HomeReportsBureau of Economic and Business Affairs2018 Investment Climate Statements...South Sudan

# 					2018 Investment Climate Statements: South Sudan			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Trade and investment conditions in South Sudan are not favorable to U.S. firms. Armed conflict broke out in December 2013 between government and anti-government forces, and since then, the conflict has continued at varying levels of intensity. The turmoil has halted most economic and development efforts and has led to large-scale displacement, widespread food insecurity, severe human-rights abuses, restricted humanitarian access, and harassment of aid workers, especially locals. In response, the USG has provided nearly USD 2.9 billion in humanitarian assistance since December 2013 for populations affected by the crisis in South Sudan, providing USD 742.8 million in 2017. South Sudan was terminated as an African Growth and Opportunity Act (AGOA) beneficiary effective January 1, 2015 due to its failure to address human rights violations and other concerns related to eligibility.

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 budget deficit for 2017/18 fiscal year was about USD 134 million, and according to the World Bank, the security sector in South Sudan takes 60% of the total annual expenditure of the budget spending due to the ongoing conflict in the country (see the Country Engagement Note (CEN) for the Republic of South Sudan, World Bank Report No. 120369-SS, published November 7, 2017). The South Sudanese Pound (SSP) continues to depreciate and there are increasing fears this will accelerate unless the government enacts financial reforms. 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. Long-term challenges for the country include diversifying the formal economy, alleviating poverty, maintaining macroeconomic stability, building good institutions, improving tax collection and public financial management, and improving the business environment.

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. Other factors inhibiting investment in South Sudan include limited physical infrastructure and a lack of both skilled and unskilled labor. The World Bank’s 2018 Doing Business report ranked the economy of Juba, South Sudan’s capital, 187 out of 190 economies on overall ease of doing business. The legal framework governing investment and private enterprises remained underdeveloped as of early 2017.

There is a high political risk for investors in South Sudan. In March 2018, the government suspended Lebanese-owned cell phone service provider Vivacell, which had previously been South Sudan’s largest telecommunications company with a 51% market share.

The U.S. Department of State maintains a Travel Advisory warning against travel to South Sudan due to critically high risks from crime and armed conflict.

*Table 1*

							1. Openness To, and Restrictions Upon, Foreign Investment					

**Policies 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, security along the entry roads and meager infrastructure make South Sudan a very difficult place to invest. 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 has no known active process for screening, reviewing, or approving FDI. South Sudan currently does not review transactions for competition-related concerns.

**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.

**Business Facilitation**

The World Bank’s Doing Business survey ranks South Sudan 181 out of 190 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 poorly resourced and neither maintains an activeweb site. The Ministry of Justice has a business registry website at http://www.registry.mojss.org/index.html . Many of the links, however, are not active.

The country makes few facilitation efforts, such as having a business registration website. The agencies that handle company registration are Investment Authorities at the Ministry of Trade and Industry, Ministry of Finance, Ministry of Justice and National Security Service. There is no single window registration process, and an investor must visit all the above mentioned agencies to complete the registration of a company. It is estimated that the process could take about 3 months for registration.

In January 2018, South Sudan joined the African Trade and Insurance Agency (ATI), which provides export insurance and other assistance to foreign investors and traders.

**Outward Investment**

The Government of South Sudan does not have a policy for promoting or incentivizing outward investment.

							2. Bilateral Investment Agreements and Taxation Treaties					

South Sudan does not have a bilateral investment or taxation treaty with the United States or any other country. The Ministry of Finance and Planning has issued an exemption of free taxes, levies, charges and fees in transactions involving the African Export-Import Bank (Afriexim Bank).

							3. Legal Regime					

**Transparency of the Regulatory System**

The private sector is governed by a mix of laws from Sudan, the pre-independence semi-autonomous Government of Southern Sudan, and since 2011, the Government of South Sudan. The National Legislative Assembly (NLA) passed laws to improve the transparency of the regulatory system, including the 2012 Companies Act and the 2012 Banking Act, however enforcement regulations are still lacking and there is little transparency. The government does not consult with the public about proposed regulations and the information is not widely published. Several key pieces of legislation governing customs, imports and exports, leasing and mortgaging, procurement, and labor have not been approved by the government and are needed to improve the business environment in South Sudan. The oil sector is the major industry that attracts FDI, but transparency in the oil sector is absent. The Ministry of Petroleum does not share data at an institutional level with the Bank of South Sudan, much less release it to the public. The Ministry of Petroleum does not publish oil production data on their website. The contracts process for oil companies that are planning to bid and invest in South Sudan is controlled by Ministry of Petroleum. This information is not publicly available on the Ministry’s website.

