Dependence on Extractive Industries in South Sudan

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Oil revenue dependence

The US Institute of Peace (USIP) called South Sudan the most oil-dependent country in the world in a July 2011 report, citing 97 to 98 percent of its domestically generated income coming from oil.[1] South Sudan's dependence threatens its political and economic growth especially because the country entered statehood in July 2011 with a mature oil industry potentially on the verge of sharp decline. The USIP reported an expected drop in oil output from 2015, leaving South Sudan little time to use its oil wealth to lay the foundations of a non-oil economy.[2][1]

In early 2012, after South Sudan shut down its oil production due to a dispute over oil transit feeds with Sudan, the UN's humanitarian affairs chief, Valerie Amos, called the situation "extremely precarious" and warned that the decision and resulting hit in revenues would result in South Sudan becoming even more dependent on international food aid.[3]

World Bank South Sudan country director Laura Kullenberg said in April 2011 that the bank would work together with the government and other stakeholders to diversify the economy into other sectors, especially agriculture and mining.[4]

Non-oil revenues

Other than oil, the domestic economy of South Sudan consists predominantly of small-scale agriculture and livestock-raising, according to the South Sudan Development Plan 2011-2013, released by the government in August 2011. There is little domestic production for markets, even for agriculture products, and much less so for export markets outside of oil. Despite South Sudan's agricultural potential, trade data indicate that about 60% of imports from neighboring Uganda and Kenya are agriculture products.[5]

The capital, Juba, and a few other economic centers have booming construction and service sectors, although this is underpinned by government spending and thereby wholly dependent on oil revenue. Many of the goods sold and inputs used, including labor, are imported.[5]

The Development Plan noted that non-oil revenue had accounted for 2-3% of total government revenue since 2008. According to the Development Plan, personal income tax revenues in South Sudan fell from about 85 million Sudanese pounds (SDG) in 2008 and 2009 to an estimated SDG 40 million in 2010. The sum of customs, value added tax (VAT) and other national revenue, all related to the national government, fluctuated around SDG 20 million. Other government revenue, not specified in the Development Plan, has been on a positive trend, rising from SDG 15 million in 2008 to a projected SDG 54 million in 2011.[5]

References

  1. 1.0 1.1 "Oil and State Building in South Sudan" US Institute of Peace, July 2011.
  2. "Policy Analyst Warns S. Sudan’s Oil Dependency" Gurtong.net, 22 February 2012.
  3. "South Sudan: Oil Stoppage Will Leave More Needing Aid in Country, UN" All Africa, 3 February 2012.
  4. "World Bank: South Sudan’s economic diversification our key priority" Sudan Tribune, July 2011.
  5. 5.0 5.1 5.2 "South Sudan Development Plan 2011-2013" Government of the Republic of South Sudan, August 2011.