Voice of America (Washington, DC)

16 January 2014

East Africa: South Sudan Conflict Squeezes Regional Economy

Kampala — The conflict in South Sudan is sending ripples across the regional economy. In Uganda, one of South Sudan's biggest trading partners, tens of thousands of merchants are feeling the loss of cross-border trade.

In late December, Dan Ssesanga was herded into a Ugandan military truck and, with gunfire ringing in his ears, given safe passage out of South Sudan's capital, Juba. But Ssesanga sells eggs, and his merchandise stayed behind.

"I left behind 600 crates of eggs - that's about $7,000," he lamented. "I don't know what's [going on] with it, because I have lost contact with the person who is managing the shop."

In any case, Ssesanga has lost thousands of dollars, and says he is not sure his business will ever recover. He is not alone.

"In all other commodities, as Uganda we've lost a lot," he added. "There are many farmers who had gone into perishable goods with a major focus on the Juba market. Right now they can't sell all that."

While all eyes are focused on Juba and Jonglei, the conflict in South Sudan has been sending economic ripples across East Africa. Exact figures do not exist, but Uganda alone had tens of thousands of traders working in the country, according to Patrick Ntege, head of the Uganda Traders Association of South Sudan.

"South Sudan is Uganda's biggest trading partner, bigger than even the whole of the European Union," he noted. " So when trade is halted abruptly, it's a blow to the economy of Uganda, it's a blow to the business community, especially the small traders who are informal traders. It's a very big blow."

With so little industry in a country still recovering from decades of war, nearly everything was imported in South Sudan, explained Jim Mugunga of the Ugandan Ministry of Finance. Kenyans were also doing business there, he said, but most basic goods came from Uganda.

"What comes out of Uganda are basic commodities - things like water, things like hygiene products, soap, and others of that nature. Uganda is a huge food basket for Southern Sudan, so you have things like sugar, salt, veggies, bananas, beans, maize," he remarked.

Mugunga said now, traders in these basic goods have no way to move their merchandise.

Regional governments have been suffering as well, as the conflict has put plans for an oil pipeline from South Sudan to the Indian Ocean on hold.

Dickens Kamugisha of the African Institute for Energy Governance said this project would give Uganda a more cost-effective way to export its own oil and would be a major revenue producer for both Uganda and Kenya.

"Sudan exports around 200,000 barrels in a year, [and] you'd be talking about $100 million (U.S.) in terms of gains if it was passing here. So in a period of one year, five years, 10 years, it would be a huge cost. That money, we as Uganda would be losing it," he said.

Both Kamugisha and Ntege agree that economic considerations could well be behind Ugandan President Yoweri Museveni's attempts to broker peace, and his swift decision to send troops to Juba.

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