No significant improvements in trade and investment conditions occurred during the past year in South Sudan, however major changes in the political and economic situation have led to stronger messaging by the U.S. Government on the risks of doing business in South Sudan. 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) at a glacial pace, ultimately delaying the transitional period by another two years from February 2023 to February 2025 in an August 4, 2022 announcement. As a result, South Sudan’s leaders again extended their time in power despite failing to deliver on peace commitments, including on a number of public financial management reforms to address endemic corruption and improve the transparency of government-managed projects. Since the beginning of 2023, the Ministry of Finance and Planning has launched a new website in English with a section on public financial management (PFM). In a positive step, the website includes a number of financial documents related to government budgeting, revenue, appropriations, and debt, although many documents were incomplete, unclear, or not current, and few pertained to the oil sector, which accounts for the vast majority of South Sudan’s economy. Lack of progress on political, financial, and judicial reforms mean that the economy operates without critical mechanisms for business or investment, including a permanent constitution, a capable and operational Anti-Corruption Commission, a functional Financial Intelligence Unit, updated and enacted revenue management legislation, and a rule-of-law based impartial judicial system. The lack of these mechanisms enables corrupt actors to engage in nontransparent behavior and increases the risk to companies for conducting business in South Sudan.
Despite the slow progress on reform by the transitional government, on March 1, the International Monetary Fund approved a $114 million Food Shock Window rapid credit facility (RCF) most of which was directed to the transitional government’s foreign reserves. The RCF, nominally intended to slow down a worsening food insecurity problem, has also largely failed to stabilize the South Sudanese Pound (SSP), which has been steadily depreciating since May 2022. The limited progress on public financial reform, and the transitional government’s extension of the transitional period beyond February 2023 and securing support from the IMF in March 2023 has permitted South Sudan’s leaders added opportunity to engage in opaque or corrupt deals.
South Sudan’s economy is nearly entirely dependent on oil-revenue. Recently released data posted on the Ministry of Finance’s website indicated approximately $1.6 billion in annual oil revenue under current exchange rates. According to a February 2023 report by The Sentry, a three-year investigation into a loan deal between a local company and a regional bank, with the backing of the South Sudanese government, uncovered red flags for illicit business practices, including bribery, tax evasion, and trade-based money laundering. In June 2022, Anglo-Swiss company Glencore pled guilty to seven counts of bribery worth a combined $29 million to gain access to oil in five African countries, including South Sudan but is still operating in South Sudan. 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, mismanagement of resources, and lack of transparency. The country’s oil-producing firms and the Ministry of Petroleum remain on the . The U.S. government assesses the 15 entities BIS added to the Entity List contributed 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 country with the world’s worst public sector corruption in its and tied for second worst in 2022. Additionally, the 2023 Report of the Commission on Human Rights in South Sudan (advance edited version) 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, including 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. South Sudan remains the most dangerous place in the world for humanitarian aid workers, with at least 10 humanitarian aid workers, contractors, and volunteers killed between January and March 24, 2023.
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 with 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. A September 2022 report identified banks, financial institutions, and individuals with ties to South Sudan enabling “state theft.”
The U.S. Department of State maintains a ‘Do Not Travel’ Advisory for South Sudan due to crime, kidnapping, and armed conflict.
|TI Corruption Perceptions Index||2022||178 of 180 (tied with Syria, ahead of Somalia)||https://www.transparency.org/en/cpi/2022|
|Global Innovation Index||2022||N/A of 132||https://www.globalinnovationindex.org/gii-2022-report#|
|U.S. FDI in partner country ($M USD, historical stock positions)||2022||N/A||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2015||1,040||https://data.worldbank.org/indicator/NY.GNP.PCAP.CD|