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South Sudan

Executive Summary

Trade and investment conditions in South Sudan improved slightly in the past year, but many challenges remain. The Revitalized Transitional Government of National Unity (R-TGoNU) continued to implement the 2018 Revitalized Agreement on the Resolution of the Conflict in the Republic of South Sudan (R-ARCSS), although key provisions on security, governance, and transitional justice remain outstanding. The transitional government continued implementing public financial management (PFM) reforms including stabilizing the South Sudanese Pound (SSP).

In its February 2022 report entitled “ Towards a Jobs Agenda,” the World Bank provided a “cautiously positive” forecast the economy could grow by 3.5 to 5.0 percent in productive sectors including household processing and artisanal production “if the peace process holds.” However, peace agreement implementation is significantly behind schedule. The country remains plagued by large-scale population displacement, widespread food insecurity, restricted humanitarian access, harassment of aid workers and journalists, and catastrophic flooding for the third straight year.

The South Sudan economy is highly dependent on oil-revenue. The transitional government did not institute any new programs in the past year to diversify the country’s economy. South Sudan’s oil sector is fraught with corruption and mismanagement. The country’s oil-producing firms and the Ministry of Petroleum remain on the U.S. Department of Commerce Bureau of Industry and Security (BIS) Entity List . The U.S. government assesses the 15 entities BIS added to the Entity List are contributing to the ongoing crisis in South Sudan “because they are a source of substantial revenue that, through public corruption, is used to fund the purchase of weapons and other material that undermine the peace, security, and stability of South Sudan rather than support the welfare of the South Sudanese people.”

Corruption and malfeasance extend beyond the oil sector. Transparency International ranked South Sudan the world’s most corrupt country in its 2021 rankings . Additionally, a September 2021 UN Human Rights Commission report highlighted the link between South Sudan’s human rights violations and economic crimes.

Humanitarian and development aid is a major source of employment. The difficulties humanitarian service providers face of arbitrary and conflicting regulations, multiple layers of taxation, airport and border obstructions, labor harassment, and looting of warehouses demonstrate what private investors can expect to encounter.

The legal system is underfunded, dysfunctional, and subject to corrupt practices and interference. Government entities do not enforce laws equitably or consistently. Corrupt government officials operate with impunity. The legal framework governing investment and private enterprises remains underdeveloped. Contract dispute litigants are sometimes arrested and imprisoned until they agree to pay a financial settlement even when never charged an offense or brought to court.

Other factors inhibiting investment in South Sudan include a lack of skilled and unskilled labor and limited physical infrastructure riddled with arbitrary checkpoints. The International Peace Information Service (IPIS) published a December 2021 report  that found checkpoints make transport in South Sudan among the most expensive in the world.

The U.S. Department of State maintains a Do Not Travel Advisory for South Sudan due to crime, kidnapping, and armed conflict.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 180 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2021 N/A https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2015 1,090 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

3. Legal Regime

4. Industrial Policies

5. Protection of Property Rights

6. Financial Sector

7. State-Owned Enterprises

The Nile Petroleum Corporation (Nilepet) is the primary SOE in South Sudan. The government, through Nilepet, holds minority stakes in other oil producing joint ventures operating in South Sudan. The 2013 Petroleum Revenue Management Act governs how Nilepet’s profits are invested, but Nilepet does not release information on its activities, even though Chapter IX of the 2013 Petroleum Revenue Management Act states comprehensive, audited reports on the company’s finances must be made publicly available. Nilepet’s revenues and expenditures are not disclosed in the central government budget.

Nilepet’s director does not report to the Minister of Petroleum and the government is not transparent about how it exercises ownership or control of Nilepet.

Nilepet is on the U.S. Department of Commerce Bureau of Industry and Security (BIS) Entity List. See 83 FR 12475 .

The government also owns stakes in construction and trade companies and several banks. It is difficult to obtain information on the number, total income, and employment figures of SOEs in South Sudan. There is no published list of SOEs.

The country does not adhere to the OECD Guidelines on Corporate Governance for SOEs.

8. Responsible Business Conduct

The idea of responsible business conduct is nascent in South Sudan, and there is little awareness of standards in this area. The few large international firms operating in South Sudan sometimes offer basic benefits to local communities but on an irregular basis. The 2009 Land Act requires investment activities carried out on land acquired from local communities to “reflect an important interest for the community or people living in the locality,” and to contribute economically and socially. Many South Sudanese complain about foreign-owned companies not hiring South Sudanese employees.

