PROJECT INFORMATION DOCUMENT (PID)
CONCEPT STAGE
Project Name
Region
Sector
Project ID
Borrower(s)
Implementing Agency
Environment Category
Date PID Prepared
Estimated Date of
Appraisal Authorization
Estimated Date of Board
Approval
Report No.: AB3768
MDTF South Sudan Private Sector Development
AFRICA
General industry and trade sector (80%); Micro- and SME finance
(20%)
P102319
GOVERNMENT OF SOUTH SUDAN (GOSS)
Ministry of Commerce, Trade and Supply (MCTS)
P.O. Box 73
Juba
Sudan
Tel: 256 477 124059
psdgoss07@yahoo.com
Ministry of Commerce, Trade and Supply
Tel: 256 477 124059
psdgoss07@yahoo.com
[ ] A [X] B [ ] C [ ] FI [ ] TBD (to be determined)
April 3rd, 2008
April 16, 2007
N/A
1. Key development issues and rationale for MDTF involvement
The Government of South Sudan is committed to delivering a peace dividend to the people of Southern
Sudan in the form of sustained peace, jobs, services and opportunities for fulfilling livelihoods based on
their skills and aspirations. The Constitution enshrines free enterprise and protects private property. The
goals of the Government of South Sudan, per article 40(1) of the Interim Constitution are:
 Eradication of poverty
 Attainment of the Millennium Development Goals
 Guaranteeing the equitable distribution of wealth
 Redressing imbalances of income and
 Achieving a decent standard of life for the people of South Sudan
Experiences from around the world, including in post-conflict settings, suggests that the best way for
Southern Sudan to achieve these goals is through the development of a strong, broad based and
competitive private sector. Tax revenues from increased formal private sector activity will in the medium
to long run present the most solid and sustainable source of funds for the GOSS to invest in the overall
development of the people of Southern Sudan and reduce its dependence on oil revenues. A well
developed private sector will offer the people of Southern Sudan the opportunity to extricate themselves
from poverty through profits earned by operating businesses or through wage earning employment.
A key lesson of post-conflict experience in Africa is that peace and security must be cemented by
economic opportunity. The wealth sharing provisions of the CPA reflect a key lesson from the failed
Addis Ababa agreement: that peace will be undermined if there are insufficient opportunities for
employment, and if South Sudan depend on external grants for its revenue. Oil cannot provide the sole
answer. As Paul Collier has noted, half of countries that have achieved peace will reenter conflict within
a decade. Those with a heavy dependence on natural resources are most likely to slip back into conflict.
The challenges are daunting. War prevented the emergence of an entrepreneurial class, and few
businesses owned by Southern Sudanese exist. Yet there are assets on which to build. Trade continued
during the war across the Southern borders with Uganda and Kenya, focused on export of timber and
some agricultural products and the import of essential goods. The South has a stable supply of cattle,
food crops, horticultural products, timber and energy. With large neighboring and domestic markets to
supply, the South of Sudan may be able to capitalize on growth in this sector and those further abroad
with the requisite investments in infrastructure, transportation and extension. Another critical asset is the
skills of Southern Sudanese who have migrated and may now return to support their country.
GOSS has taken a number of critical early actions, establishing the key responsible line Ministries
(Commerce, Trade and Supply, Industry and Mining), reviewing all major foundational laws supporting
private sector development, including banking laws (to enable a change to conventional banking),
investment law, bankruptcy laws and contract law. Donors have become involved, including USAID,
which provided support on institution building and banking, the joint donor office, and DFID.
But the first year of GOSS’s existence has indicated the size of the policy challenge. Investors who have
visited have left with the impression of policy uncertainty. The legal environment, drawing on National
laws, South Sudan (SPLM) laws has yet to be clarified in critical areas such as investment. The business
registration process was suspended and reinstated. The critical question of property rights remains open.
Traders pay arbitrary informal taxes at the border. While many Ugandan, Kenyan, Ethiopian and other
traders have quickly established themselves to provide necessary services and goods ranging from eggs to
housing, the emergence of Southern Sudanese entrepreneurs has been far less visible.
Based on these facts, the Ministry of Commerce, Trade and Supply has led the preparation of this Initial
Project Proposal on Private Sector Development
2. Proposed objective(s)
The higher order objective is to enable the private sector to maximize its contribution to the recovery of
South Sudan through increasing investment and job creation, thereby increasing the sustainability of
peace. The development objective is to increase the volume of private sector investment and number of
formal private sector jobs through (a) supporting the introduction of a predictable, transparent and
efficient legal and regulatory environment for private investment; (b) facilitating access of enterprises to
finance and skills, and (c) and through development of market-supporting infrastructure through publicprivate partnerships.
