Heavily bearded, wreathed in smoke from Safari Menthol cigarettes and dressed in the Brit-in-east-Africa uniform of boots, button-down shirt and belted khaki shorts, Michael Woodward at least looks the part of the frontier entrepreneur.
Mr Woodward runs Terrain Services from a compound consisting of a few cabins in the shadow of a pile of shipping containers on the outskirts of Juba, South Sudan’s capital city. The last few structures are finally being put in place, giving some permanency to an operation that has been in place for three years. “A lot of people are building real structures,” he says. “These ones are movable so we can take them with us when we get kicked off. Tenancy here is not very fixed.”
Some of the huts will be left vacant to rent out over December and January for a minimum of $500 per night, a figure that raises few eyebrows among regular visitors to the town. December and January should be a busy period as Juba prepares for a further influx of development workers, aid agencies and political observers getting ready for the big show, the January 8 referendum on the independence of South Sudan. The town is already heavily populated with white Toyota Land Cruisers, and the UN presence is heavy.
“Juba used to be a lot of fun,” Mr Woodward laments. “Now it’s full of silly little 19-year-old girls handing out malaria tablets.”
No war concern
Saturation of silly little girls aside, Mr Woodward is not concerned for his wellbeing, and neither does he share fears, widely reported in the international media, that the referendum process will end in violence. “If you’d asked me three years ago whether there was going to be a war here, I would have said absolutely, hands down, that’s what we’re working towards,” he says. “If you ask me now, I would say absolutely not, no way, because there’s far too much at stake.”
Since the January 2005 ceasefire and Comprehensive Peace Agreement (CPA) brought peace to a region that saw two long civil wars within a 50-year period, Juba, and the rest of South Sudan, has been undergoing a process of construction. The first civil war began in 1955, some months before the unified Sudan gained its independence. The two regions are ethnically, culturally and, to a large extent, religiously distinct. Under UK colonial rule, the two were administered separately, and South Sudan was considered more a part of British East Africa than the Arab-African bloc with which the north was more culturally contiguous.
South Sudan was granted limited self-rule under the Addis Ababa agreement in 1972, but fighting resumed in 1983. The 2005 CPA returned Sudan to a state of 'one country, two systems', with a promise of a popular referendum on Southern Sudanese independence in 2011. Secession at that time was still no certainty. John Garang, the leader of the Sudan People's Liberation Movement (SPLM) – the rebel army turned political party – signed the peace agreement with northern leader Omar al-Bashir and was known to believe in the possibility of a reconciliation with the north. Mr Garang’s death in a helicopter crash in July 2005 saw Salva Kiir, the current president of South Sudan, succeed him. According to diplomatic sources, this cemented the hegemony of the militant, secessionist members of the SPLM within the Juba government.
A way forward
International witnesses to the CPA, which included Western and regional powers, were expected to assist both Khartoum and Juba in finding ways to make unity attractive. These efforts seem to have failed, and almost all quarters agree that momentum behind a vote for secession is unstoppable. International appetite, at least among Western powers, seemed to fade away, in no part down to the powerful lobby in the US during the second civil war, which painted the north as the villain and the fighting as a Muslim versus Christian conflict, rather than one founded on complex political, ethnic and economic factors.
The alleged complicity of the Khartoum government in war crimes, crimes against humanity and genocide in its western Darfur region and the International Criminal Court warrant for the arrest of Mr Bashir have made it difficult for Western governments to publicly co-operate with Khartoum, and have added weight to a moral argument for supporting the secession of the south.
Development has been delayed during the 50 years of fighting. South Sudan’s 10 states combined are larger than France, but have between them only an estimated 60 kilometres of paved road. Generations have been denied adequate education and skills development. “This is not a reconstruction situation,” says one senior European development figure in the country, “this is a construction situation.” The government of South Sudan runs the country, albeit with a number of functions remaining the domain of Khartoum, but capacity remains an enormous issue, a fact acknowledged both by local and international officials.
