authorities provide a technical and a legal advisor to assist the local communities in monitoring the project. The company will be operating in three existing forestry reserves created under British colonial rule: Loka Forest Reserve, Korobe Forest Reserve and Kajiko North, totalling 1,845 ha.33 According to the authorities, the price paid by the company to the Government is 150 USD per cubic meter34. In addition, they also have to pay a local development tax of 5 USD per felled tree, which will go into the Social Development Fund. The company will construct a large sawmill in Loka Forest Reserve for processing saw-wood. The company will also buy timber from individual woodlots. A management plan has been written, but copies were not available. On its website, the teak is promoted as “an alternative to Burma teak for the marine decking industry. Sudan teak will be certified with Verified Progress certification leading to FSC certification, as well as ISO 14001 certification, and expects to be fully certified during 1st Quarter 2009. ETC was the first company to sign up a “Plantation Management and Development” agreement with the new government; the company is fully committed to operating on principles of sustainability, local community involvement and working towards FSC certification.”35 These claims need to be verified, possibly with the help of an environmental NGO. In case the company is serious about its intentions to invest in a responsible manner, it could be a future model of good practice for other investments.

32 Blas and Wallis, 2009. 33 Area size from Ministry of Agriculture and Forests (2007). 34 The world market prize for teak is around 1,500 USD per m3, indicating the high profit margins (pers. comm., Ministry of Agriculture and Forests, Juba). 35 Source: http://www.equatoriateak.com/index.html

One inspiring model that could be applied in the context of Southern Sudan, is the creation of an Independent Observer for the logging sector, as successfully applied in Cameroon, Congo-Brazzaville and DRC .

2.2.3 Gender concerns During the war, gender dynamics in economic activity changed due to a number of factors. In Juba, for example, men were not allowed by the authorities to leave the beleaguered town (for fear they would join the SPLA), but women were permitted to obtain a license to dig the fields outside Juba and ensure the food supply into the town. Thus many more women became engaged in economic activities, in order to secure the survival of their families. The World Food Programme supported women with tools to harvest the land.

In addition, many women were running the households alone as their husbands had joined the SPLA. A survey in Juba County, Central Equatoria revealed that 58% of the households are female headed36, a consequence of husbands having migrated, being killed in combat or going in search of employment. At the end of the war, men returned home and reclaimed their positions in the households. Furthermore, many of the previous agricultural plots that women were cultivating have now been taken over by construction projects to erect buildings for companies or housing. With the loss of these fields, there are fewer opportunities for women to be involved in agricultural activities close to Juba.

The role of women in commercial economic activities is not yet well developed. Although 65% of the population is female, only 5% actually attend schools. Reasons for the limited participation of women in commercial activities stems from the lack of (specific) knowledge and business skills. However, since many female traders (for example clothes sellers) have recently entered Southern Sudan from other parts of Eastern Africa, they are providing Southern Sudanese women with an encouraging example of how to go about becoming entrepreneurs. Furthermore, the previous strict interpretation of Sharia laws, that prevented women from openly engaging in economic life, is said to have become more flexible and therefore less of an obstacle for female participation in commercial activities outside the household.

Traditionally, economic activities involving a high percentage of females are agriculture (beans, charcoal, forestry, cultivation, cattle keeping) and small business (petty trade, stone crashing). To spur income generating activities in this sector, the Ministry of Agriculture is supporting women at county level by providing them with grains to grow certain highly nutritious crops and enabling them to sell part of their harvest to generate an additional source of income. Also, as the hospitality sector in Juba has risen, many women are (being trained to become) active in this sector too, mainly as cooks, cleaners, and laundry services. Traditional economic roles of women in beer brewing and stone crushing also continue to contribute to economic life in the region.

All the women, along with women’s or gender-based organisations that were interviewed during the research expressed their eagerness to further participate in commercial activities, and the need for obtaining skills for business development, education and access to finance. Due to cultural norms and past traditions, however, the main activities that these women propose are the typical low-skilled, low-paid activities such as soap making, tie and die and handicrafts. The more promising sectors identified in this report are however unlikely to attract many women unless specific work, in terms of awareness-raising, is initiated. Those sectors currently confirmed as being attractive to women are limited to the traditional areas mentioned above, but also teaching (250 Sudanese pound per month) (kindergarten, nursery), gardening (planting vegetables and fruits) and hospitality.

Several NGOs are engaging in activities to train women in order to encourage them to become economically active (vocational training, apprenticeships). However, many provide training in the

36 IDEAS International, 2006.

above listed traditional areas, with low revenues and very little potential for growth. A number of NGOs have, however, started trainings in hospitality, which seems a more promising sector.

Other init iatives include business training for women such as World Vision, which provides training on how to market honey and increase the quality.

Economic empowerment of women In partnership with several compounds and hotels in Juba, IRC offers on-the-job skills trainings to women in the hospitality industry. This system is unique and successful because there is an agreement to employ women who successfully complete the training.

In addition, an employment fair has been organised, together with the private sector, to identify the available , skilled people in the labour force.

Finally, ICS also runs workshops for women on making handicrafts and clothes, and provides them with training in sales and marketing.

Recently, Southern Sudan has become a member of the East African Women Entrepreneurs Network, which is engaging East African women to become active in entrepreneurial activities. The Network organises (international) training sessions and workshops on how to set up a business in diverse fields and encourages women to organise themselves in groups and exchange knowledge and know-how on a various degree of business activities.

The main challenge for business women (traders) in Western Equatoria State is the security situation as some LRA activities are ongoing in the border area. Other challenges are access to finance and education.

Southern Sudan women march for an end to gender based violence “The poor situation of women … and marginalisation are caused by our customary law and culture, where the power in society is the men,” said Rachael Nyadek Paul, Jonglei State Minister for Social Development. “But these laws are man-made things: we can decide on something new for a law.” Any change is a major challenge, but is backed by the Southern Sudanese leadership. The semi- autonomous region’s interim constitution guarantees that at least a quarter of posts in office will be held by women.

“Understand, when I talk of women’s employment, do not think I mean just the ladies who make your tea or carry your documents from office to office, or of the pretty girl who sits at your reception desk,” Southern President Salva Kiir told political leaders this month. “No, we must promote able, educated and mature women to positions of responsibility and influence if we are to ensure that we will meet the needs of the mothers and sisters and daughters in our community.”

“In the past women were treated like property, [with] less value than cows,” said demonstrator Akerwo Bol. “Today, because of this government, women are to come out and do what men do. They are equal.”

But in a region where men must pay large numbers of cattle as part of a marriage deal – the traditional basis of the economy - others were not so impressed. “If you pay cows for a woman, then of course you can beat her,” said Akoch John, an elder. “If you want to give me your daughter for free, maybe we can talk.”

Source: http://womenshpere.wordpress.com/2008/11/25/southern-sudan-women-march-for-end-to-gvb/

Gender issues are sensitive in Southern Sudan. Affirmative action has been established whereby at least 25% of the positions in government need to be filled by females. However, the question remains how to empower women to effectively make use of this space provided to them. This will include encouraging the young generation of women to be as equally educated as their male counterparts.

2.2.4 Investing in economic support services “The future of the majority of Southern Sudanese lies increasingly in labour force participation within and outside of rural agriculture. Capability enhancement through human capital investment is therefore critical.”37

2.2.4.1 Vocational training In order for the Southern Sudanese entrepreneurs to benefit from the PPC interventions, they must have the skills to be employed, or to start businesses in the chains of production. Without this the Sudanese will, as an unskilled labour force, not benefit.

Studies conducted so far indicate that, even in Juba, where a variety of training institutions and organisations exist, communities describe an almost total lack of access to vocational training places. Even if people can get training they are not able to apply it in the workplace. There is a complete absence of any analysis of the supply and demand of the labour markets, the demand for goods , services, and skills, and availability of raw materials , which is urgently required as a basis on which to determine which skills require investment.

According to one INGO: “Local staff are hired but do not know how to carry out simple tasks like book keeping. This is strongly related to trauma which blocks absorption of knowledge and skills. Another factor is an apparent lack of motivation and lack of exposure to office jobs.” The draft UNCA draws attention to the lack of skills amongst the workforce at both skilled and semi- skilled levels. It states that about 80% of the economically active population of Sudan is involved in the informal economy and about half of them are poor. It also states that women play a major but often under-recognised role in livelihoods and the economy generally. It defines two key challenges in Southern Sudan with regard to Vocation Training (VT) that need to be addressed. These are firstly, the limited workforce skills and limited employment opportunities for ex-combatants and vulnerable groups, and secondly, the lack of a full-fledged labour force survey, which should also include the informal economy. 38

Southern Sudan does have a tradition of apprenticeships. In order to meet the operational necessity to develop training capacity quickly in a variety of skills, it is advisable that the reintegration programme identifies successful businesses in the sectors where training is required, and offers them incentives for taking on ex-combatants and teaching them vocational skills. This offers the added benefit of introducing ex-combatants to life in the workplace, alongside other civilians, and may also lead to jobs at the end of the apprenticeship period, particularly for youth.

In identifying partnerships with organisations providing training, it will be important to consider the capacity of the organisation to provide follow-up support to ensure success in a new business or in fin ding employment. Some of the organisations are already doing so, particularly those providing agricultural, livestock or fishing asset grants and support. The potential for follow-up is increased if the organisations have a long-term field presence, less dependency on donor funding, and locally recruited trainers or those from the Southern Sudanese Diaspora.

37 Bertel, 2009. 38 SSVTP, December 2008.

Adult literacy for males is reportedly 37%, and 12% for females (NSCSE/UNICEF, 2004). However, in the SHHS states the average literacy rate for females aged 15 to 24 years is 2%, ranging between states from 0% to almost 7% (MoH/SSCCSE, 2006). Huge numbers of children do not have access to schooling, and the average amount is no more than two years (SSCSE/UNDP, circa 2006). Almost 85% of girls have no access to schooling, and only constitute just over a quarter of those in primary school (SSCSE/UNDP, circa 2006). Overall, less than 16% of children in Southern Sudan have attended primary school (MoH/SSCCSE, 2006). Less than half of those starting primary school, including those who repeat grades, stay on to Grade 5 ((MoH/SSCCSE, 2006). Less than 1% of girls complete primary education (JAM, 2005a). In over half the states in Southern Sudan, less than 1% of children of secondary-school age attend secondary school. 39

2.2.4.2 Business Development Services Although opportunities to exploit new ideas are diverse and plentiful, it is notable that production and services in areas commonly recognised as holding potential have not been taken up by local people. It will be important to identify the reason for this lack of entrepreneurial activity among the local population, so that hidden difficulties can be identified and overcome. Measures to boost the private sector identified in this report can be summarised as follows:

· Support to market facilities, including all-weather shelters, warehouses, transport links and security provision; · Concerted efforts to increase access to credit for new and expanding businesses. It has been noted that collective liability for loans can be more successful in ensuring repayments and therefore generating sustainable loan schemes; · Lower taxation for businesses and on goods being transported from place to place, and relief on registration for starting entrepreneurs; · Resolution of localised conflicts and provision of security (particularly for agricultural businesses and in markets); · Provision of quality seeds to support productive agriculture; · Enhancement of water supplies in areas where new entrepreneurs wish to start agricultural businesses; · Investment in processing industries to develop the market for local produce, including cowhide, fish, milk, fruit, vegetables and crops; · Improvement of roads and railways, and increased availability of cheaper transport for local workers and businesspeople; · Improvements in communications including mobile telephone networks and internet access; · Increased availability of vocational training; · Increased access to cheaper tools and technologies in agriculture and a wide range of other potential business areas. · Increased access to veterinary drugs and treatments; · Access to cultivable land for those engaging in agricultural businesses; · Availability of business advisory and mentoring services.

Communication is a real problem for businesses in Southern Sudan. For example the fixed telephone lines are not that well developed due to upspring of mobile phones, high investment costs and long- time war situation. Coverage is not always guaranteed however, and interconnection and cooperation between the different mobile phone networks seems also to be a constraint. Businesses such as banks have difficulties communicating with their branches and sub-offices.

39 MoH/SSCCSE, 2006.

2.2.4.3 Integrating environmental aspects In 2007, UNEP carried out a post-conflict environmental assessment40, which raised the alarm bell over the deterioration of the environment, especially due to the influx of returnees. Some major environmental problems include:

· Pollution and waste dumping in and near major urban centres. Around Juba, garbage is dumped on a large scale along the roadside. This is done in a completely disorganised manner and is stretching as far as 25 miles from Juba town. People have started to settle on these garbage belts in order to make a living out of the valuable items collected on these belts, or simply looking for food (e.g. leftovers from restaurants or out-of-date canned food) · Excavation of sand and removal of big trees along the road and excavation of marrum for road construction, as well as people resorting to breaking of stones (hard core and gravels). · Increasing water scarcity as some connecting rivers to the Nile (Westbank) have run dry over the last decade, possibly due to deforestation in areas upstream, leading to erosion and loss of top soil. · Mining of construction materials that leads to deepening of the water table. In addition, cattle owners are using scarce water sources for their cattle, competing with people’s water needs. This is not yet leading to local conflicts. · Tree cutting and deforestation: Small scale logging for timber (for construction), felling of acacia trees and branches (for fencing) and fuelwood (for charcoal) in rural areas, though not yet leading to deforestation, will eventually become a problem. “The single biggest threat to the forest in Southern Sudan is bushfires and deforestation. If the right environmental policies are not put in place soon, within a decade the situation will be as serious as in most parts of Northern Uganda (e.g. Moyo, Adjumani, Koboko). All tree cover will have disappeared, and bare land will be all that is left. “ (Staff member, AAH-I, Yei) · Destruction of protected areas by industrial oil and mineral exploitation. Examples include the Upper Nile/Jonglei oil fields, which have led to heavy pollution of the Sudd wetlands by dumping waste water indiscriminately (Source: article in Sudanic magazine).

In the development of PPC, environmental issues require the following action: - Carry out Environmental Impact Assessment for any major economic intervention; wherever possible train and stimulate national and local authorities to take part in it. - Include awareness raising program on environmental degradation and ecosystem management & conservation. - Specifically for agricultural projects: Set up agro-forestry and tree planting programs to promote farmers to plant trees and protect the ecosystem as an important source of life support services to local people.

40 UNEP, 2007.

3. Potential for fair and sustainable economic development

Chapter 3 first presents a number of sectors and sub-sectors that have relatively high potential for fair and sustainable economic development in the two provinces studied, detailing the ongoing economic activity and then presents sectors that have a relatively high potential for economic development. It subsequently describes the challenges for developing these sectors. The criteria the team developed for this selection is based upon the identification of sectors that:

1) are crucial for the development of Southern Sudan; 2) are likely to attract foreign companies; and 3) have the potential to boost local economies in a fair and sustainable manner.

Therefore, some economically interesting sectors have not been described in detail, as they do not clearly respond to all three criteria. In addition, PPC requires a high level of coordination and should strive towards local ownership. Thus, the second part of this chapter outlines a comprehensive stakeholder analysis, including both private and public, and national and international actors.

3.1 Specific Situation in Central and Western Equatoria State

3.1.1 Ongoing economic activity Central Equatoria is playing a central role in the economy of Southern Sudan, as it is home to Juba, the capital city and largest urban settlement in the country. Between 1983 and 2005, Juba was one of the garrison towns held by the Khartoum government. During this time, Juba was largely neglected in terms of infrastructure, housing and basic services. In 2006, when Juba became accessible by road (after the major roads to Juba were demined), the process of reconstruction began. The GoSS settled in Juba between 2005 and 2006, leading to large-scale reconstruction of offices and residential areas for government officials. The influx of international organisations also led to a wave of investments in lodging facilities and offices. At first, this consisted of temporary structures like tented camps (e.g. AFEX Camp) and prefabricated structures (e.g. UNOCHA compound). Due its historical role, geographical position and the current focus by the international community and economic actors, Juba has the potential to become a central hub not only for Southern Sudan, but also for the region. Markets, shops, small scale manufacturing, telecommunications and infrastructure development have boomed in recent years, owing partly to the influx of international organisations after the signing of the CPA, and partly to income revenues from oil which the GoSS receives from Government of National Unity in Khartoum. Since 2007, many new hotels and offices have been established, consisting of new, low-budget buildings (e.g. Beijing Hotel) or renovated buildings from the colonial period (e.g. Logali’s House and Paradise Hotel). In combination with major road works and the establishment of numerous markets, shops and restaurants, the face of Juba has changed drastically over the last four years.

