15/08/2025
South Sudan's Paradox: Oil Riches and Ubiquitous Poverty
South Sudan’s economy presents a stark paradox: a nation with immense natural resources that is simultaneously one of the most economically fragile and impoverished on Earth. The country's economic narrative is dominated by two industries that stand in dramatic contrast to one another: the highly volatile and politically dominant petroleum sector and the demographically critical but largely underdeveloped agriculture and livestock sector.
The oil industry is South Sudan's indisputed mainstay of its official economy. Since independence, petroleum has contributed a staggering 98% of the annual budget of the government to operate and an equally remarkable 80% of the GDP of the nation. It makes the nation acutely vulnerable to shocks in world oil prices and political disturbances. A classic example of such vulnerability came in the guise of the break in one of the major oil pipes in neighboring Sudan in the way of the 2024 break, suspending shipments and causing a vast estimated economic contraction of 24.5% in the year. The entire fiscal system of the nation, comprising even the salaries of government officials, almost totally relies on the inflow of the single commodity.
Deeply disconnected from the petroleum-dependent formal economy, agriculture and livestock comprise the basis of the population's economy. Approximately 80% to 95% of all families depend on subsistence farming, herding, and fishing for subsistence and income. The country has some of Africa's richest fertile farmland, and 70% of its land area can be used for farming, but just less than 5% is actively farmed. Likewise, it has a huge livestock population of upwards of 60 million animals, one of the highest per capita in Africa. Despite such enormous potential, the sector persists in a low-input, low-output condition of subsistence.
The space between the two economic pillars persists in large measure because of a combination of three interconnected challenges. First, sustained political strife and insecurity have uprooted millions, disrupted crop cycles, and made economic life dangerous. Second, a severe deficiency in national infrastructures offers a physical barrier to expansion. With only 2% of its roads paved, the cost of transporting goods makes getting produce to market unfeasible for farmers and stifles development. Third, a dearth of transparent governing means oil revenues end up on "special projects" or repayment of debt, and not on support of infrastructures or public services.
Though new sectors such as mining, which has the prospect of resources such as diamonds and gold, remain largely informal and unprotected, the way to a more durable future is through deep transformation. The long-term economic future does not consist of discovering new oil fields but of changing the economic paradigm of the country. Sustainable growth depends on tackling the basic obstacle of conflict, corruption, and infrastructural deficit and making a transition to an economy based on the strength of its people and its soil.
