VALERIE RICHARD AND MIKE SALLA FOR MSI SOUTH SUDAN PRIVATE SECTOR MAPPING THIS PUBLICATION WAS PRODUCED FOR REVIEW BY THE UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT. IT WAS PREPARED BY MANAGEMENT SYSTEMS INTERNATIONAL (MSI), A TETRA TECH COMPANY. SOUTH SUDAN PRIVATE SECTOR MAPPING Contracted under AID-I-668-13-00001, Task Order # 72066818F00001 DISCLAIMER This report is made possible by the support of the American People through the United States Agency for International Development (USAID.) The contents of this study/report/website are the sole responsibility of the contractor and do not necessarily reflect the views of USAID or the United States Government. USAID.GOV SOUTH SUDAN PRIVATE SECTOR MAPPING| ii CONTENTS ACRONYMS V EXECUTIVE SUMMARY 1 INTRODUCTION 3 SCOPE 3 PURPOSE 4 METHODOLOGY 4 LIMITATIONS 4 BACKGROUND 5 THE MACROECONOMIC CLIMATE 5 THE PRIVATE SECTOR ENVIRONMENT 6 THE NATIONAL LEVEL/JUBA BASED CONTEXT 8 THE CANDIDATE PARTNERSHIP AREAS 10 OVERALL BARRIERS 11 OVERALL ENABLING FACTORS 14 PRIVATE HEALTH CARE SECTOR 15 PRIVATE EDUCATION SECTOR 17 AGRICULTURAL AND OTHER BUSINESSES 19 OPPORTUNITIES AND CHALLENGES 22 REFERENCES 24 iii | SOUTH SUDAN PRIVATE SECTOR MAPPING USAID.GOV FIGURES Figure 1 Fluctuation of Oil prices per barrel ....................................................................................................... 5 Figure 2 Evolution of GDP Growth (Percent change) ....................................................................................... 6 Figure 3 South Sudan: Exchange Rate Development (South Sudanese Pounds per USD) ...................... 6 Figure 4 Gross Foreign Exchange Reserves (Millions of US Dollars) ........................................................... 7 Figure 5 Rankings on Doing Business topics - South Sudan ............................................................................. 7 Figure 6 Selected Indicators for Infrastructure Services ................................................................................... 8 Figure 7 Agriculture Project Location to be Revitalized ................................................................................. 10 PHOTOS Photo 1 Pharmacy at Christian Medical Center in Yambio ............................................................................ 16 Photo 2 Laboratory at Akasia Pharmaceutical in Yambio ............................................................................... 17 Photo 3 Nursery Room in Garcia Nursery and Primary School in Yambio .............................................. 18 Photo 4 Classroom in Garcia Nursery and Primary School in Yambio ...................................................... 19 Photo 5: Miye Multipurpose Cooperative in Yambio ...................................................................................... 20 Photo 6: Soap Mold Trays used by TR Company in Yambio ......................................................................... 22 USAID.GOV SOUTH SUDAN PRIVATE SECTOR MAPPING| iv ACRONYMS BSS Bank of South Sudan CAMP Comprehensive Agriculture Master Plan CIA Central Intelligence Agency CPA Candidate Partnership Area DG Director General DRC Democratic Republic of Congo ETC Equatorial Teak Company FAO Food and Agriculture Organization of the United Nations F/CFA Food/Cash for Assets FGD Focus Group Discussion FX Foreign Exchange FY Financial Year GDP Gross Domestic Products HPF Health Pooled Fund IMF International Monetary Fund KCB Kenya Commercial Bank KII Key Informant Interview MoA Ministry of Agriculture MoE Ministry of Education MoH Ministry of Health NGO Non-Governmental Organization PfRR Partnership for Recovery and Resilience PSE Private Sector Engagement R-ARCSS Revitalized Agreement on the Resolution of Conflict in South Sudan SAB South Africa Breweries SSP South Sudanese Pound US United States USAID United States Agency for International Development WB World Bank WFP World Food Program v | SOUTH SUDAN PRIVATE SECTOR MAPPING USAID.GOV EXECUTIVE SUMMARY Private Sector Engagement (PSE) is a strategic approach to planning and programming in international development through which USAID consults, strategizes, aligns, collaborates and implements with the private sector for greater scale, sustainability, and effectiveness of development or humanitarian outcome. During September 2019, MSI undertook an exercise in mapping out the macroeconomic situation in South Sudan, via desk review, and then drilled down to the main technical sectors covered by USAID and relevant to significant private sector involvement, specifically Health, Education, Agriculture. The team examined Candidate Partnership Areas (CPAs) under the Partnership for Recovery and Resilience (PfRR) to understand how, specifically, the national economic situation has affected