A man holds up South Sudan’s new flag as South Sudanese children rehearse their dance routine, to be performed at half time during South Sudan’s national soccer team’s match with Kenya as part of the independence day celebrations, in Juba July 7, 2011. Southern Sudanese in the country-in-waiting’s capital are sprucing up streets, confiscating black market guns and trying to impose order on frenetic traffic to make sure independence day goes smoothly on Saturday. REUTERS/Paul Banks/UNMIS/Handout (SUDAN – Tags: POLITICS CIVIL UNREST) FOR EDITORIAL USE ONLY. NOT FOR SALE FOR MARKETING OR ADVERTISING CAMPAIGNS. THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY. IT IS DISTRIBUTED, EXACTLY AS RECEIVED BY REUTERS, AS A SERVICE TO CLIENTS

Just over a year ago did the results of the independence referendum come in, with near 100 percent approval by those eligible to cast their vote, setting the stage for the mid July 2011 Independence from the former slave masters in Khartoum. 12 months on, and 6 months into Independence, the mood however has now changed across the Southern Sudan. External aggression by regime troops, who engaged in large scale ethnic cleansing and a policy of burned earth in three states still awaiting their own say about their future, Abyei, South Kordofan and Blue Nile, aerial bombings of UN refugee camps located in the South and the renewed use of proxy militias to ferment trouble inside the Southern Sudan, have of late combined with an economic challenge to the new government of unprecedented proportions.

Following constant allegations of the Khartoum regime stealing oil and diverting Southern oil, blocking of ships to leave with Southern oil on board from Port Sudan, has the Juba based government decreed in January that all oil production be halted, while signing an MoU with Kenya for the construction of an oil pipeline to the Kenyan coast to have an alternative outlet to the sea for exporting their oil.

That said, the lack of constant oil sales also affects the cash flow for the new country and instantly translated to sharply reduced trade with the region, affecting the manufacture and sale of goods from mainly Uganda and Kenya, Southern Sudans two most important trading partners. The resulting lack of goods on the local markets in Juba and across the country is driving inflation and slowing down projects depending on sourcing building materials, adding to the challenges the Southern Sudan is already faced with caused by a hostile neighbour in the North.

A parallel black market has now started to emerge for US Dollars and other hard currencies fueled by the demand for the greenback and in recent days opening a differential to the official exchange rates of as much as 50 percent. Tourism, as explained previously, has also not stepped up enough to bring in more than just a small trickle of adventure tourists, failing to attract greater attention and numbers due to the perceived lack of security but also due to a lack of a regulatory regime, which has not taken off so as to reassure hospitality and tour operators of legal certainties in regard of their present or planned operations.

Said a regular source from Juba earlier in the week:

This is all the doing of the regime in Khartoum, waging a covert war against us through militias, driving hundreds of thousands of Africans off their land in Blue Nile, South Kordofan and Abyei and burdening us with refugees. Their economic blockades and theft of our oil has made it even worse as they are now fighting us economically too, but they themselves are suffering just as much. That regime is also on its last leg now as internal dissent is growing over economic hardships and they are now left with few choices. Bashir lost the South according to his own hardliners and now has to bring something back, so we are guarding our oil fields. Production has been reduced and in part stopped and these installations are now guarded day and night because there are people in Khartoum who want to steal our oilfields back. We are looking at our East African partners and the international community to prevail upon the Bashir regime to stop what they are doing before it is too late.

Watch this space as this latest scenario unfolds in Southern Sudan and how it will economically and politically impact on the East African region.

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