Sept. 4 (Bloomberg) -- The World Bank would work to make a newly independent Southern Sudan a member “speedily,” paving the way for the undeveloped region to gain international financing it does not qualify for now, a top bank official said.
Under the terms of a 2005 peace agreement, Southern Sudan can choose to vote to secede from the rest of the country in a January 2011 referendum. The peace deal ended a 21-year civil war between the north and south in which 2 million people died.
“If a country is newly independent, we do have precedence of how the country quickly qualifies to become a member of the World Bank or the IMF, and so we would follow the same process to grant an independent South Sudan its membership of the bank,” Obiageli Ezekwesili, the World Bank vice president for Africa, said in an interview today in the southern capital Juba.
The region currently misses as much as $100 million in annual grants and no-interest loans that it might otherwise receive through the bank’s International Development Association, which provides financing to low-income nations, said Ezekwesili, a former minister of education in Nigeria.
The length of the accession process “varies,” though “the sentiment would be to act speedily,” Ezekwesili said.
Sudan is currently not eligible for the funds due to unpaid arrears. The country’s external debt is $36 billion, 7% of which is owed to the World Bank, according to the official.
Southern Sudan is currently in negotiations with the national government in Khartoum on how the debt might be apportioned if the region becomes independent.
“That resolution could take any form” and might complicate the process of making Southern Sudan eligible for IDA funds, Ezekwesili said.
The biggest benefit for the South Sudanese would be in making private investment look more attractive, said Ezekwesili.
“It’s the leverage that it offers them that they miss particularly,” she said. “For the private sector to create the wave of growth, it must be that South Sudanese can attract international financing of all kinds.”
“Years of conflict has prevented investment in infrastructure and destroyed much of what existed, which has impeded the emergence of market linkages and a viable indigenous private sector,” the World Bank said in a June report on Southern Sudan. These problems are compounded by a lack of skilled workers and institutions, the bank said.
Southern Sudan currently derives 98% of its budget from oil revenue acquired under a wealth-sharing agreement in the 2005 peace deal. Under the arrangement, the two sides split the profit from oil pumped in the south.
Sudan is sub-Saharan Africa’s third-biggest producer of oil and most of its daily production of 490,000 barrels comes from Southern Sudan. The crude is exported through a pipeline that runs north through Sudan to Port Sudan on the Red Sea. No agreement has been reached between the two sides on a revenue-sharing arrangement or pipeline-usage fees following the referendum. Most of Sudan’s oil is shipped to China.
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