East Africa

Oil rich but poor: no work, no money


On a good day, people have to wait for hours to get fuel in Juba. Most of the time, however, petrol stations in South Sudan’s capital stand deserted amid a deepening currency crisis that has reduced imports to a trickle and sent prices through the roof.

But this is one of the good days, and the government-owned Nilepet station near the centre of town is open for business – and doing a roaring trade.

A long line of cars extends from the petrol station around half the block, while dozens of motorcycles jostle for space to edge closer to the pumps. Police officers and plain-clothed national security agents cast a watchful eye on every transaction, occasionally funnelling the sprawling line of vehicles back into a neat single file. Soldiers and women with jerry cans buy petrol at the regulated price, only to sell it on the black market to those who end their wait empty-handed.

The scene epitomises the scramble for basic commodities in a country rich in oil, but home to an increasingly impoverished population that struggles to cope with a mismanaged economy.

“There is fuel in the country, but those who bring it don’t want to sell it at the regulated price,” says Luka William, sticking his head out of his car to gauge the queue ahead of him. “They are waiting for the prices to go up, but nobody could afford that.”

Just a few metres away, Lena Deng, who has eight children, is about to sell her last 1.5 litre bottle of black market diesel for five times the official price.

Asked whether such profiteering was fair to her fellow citizens, she was blunt: “There is no work, there’s no money, and I have to feed my family.”

The shortage of fuel – which, like everything else that’s consumed in South Sudan, is imported – is perhaps the most palpable consequence of the economic crisis that has gripped the nation after more than two years of conflict.

With the shutdown of most oil fields in conflict areas, production has dropped by about 40% since 2013 to 160,000 barrels per day.

Coupled with the global decline in oil prices and a costly pipeline deal with Sudan that allows its northern neighbour to charge South Sudan a fixed rate of $25 a barrel, the bulk of government revenues – and the country’s sole source of foreign exchange – has been virtually wiped out.

The central bank’s foreign reserves have been depleted or siphoned out of the country. A recent effort to stabilise the plummeting value of the pound by auctioning $70m obtained through the International Monetary Fund (IMF) has been a drop in the ocean for the dollar-starved economy.

The shortage of hard currency has forced businesses, including the country’s only major factory, to shut down. Traders who need dollars to pay for imported goods are at the mercy of skyrocketing black market rates, which have increased by more than 70% since January.

“People are not buying, everything has become too expensive,” says Jacqueline Benjamin, a trader in Juba’s Konyo Konyo market. The price of the pineapples she buys from Ugandan wholesalers has doubled since February.

Fruit is now considered a luxury, and Benjamin struggles to sell enough to feed her family. “All the money I now make goes towards paying for transportation,” she says.

Experts estimate that 80-90% of Juba’s population now live below the poverty line. Malnutrition in the capital has risen to 12%, a sign of the widening effect of the crisis – food insecurity had been limited to warring rural areas. “Ten percent is the threshold where you begin to worry, so it’s already getting into emergency levels,” says Joyce Luma, the country director of the UN’s World Food Programme.

With few alternatives to generate revenues and no more options to access lending through the IMF or international financial markets, the government’s only hope to salvage the ruined economy is a peace deal signed last year between President Salva Kiir and rebel leader Riek Machar. Many officials believe the international community will table a rescue package once a transitional government is formed.

“The hope is that the international community will come in to stabilise the markets. Without that, nothing is going to be done,” says Bol Jock Tiech, undersecretary for commerce at the Ministry of Industry, Commerce and Investment.

But donors may be reluctant to commit funding without fundamental reforms that tackle corruption and curb spending on the country’s vast security apparatus.

“If there is no credible signal from South Sudan that this time things will be different, then they will get far less than what they could get,” said Balazs Horvath, who heads the UN Development Programme in South Sudan.

It’s not just the donors who are losing patience with South Sudan’s leaders. Citizens who feel the brunt of the crisis are increasingly vocal about their government’s failures. “There’s a lot of corruption in the government,” says a retired colonel who has been waiting for hours to get fuel.

“People in the army and government are benefiting from the black market fuel business,” says the man, who didn’t want to give his name for fear of retribution. “It’s the ordinary citizens who are left with nothing.”

The Guardian.

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