There is a scrambling underway for the virgin land, the petroleum, the iron ore, the copper, and other minerals. It is also an attempt at filling the gap in various sectors, from education and health to construction and finance, that must be reconstructed.

The soldiers of this battlefront are businesspeople, investors, and experts. Their origin is not far away. Many come to Juba, the capital of what may become the Republic of Southern Sudan (ROSS), and from neighbouring countries – Ethiopia, Kenya, Uganda, and Eritrea.

These undeclared battlefronts opened immediately after the Northern and Southern forces of Sudan signed the comprehensive peace agreement (CPA) in Kenya, in 2005. Since the signing, calm has prevailed in the semiautonomous region of Southern Sudan, which had been a battleground between the Sudanese army and forces of the Sudanese People’s Liberation Army (SPLA), since 1983.

Businesspeople from Uganda and Kenya were the first to arrive, followed by Eritreans and Ethiopians. In the beginning, Ugandans and Kenyans were the sole providers of almost every food item, including tomatoes and onions, to Southern Sudan. Kenya’s exports to the region almost doubled within four years, since 2006. The country’s exports reached to 158 million dollars in 2009, up from 84 million dollars three years before. Later, most of these businesses were taken over by Eritreans.

When Binyam Yohannes, a businessman in Juba who was one of the first from Ethiopia, arrived in the city six years ago, Eritreans controlled almost everything.

“They were doing better business than Ugandans and Kenyans,” Binyam told Fortune.
 

Mulugeta Seifu serves as main bank manager for BCB.

Eritreans initially became involved in the underdeveloped hotel industry before they moved to importing commodities. A total of 7,333 businesses are registered in the 10 state capitals of Southern Sudan, according to data obtained from the Southern Sudan Centre Census Statistics Evaluation (SSCCSE) office. Of the, 2,683 businesses registered in the capital, Juba, 84pc constitute shops and restaurants. Apart from places to spend money, savings institutions form a big part. Big Kenyan companies, such as Kenya Commercial Bank (KBC), spearheaded the country’s business interests in Southern Sudan. It formed a subsidiary company, KCB (Sudan) Ltd, almost a year after the signing of the CPA. Its Ethiopian counterpart, Commercial Bank of Ethiopia (CBE), entered this market three years later, and while CBE still operates out of a single branch in the capital, KCB has 15 branches.

The Kenyan bank plans to increase this number to 19, by June 2011, and double the current number in four years, according to media reports.

This opportunity was possible because the region is very underdeveloped and hugely lacking in infrastructure. Southern Sudan has been shattered by a civil war that has raged since 1955. Whatever little infrastructure existed prior to the conflict was either destroyed during the war or completely neglected. However, since the suspension of hostilities, the region has received over two billion dollars from oil revenues while the international community has annually pumped in close to one billion dollars.

However, the government that commands these resources is not monolithic, and suffers from a limited capacity, according to a study conducted by the University of California.

This appears to have presented an opportunity for the neighbours to take advantage. Uganda is doing well in Southern Sudan, even better than Kenya.

In 2009, Uganda exported 184.6 million dollars worth of goods to Southern Sudan. The country did not stop there, and has already prepared the groundwork to fill the increasing appetite of consumption in the region, which has a population of 8.26 million and a GDP per capita of 130 dollars.

The Uganda Investment Authority (UIA) is in the process of establishing an industrial park for manufacturers, targeting the Southern Sudanese market in Gulu Town, located 120km from the border.

“We are still negotiating with the Gulu Town Council to acquire land to set up the park,” Doris Mitti Kimuli, deputy director of Communications and Public Relations at the UIA, told Fortune by email. “No work is being done, although the plan is to establish a park in the not too distant future.”

Besides preparing for the future, the Ugandan government is taking steps to ease cross border trade between the two neighbours. Apart from building infrastructure and providing export incentives, the government encouraged Ugandans to invest in Southern Sudan.

“The Ugandan government offers export incentives to businesspeople seeking to invest in Southern Sudan,” Kimuli said.

The government is applying tax incentives under its export promotion schemes for producers to export. These incentives are in the form of “manufacturing under bond” and “duty drawbacks.”
The first scheme allows manufacturers to seek custom permits to hold and use imported raw materials intended for manufacturing for export in secured places without the payment of taxes. It also avails working capital, which would have been tied up through with duties immediately after importation.
 

Telecommunications is another underdeveloped sector in Southern Sudan. One of the five companies providing telecom services, Vivacell, employs 30 Ethiopians in its technical and finance departments.

The second scheme is a refund of all or part of any import duty paid on imported inputs to produce export goods. Duty tax may be refunded on raw materials imported and used on the goods locally produced for export.

With encouragement like these, and most of its other neighbours also scrambling for the emerging market, Ethiopia is hardly visible. Ethiopian businesses have only a small piece of a large pie, and their presence is limited to big towns. Yet, experts among them appear to be well represented.

