South Sudan brings in new business opportunity

The South Sudan brings in new business opportunity that Tanzanians exploit in terms of investments and export of goods and services. But, the new market is not one without challenges. First, South Sudan belongs to a different trading bloc—Common Market for Eastern and Southern Africa (COMESA).

Second, is the long distance between Dar es Salaam and Juba, the capital city of the 54th African state. Unlike Kenya and Ugandan goods that enjoy preferential treatment in South Sudan under COMESA, the Tanzanian goods will be subjected to high tariffs because they don’t originate from the trading bloc member.

The long distance between Dar es Salaam and Juba, coupled with poor road infrastructure is another serious challenge that the Tanzanian products face in competing in the Juba market.
Confederation of Tanzania Industries (CTI) Director of Policy and Research Hussein Kamote
says “our goods face serious challenges and can hardly compete with Kenya and Ugandan goods in South Sudan’s market.”

He however advises the local business community to remain buoyant with the challenges
and continue looking for business opportunities in the new African state. Mr Kamote underscores the importance of Juba joining the East African Community (EAC) to enable Tanzanian products compete with Kenya and Ugandan goods at level grounds in the Sudanese market.

Products from North Sudan will likely dominate the Juba market because of proximity of
the two countries. South Sudan needs almost all industrial goods ranging from cooking oils, toilet soaps, maize and wheat flours and plastic goods for the two-week old nation has yet to develop its industrial sector.

But, Dar es Salaam will have tough time competing with its EAC partner’s states, particularly
Kenya and Uganda that have been trading with South Sudan even before it attained its independence from the north this month. “The long time trading relation give our competitors an advantage...but we should still soldier on,” Mr Kamote says.

Kenya has already signed a number of trade protocols with South Sudan and is seeking investors to fund a 22 billion US Dollar planned corridor connecting Ethiopia and Sudan to the
Kenyan coast with railways, roads, telecommunication cables and a 1,400 km pipeline.
Kampala’s figures show that South Sudan is Uganda’s main export market in the region,
exporting goods worth 184.6 million US dollar in 2009.

South Sudan is rich in oil and other natural resources, but it remains one of the poorest nations on earth, with 90 percent of the population living on less than 1 US dollar a day. The population is estimated at eight million, according to a 2008 census. Sudan’s economy picked up slightly in 2010 to grow five per cent, after 4.5 per cent in 2009 but this was one percentage point lower than expected.

The economy is projected to grow 5.1per cent in 2011 and then 5.3 per cent in 2012
largely because of increased oil production and sustained gains in the non-oil sector. The non-oil sector remains buoyant and shoinstitutions like the central bank before it can fully take off as a state. “It may also need to establish its own currency. All these will not
happen over night. It is a process not an event,” says Dr Honest Ngowi of Mzumbe University’s
Dar es Salaam Business School.

South Sudan is slightly larger than Kenya and is a home to about 85 per cent of Sudan’s oil output—estimated at about 520,000 barrels per day and has immense potential in agriculture, unique climate that could form the bulwark of unlimited commercial agriculture,
huge forest reserves for timber and the lumber industry.

The challenge ahead for South Sudan’s authorities is to ensure macroeconomic stability
and sustainability of internal and external balances by controlling the fiscal deficit, rebuilding
foreign reserves and maintaining low inflation.