Yei, which is Central Equatoria’s second largest town, is situated about 100 miles south of Juba. It hosts numerous International Non-Governmental Organisations (INGOs) and is also witnessing increased economic activity since 2005. Its agriculturally favourable climate and proximity to Uganda and the Democratic Republic of Congo (DRC) makes it a potentially strategic place for a variety of economic developments.

Despite its high potential for agriculture (it is touted as the potential bread basket for Southern Sudan), forestry and tourism, Western Equatoria state has lagged behind in development due to its extreme western geographic location, which makes accessibility by road difficult. Poor physical infrastructure, which is further compounded by insecurity arising from its vast tropical forest, the presence of the Lord’s Resistance Army (LRA) and armed banditry activities makes it difficult for goods and services to move in and out the state.

Yambio, the capital of Western Equatoria is a sleepy town which is much less developed compared to Juba. It has a history of support from a few INGOs, especially during the war, but the majority of them are currently pulling out after their role of providing relief and emergency services reduced41. Relative to Juba, only a few smaller operations in agriculture and production exist in Yambio. Nzara town is located a few miles north of Yambio. It has a history of a cotton ginnery and small-scale leather production. Also, in addition to sales of imported hardware items, household goods, motorcycles and food items, some telecommunication companies have only recently begun to establish branches there.

Both states are home to some of the most fertile soils in Sudan, especially the so-called Green Belt (see Figure 2 above). With respect to economic activities, Western Equatoria is less important, although one of the few industrial areas of Southern Sudan can be found here (in Nzara, close to the state capital Yambio).

Below are detailed the various sectors for potential PPC investments, along with the ongoing activity in these sectors.

· Oil production and minerals Sudan as a whole contained proven oil reserves of five billion barrels as of January 2007. The majority of these reserves are located in Southern Sudan in the Muglad and Melut basins 42. At present, large-scale oil drilling is taking place in the regions of Upper Nile, Abyei and Unity State (see Oil Map in Annex). Some of the major players that have controlled the oil industry in Sudan since the mid 1990s are China, Malaysia, Sweden and India – mainly state-owned companies. Oil 43 accounts for 92.6% of Sudan’s export value . The only two (partially) Dutch companies involved as subcontractors in the oil industry are Royal Dutch/Shell and Trafigura. In the CPA of 2005, one of the key issues was the sharing of oil revenues. Since then, oil revenues have been shared equally (50:50) between the North and the South and are currently representing around 98 percent of the GoSS budget.

Mining has thus far been limited in Southern Sudan. For Sudan as a whole, non-hydrocarbon minerals of actual or potential commercial value include gold, chrome, copper, iron, manganese, asbestos, gypsum, mica, limestone, marble, and uranium44. Out of these, only gold has been mined at a small- scale in Southern Sudan, where it is regarded as one of the main products in the war-economy.

· Agriculture Agriculture is of major importance to the economy in terms of both food security and employment. Out of 82 million hectares of land surface, 50 percent is prime agricultural land. A further 25 million hectares is categorised as marginal agricultural land while the rest is composed of forests, pastures and mountains 45. Currently, commercialisation takes place on a very small scale. Most of agricultural production in the South is for subsistence purposes. Some major crops include sorghum, maize, sesame, groundnuts, cotton, vegetables, and fruits. Swamps could be developed into large scale irrigated agriculture for cash crops such as rice, sesame, palm oil, vegetables, fruit trees and cotton. Rivers, streams and lakes could be used for small-scale irrigation operated by households, associations, and cooperatives.46

41 Interviews with Commissioners of the counties of Yambio and Nagero and Program Manager: World Vision International in Yambio. 42 EIA, 2007. 43 ECOS, 2007. 44 http://www.photius.com/countries/sudan/economy/sudan_economy_mining.html 45 Ministry of Agriculture, undated. 46 USAID, 2007.

Policies stipulated by the Ministry of Agriculture and Forestry (MAF) prioritise food security in the short term, followed by the development of a market-oriented agriculture in the medium to long term. The need to both conserve and enhance the natural resource base through proper natural resource management is recognised. All of the above are to be achieved through a partnership-based approach involving the GoSS, State Governments, non-governmental organizations (NGOs) and private-sector partners working with groups of farmers organised into associations. In collaboration with a group of international research centres led by ICRISAT, the Ministry of Agriculture is currently setting up the Southern Sudan Agriculture Research and Technology Organization (SSARTO). A value-chain approach will be used that starts with the identification of market opportunities. This is then followed up by ensuring that input supply, management, assembly, and marketing are all carried out in an organized and efficient way to maximize returns to smallholder producers, while ensuring the sustainability of the natural resource base.

Data on agricultural production and trade in Southern Sudan are difficult to obtain. Despite these limitations, Sudan has an outstanding natural resource base for the production of livestock and a wide range of annual crops (grains, fruits, vegetables), tree crops (coffee, tea) and forest products47. In 2008, several new private coffee plots were started in Morobo (Central-Equatoria) and Maridi and Nzara (Western Equatoria).

Some recent data published by Food Aid Organisation (FAO)/World Food Programme (WFP) (2009) indicate that in 2008 there were 1,248,000 farming households with a total area of farm land in Southern Sudan of around 1,000,000 ha 48. In terms of food security, 2008 has been a good year. Favourable rains and relatively few outbreaks of pests and diseases, together with increased returnee population, have resulted in above average cereal harvest of around 1,250,000 tonnes, compared to 860,000 tonnes in 2007. However, the dismal road infrastructure and weak marketing system have led to limited access to food and a continued dependence on food aid in some areas. Markets in Southern Sudan currently provide mainly food items imported from Uganda, and some from Kenya, which is an indication of the virtual lack of commercial farming.

Animal Production Livestock/Dairy industry Livestock plays a significant role, with around 8 million cattle head in Southern Sudan, out of a total cattle population in Sudan of 40 million head in 200449. These animals are not evenly distributed, ranging from hundreds of head per individual to zero in other areas. In all regions, except Western Equatoria, more than 75% of families reportedly have their own livestock50. In Central-Equatoria, the estimated cattle population is around 880,000 head, while in Western Equatoria there are around 680,000 head (2004) 51. Western Equatoria is less suitable for livestock because of the dense vegetation and prevalence of animal diseases.

The contribution of Southern Sudan cattle to export trade is, however, negligible. In the past, cattle were sold to Uganda, Kenya and Ethiopia , but insecurity within Southern Sudan and along the borders has put a temporary stop to this trade. There is some trade of Southern Sudanese cattle to North Sudan. As a whole, the livestock sector has not been commercialised on a large scale. A major constraint is that many Sudanese cattle owners are not willing to sell off their livestock since owning livestock is equated with economic wealth and social value, including a role in religious rituals and in marriage. The bride price in cattle varies considerably according to region and level of poverty, ranging from 30 to 200 head of cattle. The per capita livestock value of Sudan is about US$150. With rising bride prices over the last years, there is growing pressure from the population to

47 GOSS, 2008. 48 FAO/WFP, 2009. 49 Sources: Ministry of Agriculture, undated (http://www.sudanimals.com/englishedition.htm). 50 FAO/WFP, 2009. 51 Source: Ministry of Animal Resources & Fisheries-Department of information and Statistics – Khartoum (http://www.sudanimals.com/resources/epopulation.htm).

acquire larger herds. Many entrepreneurs will plough back their profits into building up their cattle herds instead of expanding their business. Livestock holdings are the main source of security against crop failure52.

The estimated economic value of cattle in Southern Sudan is about US $1 billion, but this has not been put to productive use. Instead, the majority of beef meat is being imported from neighbouring countries, in particular Uganda. Southern Sudan is rich in animal feed resources (forages, agricultural residues and by-products of agricultural processing) that can be incorporated into management packages for fattening cattle and in dairy cattle production. Other livestock in Southern Sudan includes goats, sheep and donkeys. There are an estimated 8 million small ruminants 53.

The dairy sector is not well developed in Southern Sudan, with limited milk production for subsistence purposes only. No statistics were found on dairy production in Southern Sudan. The potential for setting up dairy industries is however huge, as 100% of all dairy products are currently brought in from North Sudan, Uganda and Kenya. Judged by international standards milk production potential of most indigenous Sudanese cattle is sub-optimal. Attempts have been made to upgrade milk yield of local cattle through crossing with purebred dairy cattle breeds such as Friesians, although this is mostly limited to Northern Sudan. There are some attempts to introduce Fleckvieh cows, a dual-purpose breed, in Southern Sudan, since the cows are suitable for both meat and dairy production.

Poultry Poultry is currently not an important economic sector, but it has high potential to replace imports from Uganda. There are two systems in Sudan: the traditional, open system, in which chicken are roaming around freely in the homestead; and the closed system for broiler production. Compared to North Sudan, where broiler production is well developed, in Southern Sudan, it is still in an embryonic stage, although some small poultry farms have been set up in the past two years. One successful example is the Yei Poultry Breeding Group, which is supplying broilers to farmers, as well as chicken and cocks to local restaurants and hotels.

Example : Poultry farming in Central Equatoria In Yei Town, a poultry farm called the Yei Poultry Breeding Group is operated by an ambitious Sudanese business woman. “It is our ambition to become the number one poultry farm in Southern Sudan”. The group earns about 500 SP (250 USD) per month, although in December this may reach up to 3000 SP (1500 USD) because of the peak in demand due to Christmas. The sale price of a griller of 6 weeks is 20 SP (10 USD), compared to 25-30 SP (12.5-15 USD) for a griller from Uganda (up to 50 SP or 25 USD at Christmas).

At present, there is no egg production. The group has planned to buy 1000 layers, which will produce about 900 eggs per day. This will provide an additional income of 600 SP (300 USD) per month.

The group has received NGO support to upscale its activities. These NGOs buy high-breed cocks and distribute them to farmers in Yei and Morobo County for cross-breeding with local hens. A major constraint for up-scaling is the lack of access to micro-credit. A local micro-finance institution, Sudan Microfinance Institution (SUMI), is only giving loans to businesses that generate immediate profits, not to agricultural enterprises that have longer pay-back periods.

52 IDEAS International, 2006. 53 FAO/WFP, 2009.

Fisheries Fisheries are an important part of economic activity all along the Nile River. The Nile flows through Central-Equatoria, Jonglei and Upper Nile States, but also in other states tributaries to the Nile, lakes, wetlands and fishponds provide local communities with an important source of protein. Local fishermen are operating with traditional fishing methods (nets and hooks) in small, wooden canoes for both subsistence and sale. Main species caught include Tilapia and Nile Perch. There is no la rge-scale fishing industry in Southern Sudan, and the majority of fish in the markets is imported from Uganda. There is limited demand from hotel and restaurant owners who buy local fish for consumption in their hotels in Juba. No statistics were found on fish production in Southern Sudan. FAO is supporting local fishermen in setting up cooperatives and improving fishing techniques for commercial production.

Forestry Forestry is important for both timber and non-timber value. It is estimated that natural forests and woodlands cover a total area of 192,000 sq. km. or about 29% of total land area in Southern Sudan54. Currently, commercial exploitation is limited to teak (from plantation forests) and mahogany (natural stands). Natural teak is used locally for canoes, construction of houses and furniture. It is also exported for specialised uses such as yacht building and marine decking. In addition, tree felling takes place for charcoal burning and brick making.

GoSS urgently needs to define policies and regulations on the exploitation of forest resources for communities, private companies, and local and export markets. A first step has been made by developing a Forest Policy Framework 55. In the past, agreements were signed with foreign companies, but with limited controls on felling and export. Most of these past agreements have now been voided56. In recent years, two logging licences have been awarded to a foreign company, Equatoria Teak Company in West and Central Equatoria. It is important to carefully monitor the way in which this company and other timber companies will operate with regard to environmental sustainability and contribution to local development.

Many valuable non-timber forest products are collected in both Western and Central Equatoria. No statistics are available for Southern Sudan. Based on interviews, it was found that the main forest products include:

· Shea nut (Vittalaria Paradoxa): a small fruit which can be pressed into oil, to be used for various purposes. It is in high demand all over the world as an ingredient for production of body lotion and also used as cooking oil and soap locally. At present, Sudan as a whole produces 10,000 metric tonnes per year, while estimated production potential is 100,000 m. tonnes. Only 0.2% of total production is currently exported57. · Gum Arabic (Acacia senegal or Acacia seyal): one of the major export products of Sudan, mainly harvested in Kordofan and Darfur (Northern Sudan). It is also growing abundantly in Eastern Equatoria, and SNV (Netherlands Development Organisation) is working with local farmers to develop the value chain for gum arabic. So far, commercialisation is taking place at a very small scale. · Lalok (local name for Balanites aegyptiaca): a highly nutritious, multi-functional fruit with a hard shell, resembling a date. It is used locally and has high nutritional and medicinal value. It is especially collected and consumed during the dry season. Trade is limited to a small scale at local markets, with no exports. · Honey: collected in the wild or from natural or locally made beehives. Increasingly, farmers are using modern beehives. There is high potential for export to other African countries and

54 Ministry of Agriculture and Forestry, 2007. 55 MAF, 2007. 56 World Bank, 2007. 57 USAID, 2004.

possibly overseas as well. According to experts, Sudanese honey is superior in quality to Kenyan honey because of the rich biodiversity. · Tamarind (Tamarindus indica): in some areas, the pulp of the tamarind fruits is consumed locally and sold in the market.

There is high risk of over-exploitation of both timber and non-timber forest products because of the high dependency of the Southern Sudanese on their natural resource base. It is crucial to put measures in place to control the harvest and commercialisation of forest resources, in order to ensure a sustainable use and protection of vulnerable tree species (see 2.2.4.3).

· Manufacturing In Southern Sudan, no significant industrial manufacturing is taking place, with the exception of mineral water, beer and soft drinks production, all of which are witnessing rapid growth in Juba. A South African company, SABMiller, will open the first beer brewery in Southern Sudan in 2009. There is some small-scale indigenous manufacturing in urban areas like Juba and Malakal, as well as simple metal processing (e.g. boats, construction materials) and wood processing (e.g. furniture).

Example: Beer brewery in Juba SABMiller has announced its plan to construct a beer brewery in Southern Sudan, the first beer produced there since Islamic law shut down the region's last brewery 25 years ago. The beer would be produced in a new plant in Juba, part of an ongoing investment that has cost the company US $37 million. The company was convinced there would be a strong market for a Southern Sudanese brand after seeing the amount of SABMiller beer the region was importing from Uganda, he added. The company said its subsidiary, Southern Sudan Beverages Limited, would employ 250 people once the beer was launched in February, and would also produce soft drinks. SABMiller has also expressed its interest in sourcing local cereals for the brewery.

Source: http://www.reuters.com/article/lifestyleMolt/idUSTRE4B91K220081210

· Infrastructure

Road Construction Road construction falls under the responsibility of the Ministry of Roads and Transport. There are hardly any asphalt (bitumen) roads outside of Juba. Since 2004, World Food Program (WFP) has been responsible for opening up major routes, linking key settlements in the territory58. The long-term plan for road development in Southern Sudan is based on a core network of 3,000 km of paved and 3,000 km of gravel roads as a minimum target to be constructed by 2015. It requires about USD 100 million a year on new construction59. Some of the major companies involved in road construction are Civicon (Kenya), Iyat (Khartoum), Payii Roads and Bridges (Southern Sudan), Rhino Star (Southern Sudan), Roko Construction (Swiss/Ugandan ownership).

Already in Juba, approximately 100 miles of road surface has recently been paved with tarmac. However there is a significant amount of ongoing road graveling activity through funding from both GoSS and donors. Additionally, some sections of inter-urban and regional highways like the 188 km Nimule -Juba road; 230 km Kaya-Yei-Juba road; and 175km Juba-Mundri road have benefited. Nevertheless, this is hardly one quarter of the main roads in the two states which presents enormous opportunities for contractors.

58 The main roads maintained by WFP include the one linking Juba and major Southern Sudan towns of Bor; Malakal; Rumbek; Wau; Maridi; Mundri; Yambio and international routes from Juba to the borders of Uganda and Kenya (Buwembo 2008). 59 GOSS, 2008.

Example: Lainya-Wonduruba road in Central Equatoria The road which connects Lainya to Mundri in Central-Equatoria was recently successfully completed. One of the towns benefiting from this road is Wonduruba, which is twenty miles from Lanya. It easily passes as a classic example of how good roads can increase efficiency, drive down costs, lower prices, improve service delivery and boost trade. Before rehabilitation, the Lainya – Wonduruba road used to take motorists between three to four hours. Now, it takes a mere thirty minutes. As a result, Wonduruba town has grown from a small centre into a booming town where several businesses have sprung up in a span of just one and a half years. Wonduruba town is also home to a vibrant Agriculture Department Field Training Resource Centre.

