* Oil shutdown in dispute with Sudan has hit economy
* Inflation up, work more scarce in Africa’s newest country
By Alexander Dziadosz
BOR, South Sudan, April 3 (Reuters) – Amburose Gift expected
to make good money in South Sudan when he moved to the
oil-producing country from Uganda three years ago. Now he is
just trying to pay for a bus ticket home.
The 23-year-old construction worker has yet to cobble
together the fare of 200 South Sudanese pounds – about $50 on
the black market – to get him out of the country that stopped
pumping crude in January due to a row with Sudan.
For Gift and thousands of other foreign and local workers in
the newly independent nation, the oil shutdown meant a steep
rise in prices and less work as businesses try to hold down
spending in what has become an economic crisis.
“There have been increases in the prices for things like
eggs, even onions, everything,” Gift said.
South Sudan took about three quarters of Sudan’s oil output
when it became independent in July under a peace deal that ended
decades of civil war and oil – when it flows – provides about 98
percent of state revenues.
The catch is that South Sudan still needs pipelines, a Red
Sea port and other facilities located in Sudan to export crude.
The two have fallen out spectacularly over how much it should
pay to use them.
Facing roaring inflation and a sinking currency of its own,
Sudan began to confiscate oil from the South to make up for what
it said were unpaid fees, prompting Juba to shut down its oil
fields in protest.
That cut flows of foreign currency into the new nation and
helped weaken the South Sudanese pound to about 4 to the U.S.
dollar on the black market from around 3.5 before the shutdown.
That drove up inflation as the country relies on imports for
everything from basic food items such as sugar or bananas, to
furniture, machines and consumer goods. No sizable industry
exists outside the oil sector.
Prices were already rising before Juba stopped producing
oil, due in large part to a disruption in trade with the north.
REMOTE
The impact has particularly hit places like Bor, capital of
South Sudan’s Jonglei state, where most goods are trucked in at
a premium on bumpy dirt roads from Uganda, Kenya and elsewhere.
Analysts say annual inflation in remote places like Jonglei
is much higher than the national figure of 42 percent reported
for February, due to transport costs.
“Prices here are tied to the dollar. If the dollar goes up,
the prices go up,” said Ali Salah, a 40-year-old trader in Bor’s
dusty market, adding that staples like sugar and rice were
rising.
“The first thing in the economy of this country is
petroleum. If there’s no petroleum, there’s nothing.”
The government announced a raft of austerity measures
including cutting spending by 35 percent this budget year.
Northern Sudanese officials say the shutdown has worked to
their advantage, despite their own economic problems, pushing
South Sudan to soften its bargaining position in talks about oil
transit fees and border disputes.
MARKET BUZZ
Several traders and customers in Bor’s market said the oil
shutdown had forced authorities to collect duties more
aggressively, pushing prices even higher.
Kiyingi Paulo, a 25-year-old Ugandan trader, said “high
taxation” had helped push the cost of a 25-kg sack of flour at
his brother’s shop to about 70 pounds from 60 before the
shutdown.
The cuts are also being felt in Bor’s government offices.
One local official who asked not to be named said his ministry
had been asked to halve the “services” section of its budget,
which covers things like water, cleaning and car repairs.
“If I was given 10,000 last time, now it’s cut to 5,000,” he
said, declining to give the actual budget figures.
Despite the strain, Bor’s market of corrugated metal and
wooden shacks still appears lively. Plastic bags rustle as
shoppers haggle over vegetables for evening meals. The smell of
dried fish and burning charcoal hangs in the air.
Mary Augustine, a 36-year old hotel worker buying okra from
a woman who put the money into a piece of newspaper stapled
together into a purse, said it was becoming impossible to make
ends meet.
“It used to cost just five pounds to feed the whole family
for a day, but now 30 isn’t enough,” she said.
(Editing by Robin Pomeroy)
