The Other Side of Sudan

It could be the setting for a Hollywood Western: a wasteland of brush and scrub, a rough Main Street of bustling saloons, quickly built hotels and newcomers looking to get rich quick. It's the world's most unlikely boomtown: Juba, capital of South Sudan, a territory with 6 million people that is twice the size of its tragic neighbor, Darfur. Since a civil war with the North ended two years ago, investors have been pouring in to Juba, paying $200 a night in riverside tent camps with names like Oasis, Mango and Da Vinci.

The lure is a multibillion-dollar treasure in oil, gold, diamonds, farmland and forests. International energy companies are beginning to fight for shares of South Sudan crude. Regional entrepreneurs are hawking everything from cement to gasoline, catering to the tide of fortune hunters and job-seekers that is swelled by foreign pledges of nearly $6 billion for postwar reconstruction. More than 2, 000 kilometers of new roads are already built, boosting trade with neighbors like Kenya. The money flows give the new South Sudan regime a yearly budget of almost $1 billion—up from pretty much nothing a year ago.

The result is an environment ripe for corruption. Kidnapping and equipment theft are common, laws and business infrastructure lacking. Energy companies are drilling in conservation areas. "I imagine when they found gold in the Western U.S., this is how it must have been," said Anis Pringle, a partner at KPMG in Kenya who has been working in the region since 2003 and now performs treasury services for the government's Ministry of Finance. "We do their books," says Pringle. "We are also a travel agent, a bag carrier and a messenger service. But lately, we mostly carry large bags of cash into Juba."

Juba was once the southern base for the Sudanese army as the Islamic government in Khartoum battled the Christian animist guerrillas of the Sudan People's Liberation Army. Now, as South Sudan prepares for independence in 2011, Juba is flourishing in part because the peace deal gave it a share of oil rights. The region pumped out a modest 350 barrels a day last year, but experts say that could double in the next few years. Across the Nile from Camp Oasis sits the tallest crane in Juba, belonging to Moldovan oil firm Ascom Group, one of the newest companies to enter the South since peace. Because the government has yet to come up with an environmental protection policy, Ascom has been drilling in the Sudd, the largest freshwater swamp in Africa. It's the Sudanese equivalent of drilling in the Arctic, and Western donors are worried for its ecological future.

But their influence is limited. China, India and Malaysia currently control 90 percent of the industry, which exported $6 billion of oil last year. Total France pulled out in the 1990s because of the war, and a U.S. embargo has kept U.S. oil corporations out of Sudan. Meanwhile, North and South continue to wrangle over rights, despite their deal, adding to the chaos of a fledgling bureaucracy. Investors complain about ad hoc taxes: entrepreneur Stuart Hurd says he was charged an import fee for transporting local water. The Ministry of Finance allegedly paid $45,000 each for 200 cars that normally go for $27,000. "The ministers [in Juba] knew nothing about running a country; they had never managed anything before," says Ishac Diwan, a Sudan country director for the World Bank. "But I believe this year will be a year of delivery."

Not all donors are as optimistic, with many tightening the spigots—only $250 million of promised aid money has come into Juba. The government has tried to allay fears by setting up an anticorruption agency and a new investment committee that will try to bring order to labor and land markets. Currently, companies aren't sure which authorities in Khartoum or Juba to ask for permits. Meanwhile, Juba has begun handing out deeds to 20-foot-by-20-foot plots outside town, hoping to disperse thousands of fortune seekers crowding into the city center. They are being snapped out up by cab drivers, farmers, soldiers and other new boomtown cowboys, almost as fast as Juba can hand them out. It's crazy, but in Sudan that's progress.