Railway construction Southern Sudan has no functional railway line. There was only one line that connected Port Sudan in the North to Wau in Bahr el Ghazal State but was destroyed during the war. Rehabilitation works on the line are in progress and already about seventy kilometres from Port Sudan has been completed60. In order to plan for railway construction, GoSS contracted a German firm, INGENO Group, which did a study in 2007 and identified three main possible alternative railway links from Southern Sudan to the Indian Ocean61. Reports obtained from government officials 62 indicate that the results of the study were not adopted and that the government still welcomes potential partners. The lack of a railway network in Southern Sudan presents private sector developers with extensive opportunities.

Building construction Southern Sudan as a whole suffers general lack of permanent houses. It is therefore not unusual for business and residential premises to be built in cultural designs and using local materials like grass, mud and mud-bricks and bamboo. Within towns and some urban centres, there is occasional use of corrugated iron sheets on the roofs of semi-permanent structures. In Juba, the government is in the process of transforming its offices and other premises into modern buildings. Already, almost ten ministries are housed in post-CPA constructed buildings. Although there is some construction work going on to develop more government office blocks, there is still a huge gap since construction of hospitals and schools have not started yet.

Electricity The electricity situation in Southern Sudan can be simply summarised as deplorable. There is no national electric grid to supply consumers from a central location. The administrations of individual towns therefore install power generators with limited capacity owing to the lack of funding. In such a situation, private consumers end up being inadequately served, while some are not served at all. This has forced many consumers to install private generators and sometimes augment with solar panels; a situation which has among other factors led to a huge escalation of the cost of goods and services.

In Juba, where the total estimated demand is 100 MW, the government has, for example, five small generators with a combined output of 25 MW serving mostly government premises and a few selected private users within the town. The government is in the process of installing additional capacity of 12 MW, slated for completion by end of March 2009 and this will meet 80% of Juba’s total estimated demand63. The situation in Yei presents a similar situation, where an American company, NRECA, constructed a power plant in 2006. 64 While it has enabled all government offices and a few connected private consumers to be supplied with power, its maximum capacity only allows it provide electricity for a total 20 hours a day, intermittently. There are plans to extend the area of coverage beyond a five

60 Interview with Director General Railways, Ministry of transport and roads, GoSS. 61 The three possible alternatives are: 1,220 km line running from Juba to Lamu (Kenya); a 500 km line running from Juba to Kampala (Uganda) and connecting to the Kenya-Uganda railways leading to Mombasa (Kenya); and a 690 km line connecting Juba to Wau and hooking into an existing non-functional Wau – Port Sudan line. 62 Interview with Director General of Railway Transport: Ministry of Transport and roads, GoSS. 63 Interview with Area Manager, Southern Sudan Electricity Corporation: Ministry of Energy and Mining, GoSS. 64 Interview with Commissioner of Yei County: Central Equatoria State, GoSS.

mile radius from Yei town. Other towns like Yambio in Western Equatoria currently use smaller power generators which serve only less than half of the government consumers.

· Transportation The existing forms of transportation in Southern Sudan include road, air, and river while there is huge potential for the undeveloped rail system. Southern Sudan still lacks established public transportation systems as such the sector is dominated only by a few by private operators which make cost of transportation prohibitively high.

Road Transportation The road transportation sub-sector is used by taxis, buses, lorries, trucks, cars, motor cycles and bicycles. These are used for cross-border, inter-urban and intra-urban transportation of goods and passengers. Despite lack of organized systems, both public and private, passenger transportation is popular across the different towns and more so within Juba town. Cross-border passenger transportation is mainly served by buses which are dominated by regional operators, although a few local bus companies also ply the routes. Some bus companies plying regional routes include Gateway Bus Service (Somalia), Regional Bus Service (Kenya/Sudan), and Kampala Coach (Uganda), while Nationdit Bus Service is owned by a Southern Sudanese, and Abushaka Transport Company (Khartoum) is owned by a Northerner.

Inter-urban passenger transportation, especially from Juba to other nearby towns, is dominated by minibuses (Matatus). In a similar way, the ownership of the minibuses is also shared among foreigners, Southern and Northern Sudanese nationals. In Juba, it is estimated that more than 70% of the passenger minibuses are owned by Ethiopian entrepreneurs, and to a lesser extent, by Ugandans. Apart from minibuses, Juba and other urban centres are also patronised by motor cycles (locally known as Senke or boda boda) - a growing popular means of transportation that has sprung up to plug the gap created by lack of organized urban transport system.

Example: Cost of doing Business: Motorcycle (Senke) dealership in Yambio town The most popular means of transport in Yambio is the motorcycle, also known locally as Senke. Most of them are imported from DRC through Bazi and Yei and into Yambio. The purchase price in DRC ranges between about US $600 to US $700 while the selling price in Yambio ranges from US $800 to US $1500. The following additional taxes are paid by the traders along the road: Congo border $2 ½, Bazi $42, Morobo county $2 ½,Yei (in) $5,Yei (out) $ 5,Tore $2 ½. When the vehicles arrive in Yambio additional charges include rental cost for show room (open air) costs $25 for 2 – 3 months. Other costs are registration with Chamber of Commerce $2 ½.

Movement of goods like cement, roofing sheets, steel rods, petroleum products, fish, livestock, chicken, eggs, and vegetables are frequent on all the roads in the two states, especially in Central Equatoria due to its proximity with Kenya and Uganda. This is further boosted by heavy reliance of Southerners on imports. A trip to the Ugandan border towns of Nimule and Kaya bears witness to large numbers of trucks and lorries over 90%65 of which are owned by foreigners from Kenya, Uganda, Tanzania and DRC

River transportation There are a total of 16 ports along White Nile in Southern Sudan, 7 of which are major and 9 which are small. GoSS’s Department of River Transportation is in the process of taking over ownership and operations of the ports which had been leased by the Northern government to private operators. Already, the handing over of Juba port has been completed and is now being managed by GoSS. Ports at Malakal and Bor are in the process of being handed over in the upcoming months.

65 Interviews held with road toll collection officials, clearing and forwarding companies and truck drivers at the border towns of Nimule and Kaya.

A Dutch company, Damen Shipyards Gorinchem BV, has been contracted to rehabilitate the newly administered ports. The firm is reconstructing port yards, the ramps, and storage facilities in order to improve their capacity, efficiency and safety. Additionally, The River Transportation Department is also in the process of maintenance updates along sections of the river, beginning with the Juba to Gemmaiza section.

Air transportation For many years during the war, the main transport within and out of Southern Sudan was by air 66, mainly through the relief flights within Southern Sudan or to neighbouring countries. Air still remains the most reliable and safest means of transportation in the two states, and the region as a whole.

There now over 10 different commercial airlines, the bulk of which are foreign owned, flying in and out of Juba - the only international airport. The major airlines are East African, Jetlink, Dairo Air, Eagle Air, Delta Connection, Sudan Airways, SkyJet Airlines, Uganda Airways, Ethiopian Airlines, African Express and Marsland Aviation. In addition, there are flights operated by UN agencies like UNHAS and WFP, which are mainly used for distributing relief and emergency kits, and transport staff of various NGOs and international organisations within the country. The commercial airlines work in conjunction with a number of travel agents like Muthaiga Travel, and Charlestone Travel which have offices in Juba, Nairobi and Kampala. Despite the relatively large number of carriers, air transportation costs still remain relatively high owing to the risks of operating in the territory and also to the generally high cost of goods and services.

· Financial sector The Bank of Southern Sudan (BoSS) was established in accordance with the interim constitution as a branch of Central Bank of Sudan (CBS). It is headed by the deputy governor of CBS and uses the conventional financial instruments in implementing the national monetary policy. Apart from prudential guidelines for commercial banks, BoSS is also mandated to provide a framework, under which GoSS may borrow money. Among the guidelines that commercial banks are expected to adhere to is registration under the Banking Act, minimum capitalisation, and disclosure. This has led to development of commercial financial services in the form of banking and Microfinance Institutions (MFIs). There are also others that practice the Islamic banking system, but because these are not considered to be favourable for commercial activities, they were excluded from this study.

Banking sector There are a total of four conventional commercial banks, of which three are locally owned while one is foreign owned. Two new foreign banks, Equity (Kenya) and EXIM (Tanzania) are slated to open in Juba in March/April67. The services offered generally include business development services, loans, deposits, foreign exchange and money transfers. There are also ongoing partnerships wherein banks partner with the government to undertake development projects (see chapter 1).

Even though banks offer commercial services, loan facilities are rare, due to several constraints in the sector which are presented below. Nile Commercial Bank (NCB) has been disallowed from issuing loans since 200668 (see box below). This leaves only three other banks, two of which are relatively small and hence have limited outreach. This is further exacerbated by lack of deposits and related cash and liquidity. Despite this, loans of approximately USD 10,000, especially for starting businesses or improving manufacturing businesses, have proven relatively successful in the past. There is need to combine loans with intensive training on business development and management to enhance possibilities of better spin-offs. Some banks like NCB used to provide training as part of their credit policy. However, the management has recently ceased such trainings, considering them not

66 Akol, 2008. 67 Interview with Managing Director, Kenya Commercial Bank, Juba. 68 Interview with Managing director, Nile Commercial Bank, Juba

appropriate for their core business practices. Instead, it has suggested that a 3-4 weeks course should be setup in training centres.

Example: NCB stopped by BOSS from giving loans According to the information availed to the research team by NCB, over US$10 million was written to suspend accounts, the bulk of which are non-performing loans whose chances of recovery are close to nil. Consequently, BoSS mandated that NCB stop all forms of lending in 2006, forcing customers to seek loans and services elsewhere and causing severe disruptions in liquidity. This resulted in BoSS assisting NCB with temporary working capital and the replacement of the managing director with an expatriate.

Microfinance The other main type of commercial financial service is microfinance. MFI services generally include business development services, small loans, deposits and money transfers to small-scale operations. This are currently six MFIs operating in Southern Sudan: Sudan Microfinance Institution (SUMI); Finance Sudan; BRAC; Rural Finance Institution (RUFI); JALUA Cooperative; and Community Development Service (CDS). SUMI is the largest: it has branches in most major cities in Southern Sudan. The institution has products for loans with group guarantee as collaterals, individual loans and salaried people. It also offers money transfer services locally in collaboration with Afripayment Company. A savings product whose legislation has already been passed by the government is set to kick off early 2010. Additionally, this sector recently benefited through a US$20.2 million World Bank facility where four MFIs were selected to disburse the funds to suitable entrepreneurs.

Microfinance is useful for PPC in terms of generating supply for larger companies but the unavailability of adequate and extensive financial services has created a huge gap which has developed into an informal system of private lending and borrowing.

Remittances Inbound remittances showed an increasing trend from about US$640 million in 2000 to US$ 1,016 million in 2005 (no figures available for following years). The inbound remittances made a significant contribution of 2.7% to the GDP of Southern Sudan. The unrecorded flows of remittances through formal and informal channels are believed to be larger, making the impact of remittances to GDP potentially much greater, and even possibly doubled.

· ICT

Telecom services Currently, telecom services provided include fixed telephony, Short Messaging Service (SMS), mobile roaming and Very Small Aperture Terminal (VSAT) satellite services. In addition, Internet services will soon be offered on, or through, mobile phones by at least one of the telecom companies, MTN. Fixed telephone lines and television services have only been available in major towns. The coverage of telecom services thus far is only the vicinity of state capitals. However, all major telecom companies (Zain, Vivacell, MTN, Sudani, Gemtel) are competing to access new regions and extend their services. The issue of inter-connectivity between telecom providers remains a concern, but according to officials within the Ministry of Telecommunication and Postal services, the issue is currently being addressed. The availability of telecommunication has enabled information gathering on prices of products, and has boosted local economic activities. Customers and service providers are much better connected yet and the latest information on the security situation can be exchanged more easily. A number of informal businesses have been set up as spin-offs to the boom in the telecom sector, including airtime selling shops, small shops selling and repairing new or used mobile phones and/or offering phone charging services.

Internet services Sudan has 1,500,000 internet users as of March 2008, which is only 3.7% of the popula tion69. Several official (and some un-official) internet café’s are in operation in Juba.

· Tourism and Hospitality

Tourism Before Sudan’s second civil war (1983), the tourism industry was second to agriculture in generating Southern Sudan’s GDP, largely because the region is home to some of the rarest animal and bird species, especially in the world's largest swamp, the Sudd, where the Nile Lichwe is found. During the war, uncontrolled and unsustainable hunting decimated wildlife populations and caused the eradication of many of the larger species including elephant, rhino, buffalo, giraffe and zebra. Today, the most commonly found animals include dik-dik, gazelle, bush rat, and squirrel. Nevertheless, the Wildlife Conservation Society (WCS)'s survey of 2006 shows the greatest migration of animal herds of tiang and other antelopes in the Boma area of Jonglei State. Southern Sudan has seven National Parks and 12 Game Reserves, some of which still have large numbers of wildlife. However, none of these parks are currently operational. The Wildlife Service is severely hampered by the lack of capacity and materials to effectively control protected areas. Moreover, tourism is not well developed, but National Parks and game reserves have substantial possibility for investment, particularly in Central Equatoria state. Poaching remains a challenge to the sector, exacerbated by ownership of small arms amongst the general population. Insecurity and inaccessibility by road also present major challenges.

Hospitality Currently, the hotel industry is one of the most booming sub-sectors in Southern Sudan. Most of the hotels and lodges are foreign-owned, and are primarily non-permanent structures. The sector has been boosted by lack of adequate housing, which has forced the international and public business community to wholly rely on hotels and lodges. In total, there are over 80 hotels, restaurants and guest houses in Juba 70.

· Education and Training

The lack of skilled labour is one of the major constraints for economic development in Southern Sudan. In addition, Southern Sudan has a large gap in the supply of marketable skills, both in terms of quantity and quality. It is important that vocational training in Southern Sudan will be tailored towards labour market demand. The system is, however, severely lacking in capacity to meet the market demand due to depleted human and physical resources. The vocational training system also lacks efficiency since inadequate baseline data on performance, benchmarking, inadequate coordination and rationalisation of resources persists. These are mainly the result of the absence of a single authority mandated to manage the vocational training system, and the unplanned distribution of training delivery.71

The skills training sector has few ongoing projects, especially in the private sector. In Juba, there are currently 20 vocational training centres72, of which only a few are functional. At present, both private and public sector actors are in the midst of planning to revitalise the primary training centre: the Multi-service Training Centre (MTC), which closed down due to the war.

Access to high quality education, especially at the high school and university level, will prove to be important contributors to facilitate the return of the Diaspora and to reinstate the human capacity of

69 International Telecommunication Union, 2008. 70 Interview with Proprietor of Sunflower Lodge 71 Vocational Training Policy, December 2008, Ministry of Labour, Public Services and Human Resources Development, GOSS. 72 ILO/MoLPSHRD, 2008.

Southern Sudan. Although some progress has been made in this sector in the last four years, there is still serious lack of schools. The only primary schools are mainly found in the urban centres. Even then, the standards of education are very low due to unavailability of teachers and materials. Secondary schools are fewer, also as the supply of pupils from basic schools is limited. There are less than twenty private schools in the areas under this field research. This then affects the levels of tertiary institutions such as vocational training centres, colleges and universities. One attempt to reinforce capacity by GoSS and its development partners is the introduction of Alternative Education System, which is characterised by accelerated learning systems, running alongside the formal school system. In this system children and adults (including soldiers) are given accelerated learning to allow them to catch up with the main learning system.

Example: Education There are three main public universities in Southern Sudan, one of which is the University of Juba, with its essential faculties based in Khartoum. To supplement the University of Juba, there are plans to open another university in Kajo-Keji state, but this will require significant investment. The two other universities currently in the south are University of Upper Nile, based in Malakal, and University of Bahr-el-Ghazal, based in Wau, both of which have some faculties in Khartoum. However, these three institutions, in addition to upcoming vocational centres, will still not be able to provide the required workforce the necessary skills and knowledge. In addition to building up the public training and education system, there is great scope for private schools and vocational training centres.

· Health sector The protracted situation of war has seriously constrained the establishment of a functioning health system and has severely hampered the existing health facilities. The health profile in Southern Sudan is dismal and many people still die from preventable diseases. Since the signing of the CPA, improved freedom of movement and increased return means that existing health posts must deal with larger caseloads, putting existing services under additional strain. Diminishing interest from donors in supporting health provision is contributing to further decline73, and many Sudanese are seeking treatment in private hospitals abroad, namely in Kenya or Uganda. Civil servants have the right to receive treatment in foreign hospitals, paid by GoSS.

