Attitude toward Foreign Direct Investment
The government of South Sudan is open to and welcomes foreign investment; however, civil conflict, poor financial management, lack of transparency, widespread corruption, and meager infrastructure make South Sudan a very difficult place to invest.
South Sudan is one of the most oil-dependent countries in the world, with oil accounting for almost all of its exports and revenue. The ongoing conflict reduced daily oil production, currently about 160,000 barrels per day (bpd), and the collapse of international oil prices has cut state revenues. The IMF estimates the budget deficit for this fiscal year and the next to be at least $670 million if not higher. The South Sudanese Pound (SSP) continues to depreciate and there are increasing fears this will accelerate unless the government enacts financial reforms.
Foreign currency reserves are extremely low and the government routinely fails to pay for services. Numerous private companies claim the government has reneged on or delayed payment for work under contract. The distribution of hard currency is tightly controlled by the government and is mostly limited to financing the importation of food, medicine, fuel, and building materials. Many companies cite access to hard currency and convertibility of profits as major problems. One of the only international ventures outside the oil industry in South Sudan, the brewery and bottling plant operated by South Sudan Beverages Limited (SSBL), part of SABMiller, ended production in April 2016. The company cited the lack of hard currency to pay for imported raw materials and fuel as the reason. Long-term challenges for the country include diversifying the formal economy, alleviating poverty, maintaining macroeconomic stability, improving tax collection and public financial management, and improving the business environment.
Although the government has made commitments to judicial reform, the legal system is ineffective, underfunded, overburdened, and subject to executive interference. High-level government and military officials are immune from prosecution and parties in contract disputes are sometimes arrested and imprisoned until the party agrees to pay a sum of money, often without going to court and sometimes without formal charges.
The World Bank’s 2016 Doing Business report ranked the economy of Juba, South Sudan’s capital, 187 out of 189 economies on overall ease of doing business. The legal framework governing investment and private enterprises remained underdeveloped as of early 2016.
Other factors inhibiting investment in South Sudan include limited physical infrastructure and a lack of both skilled and unskilled labor. Despite a 119-mile paved road to the Ugandan border, funded by the United States in late 2012, South Sudan (which is slightly smaller than the state of Texas) has fewer than 313 miles of paved roads, and large parts of the country are inaccessible during the rainy season (April through October). None of South Sudan’s three power plants is working, and the country is almost completely reliant on diesel-run generators for electricity. According to the World Bank, 48 percent of the active labor force is unemployed. Unemployment in rural areas is almost 60 percent for both men and women aged 15-24. The majority of South Sudanese work in non-wage jobs, often in the agricultural sector. The country’s literacy rate is 40 percent, according to the Millennium Development Goals Progress Report, with male literacy at 55 percent, compared to 28 percent for women. USAID estimates the literacy rate is even lower, with an overall literacy rate of 27 percent and a literacy rate for women of only 15 percent.
Other Investment Policy Reviews
South Sudan is not currently a World Trade Organization (WTO) member; therefore it does not conduct Trade Policy Reviews. Likewise, it has not conducted OECD or UNCTAD Investment Policy Reviews since its independence in 2011.
Laws/Regulations on Foreign Direct Investment
The Investment Act of 2009 outlines the promotion and facilitation of investment in South Sudan and creates the administrative and operational framework for the South Sudan Investment Authority. Any foreign investor who intends to invest in South Sudan must apply to the Investment Authority for an investment certificate.
The World Bank’s Doing Business survey ranks South Sudan 181 out of 189 countries in registering or starting a business. The South Sudan Investment Authority (SSIA) has been established and has instituted a One Stop Shop Investment Center. However, both organizations are not well resourced and do not have an active web site. The Ministry of Justice has a business registry web site at http://www.registry.mojss.org/index.html. Many of the links, however, are not active.
Due to resource constraints the government has minimal programs for attracting investments.
Limits on Foreign Control and Right to Private Ownership and Establishment
Subject to the Private Security Companies Rules and Regulations, 2013, registering and setting up a protection services security company in South Sudan requires a South Sudanese citizen to hold at least 51 percent of the company. There are no other legal constraints or prohibitions on the right of foreign entities to establish and own business.
South Sudan does not have a privatization program.
Screening of FDI
South Sudan has no known active process for screening, reviewing, or approving FDI.
South Sudan currently does not review transactions for competition-related concerns.