The five years of peace have been productive and promise much. For the public sector, South Sudan is a microcosm of global preoccupations with state building in politically fragile environments. For the private sector, it is a rare opportunity to get in at the ground level in a country that is yet to exist. The antagonism between the two is palpable.
Down the hill from Terrain Services’ compound, the steam rising from the South Sudan Breweries Limited (SSBL) facility demonstrates what is possible for investors prepared to take a view on the country. SSBL, a subsidiary of South African brewer SABMiller, began operations in May 2009 following an investment of $37m. Its plant, by some distance the largest industrial facility in the country, was rigged together from two European breweries the company acquired and shipped wholesale to the country, albeit not without incident.
“One Friday morning, I got an SMS saying that one of the tanks had gone overboard,” says Ian Alsworth-Elvey, the company’s managing director. A 325 hectolitre vessel had slipped its bindings during a storm. “I hope it sank, otherwise it’s a danger to shipping somewhere off the coast of Africa.”
Mr Alsworth-Elvey is a large, garrulous South African who, along with his wife, has travelled the length and breadth of the continent during a long career in brewing. As well as bringing SABMiller to Juba, he oversaw the creation of the country’s first domestic beer brand – White Bull. It was a brand launch shrouded in secrecy. “There wasn’t really any intellectual property here,” he explains, then corrects himself. “Well, there was, but you had to get it in Khartoum.” North Sudan bans the sale of alcohol.
The market in the south was dominated by imported Tusker – the flagship brand of East African Breweries Limited (EABL), a Diageo subsidiary and one of SABMiller’s principal rivals in the region – and supplemented by Eritrean traders smuggling in crates of Heineken. As the innumerate outlets selling Tusker t-shirts to tourists in Kenya demonstrate, that brand has become to some extent in national identity. The challenge for SSBL was to build the kind of national identity around its White Bull brand as EABL has in Kenya. The choice of the name reflects this – bulls are held as symbols of peace, prosperity and fertility in pastoralist Nilotic cultures.
Building a brand based on national identity and pride in a country that does not yet formally exist is no mean feat; doing so in one that is defined, and to some extent governed, by its opposition to its northern neighbour could be seen as foolhardy. The mere establishment of an alcohol business, previously forbidden under northern rule, is in itself a form of defiance.
It is one that has proved lucrative. While he would not be drawn on sales or market-share figures, Mr Alsworth-Elvey says that White Bull has made a significant dent in the market. In August, SSBL announced it would be doubling the size of its operations in South Sudan, increasing its brewing capacity to 350,000 hectolitres by the end of 2010.
Difficult road ahead
While Mr Alsworth-Elvey and his colleagues seem to be taking a view on the smooth passage of the referendum, sharing the opinion that is common among investors, that there is simply too much at stake for a return to war, they are under no illusions that business is easy in South Sudan.
Freight costs can be twice what they are in neighbouring Kenya, if the trucking companies can be persuaded to go up country at all, preferring as they do the more lucrative and less hazardous routes to Uganda and Kenya. With little production capacity in the region, almost everything in the country is imported from its neighbours, adding cost to everything from food to construction materials. “You have to be 100% self-sufficient. It’s not just power, it’s purified water, it’s solid-waste management. None of the infrastructure exists here,” says Mr Alsworth-Elvey.
As Gary Ensor, managing director of Network Support Services (NSS), a telecoms service business, explains, the lack of transport infrastructure is a colossal problem for companies that rely on accessing remote areas. NSS, one of three investments in South Sudan made by London-based Maris Capital, runs out of the Acacia Village development in Juba’s Gudele district, and entered the country in 2007 with a contract to construct and maintain the mobile phone network for Zain.
“I’ve got a car that is stuck. It’s been stuck out in the bush for three months. It got stuck in mud and we haven’t been able to recover it since. We are in the wet season. When it gets wet, certain places become inaccessible, which creates problems for network maintenance.
“During the rainy season, we have sites that cannot be accessed by normal means. Sometimes it’s a case of a 6x6 lorry, tractors, motorbikes or foot, and walking 30 kilometres in the mud is not fun, carrying tools and all the rest of it. It’s a rarity, but it has happened. The cars get hammered. It’s one of the biggest banes of my life, vehicles get beaten to death, which adds cost to the overall delivery of the business,” he says.