The government also faces difficulties as it aims to sever its dependence on Northern Sudan for its health care services. It is expected to take many years before Southern Sudan’s public health system will be a viable independent entity, yet in the meantime services have to be maintained while health facilities are being built. Currently it is mainly IOs and INGOs, (World Vision, Save the Children, Medecins Sans Frontieres (MSF), ZOA Refugee Care, United Nations Development Programme (UNDP), World Health Organisation (WHO), WFP, United Nations Children’s Education Fund (UNICEF) and International Red Cross) that are, in collaboration with the Ministry of Health, involved in building the public health sector. However, their aim is to move into a purely “advisory” role in this field. For an overview of existing hospitals and other health facilities in the two states under study, please refer to Annex F.

Furthermore, the lack of high quality services is a main restraining factor for Diaspora to return home, as is lack of education, as explained above. Therefore, while the priority for donors and Government should be to develop an effective public health sector, there is potential for private health providers to complement the public sector.

73 MSF, 2008.

3.1.2 Potential sectors In this section, sectors and sub sectors that have potential for growth, investment by foreign (e.g. Dutch) companies and potential for fair and sustainable economic development are identified. Annex F provides more details for some of these sub-sectors.

Potential for oil production and mining The oil sector offers huge potential, but also remains a complicated sector that is already occupied by many different, and often exploitative, foreign actors. Further research is required to identify the real potential in this sector. A key source of information is the European Coalition for Oil in Sudan (ECOS), based in the Netherlands74.

With regard to non-hydrocarbon minerals of actual or potential commercial value (for the country as a whole), companies could look into gold, chrome, copper, iron, manganese, asbestos, gypsum, mica, limestone, marble, and uranium. Competition in these products is clearly lower than in oil.

Potential for Agriculture “The land is fertile and we have three quarters of the year rainfall. We need to invest in irrigation and agricultural mechanisation”75

“From an export point of view, machinery and equipment supply, recreating the concrete industry and rehabilitating industries that already exist, and taking advantage of the agriculture industry side will present significant opportunities.”76

Due to the large diversity in ecological zones in Southern Sudan, a variety of cash crops could be promoted. Crops that could be cultivated on a commercial larger scale in Southern Sudan include 77: · Sunflower · Groundnuts · Sesame (simsim) · Cereals (sorghum, rice) · Groundnuts · Maize · Beans · Sugar cane · Tea · Coffee · Fruits (e.g. pineapple, avocado) · Flowers

These crops could be developed both for domestic markets and, in some cases, for exports as well. At present, agricultural production is fully dependent on rainfall. A combination of rain-fed agriculture and irrigated farming would provide for much higher yields, as the dry season would not be “lost”. Given the abundance of uncultivated land, large agro-industrial plantations could be set up to hire local labourers, while at the same time offering a guaranteed price for surrounding producers. The opportunities for such a nucleus model in Southern Sudan should be investigated more in-depth, and should also look at examples from other countries, including the pitfalls. There should also be a more thorough investigation into the possibilities for local processing industries. In all efforts, it is crucial for foreign companies to work with local civil society and production structures (e.g. cooperatives).

74 www.ecosonline.org 75 According to the Minister of Agriculture. 76 Quoted from a local magazine, Sayeed, 2009. 77 It is beyond the scope of this study to present a detailed overview of which crop would be most suitable in which region of Southern Sudan.

Example : Potential for cooking oil. A major opportunity exists for producing cooking oil. This would require commercial farming in the following products for processing into cooking oil for the domestic (or export) market: Palm oil (growing locally, especially around Yambio), Sunflower, Sesame (simsim), Groundnuts and Cotton. Sesame is the most promising raw material for cooking oil in the Green Belt zone. In the areas further north (Ironstone Plateau), groundnuts would be more appropriate, given the ecological conditions. Sunflower is hardly grown in Sudan, but it has great potential. In Uganda, BIDCO and Mukwano Industries are leading manufacturers of sunflower oil. Mukwano is an interesting example of PPC, as it is a co-operation between an Indian company and the Uganda government.

Potential for Animal production

· Potential for Livestock/Dairy production While Southern Sudan has large numbers of cattle, commercial production of meat is taking place on a very small scale and an estimated 90-95% of meat is imported78. There is potential for large scale cattle farming and accompanying industries like feedmills, slaughterhouses.etc. At present, dairy production is negligible in Southern Sudan. There is high potential for the development of dairy industries for the domestic market, with an additional need for storage/preservation facilities.

· Potential for Fisheries 95% of all fish in Juba is currently being imported from Uganda 79, and thus there is high potential for fisheries along the Nile River. In collaboration with local communities, FAO is setting up cooperatives for fisheries in Terekeka County, Central-Equatoria. Commercial fishing and fish farms have high potential, especially if combined with processing facilities.

· Potential for Forestry Forestry is a key resource in Western, Central and Eastern Equatoria States. There is high potential for exploitation of Gum Arabic (or Gum Africa as it is called in Southern Sudan) from Acacia senegalensis or Acacia seyal. The gum belt stretches down from Darfur, Kordofan, Upper Nile and towards Eastern Equatoria. At present, many local farmers are not aware of the value of the gum trees. There is need for increased awareness and skills of farmers’ organisations and cooperatives in the harvesting, storage, cleaning and marketing of gum arabic.

Example : Gum arabic as one of the major export products of Sudan The Gum arabic belt spans over 12 states of Sudan (around one fifth of the country’s total surface or 500.000 km2), principally in the traditional rain-fed areas of western and central Sudan, and to a lesser extent in Southern Sudan (with high concentration in Eastern Equatoria). It is estimated that 6 to 8 % of the gum belt is under acacia tree cover. The Kordofan region produces more than half of the Sudanese gum. Darfur, with around 20 percent of the national production, is also an important gum producing region. Due to the unrest in Darfur, production has significantly decreased, which poses an opportunity for other parts of Sudan.

Gum arabic is multifunctional: it is used as an emulsifier, stabilizer, film-former (it forms an impenetrable film around the flavour particle), texturiser and low-viscosity water binder. In the soft drink industry, gum arabic is used as an emulsifier and stabilizer of aromatic emulsions and spray- dried flavors for beverages. In confectionary, gum arabic is used to bind water, and prevent sugar crystallization.

Although from the 1950s to the early 1990s Sudan accounted for roughly 80 percent of gum arabic production, today that figure is under 50 percent. However, Sudan is still the world's largest single

78 Based on interviews with market traders in Juba, February 2009. 79 Based on interviews with traders in Juba, February 2009

producer, and the production of gum arabic is heavily controlled by the Government of Sudan. Over the last 20 years, gum arabic export value amounted on average to $US 40 million annually. Even though there is at present no large scale commercialization of Gum Arabic in Southern Sudan, it might become an important cash crop in the future.

Source: World Bank 2007.

Another opportunity exists in the exploitation and creation of timber plantations, especially teak. There are around 72,000 ha. of high-value teak plantations, mainly in Western and Central-Equatoria. Some of the other commercial tree species found include: Tectona grandis (teak), Khaya grandivilia/senegalensis (mahogany), Melissia excelsia (mvule), Misopsis emilii and Abesilia Africana.

Other opportunities exist for non-timber forest products (NTFPs), such as: Shea nut (lulu), Honey/wax, Tannin, Latex, Silk worm, Fibres and Palm products. In additions, huge opportunities exist in carbon offsetting, REDD (Reduced Emissions from Deforestation and Degradation) and bio fuel development.

Potential for Tourism Currently the Ministry of Wildlife and Tour ism (GoSS), in partnership with the Wildlife Conservation Society (based in Washington and establishing its Headquarters at Boma Hills) is carrying out a major rehabilitation of the national parks and game reserves. One of the most interesting parks is Nimule National Park, which at present receives daily visits of less than ten people from international and local tourists. This park harbours around 300 elephants, according to the 2005 aerial survey by the Ministry of Wildlife and Environmental Conservation. Other species of wildlife include Uganda kob, leopards, chimpanzees, and antelopes. A Sudanese entrepreneur is currently developing a Chimpanzee Sanctuary as well as a centre for environmental education and eco-tourism in Kajo Keji.

In addition to wild life-viewing, other areas of tourism include historical and cultural tourism. However, the potential in this industry largely depends on increased security and accessibility.

Foreign residents and communities living near the parks could be another major source of revenue towards improved protection of national parks, as well as a source of revenue for lodges located in the parks. There is also potential for other adventure activities like white water rafting, once at least basic facilities have been established and the routes to and from the parks been sufficiently rehabilitated and secured.

Source: Tourism Policy of Southern Sudan 2008, Ministry of Wildlife Conservation and Tourism

Potential for Hospitality The hospitality sector is booming in Juba and some other medium size towns. However, the sector is found to be in transition, in which hotels are only now replacing tents by simple constructions. The real potential is in higher quality hospitality, such as hotels like Logali House and Home and Away, two of the few upmarket hotels in Juba. For the local private sector, lack of access to financing is the most important constraint. More luxury resorts, also related to game viewing, could be important in the medium term.

Potential for Education Higher and tertiary education in Central-Equatoria has good potential for both private firms and the Government but also for NGOs. During the war, about 90% of the Kuku tribe was displaced to Uganda and most of their children received their basic education there. Kajo-Keji is the leading county in Southern Sudan in terms of literacy. Today, there are 80 primary schools, 11 secondary schools and 6 training colleges in the county. In the near future, the intellectuals of Kajo-Keji county,

spearheaded by Professors Ben Yengi and Taban Lo Liyong, one of the renowned African writers now teaching in the University of Juba, are planning to build the University of Kajo-Keji. For this purpose, Professor Yengi is opening up his guest house to offer free services to Western volunteers and investors who will come and help him develop the area through a number of projects, with emphasis on environment and tourism, as explained above.

Vocational training It is an absolute precondition for economic development to take off in Southern Sudan to invest in its human resources at all levels. If economic development is to be sustainable and fair, the most pressing issue is to work on the employability of the people. Currently, the demand for training and skilled labourers is not met and there is room for private training providers. The area of education and training must however be done in the framework of PPC, to ensure quality control, affordability, certification, non-discrimination etc. The ILO is currently implementing a Vocational Training programme with the MoEducation and the MoLabour. Further details on potential models of PPC involving Dutch companies as vocational training providers can best be explored within the framework of that programme.

To fill in this educational vacuum, NGOs also have a key-role to play in service delivery. More focus on capacity building of training providers is required from INGOs It is important to develop a recognised certification system for such training, so that employers can be certain of the qualifications of it’s potential employees.

Potential for Infrastructure There is huge potential in infrastructure development owing to the enormous amount of backlog in maintenance, repair and development of new roads, airports/fields/strips, electricity, irrigation systems and railway systems.

· Road and building construction There is need for urban, inter-urban and interstate road networks to unlock the economic potential within the territory, as well as to facilitate quick and convenient movement of goods, people and services. Although there is some construction work going on to develop more government office blocks, there is still a huge gap since construction of hospitals and schools have not yet started.

· Railway construction The government has identif ied three main possible alternative routes (see the box below). They all link Southern Sudan to the Indian Ocean and may be built in different phases. The one common issue with all the options is the need to involve the various governments (Kenya and Uganda) in any contractual agreements, which increases requirements for regional cooperation.

Feasibility of railway construction in Sudan In 2007, the Department of Railways in the Ministry of Transport and Roads contracted INGENO Group, a German railway construction company to undertake a feasibility study on a railway network. The study was done aerially as the risk of landmines and wild terrain did not allow ground movement. Some of the findings of the study are:

- All the options are feasible but require vast amounts of money due to mountainous terrain and the shear distance to be covered

- Neighbouring countries need to upgrade their side of the lines to standard gauge to conform to modern railway systems in order to enable faster speeds, and thus facilitate faster movement of goods and services across the lines.

- The proposal is to construct a modern railway line that is capable of attaining maximum speeds of up to 160 km per hour with computer signal boxes, modern railway stations and junctions.

- An estimated cost for all the three options is 3,214 million Euros composed of: - Southern Sudan – 1,612 million Euros - Kenya – 1,341 million Euros - Uganda – 261 million Euros

Seeing the huge potential and the great opportunity it presents, the Government of Uganda has expressed interest to start work and has opened talks with GoSS. Additionally, the Government of Kenya has also shown interest, although the talks are only in the preliminary stages.

· Air transport The lack of an airport that adheres to international standards is truly a major challenge at the moment since travellers to Southern Sudan are forced to connect their international flights to the neighbouring countries. Subsequently, the majority of the potentia l in the airline industry lies in first, rehabilitating and upgrading the existing airports/fields, and further constructing new ones in each state. Upgraded and modern airports will not only create convenience to travellers, but will also bring in revenue to GoSS, and hence spur economic growth. Immediately after the CPA, Juba, Malakal, Wau and Rumbek were listed80 as the top priority airports for rehabilitation and upgrade. The rehabilitation cost was estimated at US$45 million for all the four airports. Development of six additional state airports was also proposed in the states that have no airports at an estimated cost of US$3.5 million each.

· Electricity Currently, the government has five generators with a total combined output of 25MW serving selected areas within Juba town. Most private premises, including individual businesses, NGOs, and residences, rely on private generators. In February 2008, the government imported generators with an additional capacity of 12 MW. Despite these efforts, there is still a vital gap in power demand. More sophisticated technology is required in order to harvest hydro-power sources along the Nile River, which has the potential to provide over 1,000 MW of power.

Potential for hydro-power generation “The Ministry of Energy should focus its attention on developing hydro-electric power stations in the South and there are already natural sites for building hydro-electric plants, such as Fulla Rapids and Beden Falls on the River Nile. According to a report prepared by MEFIT Consultants, a group of companies based in Rome, Fulla Rapids can supply the whole of Southern Sudan, some parts of Northern Sudan and the neighbouring countries with electricity. The same applies to Beden Falls near Juba81.”

Potential for ICT The ICT sector has several options for PPC. Potential areas in which investment is sought by the GoSS to implement its ICT strategy82 include: e-government projects; the development of an electronic smart city; distance learning; and telemedicine. Furthermore, the establishment of a Universal Service Fund, used to subsidise basic ICT services in areas which licensed operators consider commercially unprofitable, forms a potential tool to reach GoSS’ ‘universal access’ aspirations. As expressed by the Director of the GoSS Ministry of Telecommunication and Postal Services, external funding for this initiative is very much needed.

In addition, in order to encourage the promotion of computer literacy in all education institutions and training centres, additional capacity is required. Moreover, since it is noted that the achievement of

80 Ministry of transport and roads: Sudan Consortium, Paris between 9th – 10th March 2006 81 Source: http://www.sudanvisiondaily.com/modules.php?name=News&file=article&sid=373 82 Telecommunications and Postal Services Sector Policy Frame work and Work Plan.

universal access will depend heavily on the speed of rural electrification or alternative energy. Initiatives to ensure the electrical power for the needed units are also potentially important for PPC.

Mobile banking Several banking systems that can be accessed through the use of mobile phones have been recently introduced to several African countries, beginning in Kenya (Safaricom). However, neither M-pesa, nor any of the other mobile phone systems of banking have thus far been introduced in Southern Sudan. Because mobile banking systems largely serve people with no access to formal banks, these systems can greatly assist in filling the void of formal banking centres. Consequently, a huge potential for introducing the system exists. MTN is said to be working on an introduction of mobile banking in Southern Sudan in due course, in combination with mobile internet facilities. Competing telecom providers may develop their own versions of the concept.

Financial sector Due to an undeveloped financial sector and the great demand for financial services, there is also potential for investment in this sector. The four major commercial banks currently in operation are mainly concentrated in Juba and face serious challenges, beginning with inadequate telecommunications. Due to the sheer size of the territory and the potential for its economy, there is still great potential for starting a commercial bank in Southern Sudan. Potential also exists in mortgage lending facilities for private housing development, and to partner with existing local banks, for example, in developing a cheque payment system.

Although MFIs have been reasonably successful, largely through funding by international bodies, the sector may not attract large investors since it focuses on small enterprises and has its own unique challenges. Although MFIs do not directly help to develop the medium to large private sector, they are important from a development and humanitarian perspective. .By allowing the development of small-scale enterprises, MFIs assist in creating a supplier base from which larger enterprises may source materials. For larger operations, credit facilities need to be made available for loans of $15,000 and above, which can only be provided by regular banks. MFIs would not be able to deliver this. However, cooperatives can link up with bigger banks and provide alternatives to commercial banks. If these cooperative banks have a guarantee of a government, these could form an ideal PPC.

