South Sudan conflict could cost $158 billion over next 20 years –study

Nairobi, Wednesday January 14, 2015 - The price of failing to bring about lasting peace in South Sudan could be US$158bn over the next two decades, according to a new study. The conflict, which erupted in December 2013, has already killed tens of thousands and placed nearly a third of the population of the young country at risk of famine.

Released on the eve of two major summits in Ethiopia, the report, called South Sudan: The Cost of War, introduces empirical research that makes a compelling case for immediate action by South Sudan’s neighbours and African states to stop the fighting and avoid massive economic and financial costs.

The report quantifies the additional economic costs that would be incurred by South Sudan should the conflict continue beyond today. It takes into account declines in oil revenue and remittances and increases in military spending. It also looks at costs incurred in other countries in the region and at a global level.

The collaborators on the report, Frontier Economics, the Center for Conflict Resolution (CECORE) and the Centre for Peace and Development Studies (CPDS) at Juba University, have called on the African Union Peace and Security Council to publicly release the findings of the Commission of Inquiry on South Sudan as soon as possible and to use those findings as the basis for imposing targeted individual sanctions such as asset freezes and travel bans.

“The Cost of War report shows there are severe economic costs that have not previously been known that must now be acknowledged. Next week at the AU summit in Addis Ababa, all Heads of African States must realize that South Sudan’s economy and our people simply cannot afford to forgo billions of dollars it will cost to endure five more years of conflict”, warned Dr Luka Biong Deng of CPDS.

"There can be no price tag on the suffering of South Sudan’s people from displacement, famine and death," said Dr. Salim Ahmed Salim, former Prime Minister of Tanzania and Secretary-General of the Organisation of African Unity, writing in the foreword of the report. "But," he continued, "it is possible to assess the direct economic costs by estimating the loss of productive assets and capital and the reduction in economic activity, and they are large."

Key findings include:

· If the conflict continues for another one to five years, it will cost South Sudan between US$22.3 billion and $28 billion depending on its severity. However, if the effects are measured over twenty years to allow for flow-on effects, the loss is even greater: up to $158 billion.

· The human costs of conflict – death, hunger and disease – also have significant longer-term economic impacts. Just taking the effects of hunger on labour productivity could mean a further $6 billion in lost GDP if the conflict were to last another five years.

· The five countries considered in this report – Ethiopia, Kenya, Sudan, Tanzania, and Uganda – could between them save up to $53 billion if the conflict were resolved within a year, rather than allowed to last for five years.

· If the conflict ended within one year rather than five, the international community could save an estimated $30 billion by reducing expenditure on peacekeeping and humanitarian assistance.

“The $3bn needed for the humanitarian response and peacekeeping in South Sudan in 2014 will pale into significance when compared to the cost if a peaceful solution is not found quickly,” said Amar Breckenridge of Frontier Economics. “The cost of war is too great for this region to bear. Peace is a humanitarian necessity but also an economic one for South Sudan and its neighbours - especially Uganda and Kenya, who quite literally cannot afford to allow this situation to continue.”

The conflict has already had a pronounced negative economic effect on South Sudan. The International Monetary Fund (IMF) suggested that real GDP will have declined by around 15% in 2014 – a dramatic turnaround from the previous year, when it had the fastest growth in real GDP in the world. Because much of South Sudan’s economic activity is informal, the true costs incurred to date are likely to be considerably greater.

“On the eve of the Intergovernmental Authority on Development (IGAD) and African Union (AU) summits in Addis Ababa, we hope Africa's leaders will finally come together to ensure there is not another year of conflict in South Sudan. In addition to saving lives, they need to save their economies billions of dollars. Otherwise South Sudan

risks becoming a failed state or even being the catalyst for a full blown regional conflict,” said Rose Othieno, Executive Director of CECORE in Uganda.

The key recommendations of South Sudan: the Cost of War include:

The parties to the conflict must immediately implement the cessation of hostilities (COH) agreements they have signed.
The AU Peace and Security Council should publicly release the report of the AU Commission of Inquiry on South Sudan as soon as possible. This report should also be used as the basis for imposing targeted individual sanctions such as asset freezes and travel bans, as outlined in the IGAD resolutions of 7 November 2014.
Those governments and groupings with influence over both main parties to the conflict, especially those in attendance at this month's summits, should strategically and urgently use that influence to support the parties to resolve the conflict, in the interests of protecting civilians and securing a sustainable peace as soon as possible. The AU summit in particular is an opportunity to initiate the formation of an international contact group to help secure peace in South Sudan.
The parties to the conflict must also commit to engaging in a meaningful dialogue between themselves and with a wide range of South Sudanese stakeholder groups to swiftly form a Government of National Unity.
The Government of South Sudan should request international assistance from the African Union and United Nations to establish a hybrid court to try to the most serious crimes committed during the current conflict. The country should also embark on national reconciliation and healing processes that are owned and driven by communities so they respond to the circumstances in South Sudan.

ENDS.

Crisis Action works behind the scenes to enable our partners to respond jointly to conflict and crises. Crisis Action should not be cited in media reports.

For more information, or to organise interviews, please contact: Conor O'Loughlin at Crisis Action in London on +44 7741 963333.

Iddah Kwanyah at P&L Consulting, kwanyah@p-l.co.ke + 254 721 490984 / Charity Kamiro, kamiro@p-l.co.ke, +254 735804454

Notes to editors:

The combination of South Sudan’s low level of agricultural productivity, human displacement through conflict, and poor transport infrastructure has increased the likelihood of a humanitarian crisis. Reports by aid agencies suggest that as many as 4 million people, or close to a third of the population, face serious food shortages and the risk of famine.

Frontier Economics is one of Europe’s leading economic consultancies, and is part of the Frontier Economics network, which also includes a separately owned company based in Australia. We apply advanced economic analysis to help clients make better decisions, improve performance, and keep ahead of the competition.

CECORE is a Ugandan non-profit making organisations initiated in 1995, with programmes in Uganda, the Great Lakes Region and the Horn of Africa. CECORE’s purpose is to empower individual women and men, communities, organizations and institutions to transform conflict effectively by applying alternative and creative means in order to promote a culture of active tolerance and peace.

The Centre for Peace and Development Studies (CPDS) was established in 1997 as an academic entity within the University of Juba. The Centre serves as a forum for interdisciplinary study, research, teaching and training and public dialogue on conflict, peace and development issues related to South Sudan, the Horn of Africa, the Great Lakes region, the African continent and the world.