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farah stockman

The Wild West in South Sudan

Cowboy capitalists rush into world’s newest nation, as locals struggle — and politicians take a cut

A motorcycle taxi waited for business at the Konyo Konyo city market in Juba in July 2012.

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A motorcycle taxi waited for business at the Konyo Konyo city market in Juba in July 2012.

JUBA, South Sudan

It’s 9 a.m. The sun is already stalking Juba. The breeze off the Nile is as moist and warm as breath. On the patio of the four-star Dembesh Hotel, a Hungarian hunches over a laptop.

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An Indian in a spotless white shirt glides over, a cigarette elegantly pinched between two fingers.

“What brings you to Juba?” he asks.

“Possibilities,” the Hungarian replies.

“Exactly,” says the Indian. His name is Mustafa Rawji. His family has lived in the Democratic Republic of Congo for generations. They run a bank — called Rawbank — that has 1,300 employees and $500 million in deposits. Mustafa landed in Juba two days ago. He whips out a business card. Rawbank is looking to expand.

Every day, more foreigners arrive here in South Sudan, the world’s newest country, seeking their fortune. Since independence two years ago, Juba’s population has more than doubled. Some newcomers become millionaires. Others die trying. This is cowboy capitalism in its rawest state, unfettered by well-established rules, taxes, or insurance policies. The high-risk, high-reward atmosphere has brought entrepreneurs from all over the world who don’t mind that Juba has no central sewage system, no water filtration plant, no electrical grid. South Sudan is a blank slate. It needs everything. That’s precisely why they have come.

There is money to be made in a country that is being built from scratch, especially one with oil, like South Sudan. Some economists predict that this economy could grow 70 percent in one year. If it does, foreigners will pocket a hefty chunk of the profits. Among the largest investors here is the state-owned China National Petroleum Company. Among the largest employers is a South African brewery that bottles “Nile Special” lager. The biggest cellphone company is Vivacell, owned by a Lebanese. Even “the Rhythm of South Sudan,” a popular radio station, is owned by a Kenyan. From the poorest person in the streets selling homemade doughnuts from a cart to the wealthiest hotel mogul, nearly everyone hails from somewhere else.

The streets of Juba are teeming with the very thing that Americans believe makes the United States great: the immigrant entrepreneurial spirit, in overdrive. But it comes at a cost. The unregulated underbelly of capitalism flourishes here, too: money laundering, extortion, counterfeiting. And there is resentment that many of the locals, who fought for decades to establish their own country, can’t compete. The mayor of Juba, Mohammed El Haj Baballa, complains that foreigners provide almost all the goods and services here, but don’t hire locals. “Even waitresses and janitors are brought from outside,” he says. He hints that a crackdown on immigrants — most of whom are here illegally — is in the works.

But replacing these industrious foreigners with locals is no simple matter. South Sudan, once home to Africa’s longest civil war, is full of former rebel fighters. Most never got training for anything else, says Mou Mou Athian Kuol, former undersecretary of education. And this is a pastoralist culture, where many believe that tending cows is the only honorable profession. Waiting tables and pushing wheelbarrows is seen as a disgrace. Even traditional farming — hitching an ox to a plow — is seen as offensive to the dignity of the beast.

“People here were very proud of their dignity,” Kuol said. “But it’s changing.”

Another obstacle for the South Sudanese is getting credit to start up a business. There were few banks in South Sudan during the war. Few citizens have ever used one. Now banks are popping up everywhere in Juba. But they won’t lend to a person with no history of borrowing. It’s a classic chicken-and-egg problem.

Mustafa, of Rawbank, tells me that he faced the same problem in the Democratic Republic of Congo. Rawbank stopped requiring credit checks in order to attract new customers. Instead, it devised other ways to make sure borrowers pay the money back. For instance, if it lends to a grocery store, bank officials might visit the store four times a day to collect money straight from the cash register.

That’s the kind of creative solution that could attract thousands of new banking customers in Juba. An idea like that could make someone like Mustafa very, very rich. But it could also make him a target. Idle, armed men would likely watch him collect cash every day, all over the city.

Juba can be a dangerous, unpredictable place. For that reason, few Americans have gotten in on the action here. For every story you hear of an immigrant entrepreneur who struck it rich, there is a tale of woe: Barges sunk to the bottom of the Nile, with expensive machinery on it. “Sleeping” South Sudanese business partners who show up out of nowhere to demand a huge cut of the profits. Traveling salesmen who don’t make it home alive.

