Kenyan businesses that have set up shop in South Sudan are expected to realign their operations following a decision by the country’s cabinet to relocate the administrative capital.
The South Sudan cabinet said Juba, the present seat of government, lacks sufficient land for expansion, prompting the decision to pick Ramciel, 250 kilometres northwest of Juba for the role.
“Juba is too small. Where do you put government institutions and investors? We need a large parcel of land to accommodate development projects,” South Sudanese Information minister Barnaba Marial Benjamin said.
Resistance from the local community anxious of losing its land also forced the government’s hand.
With government as the main source of business in newly independent countries, the planned relocation is expected to send several businesses that had already pitched camp in South Sudan or intended to do so back to the drawing board.
“There will be a shake-up of operations because there are businesses that ride on the government clout and would have to be close to the seat of power,” Mr Mwenda Makathimo, a land policy and planning expert said.
Several major Kenyan companies such as Kenya Airways, Equity Bank, Kenya Commercial Bank (KCB), UAP Insurance and many other small enterprises currently mainly service clients in South Sudan from Juba.
“Once set and all facilities/infrustructure is in place, then moving becomes inevitable,” said Kenya Airways in a statement. “This will affect all industry players”.
With the service industry in South Sudan yet to fully take shape after decades of war with the North, the government remains the dominant client for establishments such as banks.
Co-operative Bank is also expected to start setting up its banking infrastructure with a new venture that will be 30 per cent owned by the Government of South Sudan.
The new bank is expected to benefit from government business as it will process salaries of government employees and enjoy business arising from the government’s shareholding in the venture.
The dominant customer base provided by government in South Sudan is expected to encourage service providers such as banks and insurance companies to extend their footprint to the new administrative capital.
“It would be more of players like banks opening additional branches in the new capital based on the clientele base,” Mr Eric Musau, an analysts with Standard Investment Bank said.