Conflicts will scare away EAC’s new friend, China

WITH RENEWED bloody conflict in South Sudan and turbulence in DR Congo, both results of trigger happy politics, the region ended 2013 on a bad note.  If this approach to resolving issues persists into 2014, growth prospects could be in arroyo.

WITH RENEWED bloody conflict in South Sudan and turbulence in DR Congo, both results of trigger happy politics, the region ended 2013 on a bad note. 

If this approach to resolving issues persists into 2014, growth prospects could be in arroyo.

While all five East African Community member states enjoyed stability in 2013, conflict in the neighborhood is ruinous to business.

Uganda estimates that over 150,000 traders operating in South Sudan generate about $900 million annually. Yet in December when business climaxes with festive season consumption, the EAC aspiring member slipped into bloodshed that left traders counting heavy losses. Since then, over 1,000 lives have been lost and the war rages on.

Within a few days of the conflict, Uganda had reportedly lost $3million in revenue, according to Association of Ugandan traders in South Sudan and Kampala City Traders Association.

South Sudanese independence two years ago had excited the region with hopes of trade and business opportunities especially in construction, food, transport and education. 

Indeed, benefiting from its proximity, approximately 1,500 Ugandans were working in Southern Sudan’s construction industry but it’s now an uncertain year for them as violence rocks the world’s youngest country. 

Without a direct road link to South Sudan, Rwanda had ventured into air transport to access trade opportunities with the launch of RwandAir’s Kigali-Juba flights in October, 2013.

During that launch, CEO John Mirenge said: ‘We are not the kind of airline which is here today and gone tomorrow, RwandAir is here to stay.’ Unfortunately, you can’t fly in insecure skies. More so, insecurity would reduce the number of travelers to South Sudan, hurting RwandAir’s projections.

With over 100,000 South Sudanese students currently attending school in Uganda, peace would have attracted investors from Rwanda, Kenya and Uganda to open schools there, but with an appetite for violence, investors will be very reluctant even though the current standoff ends. 

After a Nairobi meeting of regional leaders, Uganda’s president Museveni said East Africa will fight Riek Machar’s rebels if the latter refused to ceasefire yet by Wednesday last week, the rebels had captured Jonglei and were threatening to march to Juba despite rival parties assembling in Addis Ababa for peace talks. 

Some experts have even proposed a more pragmatic solution, letting the Dinka and Neur fight until one party attains victory but the ethnic tensions involved have had some fear for a possible genocide, a development that can’t be allowed to happen.

African countries need to attract more foreign investors to create jobs. Sadly, violent conflicts will only scare away potential investment.

For instance, South Sudanese oil wealth has attracted a lot of Chinese FDI but when violence broke out; the tone of pain could be heard in the voice of the Chinese envoy to Juba as he pleaded for peace. The Heritage Foundation estimates that China had invested over $2.2billion in South Sudan as of 2012. Most of this in petroleum. 

China also has over $6.5billion worth investment in DRC’s extractive sector yet stability is not guaranteed there either especially after December’s dramatic attempt by a machete wielding outfit to overthrow President Kabila’s government.

Even with valuable minerals and much needed oil, if political risks begin to threaten the returns on investment the region could soon witness a major capital flight as investors seek to twig losses.

Another worry for the region should be the results from the National Audit Office (NAO) commissioned in July by the Chinese government to round-up the country’s outstanding debt at a local level. It revealed that China’s local government debt is now a staggering 17.7 trillion Yuan ($2.9tn) up 70% from three years ago.

Though China’s total government debt to GDP is below 64% [regarded as safe] a rising domestic debt shows there will be no more money to throw into risky investments in Africa.

Therefore, in 2014, rather than kill each other, South Sudanese should consider procreating to replace the labour force already lost to war. As for DRC, the region needs new Lingala music to dance to celebrate trade prosperity.

Happy New Year.

 

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