Many are employed by UN agencies and NGOs. Some hold key positions or lead these organisations, while a few are working in government institutions, of whom a handful had the opportunity to advise some of the 31 ministers in the government.

Hailemelkot T. Giorgis, who formerly served as state minister for Capacity Building (MoCB) as well as Defence (MoD), is now an adviser to the Ministry of Finance and Economic Planning (MoFEP). Alebel Derib is also serving as an adviser, in the Ministry of Education (MoE), while Minweyelet Mussiee (PhD), a former advisor to the Ministry of Agriculture and Forestry (MoAF), heads the UN Food and Agriculture Organisation (FAO) office in Southern Sudan.

Top officials in the government admit that the presence of Ethiopian experts plays a significant role in addressing the government’s chronic shortage of skilled technocrats.

Only 12pc of the working population are paid employees and half of the population is under the age of 18, according to the SSCCSE.

“The Ethiopians we hired are experts,” James Hoth Mai (Gen), chief of staff of the SPLA, said during an exclusive interview with Fortune earlier this month. “The government of Southern Sudan also has advisors and consultants.”

Apart from government institutions, the number of the Ethiopian experts is increasing in private businesses. Observing the composition of the staff in Buffalo Commercial Bank (BCB), a local bank, and a mobile phone operator, Vivacell, they could misleadingly appear as companies belonging to Ethiopians.

Vivacell employs 30 Ethiopians. Buffalo, one of the five local banks operating in Southern Sudan, employs 10 Ethiopians, including Alemu Abera, its managing director who has 30 years of banking experience.

Mulugeta Seifu is one of the Ethiopian employees at Buffalo, currently serving as the main branch manager of the bank. He had served in various banks in Ethiopia and was service manager at CBE for 10 years. Like some of his colleagues from CBE, Abyssinia, Nib International, as well as Construction and Business banks, he applied for the job after seeing the vacancy announced in a newspaper.

When he arrived in Juba, in February 2009, he was not sure whether he could work in such a dusty and underdeveloped town. Two years later, Mulugeta is considering opening his own business.

After being promoted to the manager of Buffalo’s main branch, his salary increased to seven times what he had been earning in Ethiopia. He believes that if the existing peaceful situation continues, there is promise in Southern Sudan.

“You could earn enough money, even from an ordinary business, such as a tea room,” Mulugeta told Fortune.

An estimated 2,000 Ethiopians live in Southern Sudan, and most of them trade commodities or work in the service sectors. Only a few enter business.

The region after the referendum will present an equally attractive opportunity to Ethiopian exporters and those interested to work there, Negash Legesse (Col), Ethiopia’s consulate general for Southern Sudan, believes.

Ethiopia shares a long border of 1,400km with it. Gambella, Benishangul, and the Southern Regional State border the Upper Nile, Jonglei, Western Equatorial and Blue Nile states of Southern Sudan.

“We can participate in capacity and institution building,” Negash said. “There is a vast market for our export products, too.”

Many Ethiopians see enormous opportunity in the fledging finance sector; so much is still expected from this industry. In an emerging country where only one per cent of households have bank accounts, the future of banking seems lucrative.

Before the start of the war, about 20 years ago, only one bank operated in the region. This number increased to four during the war. After the signing of the CPA, the number of local banks reached five and there were three foreign banks, including CBE.

BCB is one of the two latest additions to the banking sector. Established in 2008 by Southern Sudanese businessmen with a paid-up capital of six million dollars, BCB has three branches.

Andrew Mayen Akuak, deputy general manager of BCB, credited Ethiopians with the success the bank has achieved. Their expertise in international banking and their experience in trade financing was praised by him. He also attributed the new practice of using letters of credit (LCs), instead of cash while travelling to import goods, to the arrival of the Ethiopians.

“Ethiopians are honest, loyal, and committed to their work,” Andrew told Fortune. “They have the expertise to do what is required.”

The expertise seems much needed and appreciated in the telecom sector, as well. The Lebanese telecom company, Vivacell, brought Ethiopians to Juba to work in its technical and finance departments. Joining the company when it was first established, in February 2009, the footprints of Ethiopians are visible in every part of the technical section. They work on the Internet, programming, system administration, network system installation, and maintenance.

However, some have left to complete their higher education, while others have travelled to Europe and the US for work.

“The salary is not that attractive,” an Ethiopian employee told Fortune, on condition of anonymity.
With its two offices in the capital and several points of sales (POS) throughout the country, Vivacell serves the people of Southern Sudan along with five other telecom service providers.
Like the banking sector, telecommunications has not yet developed in Southern Sudan, with only 15pc of households owning a phone, although the figure increases to 59pc in urban areas, according to the SSCCSE.

There were 9.5 million estimated mobile subscribers in 2009, according to reports from Mobile World.

By TESFALEM WALDYES,
SPECIAL TO FORTUNE, From Kampala, Uganda