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THOUGHT LEADERSHIP

Tony Sugden

Tony SugdenTony Sugden

Managing Director and Group Chief Executive

To work or not to work in South Sudan

Discussing the security situation and operating a business in Burundi, I was once simply told: “Don’t bother!” Many have the same view of working in South Sudan in the current political and security environment. South Sudan is not in ‘Don’t bother territory’ in my view.

South Sudan requires a very high level of risk tolerance for market entry and survival. Warrior Security has been successfully operating in South Sudan for the last 10 years, and continues to be the largest private security presence in the country. We are staying where we are.

Some would say that South Sudan stands at a crossroads, whereas in reality it has gone over a cliff and is hanging on by a thread. The international community continues to voice its grave concern over the breakdown of the peace agreement signed in August 2015. There has recently been talk of genocide and of further imposition of sanctions on the State and its leading individuals; and even some strongly presented arguments that South Sudan should be taken into UN trusteeship.

The violence in July 2016 was a major low point but since the expulsion from the country of Riek Machar, the international community has been largely supportive of the sovereignty of the state and the legitimacy of the current government.

Although politics in South Sudan continues to be framed in ethnic terms and consensus remains difficult to achieve, arguably their government is now much more inclusive and representative across the community.

The Nuer, now represented in government by First Vice President Taban Deng Gai, has traditionally opposed the majority Dinka tribe. Deng is a beacon of hope, a respected war time General who has been active in negotiating on behalf of the Government with minority ethnic groups such as the Murle and the Shilluk. Then there is Vice President, James Wani Igga, an Equatorian; one of the SPLM’s most senior figures.

These 3 figures are able to represent the significant tribes of the Dinka, Nuer and Equatorians, without which the consensus for federalism would be very strong. Finally, South Sudan’s accession to full membership of the East African Community in September was a major step in its development. Unfortunately it is military activity that grabs a significant amount of attention now.

What is interesting is that there is no longer a divisive armed opposition. Fighting now is between the SPLA and local armed militia groups, many of which operate in defence of a perceived threat to their territory and identity, rather than because of a distinct political agenda.

Tragically, there have been significant civilian casualties, and many of them have probably been based on ethnic hatred, but we assess that it is unlikely that this will descend into the genocide that has been predicted by some commentators. While there is a possibility that it could do so, the level of engagement at international level, and the current level of ethnic integration in the national Government, suggest otherwise.

Sadly, what I think we will not be able to avoid in 2017 is the very high likelihood of famine. As we approach the end of 2016, approximately 4.8 million people in the country suffer from severe food insecurity, which is nearly 40% of the population.

The outlook for South Sudan’s economy is also looking bleak, and it is in need of serious re-engineering. GDP is less than half of the value in 2014. 85% of the working population is engaged in non-wage work and the civil service is usually two to three months behind with payment of salaries, which are way below CPI indexes. The economy is now in hyperinflation at over 800% and rising. Oil forecast revenue for 2017 is 15% of that recorded in 2015.

These figures do not tell a positive story. And yet only two years ago South Sudan had a Revealed Comparative Advantage assessment for oil production, meaning that it was successfully exporting more than its assessed market share given the size of its economy.

Over the next decade, it has been forecast that East Africa will outpace growth in the other sub-regions of Sub-Saharan Africa by up to 20%. And there is no doubt that South Sudan has significant potential thanks to its many natural resources that have yet to be tapped. The economy is functioning, with the most serious problems being the lack of foreign currency reserves and the almost complete reliance on oil exports. For the moment, parallel structures are providing a crutch for stability such that the dollar exchange rate, which having rocketed up in the middle of the year, has been relatively stable for the last three months. Interestingly cross border trade around the country remained constant in Q3.

Having operated a company in South Sudan, which employs almost 5,000 people for nearly ten years, I am not as pessimistic as the risk indicators might demand. South Sudan has largely unrealized potential, including particularly significant oil reserves. Significant, unrealized profits exist for investors and entrepreneurs looking to help stimulate the underdeveloped economy.

There is a large and youthful labour force hungry to learn and hungry for change. Remember that as a ‘Least Developed Country’, South Sudan benefits from duty and quota-free access to most developed and developing countries under the provisions of the WTO.