Case: World Bank lending model One ongoing model that has the potential to be expanded and copied is the apex structure. The apex consists of a board of 7 or 8 people made up of representatives from WB, civil society and parent ministry (Commerce and Trade in this case) set up and mandated with the overall oversight role of the investment. The WB provides the working capital to MFIs after analysing their needs, structures and capabilities (fixed assets, training, and capacities). The apex structure together with the ministry and the PS Department then undertakes monitoring and evaluation to ensure that funds are utilised appropriately. To do this, the apex develops an M&E framework in which targets and other indicators are set. These are then monitored by the apex board on a quarterly basis. Subsequent reports are produced which are sent to the World Bank as a control.

Potential in Health The Health sector has enormous needs and forms yet another potential sector for PPC, due to its serious la ck of capacity and its inability to meet the existing demand for specialised health services in the medium or long term. While the public health sector needs to be built up in order to ensure access to medical services to all people, the large spending pattern of Sudanese nationals in hospitals abroad makes evident the need and potential for one or two private hospitals, catering for some of the domestic medical needs. It has been confirmed that many Southern-Sudanese people actually do have the money to access private medical services. Extensive use is made of private medical services in Kenya and Uganda, and not only by the elites. At the community level loans are given against cows, which allows people to access these medical services In the absence of a well functioning public

health system, some potential for private sector development in this sector is evident, not in the last place because civil servants are entitled to seek medical treatment abroad, paid for by the GoSS.

While further study of the potential modalities of PPC in the health sector is required, a framework of PPC, in which private health care providers - in addition to their commercial health care activities - are obliged to use and transfer their knowledge to the public health care system, would alleviate some of the above stated capacity problems in the health care system.

3.1.3 Challenges in the abovementioned sectors The chapter above has presented the most promising sectors for fair and sustainable development. The table below highlights the challenges of developing these sectors.

Table 2: Identifying Key Sectors and Their Challenges. POTENTIAL CHALLENGES SECTORS & SUBSECTORS Oil & Mining Lack of ports for export, poor infrastructure, high social and environmental risks. Agriculture Limited access to markets, non-prioritization of agriculture, poor irrigation, lack of information on soils and climatological data at GoSS level, poor transport infrastructure in rural-urban connectivity, inadequate storage facilities, shortage of basic skills and knowledge, lack of capacity building to farmers, socio-cultural inhibitors, aid dependency, limited access to capital. - Livestock & Dairy Few slaughterhouses, inadequate storage facilities, cattle breeds have sub-optimal milk production, lack of trade in cattle (due social and economic factors). - Poultry Non-access to micro-credit for rural enterprises, lack of technical knowledge, poor storage facilities, poor veterinary services and market access. - Fisheries Lack of technical knowledge, conservation/sustainability issues and inadequate processing infrastructure. - Timber Lack of technical know-how, skilled labour, awareness of the value of standing forests, and monitoring of foreign logging companies. Illegal logging necessitates the need to strengthen legal framework and improved law enforcement. - Non-timber forest Lack of research on the potential of locally used NTFPs, lack of products (NTFPs) technical knowledge, inadequate processing facilities, access to market and value chain development, access to finance, awareness on environmental degradation and resource management. Tourism Inaccessibility to national parks, insecurity, mines/unexploded ordinances, poaching and illegal hunting. Hospitality Lack of skilled labour, poor infrastructure (making goods unaffordable), insecurity and lack of capital. Manufacturing Assess to formal credit, shortage of skilled labour, and poor infrastructure resulting in high transport costs. Lack of skills and technology. Infrastructure Capacity challenges, lack of skills, expertise, and equipment, importation of inputs, and shortage of heavy-duty machines. - Railway Long distances of untamed land, expense and difficulties of carrying out Construction surveys of actual routes, landmines and unexploded ordnances,

unavailability of capacity, expertise, power and telecommunication systems and inadequate funding. - Irrigation Lack of funds, technical expertise and equipment. - Electricity Lack of electric poles, transformers, transistors, conductors, and cables, lack of adequate funds and capacity to install, maintain and repair infrastructure. Transportation Roads: lack of all weather roads and public road transport systems. Airline: Poorly maintained airstrips; unavailability of automatic landing facilities and guided controls; lack of fuelling facilities and technical capability. River: lack of capacity, skills and expertise, dependency on North to maintain river ports, funding, maintenance of facilities, and spare parts. Navigational challenges: cataracts, depleted water levels, accumulated water hyacinth, moving sand, and sharp bends in waterways. Finance Absence of financing sources for the private sector, (particularly medium-size enterprises), absence of a standard cheque payment system, failure of banking decentralisation, policies conducive to investment, capacity, poor infrastructure, immobilised capital, and poor telecommunications. ICT Little capacity, failure to implement universal access, poor infrastructure and ele ctricity, lack of awareness/education on use of services, inter- connectivity issues, ineffective/expensive cost of airtime selling policies, high ICT user cost. Health Localised insecurity, access to remote areas, poor infrastructure, lack of facilities and equipment, inadequate skilled personnel, little awareness activities in the field of HIV/AIDS, lack of facilities and little trauma support for war-victims, increasingly high demand for services. Education Overall lack of quantity and quality in terms of facilities, trainers and coordination mechanism

3.2 Major Stakeholders

3.2.1 Stakeholder analysis “Multi-stakeholder partnerships (MSP) represent a new and highly diverse phenomenon, which overlaps with other types of governance structures, such as tri-sector partnerships or policy networks. Nonetheless, it is distinct due to the diversity of actors that are involved in MSPs and to the status of ‘stakeholders’ of its core members, i.e. actors who have specific interest in the outcome and demonstrate some degree of ownership with respect to a particular issue83.”

There are a diverse number stakeholders involved in economic activities in Southern Sudan. These include: different levels of government; international agencies; private sector actors; business associations; and civil society organisations and NGOs. While greater details of their activities have been presented in Annex C, a summary of their functions and capacities is provided below.

Government The government is an important organ in the execution of economic activities, since it is responsible for the provision of an enabling environment in which these activities take place. GoSS was formed within a negotiated framework following the signing of the CPA in 2005. It is therefore a major stake holder. There are two governments in Southern Sudan in accordance with the CPA. These are: Government of National Unity (GNU) and the Government of Southern Sudan (GOSS).

§ Government of National Unity (GNU) The GNU is the overall body that is responsible for managing the affairs of North and South Sudan. It has its headquarters in Khartoum and is headed by H.E Omar al Bashir as president. There are two vice presidents the first one being Salva Kiir Mayardit who is also the president of Southern Sudan. The structure of GNU consists of 52% from the National Congress Party (NCP) based in Northern Sudan, 28% from the Sudanese People’s Liberation Army/Movement (SPLA/SPLM) based in Southern Sudan, and 20% from other small political parties based in the north and south (14 % Northern political parties, and 6% Southern political parties). GNU is responsible for collecting revenues and distributing it in accordance with the CPA of 2005, which provides the framework on how both governments are supposed to function and share the revenues collected from national resources.

Capacity The capacity of the GNU is two-fold. The section of the government based in Khartoum obviously faces fewer capacity challenges, compared to GoSS. This is due to the fact that while the South was destroyed by war, the North was much less affected as the battle was in Southern Sudan territory. However, the section of GNU that is composed of Southerners faces significant capacity challenges, which impacts negatively on delivery of its side of the services at the national level.

§ Government of Southern Sudan (GoSS) Government of Southern Sudan is headed by H.E. Salva Kiir Marjdit who is also the Vice President of GNU. GoSS is organised into various ministries, commissions and departments. The rele vant ministries for economic development include Commerce and Trade, Legal Affairs and Constitutional Development, Education and Technology, Roads and Transport, Agriculture, Mining and Electricity, Labour, and Finance. The relevant commissions include the Southern Sudan Relief and Rehabilitation Commission, the Southern Sudan Investment Authority, Commission for Census, Statistics and Evaluation. Some relevant departments are Private Sector Development, Southern State Development Corporation, Nile Petroleum Corporation, South Sudan Electricity Corporation. Although major steps towards providing appropriate legal and regulatory frameworks have been taken, the legal environment has yet to be clarified in critical areas such as land, investment, registration and the role of the government itself. In addition, the implementation process of the

83 EU, n.d.

already enacted laws is rather slow and confused due to both the sheer magnitude of laws and regulations, and the lack of appropriate capacity within the government institutions responsible for their implementation. Despite GoSS having taken critical early actions in establishing the relevant Ministries (i.e. Finance, Commerce, Trade and Supply, Industry and Mining), the challenge of reviewing all major foundational laws that support private sector development, including banking laws, investment law, bankruptcy laws and contract law, is enormous. The business registration process was suspended but later reinstated. Traders complained of arbitrary, informal taxation at the border, in addition to multiple taxations which they are subjected to. While many Ugandan, Kenyan, Ethiopian and other traders have quickly established themselves to provide necessary services and goods, the emergence of Southern Sudanese entrepreneurs has been less visible. This became even more evident during a stocktaking exercise at the Kaya and Nimule border towns, when it was established that more than 90% of the trucks parked with goods were all foreign registered in Uganda, DRC, Kenya, and Tanzania .

Capacity: GoSS has a new structure which may constrain its ability to design and manage the delivery of all the services needed by the investors. International agencies including investors, therefore, need to engage with the government in order to build its capacity and reinforce its legitimacy. The Multi-donor Trust Fund is set up to assist GoSS to build capacity, although not in all areas.

§ State level Governments (headed by governors) in Southern Sudan Under GoSS, there are ten local governments one in each state. Each of these local governments is headed by a governor with headquarters in each state capital. In each state, there are counties each headed by a commissioner. State governments play a significant role in economic activities, particularly in private investments. The state governments are responsible for providing an adequate environment for investments to flourish. State governments are also administratively responsible for the enactment of state -level laws and regulations and their implementation, including collection of taxes and levies. The counties are divided into smaller administration units known as Payams with each Payam having a number of much smaller administration units called Bomas. The major role of state governments is to provide an enabling environment for economic activities. Their other responsibilities also concern constructing and maintaining feeder roads, health facilities, and markets for products and services. The state governments have an additional role of developing and implementing state laws and providing the regulatory framework for commerce and trade which include inter-alia issuance of certain state level licenses, collection of taxes and levies.

§ County level administration This is the administrative unit between the state and the Payam as described in the interim constitution of Southern Sudan. Counties are headed by commissioners who are responsible for administering the county issues which include security, markets administration and management, and provision of social services. It is also not uncommon to find that in some states, some taxes are collected at county level.

§ Payam level administration (headed by Payam Administrator) Payam is the intermediate administrative unit after the county and before the Boma. Payams are headed by Payam administrators and are responsible for general law and order at Payam level. In some states, Payams also collect certain taxes where state laws have been enacted.

§ Boma level administration Boma is the lowest administrative unit in the local government structure in Southern Sudan. A Boma is headed by an executive chief whose major responsibility is to provide administrative services and support to citizens and other residents at the Boma level.

Armed forces As a result of the recent decades of war in Southern Sudan, armed forces are still very powerful. The military cuts across all activities and it is still seen as a superior power base on their own. Armed forces make decisions and can decide for instance to close some roads which may interrupt the flow of goods and services.

Capacity: The structure abovementioned has often been cited as a hindrance to economic development. In addition, the fact that governors are appointed and not always chosen in a democratic way, adds up to the overall feeling of abuse of power. It also often causes some delay in the disbursement of resources to various states and other entities which compromises the delivery of services. In addition, risks of appropriation of land and properties are still high, partially due to the multiple layers of authority. The lack of capacity that affects the GoSS cascades down to each of the ten states. For example, in the road-building and construction industries there is serious lack of expertise in the various cadres like civil and electrical engineers, architects, masons, artisans, and plumbers. This makes it difficult to plan, design, and construct roads and buildings to the desired standards. In addition, the government lacks the capacity to monitor effectively and to ensure all contractual obligations are adhered to.

Private sector § Local private sector “It is generally the case that in developing countries SMEs’ share in the total number of enterprises is about 98%, and in employment between 50 and 80 percent. Despite their contribution to the economy, most SME’s find it difficult to grow beyond a certain size or to export, because they lack access to markets, business skills, technology, and most of all finance. Investors and creditors are reluctant to do business with SMEs because of their size and lack of reliable finance information which makes it difficult to assess the risk of dealing with SMEs84.”

There are a number of local organisations currently involved in economic activities in the two states. One such organisation, the ALOK companies (which include over twenty one companies) are engaged in diverse economic activities including water purification and bottling, air transportation, stone crushing, building and road construction, and hotel management. Other domestic companies include: Bilpam Telecommunications, Athir Wic, Nile Commercial Bank, PAYII Construction, White Nile lodge, Sunflower Hotel, Rhino Supplies and Construction Company Limited, Buffalo Bank Limited, South Sudan Hotel, Bakheita Frequency Modulation (FM), Imatongas Petroleum, SkyJet Airlines, Yanyyom Water purification and Bottling.

The major focus areas of the domestic companies are retail (sugar, rice, salt, maize flour, household items, soda, beer, biscuits, hardware from China, building construction materials), foodstuffs, livestock, motor vehicle and motor cycle dealerships, sale of airtime for mobile phones, repair and maintenance of electronic equipment (i.e. computers), carpentry, provision of telecommunication service parts, banking, microfinance, money transfers and exchange, public transportation and river transportation.

Most of these local private sector companies have some foreign partnerships, although it has not been possible to establish the exact share distribution. In the most part, raw materials and processed consumables are imported. The vast majority of foodstuffs, for example, that are being consumed in Juba area are all imported from Uganda, Kenya, and Congo.

There is serious lack of capital or loan services in Southern Sudan, mainly due to the undeveloped financial sector. There are only five banks whose branch networks have not reached all the major towns. Even then, due to poor telecommunications and other infrastructure limitations, these banks

84 Bertel, 2009.

cannot offer appropriate services that are required to spur business growth. The local economic actors therefore have to either borrow money offshore where conditions are not only stringent, but also expensive. The interest rates in the local market are very high at 5-10% and 14-20% for US dollar and Sudanese Pound loans respectively. The only major local bank – Nile Commercial Bank stopped giving loans in 2006 and as such only offer deposit taking services. Other constraints facing the local private firms are lack of raw materials, poor roads, inadequate local capacity, and unfavourable government policies (e.g. multiple taxation).

Capacity: The general lack of capacity in Southern Sudan affects all sectors of economy including private sector.

§ International private sector The international private sector is vibrant in the two states, however, more so in Central Equatoria state. The players operate in diverse sectors and activities such as telecommunication, banking, air transportation, timber mining, road-building and construction, importation of goods, road transportation, hotels and lodges.

The main international players in Southern Sudan are Kenya Commercial Bank, Jetlink, East African airlines, Air Uganda, MTN, ZAIN, Vivacell, JIT Supermarket, ROKO Construction, Equatoria Timber Company, Civicon Construction, Davinci Lodge, Intra Africa, Afex Hotels, KK Security, SDV Transami, Delbit Petroleum, Spring petroleum, Total E & P – Sudan, and Ascom Petroleum. The main challenges that the private sector face are in the areas of road infrastructure, expensive and low capacity local labour, lack of raw materials, insecurity from LRA, cattle rustlers, armed banditry, and the presence of small arms.

Capacity: The international private sector is the hardest hit by lack of adequate and appropriate capacity. The sector’s main objective is to trade, produce and/or sell goods and services in order to make profit for the shareholders. In an environment in which requisite skills to achieve such objective are lacking, it becomes risky. In the process, most private sector players either employ expatriates or have to train their staff in neighbouring countries. The lack of raw materials and other inputs needed in the process of production and packaging of goods also hampers production and results in over 90% importation of such inputs.

International Organisations It is the responsibility of the international organisations to ensure that local interventions contribute to the goals of the national economic programs and that national capacities at all levels are strengthened to take over as soon as possible. There are a number of international organisations working on economic development in Southern Sudan. They include UNIDO, ILO, UNICEF, UNDP, WFP, WHO, and FAO. The major role of UN agencies is to provide humanitarian assistance to the communities affected by war and natural calamities in Southern Sudan. In addition, the World Bank, the Joint Donor Team, ILO and International Organisation of Migration (IOM) provide funding and/or technic al assistance.

Example: ILO ILO has concentrated on assisting the Ministry of Labour with formulation of its labour law. The process is almost completed. In addition, a vocational training policy was developed for the GoSS including an implementation strategy. Presently, joint UN and ILO programs combating child labour and on fostering youth employment are about to be launched. The latter project includes an element of direct support to existing cooperatives in order to create youth employment. Therefore the project also links to the ministry of Cooperatives.