The 2009 Investment Promotion Act says investors must pay a fine and clean up waste if they do not implement environmentally friendly rules, but the Act does not require environmental, social, and governance (ESG) disclosures to facilitate transparency for investors and consumers.

International observers claim many oil producing companies in South Sudan do not practice responsible behavior regarding environmental damage in the oil fields. The 2012 Petroleum Act requires the Ministry of Petroleum to subject projects to environmental and social impact assessments, but it is unclear whether or how the Ministry enforces this requirement. The Ministries of Petroleum and of Environment and Forestry are coordinating to conduct an oil sector environmental audit. The government is expected to announce in 2022 who will conduct the audit and the audit’s timeline. Additionally, the government and Hope for Humanity Africa are currently in mediation to address some of the environmental damage and health impacts of oil waste.

The 2018 peace agreement and some national laws (such as the Petroleum Act) contain responsible business conduct provisions, but the government does not enforce them. The government has not instituted corporate governance, accounting, or executive compensation standards to protect shareholders. NGOs promote responsible business conduct, particularly in the environmental domain, but activists and reporters allege government harassment.

The government has demonstrated little capacity or will to enforce laws protecting human and labor rights, consumer protection, environmental protections, and other laws/regulations intended to protect individuals from adverse business impact. There are reports of child labor in supply chains, especially for gold mining.

The government does not encourage adherence to the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas, and there are no functioning domestic measures related to such due diligence.

South Sudan does not participate in the Extractive Industries Transparency Initiative (EITI) although the 2018 peace agreement requires South Sudan to join. The United Nations Development Program’s Governance and Economic Support project (GEMS) and the Kingdom of Norway helped coordinate a conference in Juba in April 2021 with other stakeholders to discuss South Sudan joining the EITI, but the government has not taken any action since then.

Several private security companies operate in South Sudan providing protection to various embassies and NGOs. South Sudan is not a signatory to the Montreux Document on Private Military and Security Companies or a supporter of the International Code of Conduct or Private Security Service Providers. South Sudan does not participate in the International Code of Conduct for Private Security Service Providers’ Association (ICoCA).

9. Corruption

South Sudan has laws, regulations, and penalties to combat corruption, but there is a near total lack of enforcement, and considerable gaps exist in legislation. Transparency International ranked South Sudan the world’s most corrupt country in 2021.

Politically connected people are immune from prosecution. There are no laws that prevent conflict of interest in government procurement. Government officials regularly ask companies to pay extralegal taxes and fees.

The government does not encourage or require private companies to establish internal codes of conduct prohibiting bribery of public officials. There are no indications private companies use internal controls, ethics, and compliance programs to detect and prevent government bribery.

There were no significant anti-corruption cases investigated or prosecuted in 2021.

The 2009 Southern Sudan Anti-Corruption Commission (SSAC) Act established a commission with five members and the chairperson appointed by the President with approval from a simple majority in parliament. The commission is tasked with protecting public property, investigating corruption, and submitting evidence to the Ministry of Justice for necessary action. The SSACC lacks the resources or political support to investigate corruption. It has no independent arrest or prosecution authority or capacity to address state corruption. It can only relay its findings to the Ministry of Justice for prosecution.

South Sudan acceded to the United Nations Convention against Corruption in 2015. The country is not a party to the OECD Anti-Bribery Convention and is not reported to be a participant in regional anti-corruption initiatives.

The country provides no protection to NGOs or journalists who investigate corruption. NGOs and journalists of all types are routinely subject to government harassment, intimidation.

Government security services interfere with and demand payments from all major industries including the extractives sector, hotels, airlines, and banking.

10. Political and Security Environment

There is a long history of politically motivated violence in South Sudan. Warring parties concluded a peace agreement in September 2018 to stop the civil war that broke out in 2013. The conflict severely disrupted trade, markets, and agricultural activities, while claiming hundreds of thousands of lives and spurring a severe humanitarian crisis the country still grapples with. The conflict was marked by grave human rights abuses, including conflict-related sexual violence. South Sudan is slowly implementing the 2018 revitalized peace agreement and routinely misses critical deadlines associated with implementing the peace agreement. Political and sub-state violence is frequent throughout the country.

