Red Sea escalation woes pose a great risk to South Sudan

The economy of South Sudan, heavily reliant on oil exports for over 90% of its revenue, is facing potential risks due to escalating security concerns in the Red Sea. CNBC Africa's Ericks Shyaka interviewed Akol Dok in Juba to delve deeper into the implications of the situation. Dok highlighted the stable current state of South Sudan's economy, despite challenges like fluctuating oil prices and the adverse effects of the conflict in Sudan. The influx of migrants from Sudan has strained resources and logistics at the border, impacting the economy. To counter these challenges, policymakers are focusing on strengthening the South Sudanese pound, enhancing trade, and reducing reliance on oil exports. The government is exploring an export strategy to diversify its revenue sources and stabilize the economy. However, the security situation in the Red Sea poses a significant threat to South Sudan's economy. As a landlocked country, South Sudan relies on Port Sudan for exporting its crude oil, which accounts for a majority of its revenue. With shipping companies like Merix halting operations in the Red Sea due to security concerns, South Sudan faces the risk of a potential halt in oil exports, leading to production disruptions and revenue loss. The blockade could also affect the import of essential oil-field equipment, further impacting oil production. The government is exploring alternative routes, such as exporting crude through the Suez Canal, but these options come with increased costs, which could negatively impact the economy. The potential closure of the existing pipeline through Sudan due to conflict is a major concern. To mitigate risks, South Sudan is considering building alternative roads for oil transportation to ports in Djibouti, offering short-term solutions while exploring long-term infrastructure development. Plans are underway to diversify the economy by promoting exports of agricultural products like gum Arabic, sesame, and mining sectors such as gold, diamonds, and uranium. This strategic shift aims to reduce reliance on oil revenues and enhance economic stability in South Sudan, amidst the escalating Red Sea crisis.