RPT-INTERVIEW-Egypt's Citadel to grow staple crops in South Sudan
Tue Mar 20, 2012 5:18pm GMT
(Repeats to additional subscriber service)
By Ulf Laessing
JUBA, March 20 (Reuters) - A unit of Egyptian private equity firm Citadel
Capital plans to cultivate up to 40,000 acres of farmland in South Sudan to
sell staple foods such as maize in the newly-independent nation, an
executive said on Tuesday.
South Sudan seceded from Sudan in July under a peace agreement that ended
decades of civil war with Khartoum, but the new nation is struggling with
food shortages and widespread tribal and rebel violence.
The United Nations warns that around a third of the country's roughly 8
million people will need food assistance this year after bad weather and
violence hit farming.
The young nation, one of the least developed in the world, also needs to
cope with an influx of more than 80,000 refugees from Sudan's South Kordofan
and Blue Nile states, where the army is fighting rebels.
Citadel is investing about $30 million to produce staples such as maize,
sorghum and sunflower in the oil-producing Unity state bordering South
Kordofan, project manager Peter Schuurs told Reuters.
"We have so far 4,000 acres and we will be planting this year, primarily
maize with some sorghum and sunflowers," said Schuurs, managing director of
Concord Agriculture, a fully-owned Citadel unit.
"Our focus is food security in South Sudan ... we will be supplying the
local markets," he said on the sidelines of an investment conference in
Juba. "We will plant the crop in June."
The firm has leased land from Unity state to be developed with the help of
local farmers who it trains and equips with heavy machinery.
Schuurs said Citadel plans to add between 6,000 and 8,000 acres every year
to reach between 30,000 and 40,000 acres within three to five years, when
the firm expects to make its first profit from the project. Total production
would be around 67,000 tonnes at the start.
"There is a food deficit for hundreds of thousands (of tonnes)," he said,
adding that the United Nations, South Sudan's army and local merchants would
be customers.
A camp with refugees from South Kordofan is located close to Citadel's
farming land. "They will need to be fed," Schuurs said.
Citadel expects a return of 15 to 20 percent from the project, which it
plans to reinvest in the Unity state farmland.
HUGE CHALLENGES
Like other investors, Concord is facing a long list of challenges doing
business in South Sudan, which is struggling to set up a functioning
administration.
The biggest headache is importing farming machinery to the landlocked nation
from the Kenyan port of Mombasa along poor roads in Kenya and Uganda. Few
paved roads exist in South Sudan outside the capital Juba.
It not only takes weeks to get the machinery but local officials frequently
try to impose unexpected duties on the imports, Schuurs said.
"There are always challenges. At the border between Uganda and South Sudan
there is a problem at the moment," he said.
Promised by the government in Juba to be exempted from customs in the first
10 years of the project, Citadel now faces demands from South Sudan border
officials.
"And then all of a sudden you get a duty of 20 percent," he said.
He said customs officials have become much stricter since a row between
Sudan and South Sudan over oil payments escalated.
South Sudan needs to export its crude via Sudanese pipelines to a Red Sea
port but has been unable to agree on a fee with Khartoum.
In January Juba shut down its entire oil production of 350,000 barrels a day
in a protest at Sudan taking some oil for what it called unpaid transit
fees. Since then officials have been scrambling to find alternative sources
of revenue.
"There is no revenue from oil and all of a sudden they are looking for ways
to generate revenues," Schuurs said. "The easiest way to generate money is
to put up a road block and ask for a kind of a fine for a passing truck or
car." (Editing by Greg Mahlich)
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Received on Tue Mar 20 2012 - 17:11:54 EDT
