VZCZCXRO6706
RR RUEHROV
DE RUEHKH #0480/01 0541619
ZNR UUUUU ZZH
R 231619Z FEB 06
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC 1612
INFO RUCNIAD/IGAD COLLECTIVE
RUEHKI/AMEMBASSY KINSHASA 0014
RUEHGI/AMEMBASSY BANGUI 0018

UNCLAS SECTION 01 OF 02 KHARTOUM 000480 
 
SIPDIS 
 
SIPDIS, SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON EINV PGOV EAID EAGR SOCI SU
SUBJECT:  BUDDING ENTREPRENEURSHIP IN SOUTH 
 
 
KHARTOUM 00000480  001.2 OF 002 
 
 
¶1. (U) Summary:  On February 17, CG Juba met with four 
representatives of the South Sudan Chamber of Commerce, 
Industry and Agriculture (SSCCIA) to review efforts to 
build a business base in the South.  They described the 
weaknesses of the private sector, including lack of 
capacity, absence of entrepreneurial skills, and limited 
access to credit.  They described their efforts to create 
a commercial network in the South - and to keep northern 
Arabs out of it - and requested a review of USG sanctions 
that negatively effect business in the South.  End 
Summary. 
 
----------------------------------------- 
Private Sector the Key, but Many Problems 
----------------------------------------- 
 
¶2. (U) Ngor Ayuel, Chairman of SSCCIA, William Warigo 
Moro, outgoing Chairman, and Board members Lotigo Samuel 
and Santino Tito Tipo met with CG Juba February 17 to 
present a copy of the SSCCIA constitution and the body's 
work plan for the next year.  They explained that First 
Vice President Katherine Loria - the constitution 
stipulates that this position must be filled by a woman 
if the chair is a man - was out of town on business, a 
propitious sign.  They expressed their thanks to the USG 
and the American people for helping bring peace to Sudan 
and development to the South.  They expressed 
appreciation for the establishment of an American 
Consulate in Juba, and for USAID's assistance in starting 
SSCCIA. 
 
¶3. (U) Ayuel pointed out that the weakest institution in 
Southern Sudan is the private sector.  There exists a 
surfeit of soldiers, politicians, and bureaucrats, but 
few entrepreneurs.  No business culture had existed for 
many years.  Ayuel blamed this on Northerners who 
dominated Juba politically but had no interest in 
promoting local business growth. 
 
¶4. (U) He continued that this must change if the South is 
to truly develop.  The GoSS and all levels of local 
government can create 500,000 jobs for a population of 
ten million, but this would not be enough.  (Note:  Half 
a million government jobs would be an astronomical 
number.  End note.)  The private sector could be the only 
mechanism for creating sufficient employment to absorb 
excess labor capacity that would result from 
demobilization of a large portion of the SPLA.  Without 
private sector job creation, there could be no solution 
to the socio-economic problems of the South. 
 
------------------------ 
The Blueprint for Growth 
------------------------ 
 
¶5. (U) Moro explained that the SSCCIA aspires to create a 
business information network and Chamber of Commerce 
affiliates in every state.  Ultimately, it hopes to build 
a business center in Juba and each state capital with 
reliable communications links with the interior and 
outward to other countries that are the sources of 
potential investment.  Moro said that the SSCCIA had 
"several hundred" members and had just affiliated with 
the previously separate Yei Chamber of Commerce, which 
numbers ninety-eight.  The critical mass for admission of 
a new affiliate had been set at fifty.  He concluded that 
the CCSSIA had started at zero, but was gradually gaining 
strength.  Ultimately, it hopes to place an expatriate 
expert in the Chamber for a year to assist with building 
outside linkages. 
 