**International Regulatory Considerations**

South Sudan is not a member of the WTO. South Sudan is a member of the African Union. South Sudan was admitted to the Common Market for Eastern and Southern Africa (COMESA) in May 2016. South Sudan joined the East African Community (EAC) in March 2016. South Sudan is also a member of IGAD (Intergovernmental Authority on Development), and the African Economic Community.

South Sudan does not yet implement regulatory systems imposed by EAC or COMESA.

**Legal System and Judicial Independence**

South Sudan acceded to the International Centre for the Settlement of Investment Disputes (ICSID Convention) in April 2012. However, the country lacks a dedicated legal framework for enforcing court judgments on commercial matters, and has emphasized criminal cases in the development of its judicial system.

The Judiciary of Southern Sudan, or JOSS, is a constitutionally mandated government branch that oversees the court systems of South Sudan. The Chief Justice of the Supreme Court of South Sudan is the head of the judiciary, and is held accountable by the President of South Sudan. South Sudan’s judicial system faces myriad challenges, including transitioning to a common law system and using English instead of Arabic in the courtroom. Other challenges include developing criminal courts, training judges, and improving attorneys. There are no dedicated commercial courts and no effective arbitration act for handling business disputes. The lack of official channels for businesses to resolve land or other contractual disagreements leads businesses to seek informal mediation, through private lawyers, tribal elders, law enforcement officials, or business organizations. An estimated 90 percent of cases are informally handled in customary courts.

**Laws and Regulations on Foreign Direct Investment**

The lack of a unified, formal system encourages ‘forum shopping’ by businesses that are motivated to find the venue in which they can achieve an outcome most favorable to their interests. Many disputes are resolved informally. U.S. companies seeking to invest in South Sudan face a complex commercial environment with relatively weak enforcement of the law. While major U.S. and multinational companies may have enough leverage to extricate themselves from business disputes, medium-sized enterprises that are more natural counterparts to South Sudan’s fledgling business community will find themselves held to local rules.

**Competition and Anti-Trust Laws**

Domestic private businesses are often partially-owned by government or military officials, many of whom have partnered with foreigners incorporating a company. The only foreign businesses that must be part-owned by South Sudanese are in security-related areas. Foreign companies benefit from much lower fees than do domestic companies for certain services related to starting up a business. Companies owned in part or in full by government or military officials are reportedly more likely to win government contracts, regardless of the quality or price associated with a bid.

**Expropriation and Compensation**

The Investment Promotion Act of 2009 prohibits nationalization of private enterprises unless the expropriation is in the national interest for a public purpose. However, the current law does not define the terms “national interest” or “public purpose.” Expropriation must be in accordance with due process and provide for fair and adequate compensation, which is ultimately determined by the local domestic courts. In 2015, there was no known government expropriation of foreign-owned property in the private sector. Government officials frequently pressure development partners to hand over assets at the end of programs. While some donor agreements call for the government to receive goods at the close of a project, assets have been seized by local government officials even in instances where they were not included in a formal agreement.

Although officially denied, credible reports from humanitarian aid agencies indicate that money is routinely extorted at checkpoints manned by both government and opposition forces to allow the delivery of humanitarian aid throughout the country.

South Sudan has failed to pay for some services provided to it by private companies. For example, in November 2017 South Sudan stopped issuing and renewing passports and other travel documents after its production system was shut down for two weeks by the country’s German supplier, due to the government’s failure to pay an annual software license fee of around USD 500,000. In addition, numerous private companies claim the government has reneged on or delayed payment for work under contract.

In March 2018, the government suspended Lebanese-owned cell phone service provider Vivacell, which had previously been South Sudan’s largest telecommunications company with a 51% market share, due to an alleged failure to pay taxes.

**Dispute Settlement**

*ICSID Convention and New York Convention*

In April 2012, South Sudan became a member state to the International Centre for the Settlement of Investment Disputes (ICSID Convention). Currently South Sudan is not a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). There is no specific domestic legislation that enforces awards under the ICSID convention.

There are no dedicated commercial courts and no effective arbitration act for handling business disputes. Enforcement of court decisions is weak or nonexistent.

