South Sudan is at a crossroads in its recovery, reconstruction, and development. With weak institutions and recurring cycles of violence, South Sudan remains caught in a web of fragility and economic stagnation a decade after independence. This Country Economic Memorandum (CEM) discusses South Sudan’s economic performance since independence, highlighting the need for the country to leverage its natural capital in the agriculture and oil sectors to support recovery and resilience. Economic recovery has stalled in South Sudan amid a multitude of crises, including the COVID-19 pandemic, climate shocks and dwindling oil production, and most recently, the adverse effect of the rise in commodity prices brought on by the war in Ukraine. A dearth of economic opportunities and food insecurity are major concerns, and are reinforced by inadequate provision of services, infrastructure deficits, displacement, and recurring climatic shocks. With the fragile peace deal largely holding despite challenges in implementation, the authorities initiated an ambitious reform program aimed at macroeconomic stabilization and modernization of the young country’s public financial management systems.
Three messages emerge from this report. First, there is a peace dividend in South Sudan. South Sudan’s real GDP per capita in 2018 was estimated at one third of the counterfactual estimated for a non-conflict scenario. Thus, maintaining peace can by itself be a strong driver of growth. Second, with better governance and accountability, South Sudan’s oil resources can drive transformation. Third, South Sudan’s chronic food insecurity could be reversed with targeted investments to improve the resilience of the agricultural sector.