S. Sudan deal could change war economy

What you need to know:

  • With President Salva Kiir finally signing a peace deal on Wednesday, the hope is that a step has been taken towards ending the conflict — though many question if the agreement will be implemented as seven previous ceasefire deals have collapsed.
  • But the conflict — which has killed tens of thousands of people and left more than two million homeless — has not dampened the resilience of young people like Rachael Aleko Aguer.

South Sudan has what many businesspeople describe as a war economy, as they battle to keep their companies afloat as a result of the conflict which broke out in December 2013.

With President Salva Kiir finally signing a peace deal on Wednesday, the hope is that a step has been taken towards ending the conflict — though many question if the agreement will be implemented as seven previous ceasefire deals have collapsed.

But the conflict — which has killed tens of thousands of people and left more than two million homeless — has not dampened the resilience of young people like Rachael Aleko Aguer.

She launched a lifestyle magazine, Real Woman, in February 2015, well over a year into the conflict.

She told the BBC that she had huge hopes for her country — which became independent in 2011 after splitting from Sudan — and thinks her publication could contribute to its development.

But times are tough, and she could not afford to print the July issue.

“Business is not as good as it used to be,” she said.

“There are increases in prices and in my case I do the printing of the magazine outside the country because there are few printers here and they are expensive. I have skipped one publication because we didn’t have dollars.”

The scarcity of hard currency, particularly the US dollar, is a big problem, along with the sharp fall in the value of the South Sudanese pound. The official rate is 2.96 pounds for a dollar but on the black market it hovers around 14.

As a result, life is increasingly expensive because South Sudan relies heavily on imports.

Ms Aguer said both the fare for the motorbike taxi she uses to get to work and the cost of her lunch have doubled.

“I don’t know how it’ll be like by next week.”

Before the war, South Sudan earned most of its money from selling oil. It accounted for 98 per cent of government revenues. But since then, production has halved because some oil fields have been taken over by the rebel forces or damaged.

And with global oil prices having fallen, the government is not getting much for the 160,000 barrels still being produced.

To make matters worse, the government also has to pay Sudan for the oil transported through its pipelines, as part of the deal reached during independence talks.

South Sudanese economist Luol Deng says: “I do not want to be scaring people but the government is getting less than it should be getting.

“Out of every barrel passing through Sudan, our neighbour gets $24.1. So if the price is $30, the government of South Sudan gets $5.9.”

Officials hope to revise this arrangement in negotiations due to start in September.

The tough economic situation is not just affecting South Sudanese businesses. Many of the businesses and workers in Juba are from neighbouring countries — including Eritrea, Ethiopia, Kenya and Uganda.

They do not go to commercial banks to send remittances home or to buy dollars. Many banks, in fact, complain that the central bank does not give them access to dollars.