-------------------- 
The Northern Problem 
-------------------- 
 
¶6. (U) In response to CG's query, Ayuel said that no Arab 
traders from the North had expressed a desire to join the 
SSCCIA, "and we like it that way."  He cited the record 
of the North in dominating commerce in the South, in the 
process elbowing southerners aside.  He charged that the 
Arabs were interested only in trade, not production or 
investment, and that profits went back to building villas 
and industries in Khartoum.  Unlike Asian traders from 
East Africa, the northern Arabs refused to hire any but 
their own to work in their shops.  He concluded that the 
Arabs had conspired to destroy what little agro-industry 
existed in the South, such as Anzara Cotton, a parastatal 
once operating in Western Equatoria.  Khartoum had 
starved it of capital and ultimately moved industrial 
cotton production north to benefit Arab farmers on 
irrigated lands in Gezira State.  Moro said that the 
 
KHARTOUM 00000480  002.2 OF 002 
 
 
exception was Haggar Holdings from Khartoum, which would 
be warmly welcomed in the South, since the company had a 
good past record of investment and job creation with fair 
compensation. 
 
--------- 
Sanctions 
--------- 
 
¶7. (U) The SSCCIA representatives said that they 
understood the rationale for USG sanctions but felt that 
in some cases the South was suffering unfairly for the 
actions of the North.  Tipo, who imports drugs and hopes 
to begin the manufacture of pharmaceutical products, said 
that sanctions created problems in the importation of raw 
materials and some finished products.  He said that the 
same problems existed in the agricultural and petroleum 
sectors, to the detriment of both the South and outside 
investors.  The group said that a review of existing 
sanctions with a gradual lifting of those that penalized 
the South would be the ideal approach. 
 
------------------------- 
Corruption and Regulation 
------------------------- 
 
¶8. (U) CG said that it was hard to imagine successful 
sustainable development of the South without creation of 
a vital private sector.  Donor resources could provide 
impetus, but only local production could guarantee long- 
term growth.  The role of the SSCCIA should clearly be to 
identify and pursue business opportunities and outside 
investment, but there were other important 
responsibilities as well.  For business to flourish, the 
regulatory environment must be business friendly.  The 
SSCCIA could play a key role in monitoring the 
establishment of a regulatory framework and intervening 
if there were developments that were inimical to the 
business climate. 
 
¶9. (SBU) Official accountability was also key. 
Legitimate foreign investors are skittish about countries 
where corruption flourishes, but the sort of investors 
that bend the rules tend to come in droves.  It would be 
important for the local business community to weigh in 
when they discover that bad business practices are in 
play.  Ayuel said that the SSCCIA agrees, and that they 
stand ready to both approach the government and to inform 
us discreetly if questionable dealings between business 
interests and government officials come to light. 
 
------- 
Comment 
------- 
 
¶10. (SBU) The SSCCIA seems to be a serious group, if at 
times a bit bureaucratic in approach.  The near total 
lack of capital is a serious challenge compounded by the 
lack of entrepreneurial vision and energy that Ayuel 
described.  At present, the fresh vegetables that feed 
hundreds of humanitarians and GoSS officials housed in 
the various camps and compounds of Juba are flown in from 
Nairobi and elsewhere in Kenya at very high cost, but no 
local concern has thought to start vegetable gardens near 
the Nile to offer competing produce at a lower price.  An 
American has reportedly come up with a plan to bottle 
water from a spring near Rumbek to compete with imported 
Ugandan bottled water that costs over a dollar a liter. 
There are even relatively few kiosks and roadside stands 
run by micro-entrepreneurs, a fixture in many African 
countries. 
 
¶11. (SBU) This may be starting to change at a very basic 
level.  Yei is awash with small commerce, perhaps 
influenced by Uganda nearby.  The return of refugees and 
IDPs and the arrival of a host of NGOs have sparked a 
building boom in Juba.  Local residents are 
enthusiastically rooting field stones out of the ground 
to pile by the road for sale to passing truckers, who in 
turn sell this material for stone masonry construction. 
Mud brick manufacture has become a cottage industry to 
supply the building material for the hundreds of tukuls 
springing up as southerners return. 
 
¶12. (U) The IVP program, the International Executive 
Service Corps, and various other small but effective 
programs could conceivably help encourage and strengthen 
the fledgling SSCCIA. 
 
HUME