Capacity UN organisations and other international agencies usually source their technical staff worldwide. In addition, they use local expertise when needed. Thus, capacity is rarely an issue. However, hiring local individuals presents a problem due to low or inadequate capacity levels among a large majority of the local population.

Civil society: § International NGOs The focus of international NGOs has mainly been on relief and provision of humanitarian assistance. However, as the situation improves, their role shifts more towards rehabilitation and development oriented goals which may include capacity building, (re)construction of roads, bridges, hospitals, and schools. Some of the international NGOs present in Southern Sudan are: ICCO Sudan; World Vision; Cordaid; Norwegian Peoples Aid; MSF; Oxfam Great Britain; Jesuit Refugee Services (JRS), ZOA; Warchild Holland; Acted; Community Humanitarian Fund (CHF); International Rescue Committee (IRC); Tearfund; Catholic Relief Services (CRS); and German Technology (GTZ).

Capacities The general challenge for INGOs lies in the limited capacity of local NGOs and local staff, both in terms of skills and availability. In addition, most INGOs in Southern Sudan are involved in relief-type operations such as insuring access to basic services and food security. They generally did not bring into Southern Sudan any expert staff on economic development (with some exceptions such as SNV). INGOs are therefore seriously hampered by lack of adequate and sometimes specialised capacities.

In a related manner, insecurity is a major challenge to INGO capacity since quality experts may shun coming to work in Southern Sudan. The INGOs are also faced with misconception about their services. Some players wrongly think that the INGOs should provide service delivery to the communities whilst this is actually the role of the state. As a result, the locals sometimes perceive that the INGOs are not pro-local development.

§ Local NGOs In the post-conflict recovery period, NGOs are often the only actors at the local level. This provides a valuable learning opportunity for international agencies. This is more so since NGOs are also engaged in providing services that should be provided by the government. Local NGOs hence play a double role of “watch dog” and service delivery. NGOs also provide a capacity resource for investors who often require expertise that they are able to offer. Some local NGOs operating in Southern Sudan are: Equatorial Women Association (EWA), Institute For Promotion of Civil Society (IPCS), Yei Community Resource Centre (YCRC), Network for Education and Empowerment in South Sudan (NEESS), and Community Education Action Program (CEAP). Please see the Annex C for a more complete list.

Capacity: Generally, the capacities of local NGOs are extremely limited. There are many involved in small scale service delivery focusing on the poorest of the poor. The general problem in Southern Sudan is the alarming lack of skills and expertise. This is partly due to the brain drain which resulted from the war. While some professionals are returning from the Diaspora, they often take positions with GoSS, UN agencies and INGO’s, and generally do not take up functions in local NGOs, where salaries are much lower.

A healthy civil society would include NGOs that fulfil a “watch dog” function towards the implementation of government and investor policy. This capacity is almost completely absent in Southern Sudan with the exception of organizations like Action Africa Help International (AAH-I, this NGO also works internationally). There are however some NGOs with more capacity but mainly in the field of capacity building of civil society organisations (CSOs), (such as NGO Forum, South

Sudan Capacity Building Forum) and organisations like IPCS, SUHA (Sudan Health Association) and SCOPE who are strong in service delivery. The general problem of limited capacity affects the local NGOs too. In fact the turnover is more serious within the local NGOs since most of them rely almost 100% on local expertise.

Labour market organisations and representative institutions These organisations, to some extent, keep a check the government’s excesses and also offer the much needed litigation and dispute resolution among the business communities.

§ Chambers of commerce and other business associations The chamber is headed by a chairman and four vice chair persons, has branches in major towns, such as Yambio, and Yei, and is relatively highly active. The major role s of the chamber are to act as a link with the government , to coordinate its members’ activities, and solve trade disputes that may arise between members. Another business organisation is the Juba Business Chamber. The association has been registered by a group of business people to bring the business community in Juba together. The officials however indicated that they would work together with the chamber of commerce towards managing problems and other issues facing the private business community. The association still has no members and plans to launch itself in either March or April this year (2009) , after which it will start recruiting members. In addition, there are several sector-organisations, such as the farmers’ associations that mainly takes care of farmers’ specific issues like market identification, transportation, storage, and education.

Capacity: The Chamber of Commerce is just restarting after the war. It has a vibrant committee with dedicated office bearers. However, it is currently challenged by lack of office and full time personnel which it is in the process of recruiting. The other associations are also faced with lack of structures, funding, and skills.

§ Vocational training providers There are approximately 20 training providers in Southern Sudan but not all of them are operational. Vocational and business training providers are an important cluster of labour market organisations or institutions.

Capacity: Current skills shortages include both vocational skills and essential employability skills, such as communication and life skills. Overall skill shortages are exacerbated by lack of accessibility to vocational training, due to the spatial distribution of service delivery and socio-economic constraints. Gender and disability are important factors in determining participation in vocational training85.

§ Business Development Service providers Business Development Services (BDS) refers to the provision of information, skills and advice on various aspects of running a business. They are of two major types: financial and non-financial. They specifically include: Business incubators, business counsellors, providers of various types of information of direct interest to the business community; consultancy services; business training providers; marketing services etc.

Capacity: The almost complete absence of BDS providers is one of the most serious challenges for fair and sustainable economic development. Besides the lack of institutions and premises, the major challenge is to find the required expertise and experience, both of which are also not adequately available.

85 Southern Sudan Vocational Training Program (SSVTP), December 2008, ILO/ GoSS.

4. Conclusions The main conclusion of this field research is that there is indeed great need and scope for economic development in Southern Sudan, but that investments need to be embedded in local PPC modalities to create the desired effect on economic development and peace building. Many sectors are identified as having high potential for both foreign companies and the domestic private sector. The risks of further dividing the Southern Sudanese society are real but can be mitigated by a firm commitment of the Dutch Government to assist the GoSS to play their role effectively and to provide funding and guidance to NGOs to maximise spin-offs for the larger population. Also, it is not expected to be easy to attract socially and environmentally responsible Dutch firms to invest in the near future as the business environment is still fragile in terms of security, access to markets, corruption, capacities and legal frameworks. Encouraging companies to start activities in Southern Sudan therefore requires serious incentives and PPC-type stimulating measures, especially if the companies are required to explicitly contribute to stimulating fair economic development and peace.

The potentia l for fair and sustainable economic development in the study areas, as seen from a local and regional perspective (main research question A)

Upon analysis of ongoing and potential economic development at this point in time, a number of sectors and sub-sectors were identified as most promising and appropriate for PPC. These include:

- Agriculture (including fishery, cash crops and livestock); - Natural resource management (including forestry and mining); - Infrastructure (including roads, construction, electricity, irrigation but also construction materials); - Finance; - ICT; - Health and Education; - Services and Transportation; - Tourism and Hospitality.

Major assets of Southern Sudan are its favourable ecological conditions, abundant availability of land and labour (although mostly unskilled), a large and untapped consumer market, and the generally receptive attitude of the Government and local communities. However, a major reason for the current need for aid stems from the lack of income (farmers and other producers cannot sell beyond a very limited range) and high prices for manufactured goods. Both problems share common causes: the absence of proper transportation facilities and continued insecurity. Until proper transport facilities materialize and security can be guaranteed, economic development is going to be extremely difficult.

The study revealed that economic actors face a number of challenges most of which emanate from the war effects. One of the major challenges is the ongoing insecurity (the LRA presence, military tension between North and South, high number of small arms in society, presence of landmines and unexploded ordnance). Another challenge is the implementation of the Comprehensive Peace Agreement of 2005, which called for elections in 2009 and a referendum on self-determination for the South in 2011. Many observers fear that these two events might spark off new tensions between North and South, and within Southern Sudan itself. A third challenge is the lack of infrastructure and legal framework. It should be noted that many parts of Southern Sudan have seen improved security since the signing of the CPA, and that incidents are highly localised. To outsiders, insecurity might seem much more of a threat than it is in the day-today reality of local residents. During the field research, it was confirmed that large parts of the country are actually quite safe, especially in comparison to other fragile states such as Iraq, DRC and Afghanistan.

Other challenges include the limited capacity of the newly established Government and inadequate financing. These realities are affecting the economic actors adversely. Other constraints were found to be more sector-specific and their effect varied depending either on the location of the activity or its type. The agricultural sector, for example, is found to be prone to natural calamities like drought, flooding, and crop diseases. It also suffers from a general lack of mechanisation. In addition, due to the former dependency on North Sudan, and due to the war, the current level of the local private sector activity is limited, though dynamic and promising. Finally, the lack of skilled labour, and absence of a vocational training system is seriously hindering economic development in all sectors. The labour force is almost completely unskilled and investment in human resource development is urgently needed.

Furthermore, the lack of business development service providers is worrisome for economic development and PPC in Southern Sudan. Urgent action is required to establish public and private organisations and ventures that can provide training and business development services at different levels. Some of the capacity needs can be met by building on the existing activities of organisations identified thus far. In other areas, capacity will need to be developed from scratch, or competencies extended from one location to another. Partnerships should be actively developed as soon as possible to equip service providers. In general, the research identified many opportunities and potential areas for future economic development. Every sector of the economy depicted some form of gap that may be utilised and developed into an economic activity. In the transport sector, urban, inter-urban and interstate passenger and goods carriage systems are required; river transportation also presents a huge potential as an alternative or compliment to air, road and rail. In infrastructure, road, building, communications, railway and airport construction present great economic opportunities and will have a huge multiplying effect if developed. Finally , the financial sector, which is one of the most important sectors for economic development, is suffering from lack of adequate capacity, cash and liquidity and skills.

Access to finance, stimulating a more aggressive business spirit and entrepreneurship combined with increased technical knowledge and an enabling environment for business development are among the most pressing needs of the economy in Southern Sudan. Sudan furthermore requires the introduction of appropriate technology and a shift in modes of production towards mechanisation.

However, it is important to understand the overall situation in Sudan in order to plan interventions realistic ally. In contrast with other post-conflict African countries there was little infrastructure prior to the civil war. In many parts of Southern Sudan there have never been roads, water points, clinics or schools. The use of the term ‘post-war recovery’ therefore does not adequately reflect the reality. The issue is not that infrastructure, buildings, factories, ports and services need to be rebuilt but that they need to be built in the first place. The protracted nature of the civil war in Southern Sudan has left a legacy of postponed development, and the present scale and speed of urbanisation has caught the authorities by surprise. Presently, many formerly small centres and towns have grown into large scale more or less spontaneous settlements clustered around tiny service delivery centres, which are unable to cope with growing demands. The Southern Sudan case therefore combines some general features of a ‘typical’ African post conflict setting (traumatised population, shattered economy, a crisis of the subsistence economy, aid dependency, lack of foreign investment, challenges of DDR and IDPs) with features of a ‘typical’ African developmental crisis situation (fast urbanisation, lack of basic social services in much of the country, non existing infrastructure, illiteracy, high mortality rates).

The potential role of public-private cooperation in fair and sustainable economic development in Southern Sudan ( main research question B)

PPC in a fragile state as Southern Sudan is requires a complex mix of roles and responsibilities of the different players. While this research has shown that investments by Dutch companies has the

potential to make an enormous contribution to economic development in Southern Sudan, it must be embedded in a PPC framework in order to maximise the spin-offs of these investments and in order to ensure that the economic development is fair and sustainable. Fairness in turn, is a crucial element of peace building and therefore sustainability. While the GOSS is working hard to create an enabling environment for PSD, and while economic potential is high in many sectors, the reality is also that there is severe poverty, insecurity, ethnic hatred, an ongoing war-economy and high levels of corruption. PPC in Southern Sudan needs to have, in the first instance, a strong focus on capacity building of all the different actors in order to enable them to play the required roles. The Dutch government should for example engage in the initiated Southern Sudan Public Private Sector Dialogue. While it is important that the Dutch Government makes it easier for businesses to take risks in Sudan, simultaneously it should engage in capacity building. Smaller scale initiatives in SME development and initiating economic services are crucial and Dutch NGOs are encouraged to focus on this. PPC at the Dutch level must be embedded in the PPC efforts at the Sudanese level. In order to have effective partnerships with GoSS, Employment organisations and the local private sector their capacities need to be strengthened. Without this , abusive situations are more likely to occur and the investments made will not lead to sustainable economic development.

In chapter 1.4 some potential modalities for PPC in Southern Sudan have been presented. For the Dutch government, the most important areas of PPC in Southern Sudan should concentrate on: · Encouraging Dutch companies to invest in Southern Sudan by providing subsidies, guarantees and / or insurances. · Providing technical expertise to the GOSS in the framework of partnerships between Dutch companies and the GOSS. · Engaging and funding Dutch NGOs to maximise cluster-effects and spin-offs of investments made by Dutch companies. · By encouraging Dutch companies to invest in social corporate responsibility – type activities to complement their commercial ventures.

In order to build a healthy society and economy the capacities of local NGOs also need to be built, especially in fulfilling a watch-dog function. INGOs should be provided with funding to build the capacities of Sudanese NGOs to play this role, and not simply have them deliver relief-type of services.

How to set up PPC in these areas in order to contribute to conflict transformation and peace (main research question C)

Ethnic tensions exist, and are likely to increase in the future if Southern Sudan would vote for independence. Conflict sensitive PPC must ensure that foreign investment will be spread among the different regions in order to avoid working with, and being of benefit to, one ethnic group only.

Gender issues are sensitive, but affirmative action has been established wherein at least 25% of the positions in government are to be filled with females. This could also be implemented across other sectors, as well as in the Dutch companies investing in Southern Sudan and the NGOs working here.

In addition, there is need to set up environmental awareness programs and to integrate environmental concerns in the planning of PPC. This will ensure that the current economic growth will not lead to destruction of the very natural resource base that the Sudanese economy (and its population) is dependent upon. In some areas, environmental destruction has already become a serious problem, especially in and around Juba and other urban centres (water pollution, uncontrolled waste dumping, uncontrolled cutting of trees for charcoal and timber). In addition, degradation of the environment will exaggerate already existing conflict over natural resources between the different ethnic groups.

Finally it is important to understand the current political dynamics in terms of the future of Southern Sudan. After the referendum of 2011, the political but also the economic situation might change significantly.

5. Recommendations for PPC

“Fragile states are not all alike, despite being tagged with the same label. Capacity development templates tend to lean toward conceptual homogenisation and “one size fits all” oversimplification. They discount the impact of situational, historical and individual leadership factors. Among the lessons learned from experience is the value of leaders who can set direction, engender legitimacy for change and build constituencies. Identifying and working with such leaders is a critical step toward country-led capacity development and ownership in fragile states. Communicating actively with national actors regarding capacity development plans and programmes can help to avoid possible misunderstandings, and to engage national partners in a two -way exchange of ideas regarding capacity issues86.”

Potential roles for Dutch Government

· From the very start, there is a need to look critically at the potential conflicts that any investment may create, and to apply a “Do No Harm” approach · Stimulate Dutch companies to invest in Southern Sudan · Provide external funding to build capacity of civil society (e.g. watchdog function) and engaging Dutch NGOs to maximise cluster-effects and spin-offs of investments made by Dutch companies. · Provide expertise (secondments) to build capacity of the relevant ministries · Experience indicates that PPC works best in an atmosphere where dialog can be used as tool for negotiation.87 The overall recommendation is therefore that the Dutch Government engages more in the ongoing public private dialogue initiatives, such as the Southern Sudan business Forum. · Encourage Dutch companies to invest in social corporate responsibility activities to complement their commercial ventures.

Furthermore, the Dutch Government could invest more in training, which can be done in a PPC framework in which the Government gives land, infrastructure and certificates, the Bank provides finance, Businesses provide training and run the facilities, NGOs add social services to the centres and the Dutch Government provides funding to ILO to assist GOSS with certification and quality control

Ensuring sustainable and fair economic development in Southern Sudan

There are a number of recommendations to make in order to ensure that development is taking place in a fair and sustainable way: · Ensure environmental and social sustainability from the start, since local capacity is very limited and the awareness of environmental threats relatively low. This is an area to work on in partnership with local Community-Based Organisations, national NGOs and international NGOs as safeguards of social and environmental issues. · Invest in job creation, an essential part of the potential peace dividend triggered through future PPC initiatives. This requires a growing and dynamic SME sector, availability of business services and vocational training, new financial mechanisms and appropriate technology. These can often be best designed and implemented through public private partnerships. · Build capacities of the various stakeholders to empower them to play their role.

