Last month, USAID helped to spearhead a New Partnership between the government of South Sudan and the international community—including donor nations, the African Development Bank, the International Monetary Fund, and the World Bank—based on mutual commitments to focus international assistance and host country resources on strengthening governance, political inclusiveness and sustainable development in South Sudan.
As the world’s newest nation, South Sudan is also one of the least developed countries and therefore, has been highly reliant on donor assistance. Following its independence in July 2011, the international community’s high hopes for the new nation’s future were quickly tempered by an escalation in tensions between South Sudan and Sudan that led to the January 2012 suspension of oil production from South Sudan and transit through Sudan. Given that oil represents 98 percent of Juba’s revenue, the impact of this cessation was immediate and devastating.
The last year of living in austerity and diminishing government services has been a difficult time for the people of South Sudan, who have suffered high food and fuel prices, inflation, displacement from internal conflict and floods. South Sudan also hosts 200,000 refugees from Sudan, who fled fighting and a severe humanitarian crisis in that country.
In early April 2013, Sudan and South Sudan resumed cooperation on oil production, and oil is beginning to flow again. Nonetheless, South Sudan would do well to remember the tough lessons learned over the past year without oil revenues. Despite the hardships, this time of austerity has also been an opportunity to put in place tough, but necessary, economic reforms and fiscal discipline that will help grow the economy and improve transparency.
To help get South Sudan on a sustainable path for development, more than 40 governments and international organizations attended the South Sudan Economic Partners Forum in Washington on April 16. This year, donors have committed to provide approximately $1.3 billion to South Sudan—part of the continuing effort to help the new and underdeveloped nation get on its feet and provide emergency humanitarian assistance where needed. They also indicated a willingness to add new support—up to $300 million—to their existing assistance to South Sudan should the government continue on the right path. The United States is South Sudan’s largest donor. In fiscal year 2012, USAID and the State Department provided $680.4 million in assistance to South Sudan, including emergency (PDF) and development assistance, as well as peacekeeping and security sector programming.
However, donor assistance alone cannot be the solution to South Sudan’s long-term challenges—good governance and private sector growth are equally critical for sustaining the new country’s future. We know, based on decades of hard-earned experience in other parts of the world, that countries with strong economies and stable governments tend to provide more access to services for citizens, and opportunities for employment. As part of the New Partnership, South Sudan’s partners—including the United States, United Kingdom, Norway, European Union, the World Bank and others —agreed to help the government of South Sudan organize a Private Sector Investment Conference in Juba later this year. As a critical first step, USAID organized a South Sudan Investment Forum in Washington on April 17, 2013 to introduce U.S. companies in South Sudan’s priority sectors (agriculture, petroleum, energy, infrastructure and mining) to government ministers to explore potential investment opportunities. Demonstrating U.S. Government’s commitment to supporting private sector investment in South Sudan, the Overseas Private Investment Corporation (OPIC) signed an Investment Incentive Agreement supporting U.S. private sector investment in South Sudan.
To complement these efforts, USAID has offered its expertise to help the government of South Sudan complete investment agreements based on transparency and responsible stewardship of South Sudan’s public resources, to grow and diversify the economy, and to help the people of South Sudan realize their potential. With this assistance, we believe USAID and other donors’ collaboration in South Sudan in close partnership with the government will put South Sudan on a better path to deliver on its independence promise.