When South Sudan marks the first anniversary of its independence SABMiller will be raising a glass to a milestone of its own.
By the time South Sudan gained autonomy from Sudan after nearly two decades of war, a subsidiary of SABMiller, the Southern Sudan Beverages Limited (SSBL), had already clocked two years of operations. SABMiller was the first multinational manufacturer to venture into South Sudan and SSBL began operating in May 2009 with an investment of $37-million in a state-of-of-the-art brewery in the capital Juba.
Ian Alsworth-Elvey, SSBL managing director, said in a recent interview that its early entry into the South Sudan market, at a time when it was considered risky to invest in a country sitting around the bottom of nearly every global development index, eased its way into the hearts of the locals.
“We are always going to be seen as that friend who helped South Sudan in a time of need,” said Alsworth-Elvey.
SSBL provides direct employment at its factory for at least 300 South Sudanese nationals. When the indirect beneficiaries are included, Alsworth-Elvey estimates that the company provides a source of livelihood for between 8000 and 10000 South Sudanese.
A significant contributor
“We pay value-added tax, excise duty, personal income tax for our employees, so we have become a significant contributor to the coffers of the government of South Sudan,” he said.
Last year, as part of an effort to encourage local production of raw material, SSBL sponsored a project to cultivate cassava on a commercial scale. The company reaped the first rewards early this year and Alsworth-Elvey estimates that it will provide a source of income for at least 2000 cassava farmers from three regions of South Sudan.
For SABMiller, which successfully launched a similar beer from locally produced cassava in Mozambique, this will lead to a massive reduction in production costs. Without locally produced cassava, SSBL imported its raw material from Europe at a high cost. It cost the company an average of $2000 to ship a container of raw material to Mombasa and then four times as much to transport it to Juba.
That was only one of the many problems SSBL encountered initially. South Sudan does not generate electricity and the brewery has to produce its own. In addition, corruption was rampant, skilled labour lacking and a transport network nonexistent in a country about half the size of South Africa.
“When we started our investment there was very little legal framework that governed investment,” said Alsworth-Elvey.
The country’s potential
Within two years of setting up in Juba, SSBL was confident enough of the country’s potential to announce in April last year that it would invest an additional $15-million to increase its capacity and build on its “strong brand performance”.
Besides beer, SSBL produces soft drinks and water products.
With SSBL having shown that South Sudan is open for business, the government is intensifying its efforts to attract more foreign investment. In March, the government partnered with private investors already in the country and organised an investment summit that is reported to have attracted at least 400 investors.
Investments already taking place include those in oil production, cellular networks operating companies, hospitality, the banking sector, industrial development and airlines.
“I think the economy in Southern Sudan has grown and it will continue to grow,” Alsworth-Elvey said.