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South Sudan

Executive Summary

Trade and investment conditions in South Sudan have slightly improved in the past year, but many challenges remain. The peace process has moved into the transition phase with the constitution of a new presidency structure and cabinet as components of a new Revitalized Transitional Government of National Unity in February and March. The expanded cabinet included new ministries of investment and East African Community affairs. In accordance with tenets of the peace deal, the new government included representatives from the incumbent government and opposition parties (signatories to the peace agreement). While these steps are positive, implementation of the terms of the peace deal has been significantly behind schedule and remains incomplete. The country continues to be plagued by large-scale displacement, widespread food insecurity, severe human-rights abuses, restricted humanitarian access, and harassment of aid workers and journalists.

South Sudan is one of the most oil-dependent economies in the world and the sector is fraught with corruption. In March 2018, the United States Department of Commerce added the Ministry of Petroleum, the Ministry of Mining, and state-owned oil company Nilepet to the Entity List, barring export of certain U.S. goods or technologies to them due to their contribution to the conflict. Removal of these entities will require the implementation of transparency and accountability measures, consistent with aspects of Chapter IV of the peace deal.

Humanitarian and development aid is a major source of employment in South Sudan. Difficulties of changing regulations, multiple layers of taxation, and labor harassment faced in this sector may provide insight to difficulties private investors would face. Bureaucratic impediments faced by NGOs include recruitment interference, airport obstructions, and duplicate registration and permit issues by different levels of authority.

The government has made efforts to simplify and centralize taxation, with the creation of the National Revenue Authority. The Bank of South Sudan has launched a website where it posts key financial data. However, the legal system is ineffective, underfunded, overburdened, and subject to executive interference and corruption. High-level government and military officials are immune from prosecution and parties in contract disputes are sometimes arrested and imprisoned until the party agrees to pay a sum of money, often without going to court and sometimes without formal charges.

The then-South Sudan Investment Authority (SSIA) in 2018 and 2019 conducted investment roadshows, promoting South Sudan as an ideal location for investment. The SSIA compared its laws that govern investment practices in South Sudan with those in the region and determined themselves to be more favorable for investment than their neighbors; however, laws in South Sudan are not routinely enforced.

Other factors inhibiting investment in South Sudan include limited physical infrastructure and a lack of both skilled and unskilled labor. The World Bank’s 2020 Doing Business report ranked South Sudan 185 out of 190 economies on overall ease of doing business. The legal framework governing investment and private enterprises remained underdeveloped as of April 2020.

The U.S. Department of State maintains a Travel Advisory warning against travel to South Sudan due to critically high risks from crime, kidnapping, and armed conflict.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2019 179 of 180 http://www.transparency.org/
research/cpi/overview
World Bank’s Doing Business Report 2020 185 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2019 N/A of 126 https://www.globalinnovationindex.org/
analysis-indicator
U.S. FDI in partner country ($M USD, stock positions) 2019 N/A https://apps.bea.gov/
international/factsheet/
World Bank GNI per capita 2019 N/A http://data.worldbank.org/
indicator/NY.GNP.PCAP.CD

5. Protection of Property Rights

Real Property

The World Bank-funded South Sudan Country Report Findings of the Land Governance Assessment Framework assessed South Sudan’s underdeveloped legal and institutional framework reflects the difficulties that the country has faced in establishing effective governance and rule of law institutions after decades of conflict. Although significant legislative reforms have been made since the end of the war in 2005—including the passing of the 2009 Land Act and the 2009 Local Government Act—the laws remain largely unimplemented. Most land governance institutions operate according to procedures developed in the colonial era, and there is a wide divergence between law and practice. Bridging this gap has been one of the most difficult challenges of the postwar period. Institutional arrangements are also undermined by poor coordination among formal institutions at each level of government (horizontal overlap), between the three levels of government (vertical overlap) and between the formal and customary systems. While dated, this report is presumed to largely remain accurate and given the fighting since, perhaps understates the complexity of problem. (See the full report here: http://documents.worldbank.org/curated/en/756521504872888898/text/119635-WP-P095390-PUBLIC-7-9-2017-10-34-1-SouthSudanCountryReport.txt ).

Ownership of land is often unclear, with communities and government often claiming the same property. In some cases, multiple individuals hold registration certificates demonstrating sole ownership of the same piece of land. There was no progress in 2019 towards comprehensive land reform. Laws on mortgages, valuation, and the registration of titles have not been drafted. While the 2009 Land Act and the 2009 Investment Promotion Act both state that non-citizens can lease land for investment purposes; foreign ownership is prohibited and clear regulations governing how a business could access land for investment use were not available.