In recent years, a spate of Ugandans and Eritreans have been shot dead by motorcycle bandits. One Ugandan trader was castrated for sleeping with a local girl. Even oil company executives fall victim to the erratic business environment. Last year, South Sudanese government officials accused foreign oil companies of colluding with their enemies in the north to steal their crude. The president of a top Chinese oil consortium was promptly expelled from the country.

I didn’t come to Juba to write about cowboy capitalism. I came to write about Mou Riiny, a Sudanese “lost boy” who was brought to Winchester to live with a foster family. He went on to study engineering at the University of San Diego. Today, he is an example of the good that entrepreneurs can do in Africa. He returned to his village in South Sudan to install solar electricity in schools with the support of a Massachusetts-based nonprofit, Village Help for South Sudan. Mou plans to form his own company, SunGate Solar, that will rent batteries charged by the sun to villagers to run their cellphones and radios. If enough villagers are willing to pay the small monthly fee to cover the cost of the batteries, life in these remote communities would change forever. Mou could take his model global. His company could become a household name.

I went to meet Mou to talk to him about this dream. That’s why I came all the way to Juba. But South Sudan has a way of defying the best-laid plans. My flight to the town where Mou lives was abruptly canceled. Planes were grounded all week. At the airline office, the woman behind the counter gave no explanation. Kush Air, called “The Spirit of the South,” was having technical difficulties.

So I was stuck in Juba. I spent my time interviewing businessmen who have come here with a little capital and a lot of guts.

Many talked about the tiny cadre of South Sudanese who are getting rich: higher-ups in the Sudan People’s Liberation Army, the former rebel group that is now running the country. There were stories of lavish houses, with fully stocked bars, and drivers who keep Land Rovers running all day so they are air-conditioned whenever the boss wants to go for a ride.

A former child soldier who is now an analyst with a Western organization said SPLA officials in Juba talk openly about “a payback period” during which top generals felt justified to take state resources for their personal gain.

“They say, ‘I fought for my country for 21 years. Now I need houses, cars, education for my children,’ ” the analyst told me.

The theft is such an open secret that South Sudan’s president, Salva Kiir, wrote to 75 ministers last year, asking them to return $4 billion. The allegations of corruption are particularly bitter in Unity State, where oil fields provide a huge chunk of South Sudan’s government revenue. Residents complain that the SPLA pledged to give Unity State 5 percent of the oil revenue after independence, but they have yet to make good on that promise.

The failure to share the oil resources has renewed tensions in this battled-scarred land. The civil war against the north was fought, in part, because Khartoum tried to take the oil of the south without compensating the locals for it. Now officials in Juba seem to be doing the same thing.

“We rebelled against the government in Khartoum because of fairness, equality, and justice,” said the analyst, who comes from Unity State. “But now we are surprised to see our executives behaving the same way the north was behaving. Our intelligence services behaving the same way. Our army behaving the same way.”

That’s disheartening, given all that the United States has invested in helping South Sudan survive the war and get its independence. There was a time when the only regular food deliveries here came from the UN planes.

Now foreign aid organizations hold conferences about harnessing the private sector. The message is clear: South Sudan, which turns 2 on July 9, needs to stand on its own. But the economic dreams of the new nation remain stillborn for the vast majority of its citizens.

Some argue that the government should cut citizens a check from the oil wealth, like Saudi Arabia and Kuwait. Indeed, the $4 billion missing from state coffers is enough to give every man, woman, and child in South Sudan about $360 each. That’s three months’ salary for an average person in one of the world’s poorest countries. But the oil could run out in a decade. South Sudan needs to find another way to make money.

On my last day in Juba, I attended a debate about the future of Sudan’s oil, sponsored by USAID and the International Republican Institute. Opposition leader Onyoti Adigo said the oil money should have been used to build roads and infrastructure for the future.

Instead, he says, it is spent on sending the children of top officials to expensive private schools abroad. “Everyone knows this,” he said.

SPLA secretary Bol Makueng stared morosely at the ceiling. “Mistakes might have occurred,’’ he admitted.

But then he explained that this is a new day, in a new country. People can’t rely on aid anymore. And they shouldn’t just look to the government. They must catch the entrepreneurial spirit, just like the foreigners.

“The Ethiopians came without money,” he said. “They get up at 4 a.m. They are doing business . . . Most of them have more money than any of us in this room today.”

Farah Stockman can be reached at fstockman@globe.com. Follow her on Twitter @fstockman.
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