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The Oil Factor
Foreign Investors Brave Violence in South Sudan

Violence erupted again in South Sudan on Monday, with bouts of gunfire reported across the capital and claims by the President that a group of soldiers attempted to overthrow the government. The New York Times reports:

At a televised news conference, Mr. Kiir, dressed in a camouflage army uniform, told the nation that a “group of soldiers” allied with the former vice president, Riek Machar, had tried to orchestrate a coup in the capital, Juba. “The attackers fled, and your forces are pursuing them. I promise you today that justice will prevail.”

In July, Mr. Kiir dismissed his entire cabinet, including Mr. Machar. The cabinet shake-up was seen in part as an attempt to ease hostilities with South Sudan’s neighbor to the north, Sudan, because some of the members were viewed as longstanding adversaries of Sudan and as obstacles to improving relations.

Just after Kiir’s statements, gunfire erupted all over Juba, the South Sudanese capital. South Sudan is the world’s youngest country, but it has gotten off to a rocky start, to say the least.

Yet, despite the dangers and the continuous fighting with Sudan over the oil-rich frontier regions, South Sudan has become one of the fastest-growing economies in the world, according to the Economist Intelligence Unit.  As Al Jazeera reports, the nascent country now presents lucrative opportunities for investors:

Oil money and entrepreneurs from East Africa and returning South Sudanese, have transformed the capital from a sleepy garrison town at the time of the 2005 north-south peace deal into a “boom town”. Its rampant development and population growth give it a similarly vibrant feel to towns in the region’s more established economies.

According to the report, the South Sudanese government is mainly looking for investment in its energy sector. With vast oil reserves but little infrastructure to exploit and export them, South Sudan desperately needs foreign investment—not just in energy, but also in telecommunications, infrastructure, and manufacturing.

But given South Sudan’s resources, potential returns for investors may eclipse its sizable political unrest. Oil doesn’t solve every problem, but it certainly helps.

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