South Sudan: Big trading potential for EAC

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On 8 July 2011 saa 08:15
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By:Randa Rugangazi

The Republic of South Sudan is set to become the 55th African nation as of July 9 following the southern Sudanese referendum elections that enabled them secede from Khartoum government in January 2011.

In 2005, a Comprehensive Peace Agreement was signed between Southern Sudan People’s Liberation Army and the Khartoumgovernment. Five years later, the North failed to convince the South not to secede.

The vote for secession was the result of years of oppression and neglect from the Khartoum government. Years of conflict between the two regions has led to the loss of life of an estimated 2 million people during the over 20 year’s armed conflict.

South Sudan expressed interests in joining the East African Community. However, representatives of the East African regional bloc have only made statements that the EAC will consider South Sudan’s application after it is a sovereign state.

South Sudan has gone as far as declaring English, the commonly used language across East Africa, as its official language.

Kenyan and Rwandan heads of states earlier this year both invited South Sudan to join the East African Community.

It is reported that 98 percent of South Sudan’s government budget is from oil revenue. Most of the South Sudan’s oil production goes through pipelines to the north to Port Sudan.

The Khartoum government is set to charge the south hefty prices for oil transfer through their pipelines.

There is a proposed oil pipeline from South Sudan to Kenya that seems like an unlikely project in the near future. Nevertheless, if the project were to see the light of day, it would alleviate the high prices countries within the region pay for imported oil, Rwanda included.

However, the south Sudanese current government seems steadfast and committed to the project. Reuters reported of Toyota Kenya being contracted by the southern government to research the possibility of an oil pipeline to the Kenyan port of Lamu.

The pipelines would be part of a regional corridor between the two countries that would also have railway, roads, and fibre optics.

Arkangelo Okwang, South Sudan’s director general of energy, said the corridor would cost $1.5billion and would cover 1,400km.

In addition to its oil wealth, South Sudan is reported to possess untapped gold, copper and iron ore. The new country possesses fertile lands, which for the most part wait to be exploited.

Majority of the South Sudanese population are nomadic cattle herders. Much like in Rwanda, cattle in South Sudanese culture are a status symbol used to measure wealth.

Traders from neighbouring Uganda and Kenya have shown lots of interest in South Sudan. The new market in South Sudan is attractive for EAC businesses. So far, the biggest companies operating in the newly formed republic are from Uganda and Kenya.

Before any major economic developments can be made, the Juba government has a lot of work to do as far as building the necessary infrastructure from scratch. Most importantly for a resource-rich state, South Sudan will have to build efficient state institutions.

This will guarantee that the country’s natural resource revenue is reinvested in the infrastructure.