the area and what, if any, activity is happening in the private sector in the relevant areas. The information gathered will inform USAID/South Sudan to assess potential strategic engagement and collaboration with the private sector to allow it to expand its reach and impact. Given the constant changes in the South Sudan economy in the recent years, USAID/South Sudan must first understand the current environment and identify inherent risks and existing gaps that pose opportunities for collaboration. The threat from an economy that has become or is, as in the case of South Sudan, dependent upon one resource, oil, is to neglect the promotion of growth in non-oil sectors. Oil production in South Sudan is led by foreign operators and their supporting services and does not readily lend itself to diversification, creating additional products that increase value at the national level. The ‘resource curse’ can be seen to impact the economy in terms of the macroeconomic deterioration through exchange rate vulnerability and fiscal volitivity often driven by deep seated political issues and insecurity while maintaining a continuing disproportionate public sector. Despite some evidence that the worst of the crisis is easing, the banking sector faces serious challenges due to the high inflation and strong currency depreciation. The parallel market premium has been rising since the relapse into conflict in July 2016, which led to further macroeconomic instability and almost a complete loss of foreign exchange reserves. Broadening private sector growth faces major challenges in South Sudan, challenges mostly beyond the control of a nascent private sector, namely those of political instability, patronage, corruption and economic uncertainty. However, other constraints related to poor infrastructure in all its forms (power, roads, telephone and IT coverage), access to finance and high transaction costs exacerbated by unclear or uncertain regulations impact the competitiveness of the private sector. In summary, investments in power and transport (predominantly roads) are critical to growth in rural areas. The use of solar power at the personal level is increasing, and investigation into the use of renewable resources for power generation is needed. Further, inattention to the provision of public services, especially health and education leaves a growing population ill equipped to fill upcoming higher skilled labor opportunities. Opportunities for growth and investment in South Sudan remain, given its plentiful fertile lands and large expanses of forest. In all interviews conducted with government ministries and agencies in Juba, when asked where a donor would gain traction with the private sector, the response was to start small and examine what was happening in the former states, thus leading to the Candidate Partnership Areas. Studies within the seven CPA towns of Aweil, Bor, Rumbek Torit, Wau, Yambio and Yei revealed that the continued decline in the purchasing power of the South Sudanese Pound (SSP) and the lack of foreign exchange were hugely influential on private sector businesses. This continues to heavily impact trade in general as the spending power of the populace is eroded. The present lack of 1 | SOUTH SUDAN PRIVATE SECTOR MAPPING USAID.GOV confidence affects the ability to obtain finance, influencing investment in raw materials, equipment and productive technologies. The lack of infrastructure and services further compound the situation. Yet within a reported improving security situation a degree of optimism exists. Critically the political timetable of the Revitalized Agreement on the Resolution of Conflict in South Sudan is seen as significant. In discussions many positive plans for 2020 were highlighted and a general pro-business attitude of local government was noted. Thus, overtime engagement with a growing private sector is possible although with a cautious approach, not raising expectations. Notwithstanding the Chamber of Commerce in Juba highlighted the lack of effective regulations to ensure enforcement of amendments to law. The Secretary General noted that there had been a working group comprised of the public and private sector that worked hard in drafting laws for commerce; however, funding ceased prior to the establishment of regulations for the laws to be finalized. He mentioned this means that while there may be over 20 laws for commerce, many are unenforceable as they lack the requisite regulations to do so. The results of this initial study highlight some areas of initial engagement. These include the ‘low hanging fruit’ inclusion of private sector into public awareness campaigns- the report highlights the issue of Ebola Virus Disease warning posters not circulated to private clinics. The use of the