South Sudan went to the polls yesterday to vote on whether to secede from the north, the culmination of a peace process that ended decades of civil war. Balloting will last a week, but it appears a foregone conclusion that the country will vote for independence.
No one is sure, however, what the aftermath of that decision will look like. Many analysts have focused on the political challenges of disentangling the two countries, from citizenship rights to currency to oil resources. Less frequently mentioned but potentially more destabilising is the prospect of a serious humanitarian crisis. Such a crisis could be caused by violent clashes, but if history is a guide, it is more likely to be caused by food shortages.
Already, south Sudan faces dire rates of malnutrition. In 2009, 47 per cent of the population suffered from food deprivation, according to the National Baseline Household Survey. This rate is more than twice the average for countries in sub-Saharan Africa. While the north faces its own problems, the challenges in the south are significantly higher.
Many signs point to an increase in food insecurity in 2011. For one, south Sudan does not have a strategic grain reserve. Two years ago, drought pushed south Sudan to the brink of famine. In 2010, good rains increased yields of key crops, including sorghum and millet. Overall, the number of people reliant on food aid decreased. But there is not enough grain to store for later this year, and even if there was, south Sudan lacks the facilities for large-scale storage.
As a result, southern Sudanese are dependent on two things: the weather, and the market. If it rains the right amount, the harvests will be good. If it doesn't, they will go hungry. The market is more complicated: it can offset favourable weather. Right now, despite the good harvests of late 2010, grain prices remain higher than normal. Traders in major markets have left ahead of the referendum, and it is unclear when they will return. The Famine Early Warning Systems Network reports that prices will remain high until August.
In south Sudan, June to August is traditionally known as the "hunger season". Most countries in the region experience a "hunger season", but this year, south Sudan's is likely to coincide with a population influx. Roughly 400,000 southerners living in the north have registered their intention to return to the south.
The government is unlikely to have the capacity or the funds to handle increased food insecurity in the next year. After the referendum, as the prospect of a food crisis looms, government officials will be occupied with political questions on border demarcation, the division of oil and water resources and the status of the disputed area of Abyei.
Equally important, though, is the question of how to boost south Sudan's agriculture productivity. More than 80 per cent of the population is engaged in agriculture for its livelihood. And there is the potential to substantially increase production. Much of south Sudan's land is arable, particularly in the southwestern "greenbelt", but only 4 per cent of arable land is currently being farmed. Some Africa experts believe south Sudan has the potential to become a regional breadbasket.
To do so, the government needs to invest in infrastructure - not just roads, but a national agriculture research agency and an agriculture extension service. A research agency could develop seeds to thrive in south Sudan's agro-ecological zones. An extension service could provide education and training to farmers on how to use fertiliser, disease prevention for livestock and the benefits of planting new seed varieties.
But the government cannot build a thriving agriculture sector on its own. It will need the assistance of development partners like USAID and the World Food Program, as well as nongovernmental organisations such as the Bangladesh-based development organisation BRAC and World Vision. Most importantly, it needs the support of the private sector. Banks need to increase their agriculture lending, and successful seed companies and fertiliser distributors in Uganda and Kenya need to enter the south Sudan market.
Some of these actors have already started to work on agriculture. The World Bank currently has a $42 million (Dh154.3 million) project to increase agriculture productivity in five states in south Sudan. USAID is ramping up its agriculture projects in the area (it held a conference on the topic in August 2010 in Nairobi). BRAC has a project with 4,000 small-holder farmers to provide them with tools and education.
The south's government recognises the importance of agriculture. Dr Ann Itto Leonardo, the minister of agriculture, said recently: "We need to change the current dependency syndrome of over relying on food imported from neighbouring Uganda, Kenya and others. The government remains committed towards reversing these trends for the benefit of our people." She is leading an effort to develop a new agriculture extension policy.
Yet if south Sudan faces a food crisis this year, the outcome of this week's voting will push the burden onto to shoulders of a young government. To cope, south Sudan will need to seek assistance from international partners, as well as its neighbours. Kenya and Uganda, in particular, have a vested interest in helping.
With an intense focus on agriculture development, south Sudan could eventually export food to Kenya and Uganda. That prospect is years away, while the next hunger season begins in five months.
Stephanie Hanson is the director of policy and outreach at One Acre Fund, an agriculture organisation that operates in Kenya and Rwanda
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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