Currently, some businesses lease land from the government, while others lease land directly from local communities and/or individuals. Under the Land Act, investment in land acquired from local communities must contribute economically and socially to the development of the local community. Businesses will often sign a memorandum of understanding with the local communities in which they agree to employ locals or invest in social services in exchange for use of the land. Land negotiations with communities often require several months or longer to complete. South Sudan ranked 177 out of 185 countries for ease of registering property in the World Bank’s 2020 Doing Business Report.

As of March 2020, 3.91 million South Sudanese were internally or internationally (refugees) displaced from their homes due to conflict. During the five-year civil war, many of their houses were illegally occupied and likely remain so. Property owners or public authorities may file for an order to evict unauthorized occupants under the Land Act. While the rightful owners may hold clear land titles, it is unclear if the legal system is equipped to handle their claims and it is likely that land ownership will be regularly disputed throughout large parts of the country in the foreseeable future.

Intellectual Property Rights

The legal structure for intellectual property rights (IPR) is weak, and enforcement is lax. Recorded instances of intellectual property theft are rare. While the Investment Act of 2009 includes an article on the protection of IPR, implementing legislation on trademarks, copyrights, and patents has not yet been passed. To date, the only intellectual property law which has been put forward to the legislature is the Trademarks Bill of 2013. No new IP-related laws or regulations were enacted in 2019.

South Sudan does not track or seize counterfeit goods. There has been no known prosecution of IPR violations, and there are no estimates available for traffic of counterfeit goods. There was one report of an unauthorized public screening of a U.S. film in 2018.

South Sudan is not a member of the World Intellectual Property Organization (WIPO). Sudan is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

7. State-Owned Enterprises

The national oil company – Nile Petroleum Corporation, or Nilepet – remains the primary fully State-owned enterprise (SOE) in South Sudan. The government owns stakes in construction and trade companies and in several banks. Limited data is available on number, total income, and employment figures of SOEs. There is no published list of SOEs.

Nilepet is the technical and operational branch of the Ministry of Petroleum. Nilepet took over Sudan’s national oil company’s shares in six exploration and petroleum sharing agreements in South Sudan at the time of the country’s independence in 2011. Nilepet also distributes petroleum products in South Sudan. The government, through Nilepet, holds minority stakes in other oil companies operating in South Sudan.

The Petroleum Revenue Management Bill, which governs how Nilepet’s profits are invested, was enacted into law in 2013; however, the company has yet to release any information on its activities, even though the law states that comprehensive, audited reports on the company’s finances must be made publicly available.

The government is not transparent about how it exercises ownership or control of Nilepet. Its director reports to the Minister of Petroleum. Nilepet’s revenues and expenditures are not disclosed in the central government budget. No audited accounts of Nilepet are publicly available. After the January 2012 oil production shutdown, oil production recovered to more than 235,000 barrels per day at end of 2013, only to fall to about 160,000 barrels per day in early 2014 as a result of the conflict that started in December 2013. As of April 2020, production was approximately 178,000 barrels per day.

In March 2018, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce amended the Export Administration Regulations (EAR) to add Nilepet and several related companies to the Entity List, along with the Ministry of Petroleum and the Ministry of Mining, due to their role in worsening the conflict in South Sudan. The Entity List identifies entities, including corporations, private or government organizations, and natural persons, and other persons reasonably believed to be involved, or to pose a significant risk of being or becoming involved, in activities contrary to the national security or foreign policy interests of the United States.

The U.S. Government assesses the 15 entities BIS added to the Entity List as contributing to the ongoing crisis in South Sudan because they are a source of substantial revenue that, through public corruption, is used to fund the purchase of weapons and other material that undermine the peace, security, and stability of South Sudan rather than support the welfare of the South Sudanese people. Adding these entities to the Entity List is intended to ensure that items subject to the EAR are not used to generate revenue to finance the continuing violence in South Sudan.

The following 15 entities are the first South Sudanese entities added to the Entity List: Ascom Sudd Operating Company; Dar Petroleum Operating Company; DietsmannNile; Greater Pioneer Operating Co. Ltd; Juba Petrotech Technical Services Ltd; Nile Delta Petroleum Company; Nile Drilling and Services Company; Nile Petroleum Corporation; Nyakek and Sons; Oranto Petroleum; Safinat Group; SIPET Engineering and Consultancy Services; South Sudan Ministry of Mining; South Sudan Ministry of Petroleum; and Sudd Petroleum Operating Co.

