South Sudan risk report
Corruption is widespread in South Sudan and businesses operating or planning to invest in the country should beware of these risks. Bribery is widespread in all sectors of the economy and close relations between the government and businesses are mentioned as a crucial factor in succeeding in business. The country's judicial system is inefficient and is plagued by corruption and a culture of impunity. Accordingly, South Sudan's primary corruption legislation, the Southern Sudan Anti-Corruption Commission Act 2009 and the South Sudan Penal Code Act 2008, despite covering a range of corruption offenses, are not adequately enforced. Gifts are prohibited under South Sudan's laws, but minimal enforcement results in gifts and facilitation payments being widespread.
Judicial system Very high risk
Corruption undermines the courts in South Sudan, which are also perceived as ineffective and overburdened (HRR 2015, ICS 2016). Almost two-thirds of citizens find the courts to be corrupt (GCB 2013). The South Sudanese constitution guarantees the judiciary's independence; however, in practice, it is influenced by the executive (BTI 2016). Officials found guilty of corruption in South Sudan are unlikely to face sanctions as they are often protected by personal networks (BTI 2016).
South Sudan lacks the legal framework to enforce judgments on commercial matters as well as an arbitration act dedicated to handling business disputes (ICS 2016). Moreover, there is a weak enforcement of court decisions, and consequently, many commercial disputes are settled informally (ICS 2016). South Sudan has signed and ratified the Convention of the International Center for the Settlement of Investment Disputes (ICSID), but is not yet signatory to the 1958 New York Convention on the Recognition and enforcement of Foreign Arbitral Awards.
Police Very high risk
The police is widely perceived as corrupt and ineffective and thus presents businesses with high risks (HRR 2015). There have been a number of reported instances of police acting with impunity and demanding bribes in varied aspects of their operations (HRR 2015, HRR 2013). In the same vein, almost half of citizens find the police be corrupt, and abuse among officers is rarely investigated (GCB 2013, HRR 2015). The police are undermined by a lack of funding (BTI 2016). Almost half of firms in South Sudan pay for security and approximately a quarter find that crime and disorder are a major constraint to doing business in the country (ES 2014).
Public services Very high risk
The public services sector carries high corruption risks for business. More than a third of companies expect to give gifts or other irregular payments to government officials to obtain an operating license (ES 2014). Likewise, almost four in every ten surveyed companies expect to offer gifts to officials in order to 'get things done' (ES 2014). Recruitment to government positions is based on loyalty to the ruling party rather than merit and the lack of monitoring has left room for corrupt officials to siphon public funds, which would typically come from the employment of ghost workers to inflate public payrolls (FitW 2015).
The total cost and number of procedures and the length of time necessary to start a business and to obtain electricity in South Sudan are among the highest and longest in the world (DB 2016), indicating a high risk of encountering corruption when dealing with public services in the country. Businesses report it being difficult to know how much license and certificate fees should cost (ICS 2014).
Land administration Very high risk
Companies face high risks of corruption when dealing with land authorities in South Sudan. Almost half of all businesses expect to give gifts to officials when applying for a construction permit (ES 2014). Property rights are not well protected and customary land use rights have been replaced by more formal laws, leading to conflict in many communities (BTI 2016, BTI 2014). Several other reasons undermine the effective protection of property rights in South Sudan: People in power often trespass property regulations, local elites often engage in disputes with foreign companies over concessions, and property registration as some plots have various legitimate owners who have been accorded ownership from the same or different government entities (BTI 2016).
As of 2015, there were no clear regulations for businesses on how businesses can acquire land; some businesses go about it by leasing land from the government while others lease land from individuals or local communities (ICS 2016). However, land negotiations with communities may take several months to settle (ICS 2016). South Sudan ranks among the countries with the highest averages of time and cost required to register property in the world (DB 2016).
Tax administration Very high risk
Companies contend with high corruption risks when dealing with the tax administration. More than three in every ten businesses expect to offer gifts during meetings with tax officials (ES 2014). On a more positive note, however, South Sudan performs better than the average in Sub-Saharan Africa in relation to paying taxes (DB 2016).
Customs administration Very high risk
Businesses face high corruption risks when dealing with the customs administration. There is no law governing customs in South Sudan and trade conditions are generally not favorable to companies (ICS 2016). Almost four in every ten businesses expect to offer irregular payments and gifts to obtain an import license (ES 2014). Furthermore, businesses complain about shady taxes imposed on imported goods into the country (BTI 2016).