Another concern is the shortage of dollars, which has worsened in recent months. With much of the trading landscape monopolised by Ugandan and Kenyan nationals, hard currency that can cross borders is of paramount importance. When the Khartoum government paid a month’s oil revenues to the south in Sudanese pounds rather than US dollars, it caused ripples of concern. As the referendum approaches, Mr Ensor believes that some companies and traders are taking out a dollar position overseas and trying to avoid being exposed to the Sudanese pound come January.
“I want dollars – everything I buy has to be in dollars. And the exchange rate is going up and up,” he complains. “When we started, it was about 2.1 [Sudanese pounds to the dollar], and now [Kenya Commercial Bank] will give you it at 2.75, but you can’t have any. There are people who have dollar bank accounts but can’t get any out.”
Mr Ensor seems weary of the minor day-to-day problems of working in this frontier market, but is unconcerned by the threat of a violent secession, even despite an ongoing and seemingly intractable disagreement building in the state of Abyei, where a large proportion of the combined Sudan’s oil wealth sits on a fractious and ill-defined border.
“I hate politics,” he says, when asked about the readiness of the new government to build a country. The Acacia Village rents out chalet-style huts to international civil servants, and the continual tenancy of experts in tax and various aspects of governance are testament to the amount the international community is spending on capacity building.
Mr Ensor is instead thinking of more practical matters. “We have to make sure the mobile sites are filled up with diesel well in advance of it, because what tends to happen is that they restrict movements during the election process. We will try to get sites filled up in good time and do our maintenance schedule before or after, not during. We will try to limit our movements going out. However, if a site goes down, we will take precautions – but we will still have to go out.”
Getting the goods
A few miles away, down a waterlogged road near Juba’s half-constructed new airport, Vikash Patel’s preparations for the fractious end to 2010 consist of stacks of frozen Thanksgiving turkeys and Christmas hams.
A Kenyan, Mr Patel runs Nature Valley Organic Farms, one of South Sudan’s largest importers of meat, dry goods and cleaning supplies. As with many of the entrepreneurs who have made it in South Sudan, his company was beset by teething troubles and had to engineer creative solutions to some of the country’s infrastructure and procedural challenges, including the construction from scratch of the storage facility and the entire graded access road.
Nature Valley’s products are all imported from Kenya, and need to be kept entirely frozen. Despite his yard’s proximity to the airport and the long journey times overland from Kenya, Mr Patel’s early experiences with air freight were unsuccessful.
“It’s easier to control the temperatures by road than by air because of the infrastructure that they have here,” he says. “The holding capacity in Nairobi is fine outside the airport but not inside. Also, as soon as it gets down here you’re fighting time trying to get into the airport to pick up the stuff off the runway, because there’s no holding facility. We did a couple of trial shipments by air, but they were bust.”
Everything, then, had to come by road. “The first consignment that came in by truck took us almost nine days. Now we’ve got it down to three,” Mr Patel says.
This improvement was not down to material changes in the infrastructure or customs procedures, but by a clever – and expensive – new process. “We use smaller trucks and do all the pre-clearances beforehand. We also use two vehicles to move one truck of meat up. There’s a meat truck and we have a pick-up truck that goes up with the documents,” Mr Patel explains. “If we are going to wait eight hours at the border, we’re going to lose between seven and eight degrees centigrade of cooling in the back. The pick-up truck also has an extra driver and a refrigeration technician on it to sort out any issues on the road. We basically drive our truck like a bus. Wherever it’s safe to drive at night, we drive throughout.”
This, added to the requirement to construct infrastructure, the high cost of running generators continuously – Juba Power, the local grid supplier, is not yet reliable and would require the company to pay for its own poles and wiring – as well as the variable tariffs, duties and land rents, means the outlay adds up. “The cost of doing business in Juba is ridiculously high,” says Mr Patel. Even so, he is enjoying a roaring trade, bringing in around six tonnes of meat per month.
