South Sudan facing food crisis
Juba - South Sudan will introduce a series of measures to ward off a looming food crisis in light of spiralling food prices and shortages in the newly independent nation and neighbouring countries.
Commerce Minister Garang Diing Akuong said plans for a sugar project, brewery and fruit cannery were part of the government's strategy to promote agriculture, revive industry and diversify the resource-rich nation's economy from a 98% dependence on oil.
But the immediate worry is to tackle food shortages and sky-rocketing prices due to "low production, the closure of borders with Sudan and the high cost of production," Akuong said.
"In South Sudan we have never produced enough food for ourselves", Akuong said of the import-dependent nation that is now landlocked since it seceded from Sudan in July.
The country's food problems have been compounded by rising fuel prices and natural disasters such as the drought in neighbouring east African countries, Akuong said.
"The government will bring in 300 000 bags of maize from Malawi to reduce the food crisis", he said, but could not give more specific details.
The government hopes this will help reduce prices and the food deficit after the UN Food and Agricultural Organisation's prediction last month that South Sudan will produce half the 1.5 million tons of cereals it needs for 2012.
South Sudan usually imports most of its supplementary food from the north, but "Sudan since May has blocked the borders," Akuong said, after its government occupied the contested area of Abyei.
Conflict spread to the neighbouring regions of South Kordofan in June and last month Blue Nile, as the SPLM political party turned rebel group fights a guerilla war against President Omar al-Bashir's government.
Illegal tax points
"In our first official visit to Khartoum after independence, they told us they were not going to reopen the borders until the problems of Blue Nile and South Kordofan are solved", Akuong said.
"What we are getting from east Africa is not enough to meet these shortages," Information Minister Barnaba Marial Benjamin said.
"They think that by keeping open the borders of the south, this will actually strengthen the position of rebels in Southern Kordofan and Blue Nile", Benjamin added, again denying accusations from the north that South Sudan is funding rebels.
The northern faction of the SPLM fought alongside rebels for years until a 2005 peace agreement paved the way for a January referendum and peaceful southern secession.
But the two countries accuse each other of funding rebel groups that threaten to destabilise the fragile peace and further burden economic woes in both of them.
Akuong said the government had reduced border taxation offices from 25 to five in a bid to crack down on multiple taxation from official and unofficial agents that led to a 61.5% hike in inflation of mainly food products in September from the same month in 2010.
Commerce Under-secretary Elizabeth Majok said a further crackdown was needed as illegal tax points had immediately sprung up again.
Black market dollar traders had also thwarted a recent government effort to encourage traders to import food by doubling the weekly provision of dollars to $4m.
Now, banks will give a letter of credit instead of hard currency to identify real traders and dampen massive price hikes caused by the disparity between official rates of 2.9-3.3 South Sudanese pounds to the dollar and black market rates fetching up to 4.2.
"The essence of them being facilitated is for them to fill the gap in the market by bringing in commodities. But if they don't do that actually the gap will still be high and the prices will be high. The demand will be still be higher than the supply and this is what's causing the price increases", Majok said.
Akuong said a feasibility study was being carried out for a cement factory in South Sudan to reduce the underdeveloped country's dependence on expensive imports and aid a massive construction boom.
The government has not decided when South Sudan will join the East African Community trade bloc.
Akuong said opinion was split on whether to take the risk of opening up the fledgling nation's import-based economy to neighbouring countries that could flood the market and weaken its strong currency.