86 Brinkerhoff, n.d. 87 http://publicprivatedialogue.org/papers/How_to_Promote_PublicPrivate_Dialogue.pdf.

Risk management

Risk management is one of the key-concerns of foreign businesses. This is an even bigger concern when investing in fragile states such as Southern Sudan. The following recommendations can be made:

· Create a positive image among potential investors. While in some countries western foreigners are, or are perceived to be, not very welcome, in Southern Sudan the Government, private sector and the overall population warmly welcomes Western foreigners who wish to invest. Westerners are not targets for armed groups in Southern Sudan. · Assist in combating corruption. There is recognition that corruption exists in Southern Sudan at all levels. The power structure, as explained in Chapter 3 allows for many layers of taxation, both legal but also illegal. Expropriations are said to be regular if enough benefits are not “shared”. · Operate in a conflict sensitive manner in a fragile political system. According to a senior Government official, the influence of the SPLA on allocation of land is enormous. The SPLM is a political party but in fact also the government. There is no separation between the Government office and political parties. Many SPLA higher ranks take direct orders from Government officials. They are sometimes referred to as private armies, but they are formally part of the SPLA. The land is commercially owned and the Government officially needs to negotiate on behalf of an investor if the community accepts to provide the land. According to some accounts, it is the SPLA who in fact determine how businesses can operate. “So in this set-up, the biggest problem for a business person is: how do you get the land? By paying the SPLA?” In addition, police and the other uniformed forces are still collecting illegal taxes. · Be realistic in terms of the security situation. The ongoing insecurity in large parts of Southern Sudan is one of the explanatory factors for the hesitance of many foreign investors to come to Southern Sudan, leading to their "wait and see" attitude. The Dutch Embassy has also expressed its concern about the PPC study team travelling in the border zone with DRC and Uganda, for which the Dutch Ministry of Foreign Affairs has put out a negative travel advice. The Embassy also stated that such insecurity would prevent Dutch companies from starting operations over fears of losing their investments. It should be noted that the choice for Western and Central Equatoria had been made before the unrest in this part of Southern Sudan started.

Recommendations for the centralised (2nd phase) mission

While this report is intended to give a broad picture of the potential for PPC in Southern Sudan, it has been possible to highlight some specific recommendations to further research by the centralised mission. These are as follows:

§ Undertake a thorough analysis of regulations, restrictions and incentives for Foreign Direct Investment currently provided by GoSS; § Assess the extent to which it is possible for GoSS to provide waivers on certain taxes, levies etc., while still maintaining sufficient income to cover its expenditure; § Clarify which role the relevant ministries are able to play in specific sectors such as joint ventures, investments, capital for subcontracting in public works, working on enabling environment etc; § Assess trade barriers or agreements between Southern Sudan and its bordering countries; § Prioritise sectors for development and investment, and conduct more in-depth analysis into these sectors, including labour market analysis. § After the prioritisation of sectors that are likely to attract Dutch companies, determine much more precisely which capacities (human, physical, financial etc.) are weak in relevant Government, public and private sectors and civil society/NGOs, and in what ways these capacities can and should be built.

Annex A People contacted Organisations Position Name(s) E-mail Government GoSS Ministry of Agriculture and Forestry Goss- Director of Afforestation and Natural Forest Mindo Ondrande James [email protected] Juba Conservation MAF-GOSS Director General Forestry Timothy Thwol Onak [email protected] Director General John Chuol Dhol Director General Research and Training Dr. Lomoro George Leju [email protected] Lugor Director General, Agriculture and Extension Mr. David Chuol Dhol services Ministry of Telecommunication and postal Director for Telecommunication Eng. Thomas Gatkwoth services Ministry of Gender, social welfare and Director General Regina Ossa Lullo [email protected] Religious Affairs Senior Inspector for Gender Ajak Kuol Ministry of Health Director General of Research, Planning and Dr. Olivia Lomoro Damian, [email protected] Health System Development PhD Ministry of Health, Yambio Director Curative Services Matrin Morsora Director for Primary Healthcare and Preventive Marco Wanga Billal Activities Director HIV/Aids Samuel Timatio Ministry of Cooperatives and Rural Director General of Cooperatives Abdon Ayuen Development Ministry of Cooperatives Director of Cooperative Training Bosco Abucha Director Pharmaceutical Issues Ministry of Health, Yambio Marcos Wey Wey Ministry of Cabinet Affairs Secretary General of Government- Goss Abdon Agaw Jok Nhial Ministry of Transport and Roads Director for railways Mr. Jacob Marial Maker Director for Roads and Bridges Director General, Railways Mr. Leonard Nhial Bol Director General, River transport Mr. Abdu Silye M. Lako Minister Trade and Commerce Anthony Lino Makana Ministry of Trade and commerce Deputy Director – External Trade Mr. Moses Nur

Ministry of Commerce and Industry Director of Private Development Mary Akech Yei County Commissioner David Lokonga Moses Assistant Commissioner General, Agriculture Edmond Taban Gogo and Forestry Chairman, Chamber of Commerce Mike Wani Ministry of health Director General of Research Planning and Dr. Olivia Lomoro Damian Health System Administrator Juba Teaching Hospital, Juba Ladu Joseph, Ministry of Energy and Mining Director General Mining Mr. David Loro Gubek Secretary general, Investment Promotion Mr. Emanuel Bor Kagelu Forestry Training Center, Yei Training Coordinator Drama Patrick, County Ministry of finance and Planning, Kaya Revenue officer, Toll Ms Margaret Rupani Border Revenue officer, Toll Mr. Adel Paul Revenue officer, Toll Mr. Mach William Kaya, Boma Boma Administrator Mr. Taban Johnson Morobo County Assistant Commissioner of Agriculture Mr. Christopher Kenyi Gordon Yambio Youth Representative Mr. Emanuel Ako Juba Area Manager, South Sudan Electricity Mr. Kazi Yugusuk Corporation GOSS, Juba Undersecretary, MWRI Mr. Isaac Liabwel C. Yol Terakeka Veterinary officer Chief Andreya B. Lado, Terakeka SSRRC Acting Secretary James Modi, Terakeka Assistant Commissioner for Social Welfare & Peter Dakta Acting County Commissioner County Health Center, Terakeka Medical Officer Santino Modi

County Education Department, Terakeka Director/Teacher, Bagilio & Lagu, Mayo village, Terakeka Chief Peter Nyombe, Private sector International Kenya Commercial Bank Managing Director Daniel Mavindu Director of Business Development KCB John Kimanthi Nile Commercial Bank Managing Director Charles Whyte

Interbeton Company Manager Kamil Mowa Damen Shipyards [email protected] Gemtel Ltd., Juba Branch Manager, J-vent Nsaba, LOKO Construction Consultant Mr. Andreas Benz MTN PR Supervisor Sally Arabi Branch Manager Joy Sigaba Zain Southern Regional Manager David Deng Kor Private sector local ALOK Group General manager, Yanyyom Mr. Roldwan Yousif Ali Public Relations and Marketing Officer Mr. Paul Deng Joshua Deputy Managing Director Ms. Liz Peta Yambio Business Woman Ms. Eunice Dungu Pai Otim Terakeka Trader Jackson Lako, Yei Poultry Breeding Group Proprietor Mrs. Farida Lulu Works (sheanut processing & export) Eunice Elisama, SUMI Managing Director Mr. Lokule Edward Yengi Lainya county market Trader/Business woman Ms. Charity James Lainya Cathedral Church leader Canon Alison Yokwe Deng Malok Director Bilpam Telecommunications Yambio Branch Manager, NCB Mr. Samuel Wasula Yambio Proprietor, Athir Wic Construction Company Mr. William Warigo Juba Cement Dealer Mr. Libal Areth NGOS International SNV Country Director Nigel Cross Advisor Imke Van der Honing GTZ Country Program Manager Filiberto Gabresi, World Vision, Yambio Programme Manager Mr. Paul Odhiambo Quality Assurance Officer Ms. Sapenzi Ojiambo Food Security Officer Mr. Louis Bagare Tearfund Project Coordinator Melisa Philips AAH-I Food & Income Security Officer Miiro Mivule, Yei Programme Coordinator John K. Odolon Otiema,

Agricultural Coordinator for Yei and Lanya Bullen Agastin, County, Wild Life Conservation Society Program Director Paul Elkan Interbeton/BAM in Southern Sudan Country Representative Kamil Kowa Makki, Local NGO Institute for Promotion of Civil Societies Program Officer Mr. Dimo Michael Information Officer Mr. Oliver Modi NGO- Reliance, Deputy Director for Wild life-Kajokeji Joseph Kenyi Killion [email protected] South Sudan KADI Ben Yengi Lijo [email protected] Project Manager Margaret Bassa SUMI, Yei Managing Director, Lokule Edward Yengi Mugo Farmers Development Forum Secretary Mr. Emanuel Babel Equatoria Women Association Chairperson Jane Gordon Administrator Mr. Kenyi Thomas Ms Project Consultant Mr. Vitalis Chinaka Ms Project Consultant Mr. Loliwa Luke New Sudan Women Association Chairperson Ms. Grace Apollo Musa Wonduruba Agricultural Project Project Officer Mr. Emanuel Surur Youth Parliament Speaker Mr. Buay Turoal Tambura County Resident Mr. Charles Undo Kazmilo International Community (Diplomacy) First Secretary Carola Baller Joint Donor Funds Senior Economic Advisor Dirk-Jan Omtzigt Netherlands Embassy Defence Attaché Bart van Gelderen, International organizations World Bank Private Sector Development Melody Atil Skype id: melodyatil Yahoo id: melody.atil Environmental Economist Kenyi Spencer Waleed Alatabani Catherine Masinde

UNDP Monitoring and Evaluation Analyst Recovery Dramani Martin [email protected] and Rehabilitation Program Skype: martin.dramani www.undp.org/recovery.htm RRP Mana Godier Yohannes Monitoring and Evaluation Officer, Martin Dramani, UNFAO Senior Emergency and Rehabilitation George Okech [email protected] Coordinator ILO Sudan Job Wani, UNIDO Liaison Officer, Bethelhem Ketsela Moulat, Chief Technical Advisor Dr. Etonga UNIFEM Programme Manager Sudan Lucie Andrew Lugala Programme Specialist Joy Zacharia Labour market institutions Skills training Sustainable Forestry & Natural Resources Principal Martin Lohure Tobiolo [email protected] GOSS [email protected] Chamber of Commerce, Yambio Chairman Hezekiah Philip Tuu Financial Officer Mr. Mustafa Manase Chairperson Mr. Mike Wani Secretary, Chamber of Commerce Mr. Patrick Peter Mukanga Vice Chairperson, Chamber of Commerce Mr. Joseph Kongo Chairperson, Chamber of Commerce Mr. Hezekiah Tuu Phillip Advisor, CoC Mr. George Koska Member, CoC Mr. Sebit Julius Member, CoC Mr. James Ndani Institute for the Promotion of Civil Society, Executive Director Oliver Michael Yei Juba Business Chamber Deputy Director Holger Polher Freight Forwarders Company Ltd Assistant Manager Mr. Nyok Jacob Southern Sudan War Veterans Association Executive Director Bol Akok Akok Chamber of Commerce, Juba Vice-chair, Chamber of Commerce, Industry Santino, and Agriculture

Annex B Methodology

1. Introduction The Netherlands Ministry of Foreign Affairs (MFA) has indicated that its overall objective in Southern Sudan is to promote peace, security and development. It recognizes that poverty reduction contributes to the creation of peace dividend. The Security and Development in Fragile States policy document of the MFA also explicitly identifies the importance of private sector development in fragile situations in general88.

The PPC (Public Private Cooperation) study ultimately aims to (in)directly contribute to achieving this strategic objective. The direct goal of the field research is to identify whether and if so how cooperation between the Dutch government, the (Dutch) private sector and NGOs can contribute to pro-poor growth in Southern Sudan, in cooperation with Government of South Sudan (GoSS), local (national) private sector and NGOs. The research aims also to identify sectors for Public Private Partnerships (PPPs) in Southern Sudan. It should answer the following three main research questions (see Annex A): A. What is the potential for fair and sustainable economic development in the study areas as seen from a local and regional perspective? B. Can public-private cooperation (PPC) play a role in fair and sustainable economic development in the study areas? C. How should PPC be set up in these areas in order to contribute to conflict transformation and peace and not to function as dividers?

The field research concentrates on sectors that have the potential to contribute to reconstruction and rehabilitation, being critical for short term but will also assess which sectors are crucial for longer term fair and sustainable economic development in South Sudan. By identifying the roles and relations of different economic actors, local needs and ways to overcome possible challenges to cooperation, the study will also identify entry points for PPC and potential risks. It will focus on Western and Central Equatorial State, as this is the main interest for ICCO. By carrying out field research in Juba and its surroundings as well as in rural areas, potentially around Yei and Yambio, the study aims for concrete and widely applicable recommendations on possible PPC, to stimulate the rural and urban economy. Given the importance of the rural economy in South-Sudan, the study will include among others an assessment of the potential for PPC in the agricultural sector and natural resources. Throughout the study, the issue of conflict-sensitivity and social, environmental and economic sustainability will be integrated, as well as fairness in economic development. The study will also look at the role of economic actors from neighbouring countries such as DRC, Uganda and Kenya, as far as the security situation allows for.

The main goal of the de-central research, the methodology of which is described in this document, is to identify the local needs and possibilities in terms of public private cooperation. To achieve this, the research team will focus on economic opportunity mapping and on a stakeholder analysis of the local/national private sector, government and civil society actors, and their potential role in PPCs. For a selected number of subsectors, a sectoral analysis will be carried out. The results will be communicated to the Central research team to be further deepened.

88 Security and Development in Fragile States, Peacebuilding and Stabilization Unit, Netherlands Ministry of Foreign Affairs, November 2008.

The de-central study is divided into two parts: 1) a preparatory study, carried out by two local consultants, focusing on the identification of the most important economic sectors and activities and main stakeholders, and 2) an international research mission, carried out by two international researchers and one PhD student from the Netherlands, together with the 2 local consultants, focusing on the economic potential of Central and Western Equatorial States, existing and potential PPC, and other factors such as inclusion of vulnerable groups, gender and environmental aspects. It will furthermore identify pre-conditions for economic growth in terms of infrastructure, capacity needs of local stakeholders, labour market policies etc. which will need further exploration by the central research team.

2. METHODS USED The main methods used will be literature review, economic opportunity mapping, stakeholder and power analysis and sectoral analysis.

Limited literature review ICCO provided the research team with an extensive literature list, of which some key- documents will be consulted. Additional information from existing studies of the economy of South Sudan will be collected and analysed, including the data available at national and international institutions (including the South Sudan Bureau of Statistics, South Sudan Chamber of Commerce, Southern Sudan Investment Authority, ILO, UNDP, World Bank, joint donor office and the UN DDR programme).

Economic opportunity mapping The most important methodology in this research will be economic opportunity mapping. This is a method to assess the economic potential at local and regional levels by identifying the most important economic sectors. This will lead to a list of the current most important sectors, as well as potentially interesting sectors for development. Based on this, a number of sectors will be selected for more in-depth study. These will be the sectors with highest potential for PPC including foreign direct investment (FDI) and privatisation. Sustainability and conflict-sensitivity will be important issues when selecting potentially interesting sectors.

Stakeholder analysis In addition, a broad stakeholder analysis will be undertaken to identify relevant actors, their interests in economic development and PPC, their relations, capacities and current and potential type and level of involvement. This will be used to analyse stakeholder relations, including power relations, cooperation and conflicts, also taking account external factors affecting stakeholders and their activities. In the war-affected economy of Sudan it will furthermore be analysed whether these actors are potential dividers or connectors, and if they mainly operate in a destructive way continuing the “war-economy” or contributing to the “constructive (post-war) economy”.

Sectoral analysis A preliminary sectoral analysis will be done using three different tools89: - Subsector analysis: analysis of all participants, their links and influential factors in the economic system in order to identify constraints and opportunities for growth. It can be used for any sector, ranging from agricultural and industrial to service sectors.

89 See: Danse & Wiersinga (2008), ICCO’s Roadmap of market access strategies for poverty alleviation. See Annex C for detailed methodological steps.

- Value Chain Analysis: analysis of one or more value chains to identify opportunities for sustained growth and income for the chain actors involved, taking into account the need for environmental sustainability. A value chain looks at one market channel, while a subsector analysis identifies the different channels within the overall sector and then looks at the competitive relationships between those channels, - Chains of production analyses: Analysing how economic actors are related in the production cycle and what the potentials are for strengthening these chains, including ensuring opportunities for vulnerable groups, an increased gender balance.

3. PHASING A. Preparatory study Period: 29 Jan – 5 Feb 2009 (8 days)

Participants: Two national researchers based in South Sudan (Juba), supervised by the ICCO Sudan Field Representative as long as the decentral research Team Leader has not arrived.