“Initially, when we came in we had one competitor, which was South Sudan Meats – also from Kenya. But there’s so much potential that these things have cropped up everywhere. You’ve got the boda-boda [motorbike taxi] salesmen from Uganda bringing in stuff by bus. Then we have a lot of Lebanese bringing in chicken.”
As with other importers, Mr Patel’s concerns around the referendum mainly focus on the closing of the borders harming his ability to stock up. But with the Christmas period typically lean – the legions of expats return home for much of the season – he is not overly worried.
A clash of cultures
The almost offhand lack of concern demonstrated by the private sector in Juba could easily be dismissed as bravado, and is routinely sneered at by the international development presence. Some consulates and missions seem keen to talk up the role of businesses in rebuilding South Sudan, and much work has gone into creating an investment ministry and re-orienting legislation to attract international investment. The government of South Sudan hopes to use SSBL’s facility as an example of what can be achieved in this new country, according to Barnaba Marial Benjamin, the government of Southern Sudan’s minister of information.
Western development agencies say their mission includes building a private-sector presence, yet some, along with several non-governmental organisations (NGOs), have an instinctive distrust of these frontier entrepreneurs. 'Cowboys' is a common term of dismissal.
The feeling is mutual. The divergence of opinion, and at times outright antagonism, between the development community in the country and the private sector, is marked. As well as the almost universal complaint that NGOs and the UN system sucks in local talent at inflated prices, there are others that call into question the role the UN in particular plays in undermining market-based solutions.
One example, which Terrain Services’ Mr Woodward is keen to elucidate, is the Humanitarian Air Service, which provides free – at least at the point of delivery – air transport to humanitarian workers in non-permissive environments. While he does not dispute the need for the service to serve conflict zones, he believes the service has prevented the development of a privately operated service, such as Jetlink in Kenya. Mr Woodward, explicitly not a professional humanitarian, finds he has to drive.
Although the vast majority of his business comes from the aid community, he shrugs off suggestions that he is biting the hand that feeds him.
“They pay us very well and we certainly can’t complain. But it’s not good for the country when it doesn’t develop because we can’t get on the planes. In Kenya, humanitarians get on Jetlink. Jetlink is there because the UN doesn’t run its own airline.”
If the private sector is going to be crowded post-referendum, much will have to be done to break down the barriers between the 'cowboys' in the sector and the development community, who are perceived as hiding behind their high walls. Mr Woodward voices a standard complaint: “We do their construction for them, [Kenyan construction company] Civicon does their transport for them, the private sector supplies their grain. So what are they doing? They’re organising us and treating us like shit because we’re not humanitarians. They couldn’t survive without us.”
Many businesses express similar frustrations, with differing levels of vehemence and profanity. Even Mr Alsworth-Elvey, who has worked with NGOs through SABMiller programmes, bemoans the damage they can do to the public perception of a place. The highly publicised visit of actor George Clooney in October draws particular scorn, since he is known for his activism on Darfur, not South Sudan. The confusion over 'which Sudan' still leads to US companies, unwilling to break sanctions on doing business with Khartoum, routinely insisting they have to pay companies in Juba through Nairobi or Kampala, despite a Bush-era exemption for the south. On top of this, the insistence among many in the aid community on painting the town as a violent Wild West – ascribed by the more cynical businesspeople as a way of aid workers to gain personal glory – is deterring investors.
“The risk assessments are done by some wanker who’s just come from Kabul and is under the impression we are all about to be blown up,” Mr Woodward sighs. “The ones I really have a problem with are the Americans who tell you within the first minute they’ve been to Pakistan, Haiti and Afghanistan, as if this is really dangerous. This is not in that circle. It is not a war zone. People are not trying to kill us. This is not anything like Iraq, Afghanistan or Somalia.
“The world’s got a very incorrect perception of South Sudan, and I think the world also confuses Darfur with South Sudan, which is an entirely different matter," he says. “Americans have definitely got the wrong idea, and George [expletive] Clooney parading around town is not in anybody’s best interests.”
This article was originally published in fDi Magazine's sister publication This is Africa