These 15 entities are subject to a license requirement for all exports and reexports destined for any of the entities and transfers (in-country) to them of all items subject to the EAR with a licensing review policy of a presumption of denial. This license requirement also applies to any transaction involving any of these entities in which such entities act as a purchaser, intermediate consignee, ultimate consignee or end-user. Additionally, no license exceptions are available to these entities.

If any person participates in a transaction described above involving any of these 15 entities without first obtaining the required license from BIS, that person would be in violation of the EAR and could be subject to civil or criminal enforcement proceedings. Civil enforcement could result in the imposition of monetary penalties or the denial of the person’s export privileges. Additionally, a person’s supplying or procuring items subject to the EAR or engaging in other activity involving an entity on the Entity List could result in a determination to add that person to the Entity List consistent with the procedures set forth in the EAR.

The regulation can be viewed on the Federal Register at https://www.gpo.gov/fdsys/pkg/FR-2018-03-22/pdf/2018-05789.pdf .

The country does not adhere to the OECD Guidelines on Corporate Governance for SOEs.

Privatization Program

South Sudan does not have a privatization program. So far, the government has no plans for privatization, and there are few government-owned entities that provide services to individuals.

9. Corruption

South Sudan has laws, regulations, and penalties to combat corruption, but there is a near total lack of enforcement and considerable gaps exist in legislation. As a result, corruption is pervasive.

Companies are reportedly asked to pay extralegal taxes and fees. Security officials have been reported to impose business conditions including payment of fees, salaries, and logistical support to their operations. In practice, politically connected people are immune to prosecution. There are no laws that prevent conflict of interest in government procurement.

The government does not encourage or require private companies to establish internal codes of conduct that, among other things, prohibit bribery of public officials. There is no indication that private companies use internal controls, ethics, and compliance programs to detect and prevent bribery of government officials.

The South Sudan Anti-Corruption Commission (SSACC) was established in accordance with the 2005 Constitution and the 2009 SSACC Act. The five commission members and chairperson are appointed by the President with approval by a simple majority in the parliament. The commission is tasked with protecting public property, investigating corruption, and submitting evidence to the Ministry of Justice for necessary action. In addition, the commission is tasked with combatting administrative malpractice in public institutions, such as nepotism, favoritism, tribalism, sectionalism, gender discrimination, bribery, embezzlement, and sexual harassment.

In reality, the SSACC lacks the resources or political support to investigate corruption. It has no capacity to address state corruption as it can only relay its findings to the Ministry of Justice for prosecution. There were no significant anti-corruption cases investigated or prosecuted in 2019.

South Sudan acceded to the United Nations Convention against Corruption on January 23, 2015 but has not yet ratified it. The country is not a party to the OECD Anti-Bribery Convention and is not reported to be a participant in regional anti-corruption initiatives.

The country provides no protection to NGOs or journalists involved in investigating corruption. NGOs and journalists of all types are routinely subject to government harassment.

All major sectors including the extractive sector, hotels, airlines, banking, and security sectors are subject to interference from the security sector including recruitment and demand for payments of fees and salaries.

Corruption appears to be pervasive at all levels of government and society. The regulatory system is poor or non-existent, and dispute settlement is weak and subject to influence.

Resources to Report Corruption

National Audit Chamber
P.O. Box 210
Juba, South Sudan
Tel: +211(0)955481021
info@auditchamber-ss.org

Honorable Ngor Kulong Ngor
Chairperson
South Sudan Anti-Corruption Commission
P.O Box 312
Juba, South Sudan
anticorruptioncommission@yahoo.co.uk; sssaccchair@gmail.com
+211(0) 927117414; +211(0)0929201028

Akuei Deng
Executive Secretary
South Sudan Anti-Corruption Commission
P.O Box 312
Juba, South Sudan
anticorruptioncommission@yahoo.co.uk
+211912979575

Contact at “watchdog” organizations:

UN Panel of Experts on South Sudan
Mr. David Biggs (Senior Committee Secretary)
Tel: +1(212)9635598
sc-2206-committee@un.org

Transparency International
Alt-Moabit 96
10559 Berlin
Germany
Telephone: +49 30 3438 200
Fax: +49 30 3470 3912
ti@transparency.org

The Sentry c/o The Enough Project
c/o The Enough Project
1420 K Street, NW, Suite 200
Washington, DC 20005
info@thesentry.org

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