Objectives: A. Identification of the most important economic sectors and activities and main stakeholders

This fact finding study will consist of the following steps: 1. Economic Mapping of Western and Central Equatoria, based on data collected in Juba. a. Mapping of local business and trade centers b. Collection of all relevant documents: trade statistics, directories (foreign and local), laws, regulations, incentives, studies c. Mapping/organogram of relevant economic actors including ministries and departments, NGOs working with trade/business development, Business associations, Foreign investors and business people, finance institutions, training centres, business incubators and BDS providers etc. d. Collection of information related to “war economy” and “constructive economy” e. Establishing the “rural economy link” e.g. collecting data related to value chain development/VCA 2. Mapping of economic activities with a cross-border/regional component 3. Mapping of main stakeholders in these various sectors and activities and existing power relations 4. Quick Scan on existing PPC initiatives in South Sudan with a focus on the 2 states involved.

Specific methods used will include: - Collection of trade statistics, overview of private sector investments, economic sector surveys etc.; - Preliminary interviews to determine key sectors and stakeholders; - Quick Scan on existing PPC initiatives through interviews and literature search. - Interviews with actors mentioned in c. above

B. Prepare the ground for the international research mission in the two regions by making practical arrangements for the international research team and support the international research mission by proposing focus on potential economic sectors and actors and locations for field research.

B. International research mission Period: 4 Feb - 2 March 2009 (4 weeks)

Research Team: Two international researchers, one international PhD student and two national researchers. The research team will be based in Juba with extensive travel in Western and Central Equatoria. The ICCO Sudan Field Office will provide logistical support and will also be an important source of information by itself. ICCO’s partner organisations, especially AAH, SCOPE and SUMI will be consulted as well, and might be asked to provide logistical support in rural areas (depending on the security situation).

The Team Leader will supervise the field research, will provide guidance and backstopping throughout the period and will present the results to the centralised mission on the 2nd of March. She will undertake 3 missions to Juba in this period. The international researcher will be present during the first 3 weeks and the PhD student, together with the two national researchers throughout the 4-week period (See workplan below).

Objectives: · Validate findings of the preparatory study with local stakeholders · Validate findings from the literature review · Undertake Opportunity mapping, stakeholder analyses, sectoral analyses. · Further assess the opportunities for PPC in general and for involving the Dutch private sector in PPC in particular · Identify possible opportunities/constraints for social and environmental sustainability, related to the enabling environment and to capacities of stakeholders

4. RISKS AND ASSUMPTIONS The methodology is based upon the assumption that the two states included in the study, Western and Central Equatoria, are accessible in terms of security. If the security situation does not allow extensive travelling into the rural areas, the focus will be on the urban centres. In that case, partner organisations of ICCO will be asked to provide information on the rural areas.

Cross border issues can only be covered if the security situation allows for this.

RESEARCH QUESTIONS OF DECENTRAL FIELD RESEARCH MISSION

Main Research questions:

A. What is the potential for fair and sustainable economic development in the study areas as seen from a local and regional perspective? B. Can public -private cooperation (PPC) play a role in fair and sustainable economic development in the study areas? C. How should PPC be set up in these areas in order to contribute to conflict transformation and peace and not to function as dividers?

1. Economic potential/opportunities at local and regional level: Overall question: What is the potential for fair and sustainable economic development in South Sudan (West and Central Equatorial State) and DRC (Eastern parts) as seen from a local perspective?

1. What are the most important economic sectors in the regions under study? Describe the pre- war economy, the actual economy and the present potential of economic recovery and development. 2. Which economic activities (formal/informal, men/women, involving local or international private sector) take place? 3. Which economic activities have a cross-border/regional component? 4. Who are the main stakeholders in these various sectors and activities? What power relations exist between them? E.g. local/provincial/national government, military groups, local/international private sector, labourers, local civil society, local consumers, international organisations, etc. - 5. What is the potential of current economic activities for growth? 6. What challenges do current economic activities face? 7. Which specific economic sectors offer potentially interesting opportunities for the Dutch private sector? 8. What are the relevant similarities and what are the differences regarding economic potential between the two regions? Does this for instance need another approach in Dutch policies?

2. Public-private cooperation: 1. What are existing (positive and negative) experiences with public -private cooperation in the areas and region under study? 2. What are the opinions and perspectives of various local stakeholders – in particular local community leaders/government, businessmen – on PPC? 3. What are recommendations to make PPC conflict-sensitive (i.e. contributing to conflic t transformation and durable peace) and socially and environmentally sustainable (see indicators in annexe)? 4. How could the Netherlands, through the PPC mechanism, contribute to the identified potential for local and/or regional fair and sustainable economic development?

3. Enabling environment for private sector/PPC90: How does the (enabling) environment for private sector investment and PPC look in the regions under study? 1. Rules and regulations related to private sector development, investment (national and foreign) and PPC, copyright, environmental and social laws (e.g. labour laws) 2. Enforcement of above-mentioned rules and regulations

90 This part will specifically be researched by the so-called central research team, consisting of researchers from CRU, EVD, NABC, ICCO and Cordaid

3. Incentives for the (local and international) private sector: subsidies, tax regime, etc. 4. Access to financing (loans, equity, micro-finance/credit projects etc.) 5. Corruption 6. Security situation (e.g. inter and intra community conflicts) 7. Infrastructure (roads, telephone lines, Internet connections, banking facilities, transport, storage, etc.)

4. Vulnerable groups / gender aspects / environment 1. Which vulnerable groups exist in the areas and region under study and what is their potential for economic development / involvement in PPC? 2. To what extent have they been incorporated in PPC? 3. What gender aspects are supportive and/or disruptive for viable PPC development in the areas under study 4. What environmental aspects need to be considered for viable PPC development in the areas under study 5. In what way can the enabling environment be enlarged for those vulnerable groups that can be incorporated in PPC?

5. Needs for capacity development 1. What is the capacity of local stakeholders (local government, private sector, producers and NGOs/CBOs) for PPC that lead to fair and sustainable economic development? In what areas is support needed? 2. What are the capacity needs of civil society organisations to empower them so they can fulfil a role in social and environmental monitoring/as watchdog of private investors?

Annex C Legal frameworks

LIST OF LAWS FOR PUBLICATION AS OF 12 FEBRUARY, 2009 YEAR ENACTED LAWS DATE OF ASSENT CITATION NUMBER OF STATUS NUMBER COPIES 2006 Interpretation of Laws and General Provision Act, 10th October, 2006 1 1000 Completed 2006 The Evidence Act, 2006 20th October, 2006 2 1000 Completed Investigation Committee Act, 2006 15th November,2006 3 1000 Completed Public Premises Eviction Act, 2006 15th Novemmber,2006 4 1000 Completed Appropriation Act, 2006 5 1000 For assent 2007 Appropriation Act, 2007 1000 For assent Southern Sudan Research Council Act, 2007 20th December, 2007 1000 Completed Constituencies Development Fund Act, 2007 1000 Completed Personal Income Tax Act, 2007 1000 Completed 2008 Appropriation Act, 2008 5th January, 2008 1 1000 Completed rd The Kush Institute Act, 2008 23 January, 2008 2 1000 Completed

th Judiciary Services Council Act, 2008 26 January, 2008 3 1000 Judiciary Act, 2008 26th January,2008 4 1000 Completed

The Code of Criminal Procedure Act, 2008 20th March, 2008 5 1000 Completed Partnerships Act, 2008 2nd July, 2008 6 1000 Completed Registration of Business Names Act, 2008 2nd July, 2008 7 1000 Completed The Ministry of Legal Affairs and Constitutional 23rd July, 2008 8 1000 For assent Development Organizational Act, 2008 The Penal Code Act, 2008 22nd August,2008 9 1000 For assent

The Child Act, 2008 13th October, 2008 10 2000- Completed (UNIC EF) The Agency Act, 2008 28th November, 2008 11 1000 Completed The Limited Partnership Act, 2008 28th November, 2008 12 1000 Completed The Contract Act, 2008 28th November, 2008 13 1000 Completed 2009 Sudan People’s Liberation Army (SPLA) Act, 2009 24th January, 2009 1 Completed The Appropriation Act, 2009 2 For assent The Land Act, 2009 3 For assent Investment Promotion Bill, 2009 Status to be verified 4

Annex D List of Abbreviations

AAH-I Action Africa Help International AES Alternative Education System BDS Business Development Service BOSS Bank of Southern Sudan CBS Central bank of Sudan CDS Community Development Services CEAP Community Empowerment Action Program CHF Community Humanitarian Fund CMC Cooper Motors Corporation CNPC Chinese National Petroleum Company CoC Chamber of Commerce CPA Comprehensive Peace Agreement CRS Catholic Relief Services CSO Civil Society Organization DRC Democratic Republic of Congo ECO European Coalition for Oil EWA Equatoria Women’s Association FAO Food and Agriculture Organization FDI Foreign Direct Investment FIAS Foreign Investment Advisory Service GDP Gross Domestic Product GEM Generating Economic Development Microfinance GNU Government of National Unity GTZ German Technology ICC International Criminal Court ICCO Inter Church Organization for Development Cooperation ICT Information Communication and Technology ILO International Labour Organization IMF International Monetary Fund INGO International Non- Governmental Organization IOM International Organization for Migration IPCS Institute for Promotion of Civil Society IRC International Rescue Committee IT Information Technology JAM Joint Assessment Mission JDO Joint Donor Office JRS Jesuit Refugee Services KADI Kajo-Keji Australian Development Initiative KCB Kenya Commercial Bank LRA Lords Resistance Army MAF Ministry of Agriculture and Forestry MDTF Multi-Donor Trust Fund MFA Ministry of Foreign Affairs MFI Microfinance Institution MOU Memorandum of Understanding MRDA Mundri Rural Development Agency MSF Medicines sans Frontiers MTC Multi-Service Training Centre NCB Nile Commercial Bank NCP National Congress Party

NEESS Network for Education and Empowerment in South Sudan NGO Non Governmental Organization NPA Norwegian Peoples Aid NRC Norwegian Refugee Commission NSCSE New Sudan Centre for Statistics and Evaluation NTFPs Non-Timber Forest Products PHCC Primary Health Care Centre PHCU Primary Health Care Unit PPC Public Private Cooperation PPD Public Private Dialogue PPP Public Private Partnership PSD Private Sector Development REDD Reduced Emission from Deforestation and Degradation RRP Recovery Reintegration Program RUFI Rural Finance Institutions SDP Sudanese Pounds SHHS Sudan House Hold Survey SMDF Sudan Microfinance Development Facility SME Small and Medium Enterprise SNV Stichting Nederlandse Vrijwilligers SPLA/M Sudan Peoples Liberation Army/Movement SSARTO South Sudan Agriculture Research and Technology SSCSE Southern Sudan Centre for Statistics and Evaluation SSVTP Southern Sudan Vocational Training Program SUHA Sudan Health Association SUMI Sudan Microfinance Institution UNDDR United Nationals Demobilization Disarmament Reintegration UNDP United Nations Development Program UNICEF United Nations Children’s Educational Fund UNIDO United Nations Industrial Development Organization UNIFEM United Nations Development Fund for Women UNOCHA United Nations Organization for Coordination of Humanitarian Affairs USD United States Dollars USAID United States Agency for International Development UXOs Unexploded Ordnances VT Vocational Training WB The World Bank WCS Wildlife Conservation Society WFP World Food Program WHO World Health Organization YCRC Yei Community Resource Centre ZOA ZOA Refugee CARE

Annex E Bibliography

Abebe, M. (2003). ‘Bardge operation assessment for the Republic of Sudan’, WFP Sudan. Akol, M.A. (2008). ‘The dilemma of air safety in Southern Sudan’. http://www.gurtong.com/forums/index, May 2008. Akuei, S. (2004). ‘Remittances as unforeseen burdance considering displacement, family and settlement contests in refugee livelihood’. www.unhcr.ch/chi Atil, M. (2009) ‘Microfinance component fact sheet for Southern Sudan’. World Bank. Bertel, C. (2009). ‘Development through entrepreneurship: The role of small businesses’, Sudanic , Vol. 1 Issue 4, January/February 2009. Beus, J. de (2007). Report of the mid-term review of the Juba County Consortium, Recovery and Rehabilitation Programme 07. Report to ICCO. Blas, J. and Wallis, W. (2009). ‘US investor buys Sudanese warlord’s land’. Financial Times online edition, 9 January 2009. Brinkerhoff, D.W. (n.d.). ‘Capacity development in fragile states’. RTI International Faculty Associate, George Washington. Buwembo, J. (2008). ‘Why food, health agencies are building roads in South Sudan’. ECOS (2007). Fact Sheet II – ‘The Economy of Sudan’s Oil Industry’. EIA (2007). Country Analysis Brief Sudan, Energy Information Administration. European Union (n.d.). ‘Multi-stakeholder partnership in postconflict reconstruction’. FAO/WFP (2009). FAO/WFP Crop and Food Security assessment mission to Southern Sudan. GOSS/MDTF (2007). Final Project Proposal (FPP) on a Proposed Multi Donor Trust Fund (MDTF) Grant for the Southern Sudan Private Sector Development Project. GoSS (2008). ‘Sudan - Revitalizing Non-Oil Exports Diagnostic Trade Integration’ Study (DTIS) for the Integrated Framework Program, Commission for WTO Affairs, Government of Southern Sudan. GoSS Ministry of Labour, Public Service and Human Resource Development (2008). ‘Background Analytical Report For The Southern Sudan Vocational Training Policy.’ GoSS Ministry of Labour, Public Service and Human Resource Development (2008). ‘Southern Sudan Vocational Training Policy’. GSS Ministry of Agriculture and Forestry (undated). ‘The status, potential and strategy for the development of agricultural and forestry sectors’. GoSS Ministry of Agriculture and Forestry (2007). ‘Forest Policy Framework’. IDEAS International (2006). ‘Rapid Market Assessment for agro and off farm enterprises, Juba County, South Sudan’. Report for the Juba RRP Consortium. ILO (2008). Implementation Strategy For The Southern Sudan Vocational Training Policy. MSF (2008). ‘Greater Upper Nile, Southern Sudan: Immediate Health Needs Remain Amid a Precarious Peace’. Netherlands’ Ministry of Foreign Affairs, Peacebuilding and Stabilization Unit (2008). ‘Security and Development in Fragile States’, Netherlands Ministry of Foreign Affairs, November 2008. Odero, A.N. (2007). ‘Livelihood Characterisation of South Sudan: The use of physiographic and agro-climatic layers’. Philips, J. J., Stoll, K. (2005), ‘Remittance patterns of Southern Sudanese Refugee men’. Vol. 51. Ratha, D., Xu, X. (2007). ‘Migration and Remittances Factbook 2007’, Migration and Remittances Team, World Bank; www.worldbank.org/propects/migrationandremittances Sayeed, S. (2009). ‘Southern Sudan braces for influx of foreign investors’, Sudanic, Vol. 1, Issue, 4, January/February 2009. Scroggins, D. (2002). ‘Emma’s War – Love, betrayal and death in the Sudan’. SSCCSE (2006). Southern Sudan Commission for Census, Statistics and Evaluation.

Transition International (2007). ‘Socio-economic profiling and opportunity mapping system to support the IDDRP in Sudan’, UNDDR Unit Sudan. UNDP Sudan (2007). ‘Macroeconomic Policies For Poverty Reduction: The Case Of Sudan’. UNEP (2007). ‘Sudan Post-Conflict Environmental Assessment’. UNICEF (2007) ‘Humanitarian Action in Sudan’. USAID (2004). ‘The Shea Butter Value Chain’. West Africa Trade Hub Technical report. USAID (2007). ‘Southern Sudan Environmental Threats And Opportunities Assessment’. Wesselink and Weller (2006). ‘Oil and Violence in Sudan Drilling, Poverty and Death in Upper Nile State’. Multinational Monitor, Vol. 27 No. 3, May/June 2006. World Bank (2007). ‘Export marketing of gum Arabic from Sudan’. Policy Note. World Bank (2007). Agriculture & Forestry Development Project (AFDP) – Project Information Document. World Bank (2008). ‘Country Brief Sudan’. World Bank (2009). ‘Supporting GoSS Growth strategy Development in Southern Sudan’.

Other sources: · www.microfinancegateway.org · www.usaid.gov/about/sudan · www.state.gov/r/pa/ei/r/s/c2671.htm · www.newsudanweb.com · www.ecosonline.org/

Annex F Key stakeholders and specific (sub)sectors in more detail (see supplementary document)

Annexe G: Map of Sudan