The country is plagued by large-scale displacement of people (internally and as refugees), widespread food insecurity, severe human-rights abuses, restricted humanitarian assistance access, and harassment of aid workers and journalists. In its January 2022 South Sudan Humanitarian Snapshot , the UN Office for Coordination of Humanitarian Affairs estimated that out of a population 12.1 million, South Sudan has two million Internally Displaced Persons (IDPs) and 2.3 million South Sudanese refugees in neighboring countries. The government stabilized conditions in the country to allow IDPs and refugees to safely return to their homes. The country has 8.3 million people who need humanitarian assistance to survive. Humanitarian partners and international donors are reviewing South Sudan’s Integrated Food Security Phase Classification (IPC) IPC ratings and expected to provide revised ratings in spring 2022.

Previous violence during conflict with Sudan resulted in damage to installations in one of the major oil producing areas in the country, shutting down production in that region. Repairs to these facilities began in 2018, allowing oil production to increase, although production declined again in 2021 due mostly to the third year of sustained flooding South Sudan is experiencing.

Fighting continues in some parts of the country between the government and non-signatories to the 2018 peace deal. Generally, the ceasefire is holding between the government and main opposition groups, but under increasing stress. Persistent sub-national violence stemming from complex socioeconomic, ethnic, and political causes is present throughout South Sudan and has increased since 2019.

The government continued to detain political opposition leaders in 2021. The government periodically detained journalists and temporarily shut down media outlets (print and radio) it accused of publishing articles or broadcasting radio programs that allegedly threatened the government, challenged its competence, or reported instances of corruption.

NGOs complained of harassment, and armed groups continued to attack aid convoys and depots in 2021 and early 2022. NGOs periodically report ambushes along major supply routes in South Sudan. Such attacks resulted in death and injury to, and even killing of, NGO personnel, vehicles destroyed, and supplies looted or destroyed. Such attacks hinder the delivery of aid to countless South Sudanese throughout the country who area dependent on such assistance to survive.

Five aid workers were killed in 2021, and at least three have been killed since January 2022. Since the civil war started in 2013, at least 130 aid workers have been killed, most between 2013 and 2015 when violence peaked.

11. Labor Policies and Practices

South Sudan has a shortage of skilled and unskilled workers across most areas in the formal sector. Construction and service sector employers often hire workers from neighboring countries because of the lack of basic skills training among South Sudanese workers. UNESCO Institute of Statistics  estimates the adult literacy rate in South Sudan is only 34.5 percent.

The most recent changes to South Sudan’s labor laws came from the 2017 Labor Act, but the government generally does not enforce labor laws. The Ministry of Labor has not conducted labor inspections since March 2020 due to the COVID-19 pandemic. When it did, NGOs and foreign investors reported employees colluded with labor inspectors to extort fines from business managers. Most small South Sudanese businesses operate in the informal economy, where labor laws and regulations are widely ignored.

The Ministry of Labor reviews work permit applications to determine whether a position could be filled by a South Sudanese national. Some foreign-owned companies report long delays in receiving work permits for expatriate staff, and many expatriates are only able to obtain work permits for one to three months. State and local authorities reportedly charge additional fees and attempt to restrict employment to people from a certain place or of a certain ethnic group. Government security offices reportedly interfere with hiring in some cases.

The 2017 Labor Act allows for Termination for Redundancy “due to changes in the operational requirements of the employer” and requires severance pay in some cases. The law differentiates between this and other forms of termination.

South Sudan has limited social safety net programs for workers laid off for economic reasons. The Labor Act establishes an “employment exchange” scheme for unemployed people that reserves vending, driving, office support staffing, and other manual labor for South Sudan nationals only. In April 2020, the World Bank approved a USD 40 million grant to create the South Sudan Safety Net Project (SSSNP)  but has not yet released program results information.

There are no special labor provisions to attract or retain investment. No formal functioning collective bargaining systems exist. Those seeking resolution of labor disputes must work with the Ministry of Labor, courts, informal mediation, or a combination thereof. Foreign employers report being at a significant disadvantage in such disputes.

In 2021, South Sudanese – usually unemployed youths – continued to protest to express displeasure, resorted to violent activities, and threatened and targeted NGOs due to the lack of economic opportunities. Occasionally employees from specific ethnic groups protest or strike if they believe employees from different ethnic groups receive favored treatment.

Child labor is rampant. The Ministry of Labor does not enforce child labor laws. Child labor mostly occurs in the informal economy, which the government generally does not monitor.

14. Contact for More Information

Economic/Commercial Section
U.S. Embassy, Kololo Road, Juba, South Sudan
(U.S.) +1 (202) 216-6279, ext 355
JubaCommercial@state.gov 

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