There is no escaping that South Sudan is almost at the bottom of the World Bank ‘Doing Business’ league table, but there are some stark exceptions within the metrics, worthy of note. Indices for both payment of taxes and enforcement of contracts are both well into the top half of World Bank rankings and a number of other metrics are trending upwards. South Sudan is a frontier environment with opportunities in all sectors albeit with significant challenges.

The biggest risk is not taking any risk. In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks. Well said Mark Zuckerberg!

With a suitable approach to risk mitigation it is sufficiently permissive to merit an early market entry, particularly if you have low exit barriers. Corporates can make a real difference to the crisis.

One of our clients is working to develop infrastructure and a favourable tax and tariff framework, and some progress is being made. Business can be done and it is being done not least with the UN and the many NGOs who are in South Sudan to stay. The key is that market entry requires collaboration and patience. It needs collaboration with government and international organisations and also with organisations which have operated in South Sudan for some time which can help in managing the clear risks that exist. It is difficult to go it alone.

Be ready to stay for the longer term, because it is unlikely there will be any return on investment tomorrow, or any time soon.

Tony Sugden

Tony SugdenTony Sugden

Managing Director and Group Chief Executive

The real crime is their working hours

In East Africa, it’s not uncommon for employees such as security guards to clock up over 70 hours of work each week. This punishing schedule is not only bad news for security workers but it is bad for business too.

A security guard employed in East Africa typically works 12 hour shifts for six consecutive days of the week. With journeys to and from work often totalling two hours, this effectively results in 16 hour days, with overloaded schedules leaving virtually no time for a meal, proper rest or personal administration. Unsurprisingly, night guards commonly use what should be eight hours of sleep time that remain in the day for catching up on their personal lives.

Overworking can arise not only through employers setting long hours in contracts, but also because of low pay driving workers to maximise their hours to supplement their minimum wage incomes. This can come in the form of overtime and in some cases, moonlighting to hold down other jobs. The potential strains and knock-on effects of excessive work hours are manifold, but the immediate damage is to the health and well-being of employees. There is no shortage of evidence documenting the personal and family deterioration that can result from overwork and insufficient rest, but it is clear that overwork in the security industry impacts on the companies that are being protected as well.

There are numerous cases of guards with excellent track records, whose performance has nosedived through exhaustion. Too tired and distracted to do an effective job, good work habits slip and guards become a danger to themselves and to clients. Welfare related problems can also lead to guards absconding from work. A family sickness or a bereavement can require a guard to make time to attend a funeral or to find extra money to pay or contribute for healthcare or funeral expenses, and such scenarios have been shown to lead to a guard’s sudden departure and the theft of money or property out of desperation.

The solution has been shown to be relatively simple: a reasonable expectation of working hours, combined with fair pay and a comprehensive staff welfare system. All employees are entitled to a ‘Duty of Care’ from their employers, and the security industry is no different. Security firms have a duty to ensure that employees are not over tired or over worked, which potentially puts themselves and their clients at risk of harm.

Some governments have enshrined the resistance against excessive working hours in legislation, and this can be a useful starting point for establishing company policy. The UK’s Work Time Regulations 2012 (WTR 2012) guarantee employees a period of 24 hours' uninterrupted rest per week (or, at the employer's choice, 48 hours per fortnight), an unbroken daily rest period of 11 hours and a rest break of 20 minutes when a day's working time exceeds six hours. Its regulations also limit the normal working hours of night workers to an average of eight hours in a 24-hour period, with an entitlement to receive regular health assessments.

In order for staff to work unencumbered by personal stresses it is also recommended that they be granted free time in the week – outside of the work and resting hours – to carry out personal administration. This creates an invaluable space for tending to everyday matters, especially when personal issues arise. Our experience is that giving staff additional free time in this way boosts welfare, improves staff retention and reduces the risk of staff absconding.

Pushing guards to sustain overly long working weeks has unacceptable costs for staff and their families – but it’s a false economy too. A happy, rested workforce is also a productive and loyal one so promoting a positive work-life balance among employees is a benefit not just to them but to employers and clients too. It’s about ‘Duty of Care’ within the security industry, which is a win-win!