3 June 2012

South Sudan: Govt Joins AfDB Group as 79th Shareholder

The newly independent state of South Sudan has joined the African Development Bank (AfDB), the continent's flagship development financing agency, as its 79th shareholder, after the board of directors of the Bank approved its application last week, at an annual meeting held in Arusha, Tanzania's safari town.

Established in September 1964, a year after the Organisation of African Unity (OAU) was formed in Addis Ababa, AfDB came into existence after 23 founding shareholders, including Ethiopia, signed the treaty in the aftermath of the end of the colonial era in Africa. Originally an exclusive club for African nations, AfDB opened its doors to countries off of the continent in 1982. Today, there are 26 non-African countries that are shareholders, including the United States, China, and major European countries.

Over the past four decades, the Bank has financed 2,885 projects in Africa, largely in infrastructure, spending over 48 billion dollars.

South Sudan, whose membership in the World Bank and the International Monetary Fund (IMF) was signed in April 2012, hopes to tap part of this financing available for national development.

Tanzania, which hosted the annual meeting of shareholders for the first time last week, is one of the largest borrowers, with Ethiopia sometimes leading with a half a billion-dollar annual portfolio. Both countries benefit from lending furnished through the African Development Fund (ADF), almost with no interest.

"The AfDB provides loans to middle-income countries in Africa, mostly in the north, and finance development projects in poor countries south of the Sahara," said a senior expert working for the Bank, headquartered in Tunis.

Delegates of South Sudan, led by Mary Y. Jervase, deputy minister of Finance & Economic Planning, were roaming the corridors at the AfDB Group's annual meeting held inside the Arusha Conference Centre, from May 31 to June 1, 2012. They have yet to enjoy the right to vote, for the South Sudan Parliament has to approve the agreement signed by the membership, according to Philip A. Balder, director general for Macroeconomic Planning at the Ministry.

"We feel great, for we have been recognised," Jervase told Fortune. "We are part of the world, and they (the board of directors) saw that we deserved it. It gives us confidence."

Coming out of a destructive civil war of five decades, South Sudan joins the AfDB Group with zero debt. However, the time of its membership in a development finance agency is marked by the backdrop of its political deadlock with Sudan to its north, where the South's shutdown oil pipes lead to Port Sudan, without first finding an alternative way to sell its natural wealth.

"We have actually considered the impact of the decision to shut the pipeline off," Jervase told a panel called to discuss peace and state building processes in South Sudan and Somalia. "We are prepared to fill the gap in revenues."

However, many observers of South Sudan question how its officials are planning to cover for the loss of oil exports, which form 90pc of the nation's GDP. In fact, there are those in the South Sudan government who see membership in the AfDB Group and the Bretton Woods Institutions as part of the plan in searching for an alternative way of finding finances.

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