Why investors are not coming

By Kenyi A. Spencer

October 18, 2013 (SSNA) — One citizen, a few days ago, wondered why investors are not coming to invest in South Sudan after our incessant campaigns for them to do so till we turned blue in the face. My brother, there are major huddles South Sudan has to jump over first. Some of these huddles are so trivial to our eye, but to the investor they are the real gut-wrenching issues. Investors come with loads of assets to protect. Remember, they are INVESTORS not donors. Investors come for profits, period. If there is any Corporate Social Responsibility (CSR), it is decided (by the corporate body) after it has balanced its books.

Let’s take a quick look at those huddles I mentioned:

Misunderstanding investors

Investors (foreign or domestic) aim for profits. Nothing else! The request made for foreign direct investors to partner with domestic someone they do not know is preposterous. Worse when they are asked to adhere to a certain percentage in the partnership. The fact that our foundation, right from colonial times, has been built around grants and donations should be the area to blame. Even during the era of one Sudan, the South was a budget-granted entity. We were never shown how much the government sweated to raise revenue. We were never exposed to the real source of fund accrual. This made us to always expect hand-outs.

Lack of dispute resolution mechanisms

Investors care about another important asset than the one they physically plant on the ground – reputation. There is a lot of reputational risk borne by a company where commercial dispute mechanisms are either absent or inept. No businessman wants his photo splashed on newspaper tabloids taken getting out of a criminal court while attending to a consumer-related dispute. This carries horrible images to the company’s associates out there, especially from equity investors.

Small trivialities

It is unfortunate most of us have come to learn malicious ethics that jeopardize our sense of humility and good-faith as a proud nation. A few examples are cited under.

Entry visa fees: In essence single-entry visas are U$ 50, charged at entry points to South Sudan. Border points like Nile, Nadapal and Kaya cater to small businesses, therefore not a terrible worry. The chicanery that goes on there only transfers to the pricing in the market. All of us suffer, but that is a small pain to bear. What worries is the airport. It is through here that the heavy foreign investors enter the country. The treatment a prospective investor receives at the airport is enough to create deterrence over the simple issue of U$ 50. Despite the knowledge an investor had before boarding the plane to Juba the first shock that hits home is when he is asked to fork out U$ 100 and then receives a receipt of U$ 50. No balance; take it or leave it. The first question that springs to the mind of an investor is, if 50 dollars can cause such a hullaballoo what about a billion dollars

Maniacal driving: Everyone knows war has ended in South Sudan, though some pockets of skirmishes persist in places, but generally South Sudan is perceived to be at peace. An investor visiting the country is only reminded that there is war somewhere near when military vehicles zoom in and around Juba streets with such murderous disregard for traffic rules for apparently no reason. This scares any would-be investor as the possibilities of likeliness to lose his/her investments are high in such a volatile situation.

Lack of rule of law: Sometimes, especially after a traffic accident, you see drivers go for fist-cuffs to solve the problem, in most cases with a unformed traffic officer in the middle of the melee. Sirens of scare are set off in the mind of the investor after witnessing such an episode. Secondly, investors are scared of sharing the street with people carrying assault rifles. As long as our gentlemen and ladies in uniform still pepper our streets with guns in hand forget about investors coming. In their minds, there’s still war out here.

Formalized parallel money market: The sight of dollars selling like a commodity in the open market is bad news to investment. It shows the act is formerly condoned. It shows lack of discipline in the monetary policy of government. It is only in South Sudan that small tables of dollar notes and tomatoes vie for space in the local market place. Note that investors take money where they feel their money is protected and held dear.

Cash Economy: Lack of proper trade finance and trading instruments is another big deterrent to investment. The number of forex bureau alone in town scares the blazes out of any serious investor. The question that comes to the investor’s mind is, What is their central bank doing? Or better, Where the hell is their treasury?

Traffic road blocks: Many cities hold important events but they do not bring the entire city to a standstill the way we do. An investor with an assembly factory already switched on cannot be kept in traffic for God-knows-what and for so long. We need to learn that while some roads remain closed (for whatever reason!) others should be open to traffic.

Unnecessary holidays: From our “colonial masters” we managed to carry a huge hang-over of holiday-this holiday-that. This is a detriment to the functions of the private sector as a whole, let alone the foreign investor. There are holidays that can be accomplished by a single television address at the end of the day. There are others that can be celebrated while at work. But holidays, even those declared by rain, are unwelcome. As a nation, we need to re-calibrate our ethics for work with the understanding that what we are working for now is for our own and for our children’s benefit. I know, during the “colonial” days we worked for a master. If the master forgot to give you a piece of the cake at the end of the day it did not matter; if he did, it did not matter either. This must stop. We must realize now that we are on our own. Whatever we do now is to either our benefit or detriment. Our love of holidays must stop. No investor will come to start his industry here today and tomorrow is forced to shut down because someone had an itch. Investors don’t work that way. Remember, they are here to reap profits from their investments, the higher the spread the better. Period.

Bloated Economy

The South Sudan economy is so rigidly tied to principles of income re-distribution. Nothing is left to the man in the street to carve out his own source of funding. Let’s look at how this is a disadvantage to us. In the first instance, revenue is only from sale of natural resource: the oil. This is the only major way government receives revenue. All other areas are miniscule in value. Not because they do not matter, but some corrupt individuals, for reasons beyond me, take the other revenue as unimportant to government and thus consider it fit for personal pockets. This leaves the rest of the population without any option for sustenance than the reliance on government or on those individuals who happen to hold the key to the safe. No wonder our government is so top-heavy, and, no wonder families of our employed town-dwellers are so clogged neck-deep in dependants who contribute absolutely nothing to the up-keep of the family. Should we then wonder why illiteracy and corruption are throttling us! Reasonable potential employees are forced to seek for government jobs, making government the only miserable employer. Need you ask why the government sector is so bloated? Even after re-shaping the government in a quest to make it leaner the difference is still virtually the same. The first step that was supposed to have been taken in forming government right in 2005 was to lay down the roles of agencies of government. It is from this that structures of government should have sprung instead of starting by forming government structures. This is what has tied us down. Even if another re-shaping is done it will not amount to much. In the first instance, you ask yourself what the role of the ministry of commerce was without much to trade. If it was to trade the oil with the outside world then the petroleum ministry should have handled that. The ministry of commerce should have been phased in gradually as we became involved in trading. At the moment it makes little sense. Conversely, the ministry of petroleum should have reverted to ministry of commerce for cost-effectiveness in managing the economy. There are many examples in government where redundancies are plenty.

Kenyi A. Spencer is an environmental economist, international trade specialist, and private sector development consultant based in Juba, South Sudan.

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