South Sudan Hopes Planned Port in Djibouti Will Increase Market Access, Profits

Officials in South Sudan confirmed this month they have bought land on the coast of Djibouti to build a port. South Sudan says the port will be key for exporting the country’s crude oil, which currently goes through Sudan, as well as for importing goods, most of which come through the Kenyan port of Mombasa.

Puot Kang Chol, South Sudan's minister of petroleum, said last week that the land was purchased for exporting crude oil.

“I would like to announce to all of you, that as we have been pushing to make sure we open all our ways because as we all know, South Sudan is a landlocked country and therefore there is need for us to try our level best to have access to the market,” he said.

Two other African Great Lakes countries, Uganda and the Democratic Republic of the Congo, recently said they will shift their port operations to Tanzania, leaving just Rwanda and Burundi still fully dependent on the port of Mombasa.

Duncan Otieno, a Nairobi-based economist, said the move leaves Kenya in a difficult situation as it feels the pinch of competition from the regional port in Dar es Salaam and now Djibouti.

“There is every reason to believe that exit of South Sudan will affect the port of Mombasa in the essence that, with Uganda existing and considering the port of Dar es Salaam, that is likely to affect the operations in the port of Mombasa,” he said. “We need to ask ourselves what could have led to DRC and Uganda and now South Sudan considering giving the port of Mombasa a wide berth.”

South Sudanese economist Abraham Mamer said the Djibouti port will provide a cheaper route for South Sudanese exports and imports.

“In terms of economies of scale, we are better off than building another railway to connect us to Sudan,” he said. “We are saving to directly import or export our oil from the eastern part of South Sudan through Djibouti, Ethiopia. So, for us we are not losing, we are gaining, South Sudan is not land-locked, it is land-linked so it is OK.”

However, Otieno said Juba’s attempt to cut reliance on Mombasa might have ramifications within the East African Community bloc, such as undermining the LAPSET project, a regional cargo transportation network starting at the Kenyan port of Lamu.

“Every country is guided by its national interest, which changes from time to time,” he said. “But that also needs to be looked into within the geopolitics of the regional body, EAC. There is need to consider this because it runs the risk of affecting the economy of this region.”

Mamer, on the other hand, said that South Sudan's acquisition of land for a port in Djibouti will have no impact on LAPSET.

He said South Sudan cannot afford to lose that project, which will connect the country with Rwanda and Uganda.

“If we have many ways to import and export our goods then we are the best,” he said. We are going to build a refinery where we are going to import and export our finished product. Even if we have Djibouti, it is a way we can import and export, so we are not losing we are maximizing our impact in the region.”

South Sudan has oil deposits estimated at 3.5 billion barrels. That means if the country could ever find a way to end its chronic state of conflict and increase oil production, the economic impact could be enormous — no matter which port the country uses for its exports.