Government contracts face investigation in South Sudan. Libya faces a period of political instability.
South Sudan
On July 8, South Sudan's Vice-President Riek Machar announced that the cabinet mandated the justice minister to prosecute government officials allegedly involved in large-scale corruption during a 2008 grain project.
Investigations by a World Bank sponsored body, Star Agency, revealed that finance ministry officials had awarded grain resale and distribution contracts to shell companies. This announcement follows a recent probe that resulted in parliament calling for the suspension of 75 government officials implicated in a scandal involving some $4 billion, including Lual Achuek, a former petroleum minister in the Khartoum-based unity government. Vice-President Machar also highlighted that land titling was another source of corruption and disclosed that the World Bank has been charged with investigating all other contracts signed since 2006.
The Sudan People's Liberation Movement (SPLM) government was already under increasing pressure, particularly from donors, to address rampant corruption as state finances dwindled following the January 2012 shutdown of oil production. As a result, contracts signed by or associated with officials implicated in corruption scandals are at high risk of contract renegotiation and possibly cancellation. Further, we had assessed that government is also likely to investigate tax payments, heightening risks of arbitrary tax demands and fines against non-compliant firms. Government contractors and firms within the oil, construction, mining and agricultural sectors are likely to be at most risk.
Libya
Contrary to media reports, the National Assembly is unlikely to be dominated by a liberal bloc, but fragmented by regional rivalries. The international media are reporting on election results in Libya, claiming that the 'liberals' have won. The so-called liberals (a misleading term used by the Western press, not by Libyans) are the National Forces Alliance (NFA), a loose coalition of 40 regional parties with mainly undefined political agendas, led by former Prime Minister Mahmoud Jibril. This large umbrella grouping of conflicting interests is likely to be constrained by the need to seek consensus, hampering its ability to make policy. Furthermore, the reported results so far refer to only 80 out of 200 National Assembly seats reserved for political parties' lists. The remaining 120 seats are reserved for individual candidates (as opposed to political party lists) on a 'first past the post' system. The winners of these seats will determine the composition of the assembly. They are likely to give priority to the interests of their respective regions over any political party or ideology, and to change their allegiance constantly.
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No single political group is likely to dominate the future Libyan National Assembly. Any cabinet that emerges from it will have to maintain a minimum level of regional consensus in order to be able to formulate any policies. Moreover, the Constituent Assembly, which will draft a new constitution, is likely to agree to giving regions the right to spend a significant portion of oil revenues derived from production on their territory. This will create a large number of new, regional institutions that are likely to be used by local politicians with little technical or bureaucratic experience to further their patronage networks, in turn increasing contract frustration and corruption risks for future entrants into Libya. On the other hand, failure to reach such an agreement would be likely to prompt eastern Libya, which provides two-thirds of Libya's oil production, to secede.
Exclusive Analysis is a specialist intelligence company that forecasts commercially relevant political and violent risks worldwide. They leverage their source network and methodology to produce accurate and actionable forecasts. Their global network of 200 expert analysts and 1,000 sources reports risk-relevant, specialist information to their core London-based team. Their clients are from a broad range of industries including insurance, banking and asset management, energy, mining, aviation, shipping and telecoms.