*Investor-State Dispute Settlement*

High political risk exists for investment in South Sudan. In March 2018, the government suspended Lebanese-owned cell phone service provider Vivacell, which had previously been South Sudan’s largest telecommunications company with a 51% market share, due to allegations that Vivacell had not paid required taxes. In July 2018, the government ceased a cooperation agreement with French oil major Total.

*International Commercial Arbitration and Foreign Courts*

The government is not a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). The only means of settling disputes between private parties in South Sudan is civil court.

**Bankruptcy Regulations**

Bankruptcy is covered by the Insolvency Act of 2011. As in many areas, enforcement and implementation of the law remains problematic. The country ranks 168 out of 190 in resolving insolvency according to the World Bank’s Doing Business rankings. There is no commercial credit monitoring authority currently operational in South Sudan. In 2017, the Bank of South Sudan established a Credit Reference Bureau Section within the bank with two staff members assigned to collect and assess risk in the banking sector.

							4. Industrial Policies					

**Investment Incentives**

Applications for investment incentives are made to the Ministry of Finance and Economic Planning through the One Stop Shop Investment Centre (OSSIC). Tax exemptions and concessions on machinery, equipment, capital and net profits are approved for stated periods by the Ministry of Finance, at its discretion. Financial incentives also include capital allowances, deductible annual allowances, and annual depreciation allowances.

South Sudan currently maintains political and trade agreements with the African Union, the European Union, and recently joined the East African Community (EAC). The Overseas Private Investment Corporation (OPIC) is open to doing business in South Sudan. The country has observer status in the Common Market for East and Southern Africa (COMESA).

The Investment Promotion Act provides for various tax incentives, including capital allowances ranging from 20 to 100 percent of eligible expenditures, deductible annual allowances ranging from 20 to 40 percent, and depreciation allowances ranging from 8 to 10 percent. Tax incentives and duty exemptions are requested through an application to the Ministry of Finance and Economic Planning. A foreign tax credit is granted to any resident company paying foreign taxes on income from business activities outside South Sudan.

**Foreign Trade Zones/Free Ports/Trade Facilitation**

South Sudan has not established any free trade zones. On June 22, 2013 the government of South Sudan announced the construction of a 625 square km Juba Specialized Economic Zone (SEZ) about 30 km from Juba. It is intended to be an industrial area for business and investment activities but development of the area has not progressed.

**Performance and Data Localization Requirements**

In 2016 the government passed a law mandating employment procedures for non-governmental organizations (NGOs). The law dictates that 80 percent of NGO staff at all levels (managerial, mid-level, and junior staff) must be South Sudanese nationals.

The Government of South Sudan issued a new Financial Act in September 2017 mandating fees for employment of foreign nationals. Annual fees and charges for foreign nationals currently apply as follows: consultants and managers pay USD 4,000, professionals USD 3,000, technicians USD 2,000, skilled workers USD 1,000, unskilled workers USD 500. Fines for violating these regulations begin at USD 200.

There is no government funding available for subsidized research and development programs.

There are no known requirements for foreign IT providers to turn over source code or provide access to surveillance. There are no known rules on maintaining a certain amount of data storage within the country.

							5. Protection of Property Rights					

**Real Property**

There was no progress in 2017 from the National Legislative Assembly (NLA) to approve a land policy to allow comprehensive land reform. Laws on mortgages, valuation, and the registration of titles have not been drafted.

While the 2009 Land Act and the 2009 Investment Promotion Act both state that non-citizens can access land for investment purposes, by leasing the land but not owning it, clear regulations governing how a business acquires land were not available in 2017. Currently, some businesses lease land from the government, while others lease land directly from local communities and/or individuals. Under the Land Act, investment in land acquired from local communities must contribute economically and socially to the development of the local community. Businesses will often sign a memorandum of understanding with the local communities in which they agree to employ locals or invest in social services in exchange for use of the land. Land negotiations with communities often require several months or longer to complete. Ownership of land is often unclear, with communities and government both claiming the same property. In some cases, multiple individuals hold registration certificates demonstrating sole ownership of the same piece of land. South Sudan ranks 181 out of 190 countries in registering property in the World Bank’s Doing Business Report (http://www.doingbusiness.org/rankings ).

