South Sudan: Investing

FDI in Figures

According to UNCTAD’s World Investment Report 2023, FDI inflows to South Sudan peaked at USD 122 million in 2022, up from 68 million one year earlier. However, FDI stocks in the country were not measured in the UNCTAD report. Most FDI in South Sudan is concentrated in the oil and gas sector. Other sectors that have attracted some investment include agriculture, mining, and infrastructure development. China, Malaysia, India, and Uganda are among the top countries investing in South Sudan. For example, China National Petroleum Corporation (CNPC) has been involved in oil exploration and drilling activities, and a joint venture between CNPC, Malaysia's Petronas, and Sudan's Sudapet, named Petrodar Operating, was formed to conduct oil exploration, drilling, and transportation activities. Various other foreign investors are present in the country: Russian oil and gas companies Zarubezhneft, Gazprom Neft, and Rosneft; Indian Oil and Natural Gas Corporation; Malaysia-based Petronas; Nigeria’s Oranto Petroleum and Sahara Group; Moldova’s Ascom and South Africa’s state-backed Strategic Fuel Fund (SFF).

South Sudan suffers from a highly unfavorable business climate. The main factors impeding FDI flows are external threats to peace, security, and stability; institutional and human capacity weaknesses, heavy dependence on the oil sector and dilapidated infrastructure (AfDB). The civil war has hampered investment. The creation of institutions as well as the establishment of attractive fiscal regimes were some of the first measures taken by the Government to promote foreign investment. The Southern Sudan Business Forum (SSBF) was created to facilitate dialogue between the public and private sectors. In theory, foreign investors could control a company in all sectors, but the authorities have reserved their right to rule an investment in each sector. There is no title insurance and no formal way to determine ownership outside of current possession. The legal system is underfunded, dysfunctional, and subject to corrupt practices and interference. Government entities do not enforce laws equitably or consistently. Therefore, corruption is rampant, and South Sudan ranks 177th out of 180 countries in Transparency International's 2023 Corruption Perception Index. On the other hand, the country is rich in natural resources (oil, iron, diamond, copper, nickel, marble, and gold) and has potential hydropower sites. The South Sudan Companies Act of 2012 permits non-South Sudanese to invest in medium and large companies, provided a South Sudanese holds a minimum of 31 percent ownership. Foreign investors must have a local shareholder to obtain a business license. However, this requirement doesn't apply to foreign companies establishing subsidiaries. In the extractives sector, companies must have a South Sudanese owner, though the exact ownership percentage isn't specified. The Transitional Government of National Unity in South Sudan, under the Revitalized Agreement signed in 2018, has been sluggish in its implementation, pushing the transitional period to February 2025 from the originally planned February 2023. This extension allows leaders to hold onto power longer, yet they've fallen short on peace promises, notably in tackling corruption and enhancing government project transparency. While the transitional government has pinpointed key sectors for investment like agriculture, transport infrastructure, petroleum, mining, and energy, it has yet to devise compelling incentives to lure investors. Nevertheless, over the past few years, the government has not introduced any new initiatives to diversify the country's economy.

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Latest Update: May 2024