South Sudan balances north, African trade after split

JUBA, Sudan Tue Jul 5, 2011 10:38am EDT

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JUBA, Sudan (Reuters) - High over a roundabout in south Sudan's capital Juba, a digital clock counts down the minutes to the independence of the region and flashes the message "Welcome to East Africa's country number 6".

South Sudan, which is due to secede on Saturday, will remain economically tied to mostly Muslim north Sudan through the pipelines that funnel southern oil up to the Red Sea coast.

But as full statehood approaches, it is doing all it can to build on links with the countries to its east and south, most of them sharing parts of its largely Christian and traditionalist African culture -- if only to give it some distance from its former civil war foe.

Kenyans, Ugandans and Ethiopians already dominate the stalls in Juba's bustling markets, repairing everything from motorbikes to shoes and selling vegetables, hot food and all manner of household goods.

Southern officials say the East African trade increased earlier this year when northern forces temporarily blocked fuel and other deliveries through the north/south border. The north denied the reports.

"We have alternatives. When they closed the border we had the road to Ethiopia ... We have the road to Uganda, the road to Kenya. So it is not punishing us in terms of business ... After a week or two we adjusted," Elizabeth Majok, the south's undersecretary for commerce and industry, told Reuters.

The East African domination of the market stalls has sparked some local resentment. But foreign traders say they are mostly welcome. Kenyan Elizabeth Mungai, 28, has a stall on a muddy street in Juba, selling food and a few kitchen and bathroom items, all trucked along the rough roads that cross south Sudan's southern border.

"Through the elections, the referendum ... for all those things I am here. I proved there is no problem," she said, referring to south Sudan's steps toward independence.

Southerners overwhelmingly voted to leave the north in a January referendum, promised in a 2005 peace deal that ended decades of civil war with the north.

South Sudan's new draft constitution names English -- a common business language across East Africa -- as the new nation's language of government and education.

"South Sudan contains enormous agricultural and natural resources ... In few years, (it) is expected to rebuild its economic infrastructure and improve its trade relations with neighboring countries," said Amir Idris, professor of African and African American Studies at Fordham University in New York.

NORTHERN OIL LINK

Up to date figures on the size of south Sudan's trade with East Africa are hard to find. But it is safe to say they would be dwarfed by the scale of the south's oil industry, responsible for about 98 percent of its total revenues.

Kenya's exports to south Sudan almost doubled between 2005 and 2009, rising to 12.8 billion shillings ($144.5 million) from 6.8 billion after the peace deal.

South Sudan was neighboring Uganda's main export market in 2009, when it imported goods worth $184.6 million from east Africa's third largest economy, according to the Uganda Exports Promotions Board.

The south says it wants to join the East African Community trade bloc. Kenya Commercial Bank operates in the south and South Africa's SABMiller has a brewery.

By contrast, analysts have estimated that the south may be able to add $1 billion to its annual budget of around $2 billion by getting more revenues from its oil after the split.

That all means the south's relationship with the north will still remain a priority -- even though both sides have still not agreed how they will mange oil revenues and, crucially, how much the north will charge the south to use its pipelines.

Southern leaders have said they want to open new oil pipeline routes south via Kenya and Uganda, though such schemes would take years. Meanwhile the south's president has been at pains to assure the world he have no interest in returning to open conflict with the north, whatever the provocation.

"We thought that as neighbors we would be the best friends. We need them and they need us," southern President Salva Kiir said after northern forces rolled tanks and troops into the hotly contested Abyei region on May 21, sending tens of thousands of southerners fleeing.

It is hard to find anyone to echo that neighborly talk in the markets of Juba. Memories of the bloody civil war -- that killed an estimated two million Sudanese and forced four million to flee -- still run deep.

"I try not to think about the northerners ... Peace is not the same as forgiving. We want peace with them but I can never forgive them," said Vincent Madut, 22, shopping at one of the markets.

"I don't want to fight them but they will never be friends."

(Additional reporting by Barry Malone in Kampala, Editing by Andrew Heavens)

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