**Intellectual Property Rights**

While the investment law includes an article on the protection of intellectual property rights, implementing legislation on trademarks, copyrights, and patents has not yet been passed. To date, the only intellectual property law which has been put forward to the legislature is the Trade Marks Bill of 2013. South Sudan is neither a member of, nor an observer to, the WTO, nor is it a member of WIPO. South Sudan is not listed in USTR’s Special 301 report. South Sudan is not listed in the notorious market report.

The legal structure is weak and enforcement is lax. Recorded instances of intellectual property theft are rare. For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

*Resources for Rights Holders*

For a list of local lawyers, see: http://photos.state.gov/libraries/juba/895/pdf/Lawyers.pdf Embassy POC: Matthew Pagett – pagettmj@state.gov

							6. Financial Sector					

**Capital Markets and Portfolio Investment**

South Sudan’s financial system offers few financial products. It is difficult for foreign investors to get credit on the local market due to the shortage of hard currency, the lack of accurate means of obtaining reliable figures or audited accounts, the absence of a credit reference bureau, and South Sudan’s failure to document land ownership properly. According to the World Bank, 50 percent of all South Sudanese firms cite access to finance as a constraint.

Banks are unwilling to lend due to the lack of adequate laws to protect lenders and difficulties related to personal identification. After the Bank of South Sudan confiscated commercial banks’ reserves on deposit at the central bank in autumn 2015, diverting them to the use of the government, companies and individuals had difficulty accessing their funds. This has made depositors reluctant to trust their funds to the banking system.

The Bank of South Sudan launched treasury bills on August 18, 2016 up for purchase by members of the public, companies and commercial banks. This lasted until April 2017, when people stopped investing in the bills due to high inflation and a lack of a secondary market for them. The bank had previously issued treasury bills in 2012 without success.

**Money and Banking System**

Activity in the financial system grew after independence for a period until it deteriorated in 2014 due to civil conflict and the reduction of oil exports. The economy of South Sudan is cash-based, with limited use of demand deposits. The IMF has categorized South Sudan’s financial sector as small and undeveloped. There is limited information to assess the health of this sector.

The Bank of South Sudan is the country’s central bank. Most of the foreign owned banks that have branches in South Sudan, such as Kenya Commercial Bank (KCB) and Equity Bank, closed their branches due to the conflict, devaluation of the SSP, and high inflation that has greatly affected bank profits.

There are a total of nine foreign-owned banks and 21 local banks. The combination of conflict and economic crisis and the high risk of doing business in South Sudan forced foreign banks to close at least 22 out of 50 branches. Lending is now rare, and most banks are barely more than conduits for transferring money or receiving spoils. Economic activities that bear big shares of commercial bank lending are Domestic Trade Restaurants & Hotels (49%), Foreign Trade (17%) and Real Estate (17%), representing 83% of total lending by commercial banks.

Kenyan multinationals with subsidiaries in South Sudan have lost billions of shillings to devaluation of the South Sudanese Pound by 84%, as part the transition by the Bank of South Sudan (BSS) from a fixed exchange rate regime to a managed floating regime in December 2015. Inflation has risen sharply since then, diluting the value of assets denominated in local currency, including cash and loans held by Kenyan banks. Foreign banks are allowed to operate in South Sudan and are subject to Bank of South Sudan regulations. The banking sector has been in crisis since the devaluation of December 2015. According to a December 2017 commercial banks survey (other depositary corporation survey), net foreign assets were about USD 458 million.

**Foreign Exchange and Remittances**

*Foreign Exchange Policies*

South Sudan maintained a fixed exchange rate for the South Sudanese Pound until December 2015 when it moved to a managed floating exchange rate regime. Since then, the local currency has depreciated significantly due to deficit spending by the government, printing of money, and a lack of hard currency. The current official exchange rate can only be found directly from the Bank of South Sudan, or from commercial banks in Juba that get the daily report from BSS.

South Sudan relies on oil exports for inflow of hard currency. Those exports and the accompanying revenues were reduced after the outbreak of an internal conflict in 2013; however, after the increase in oil prices in 2017 the government of South Sudan still faces challenges in paying civil servants on time. Revenues have increased slightly due to the increase in the price of oil.

With no access to external financing, the government has used domestic borrowing from the central bank, printing money to cover a growing financial shortfall and pay monthly operating expenses. Foreign currency reserves are extremely low, and the government routinely fails to pay salaries of civil servants and diplomatic staff.