South Sudan ranks among the least performing countries in the world when it comes to the ease of trading across borders; with time and cost averages higher than in other countries in Sub-Saharan Africa (DB 2016).
Public procurement Very high risk
Corruption is considered a problem in South Sudan's public procurement process and presents business operating in the sector with very high risks. More than a third of companies expect to give gifts and other irregular payments to government officials to obtain public procurement contracts (ES 2014). Furthermore, businesses depend to a large extent on connections in the government and the military - as these are the main contractors-, bribes and other corrupt means to win public contracts (BTI 2016). Public officials often circumvent or influence procurement procedures, suggesting high rates of favoritism in the sector (BTI 2016). Accordingly, companies partially or fully owned by government or military officials are more likely to win public contracts regardless of the quality and price of their services (ICS 2016).
Thus, companies are recommended to use a specialized public procurement due diligence tool to reduce corruption risks related to public procurement in South Sudan.
Natural resources Very high risk
The natural resource and extractive industries is rife with corruption and companies should be diligent when operating in this sector. The opaque management of the country's oil resources has allowed for high-ranking officials within the government to siphon funds with impunity (FitW 2015). In 2012, President Kiir accused three-quarters of former and current officials of stealing USD four billion and ordered the money be returned to government coffers, yet no further action was undertaken in the case (FitW 2015).
Companies operating in South Sudan's oil sector face interference by the government, and corruption is a major factor limiting investment in the country's natural resources sector (BTI 2014). The Petroleum Act 2012 has anti-corruption provisions, but the Act is poorly enforced (Sudd Institute, Apr. 2015).
The Southern Sudan Anti-Corruption Commission Act 2009 and the South Sudan Penal Code Act 2008 are the country's main laws that deal with anti-corruption; they criminalize a range of corruption offenses, including passive and active bribery, embezzlement, nepotism and gift-giving and gift-receiving. Other corruption-related legislation includes the Public Financial Management and Accountability Act 2011 and the Public Grievances Act 2011. Companies should note, however, that laws in South Sudan are not enforced, and that there eexistmany gaps in the country's legislation (ICS 2016). Government officials are subject to disclosure laws, nonetheless, there are no penalties applied for noncompliance (HRR 2015). Furthermore, officials engaged in corruption with impunity (HRR 2015). South Sudan is yet to sign any international anti-corruption conventions.
South Sudan's transitional constitution guarantees freedoms of expression and of the press, but authorities frequently violated these rights in practice (HRR 2015). The room for investigative journalism have been decreasing in recent years; self-censorship is increasing and journalists are threatened when reporting outside government-set boundaries (BTI 2016). The murder of several journalists have led the Committee to Protect Journalists to list South Sudan on its Global Impunity Index (HRR 2015). This situation has been exacerbated after the outbreak of the civil war in South Sudan in late 2013. The passing of the press law in 2014 further limited press freedom as the government used its control over the media in order to control public opinion, resulting in the detainment and threatening of journalists and the seizure of printed papers before distribution (BTI 2016). South Sudan ranks very poorly in terms of press freedoms; its press is considered 'not free' (FotP 2015).
There is a growing number of civil society organizations (CSOs) in South Sudan, however CSOs are only proactive and inclusive to a limited extent (BTI 2016). Furthermore, the extent to which CSOs can influence government policy is also limited (BTI 2016). CSOs' criticism of the government is decreasing as many activists are associated with rebel and opposition groups and thus face arbitrary arrest and detainment (BTI 2016).
- World Bank & IFC: Doing Business 2016.
- US Department of State: Investment Climate Statements 2016.
- Bertelsmann Foundation: Transformation Index 2016.
- US Department of State: Investment Climate Statements 2014.
- Freedom House: Freedom of the Press 2015.
- US Department of State: Human Rights Practices Report - South Sudan 2015.
- Freedom House: Freedom in the World - South Sudan 2015.
- The Sudd Institute: Understanding the Enforcement of Environmental Provisions of Petroleum Act, 2012 and Why Environmental Ruin Continues', 21 April 2015.
- World Bank Group: Enterprise Surveys - South Sudan 2014.
- Bertelsmann Foundation: Transformation Index 2014.
- The US Department of State: Human Rights Practices 2013.