Is Sudan’s war the reason for South Sudan’s economic

South Sudan's economy is in freefall, and while Sudan's ongoing civil war is a convenient scapegoat, the reality is more complex—and more troubling for investors.

The narrative is simple: Sudan's conflict disrupts oil transit, South Sudan loses revenue, economy collapses. But this oversimplifies a structural crisis that predates the 2023 Sudan war by years. South Sudan has been wrestling with oil dependency, currency instability, and governance failures since independence in 2011. Sudan's war is an accelerant, not the spark.

## How dependent is South Sudan on oil revenue?

Oil accounts for roughly 95% of South Sudan's government revenue and 75% of exports. The country produces approximately 150,000–170,000 barrels per day (bpd), down from a peak of 350,000 bpd in 2012. This isn't war-induced volatility—it's chronic underinvestment, aging infrastructure, and production theft. Sudan's conflict does matter: the Suez Pipeline Company (operated jointly) has faced intermittent disruptions, and port access through Port Sudan remains unpredictable. But Sudan's war explains maybe 20–30% of South Sudan's production decline; the rest is operational decay.

The broader problem: South Sudan lacks refining capacity and domestic fuel security. Citizens queue for diesel and petrol despite being an oil exporter. The central bank's reserve position has deteriorated sharply. The South Sudanese pound (SSP) has lost 97% of its value against the US dollar since 2015. Inflation regularly hits triple digits. These aren't war symptoms—they're symptoms of monetary mismanagement and capital flight.

## What's the real impact on oil revenues?

South Sudan's oil revenue fell from $4.8 billion in 2011 to under $700 million in 2023. Even accounting for lower global oil prices and production cuts, this represents a strategic collapse. In 2024, revenue is tracking toward $600–800 million—barely enough to service arrears to Sudan (under the 2020 peace deal, South Sudan owes transit fees) and keep the military supplied.

Sudan's war has created two tangible pressures: First, pipeline transit risk. Oil exports route through Port Sudan; the war creates security uncertainty and operational delays, pushing logistics costs up and predictability down. Second, the loss of unified negotiating power. When Sudan was stable, South Sudan had a counterpart for oil-sharing arrangements and infrastructure maintenance. Now, fragmenting Sudanese factions mean unclear contractual partners and delayed payments.

But here's what investors miss: South Sudan's oil reserves (an estimated 6.5 billion barrels) remain substantial. Production *could* recover to 300,000+ bpd with proper investment and security. The issue isn't geology—it's governance, capital discipline, and regional stability.

## What must change for recovery?

South Sudan needs: (1) diversification beyond oil—agriculture, mining, regional trade; (2) monetary reform—a credible currency peg or dollarization strategy; (3) infrastructure investment in non-oil sectors; (4) a durable peace settlement that reduces military expenditure.

Sudan's war is a symptom South Sudan can't ignore, but it's not an excuse. The real crisis is South Sudan's inability to manage the revenue it *does* extract. Until that changes, even a peaceful Sudan won't save this economy.

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