Since January 2017, the Bank of South Sudan has only allocated U.S. dollars to two forex bureaus, called “Adjum Forex Bureau” and “Green South Forex Bureau,” which sell dollars to the public at a rate close to the black market rate. In 2016, the central bank stopped allocating dollars through periodic auctions conducted after the December 2015 devaluation of the SSP. Foreign investors found it difficult to repatriate their locally-generated income. Multiple international companies suspended operations in South Sudan since 2015, claiming that, despite promises at the highest levels to rectify the situation, they were unable to convert their profits in the local currency into USD. Black market exchange is prevalent. The value of SSP/1USD in the black market depreciated by 47.9% from January 1 to December 31, 2017.

In March 2017, the Bank of South Sudan issued a new regulation requiring banks, companies and individuals seeking to transfer amounts over USD 10,000 to undergo checks and approval procedures from the country’s central bank. Under the new guidelines, all financial institutions and individuals will be required to report any transaction such as withdrawals, deposits and bank transfers above USD 10,000 to the central bank.

The Bank of South Sudan has implemented licensing and regulatory framework for mobile money but has not specifically expressed an interest in blockchain technology.

*Remittance Policies*

Foreign investors cannot remit through the parallel market. They are required by law to remit through banks or foreign exchange bureaus.

In theory, funds associated with any form of investment can be freely converted into any world currency. The exchange rate in South Sudan is determined according to data gathered from commercial banks every day, and the central bank indicative rate is the average rate of all the operating commercial banks in South Sudan. This system started after the devaluation of the local currency when the bank announced a shift from Fixed Exchange Rate Regime to a managed floating Exchange Rate Regime in December 2015.

The 2009 Investment Promotion Act guarantees unconditional transferability in and out of South Sudan “in freely convertible currency of capital for investment; payments in respect of loan servicing where foreign loans have been obtained; and the remittance of proceeds, net of all taxes and other statutory obligations, in the event of sale or liquidation of the enterprise.” In reality, the ability to exchange local currency for foreign currency is severely restricted.

South Sudan is not a member of the Financial Action Task Force (FATF).

**Sovereign Wealth Funds**

The Petroleum Revenue Management Law 2013 created a sovereign wealth fund (SWF) to set aside surplus profits from oil sales. The law established the Oil Revenue Stabilization Account to act as a buffer against volatility in oil prices and the Future Generations Fund to set aside some funds for future generations. The law is in line with the Transitional Constitution of South Sudan, which states that the ownership of petroleum and gas shall be vested in the people of South Sudan and shall be developed and managed by the national government on behalf of, and for the benefit of, the people. The SWF is supposed to distribute 10 percent of oil profits into the Oil Revenue Stabilization Account and 15 percent to the Future Generations Fund. To date, however, neither has received any financing. The Comprehensive Peace Agreement (CPA) that ended the civil war with Sudan sets a 2% share of oil revenue that is supposed to be given to the oil producing states along with 3% revenue allocation to the local communities. However, in August 2017, the government announced that it would stop giving the 3% and 2% share to states.

							7. State-Owned Enterprises					

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

The national oil company – Nilepet – remains the primary fully State-owned enterprise (SOE) in South Sudan. It is the technical and operational branch of the Ministry of Mining and Petroleum. Nilepet took over Sudan’s national oil company’s shares in six exploration and petroleum sharing agreements in South Sudan at the time of the country’s independence in 2011. Nilepet also distributes petroleum products in South Sudan. The government, through Nilepet, holds minority stakes in other oil companies operating in South Sudan.

The Petroleum Revenue Management Bill, which governs how Nilepet’s profits are invested, was enacted into law in 2013; however, the company has yet to release any information on its activities, even though the law states that comprehensive, audited reports on the company’s finances must be made publicly available.

The government is not transparent about how it exercises ownership or control of Nilepet. Its director reports to the Minister of Petroleum and Mining. Nilepet’s revenues and expenditures are not disclosed in the central government budget. No audited accounts of Nilepet are publicly available. After the January 2012 oil production shutdown, oil production recovered to more than 235,000 barrels per day at end 2013, only to fall to about 160,000 barrels per day in early 2014 as a result of the conflict that started in December 2013. The ongoing conflict reduced daily oil production currently (August 2018) to about 127,000 barrels per day (bpd), and the collapse of international oil prices plus the drop in oil production has cut state revenues. The increase of oil prices in late 2017 had some positive effect on oil revenues to the country.

