Unequal Partners: South Sudan and the East African Community

AOP talks to Jacob Nul Mayendit, Managing Director of South Sudan’s Baping National Insurance, about South Sudan’s integration into the East Africa region.

What do you see as the key trends for the oil and power sectors in Africa in 2018?

Africa, a continent endowed with enormous oil and gas products, will always remain a place where it is uncertain to predict the future, however, this year projects infrastructural development as a major theme. African owned banks such as Ecobank, Stanbic, Equity Bank and others took the lead in supporting agricultural activities and loans to oil sector companies. The eventual adjustment in fast falling oil prices up to 2017 enhances political stability in some parts of Africa.

It is worth noting that African political instabilities somewhat relate to the fall or rise in oil and gas prices in international markets. When there is a fall in the prices of such products, political leaders tend to struggle for meagre tax revenues, which are not sufficient to run the state, and thus rebellions mushroom, whereas high costs of oil and gas indicate relative peace and democracy.

Based on these indicators, where oil and gas prices are increasing in the international market, Africa should be relatively calm and see more development, growth and wells drilled, which would ultimately improve livelihoods.

What do you see as the key trends for the oil sector in South Sudan in 2018? What obstacles and opportunities do you expect the country to experience in the next year?

South Sudan is a country blessed with several minerals, and floating on oil. Other untapped potentialities will always remain an opportunity for investment. However, given the country’s political immaturity, threat of famine, looming international sanctions, arms embargo, banditry, and corruption, South Sudan will experience more difficulties in the oil sector.

Our theme for AOP this year is ‘Energy Coalitions’. South Sudan is the newest member of the East African Community. Has closer regional integration changed the investment and economic outlook?

The coalition in itself shows growth in terms of rapid development. East Africa remained underdeveloped because the ideology of integration has been theoretical but not practical. The more states remain fragmented, the less development is going to be realized. East African integration is a possibility within reach, but South Sudan is out of balance with the rest of the members. Without peace, South Sudan cannot endorse membership of the East African Community, as it will not be economically integrated into the region in any genuine sense. The real investment will be in other states of East Africa.

Profit repatriation currently in South Sudan can be estimated at approximately 80 percent to East Africa, 7 percent to the Middle East, 3 percent to the Western world and 10 percent within in Sudan and South Sudan. Because of this, South Sudan should not join the bloc before stabilization.

What are the possibilities for greater regional cooperation in the region?

Until the current president of Tanzania accepted regional cooperation, it had been limited on Tanzania’s part for the past two decades. As one of the fastest growing economies in the region, Kenya posed a threat to upcoming nations of Rwanda, Burundi, South Sudan and Uganda, and this made it challenging for cooperation to take effect among other members of the bloc since 2000. There is a possibility for this regional group to cooperate further, but it is almost impossible to see it working under one umbrella like other regional bodies such as ECOWAS, SADC and the like.

What opportunities exist for the region that may not be possible for individual countries acting alone?

It is very important for East African countries to work together to avert challenges that vary in nature and solve common problems. Better infrastructure and common tariffs would eliminate trade barriers and the subsequent illicit trade across borders. Employment opportunities will enhance equalization in the education sectors, and promote transfer of skills to abundantly unskilled population in countries like South Sudan, Uganda and Burundi. Economic growth and increased GDP are an opportunity and there will be benefits from large economies of scale for countries that are not endowed with oil and gas.

Other opportunities include that the regional body might ensure political stability, so that any member state that may not adhere to democratic practices would be penalized in order to comply with rules of good governance, and hence stronger regional integration.