B. Relationship with the Joint Assessment Mission (JAM)
The JAM Chap 4 explains that “promoting private sector development is central to the challenge of
sustainable peace and development in Southern Sudan, and will require substantial policy and program
efforts.” Key proposed interventions are (a) a regulatory framework for the private sector; (b)
microfinance programs; and (c) market centers.
C. Key Outcomes for Private Sector Development in South Sudan
A number of outcomes are envisaged over four years:
1. A clear legal and policy framework for development that is articulated and developed through
consultation with the domestic private sector. The key outcome will be a measurable reduction in
policy uncertainty, and an increase in foreign and domestic investment;
2. An increase in the number of women entrepreneurs;
3. The ability to monitor and evaluate private sector development indicators;
4. A competitive market for commercial microfinance, with at least five microfinance providers
providing finance to the private sector.
5. A number of skilled craftsmen trained by their peers returning from the diaspora;
6. A return of southern Sudanese craftsmen, training their local peers;
7. Demonstration effects on establishment of successful Public-Private Partnerships;
8. A fruit and vegetable wholesale market allowing the establishment of Southern Sudanese
entrepreneurs with efficient trading operations and an increase in the quality of food.
For Phase II, the key results will include:
1. An industrial zone operating on 50 hectares in Juba, allowing the establishment of 200-400
enterprises. According to ILO, 64 EPZs in Sub Saharan Africa provide employment to 431,000
workers;
2. Up to 10 trade and investment centers in all states of South Sudan, serving as information
coordination platforms for incoming investors as well as local businessmen.
3. Preliminary description
Component 1: Policy & Regulatory Environment for the Private Sector
Trade and investment policy framework
The project will provide a long-term policy advisor on private sector development to the Ministry of
Commerce to focus on the establishment and continuous improvement of trade and investment policies
for South Sudan consistent with the CPA. The specific policies that the Advisor will assist in form the
legal and regulatory framework for establishment, operation and closure of businesses in South Sudan.
These key laws, also referenced in the Budget Sector Plan for Economic Functions 2007-2009, include:
 The Company Act
 Business registration and licensing
 Trade policy consistent with roles defined in the CPA
 Bankruptcy and liquidation legislation
 Investment Act and establishment of investment policy.
 Intellectual property rights protection.
Component 2: Access to Finance
The Sudanese financial system is characterized by a mismatch between the demand for, and supply of,
financial services for small retail clients. The commercial banking system is highly concentrated in a few
cities, and a number of states do not have any commercial bank branches at all. While Sudan’s financial
system has made significant progress in terms of stabilization and consolidation (FSAP, 2005), lack of
access to finance remains a major impediment for micro and small businesses as well as for agricultural
smallholders. Microfinance not only comprises the granting of small loans but also includes deposit
facilities as well as money transfer services.
Component 3: Industry-level Support
The Ministry of Trade and Industry faces the challenge of developing strategies and policies for the
sectors which may prove viable sources of industrial growth. This includes substantial agro-processing
potential (juice processing, canning), gold mining, cement, leather, light industry. Governments around
the world have increasingly realized that private sector efforts can be effectively catalyzed through clear
information on the economic opportunities which can then be promoted with the private sector.
Component 4: Public-Private Partnership for Wholesale Market
Due to the higher risk environment, private sector will not finance large infrastructure investments at low
cost. However, the public sector also lacks the capacity to finance and manage all infrastructure needs,
particularly specialized infrastructure which may be more likely to be viable as a commercial investment
over time. This suggests combinations of public and private resources with a declining role for
government as the risk environment improves.
4.
Key Safeguard Policy Issues and their Management
[Guideline: Refer to section 5 of the PCN. Which safeguard policies might apply to the project
and in what ways? What actions might be needed during project preparation to assess
safeguard issues and prepare to mitigate them?]
Tentative environment classification is B category. It will be determined and confirmed at
appraisal stage.
4. Tentative financing
Source:
Borrower
Multi-donor Trust Fund for South Sudan
Total
5. Contact point
Contact: Alwaleed Fareed Alatabani
Title: Senior Financial Sector Spec.
Tel: (202) 473-4115
Fax:
Email: aalatabani@worldbank.org
($m.)
4.28
6.78
11.06