The government owns stakes in construction and trade companies and in several banks. Limited data is available on number and the total income of SOEs.

**Privatization Program**

South Sudan does not have a privatization program. So far, the government has no plans for privatization, and there are few government-owned entities that provide services to individuals.

							8. Responsible Business Conduct					

The idea of responsible business conduct is new in South Sudan, and there is little awareness of standards in this area. The few large international firms operating in South Sudan sometimes offer some 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. There are complaints in the media about the number of foreign-owned companies and the lack of hiring of South Sudanese employees. International observers have argued that many of the oil producing companies do not practice responsible behavior in regard to environmental damage in the oil fields.

The government does not participate in the Extractive Industries Transparency Initiative (EITI) and while the law requires the disclosure of payments made to the government in regard to oil sales, in reality disclosure is weak or nonexistent.

							9. Corruption					

Corruption in South Sudan is entrenched, widespread and undermines the development and stability of the state. South Sudan has laws, regulations, and penalties to combat corruption, but there is a lack of enforcement and considerable gaps exist in legislation. There are, for example, no laws that prevent conflict of interest in government procurement. Transparency International has named South Sudan among countries that are highly corrupt in its 2017 index: its rank was 179 out of 180 countries. According to Transparency International, South Sudan ranks second to Somalia as country the country in the world where corruption is most highly rampant (http://cpi.transparency.org/ ).

The South Sudan Anti-Corruption Committee (SSACC) was established in accordance with the 2005 Constitution and the 2009 SSACC Act. The five commission members and chairperson are appointed by the President with approval by a simple majority in the parliament. The commission is tasked with protecting public property, investigating corruption, and submitting evidence to the Ministry of Justice for necessary action. In addition, the commission combats administrative malpractice in public institutions, such as nepotism, favoritism, tribalism, sectionalism, gender discrimination, bribery, embezzlement, and sexual harassment.

In reality, the SSACC has no capacity to address state corruption as it can only relay its findings to the Ministry of Justice for prosecution. There were no significant anti-corruption cases investigated or prosecuted in 2017.

South Sudan is a member of the United Nations Conference on Trade and Development (UNCTAD), and the International Centre for Settlement of Investment Disputes (ICSID) convention entered into force for South Sudan on May 18, 2012. The country is not reported to be a participant in regional anti-corruption initiatives.

*UN Anticorruption Convention, OECD Convention on Combatting Bribery*

South Sudan acceded to the United Nations Convention against Corruption in January 2015, but has not yet ratified it. The country is not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

**Resources to Report Corruption**

Contact at government agency or agencies are responsible for combating corruption:

Honorable Ngor Kulong NgorChairpersonSouth Sudan Anti-Corruption CommissionP.O Box 312Juba, South Sudan

Honorable Awad Masha ZigizoCommissionerSouth Sudan Anti-Corruption CommissionP.O Box 312Juba, South Sudananticorruptioncommission@yahoo.co.uk

Contact at “watchdog” organizations:

UN Panel of Experts on South SudanMr. David Biggs (Senior Committee Secretary)Tel: (212) 963-5598sc-2206-committee@un.org

Transparency InternationalAlt-Moabit 9610559 BerlinGermanyTelephone: +49 30 3438 200Fax: +49 30 3470 3912ti@transparency.org

The Sentryc/o The Enough Project1420 K Street, NW, Suite 200Washington, DC 20005info@thesentry.org

							10. Political and Security Environment					

Although the government and diverse opposition forces concluded a peace agreement in August 2015 to stop the conflict that broke out in December 2013, fighting continues in parts of the country. The effects of the war on the economy and investment will be evident for some time.

South Sudan has over 2.18 million Internally Displaced Persons (IDPs), and an additional 2.4 million South Sudanese refugees in neighboring countries, according to the UN Refugee Agency (UNHCR). The government has not yet developed the conditions that would allow the IDPs to safely return home. Political opposition leaders faced illegal detention and travel restrictions in 2017. The government has temporarily shut down several newspapers and detained journalists it accused of printing articles opposing policies or actions undertaken by the government.

The conflict has severely disrupted trade, markets, and agricultural activities, claimed thousands of lives and spurred one of the world’s most serious humanitarian crises. The conflict has been marked by grave human rights abuses, especially pervasive gender-based violence. Out of a population of approximately 12 million, some 4.8 million people are considered “food insecure”, as famine was declared in early 2017 in South Sudan – the first famine declaration anywhere in the world in six years. During 2017, the bulk of U.S. and the international community’s support efforts were directed at the immediate needs of the ongoing humanitarian crisis brought on by the civil conflict. Other development assistance has been significantly reduced.

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 and solar system power for electricity. Despite a 119-mile paved road to the Ugandan border (Juba-Nimule Road), funded by the United States in late 2012, and unnecessary delay by the Ministry of Finance in authenticating contractor documents, a heavy bureaucratic burden has discouraged private construction companies from applying for contracts. This has made it difficult to maintain the Juba-Nimule Road, which, according to travelers, is badly damaged and unmaintained by the government.

Violence has resulted in damage to installations in one of the major oil producing areas in the country, shutting down production in that region. NGOs complain of harassment in remote areas. The government has deployed troops in oilfield areas to protect oil workers. Additionally, at least two foreign gold miners were shot and killed in an ambush by unknown gunmen in South Sudan’s Kapoeta State, an area where gold mining occurs. Finally, many traders have been killed along Juba-Nimule road, and public calls have been made to the government to find a solution to the rampant insecurity along the road that connects the country’s capital Juba with Nimule on the Ugandan border, and which is a key artery for trade with Uganda.

The Department of State currently warns against travel to South Sudan due to the critically high risk of crime and armed conflict.

							11. Labor Policies and Practices					

South Sudan has a shortage of both skilled and unskilled workers across most areas in the formal sector. According to the 2008 census, 84 percent of those employed are in non-wage work. Unskilled labor in the service and construction sectors is often performed by immigrants from neighboring countries. The transitional parliament passed a new Labor Law in November 2017 that was signed by the South Sudanese President in December. Although a final copy of the law is currently unavailable and regulations interpreting the law are yet to be written, generally, in the new laws the minimum age will be 14, except for some light work which can be performed at age 12 and some categories deemed “hazardous” which children aged 16 would be allowed to perform only with training. The new law seeks to protect workers’ rights and provide guidelines for employment of foreigners in the war-torn nation. The law, consisting of 11 chapters, gives details on fundamental rights at workplaces, terms and conditions of employment, and dispute resolutions, but it is has not yet taken effect.

Cattle are included on both United States Executive Order 13126 List of Goods Produced by Forced and Indentured Child Labor, and List of Goods Produced by Child Labor or Forced Labor. South Sudan, with the support of the UN, signed a recommitment agreement in 2014 and created a work plan to end the recruitment and use of child soldiers.

Government enforcement of existing labor laws has been absent. Most small South Sudanese businesses operate in the informal economy, where labor laws and regulations are widely ignored. The Ministry of Labor thoroughly reviews all work permit applications in an attempt to determine whether a position could be filled by a South Sudanese national. Some foreign-owned companies reported long delays in receiving work permits for expatriate staff, and many expatriates are issued work permits for just one to three months, rather than the standard one year.

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.

There is no trade agreement between South Sudan and the United States.

							12. OPIC and Other Investment Insurance Programs					

The Overseas Private Investment Corporation (OPIC) has been open to business in South Sudan since 2012. South Sudan ratified its Investment Incentive Agreement (IIA) with OPIC in 2013. South Sudan is a member country of the Multilateral Investment Guarantee Agency.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

No data on FDI is reported by the government of South Sudan.

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*

*Table 3: Sources and Destination of FDI*

Data not available.

*Table 4: Sources of Portfolio Investment*

Data not available.

							14. Contact for More Information					

U.S. Embassy Juba’s switchboard telephone number is 1-202-216-6279Primary POC – Matthew Pagett, Economic Affairs Officer – PagettMJ@state.govAlternate POC – Juanita Aguirre, Economic Counselor – AguirreJL@state.gov

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### On This Page

                    -  Executive Summary 
                    -  1. Openness To, and Restrictions Upon, Foreign Investment   
                    -  2. Bilateral Investment Agreements and Taxation Treaties   
                    -  3. Legal Regime   
                    -  4. Industrial Policies   
                    -  5. Protection of Property Rights   
                    -  6. Financial Sector   
                    -  7. State-Owned Enterprises   
                    -  8. Responsible Business Conduct   
                    -  9. Corruption   
                    -  10. Political and Security Environment   
                    -  11. Labor Policies and Practices   
                    -  12. OPIC and Other Investment Insurance Programs   
                    -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                    -  14. Contact for More Information   

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