VZCZCXRO9614
PP RUEHROV
DE RUEHKH #2000 2360958
ZNR UUUUU ZZH
P 240958Z AUG 06
FM AMEMBASSY KHARTOUM
TO RUEHC/SECSTATE WASHDC PRIORITY 4263
INFO RUCNIAD/IGAD COLLECTIVE
UNCLAS KHARTOUM 002000
SIPDIS
SIPDIS
SENSITIVE
E.O. 12958: N/A
TAGS: EINV ECON SOCI SU
SUBJECT: Juba Investment Fair: A Litany of Woes
Ref: Khartoum 00721
1. (SBU) SUMMARY: Recent attempts at a Southern Sudan trade fair in
Juba failed to display the region as an attractive place for doing
business, highlighting the South's low capacity, lack of a proper
regulatory environment, and possibility for corruption. The INGO
Bread of Life Africa (BOLA), run by an American living in Kenya,
organized the Southern Sudan International Trade Fair and
Reconstruction Exhibition at Juba University from August 10-12.
This is the third trade fair that BOLA has put on and the first in
Southern Sudan. The two previous fairs, held in Kenya in May 2005
and March 2006, also attracted much initial interest, but were
handicapped by poor organization (reftel). End Summary.
2. (SBU) Don Reid, the American who founded BOLA, met with the
Acting Consul General (A/CG) after the fair and described a series
of problems that were representative of the environment in Southern.
The most serious problem was with the tent camp that Mr. Reid had
hired to provide food and accommodations. A new camp, it only had
49 of the promised 100 tents, served food Mr. Reid found inedible,
and was submerged under several inches of mud and water. After the
event, the camp owners, affiliated with the SPLA, demanded payment
in full of the originally contracted price and physically detained
Mr. Reid at the airport, demanding he give them all of the USD
12,000 they were owed in cash before departing. Because of the
rudimentary banking system in Southern Sudan, it took nearly a week
to have that cash delivered, and Reid told the A/CG that he feared
for his safety because the camp owners had threatened him and were
getting inpatient. A/CG subsequently spoke with Ministry of
Commerce officials, who agreed to provide police officers to provide
for Reid's safety until the money arrived.
3. (SBU) Mr. Reid said that the Ministry of Commerce had been
helpful throughout these ordeals, and had waived its normal 2
percent fee for investment conferences. He did, however, say that
he had been the victim of a shakedown from the Southern Sudan
Chamber of Commerce. After repeated attempts to get in touch with
the Chamber, Reid said he finally met with them the day before the
event. In that meeting, they demanded a USD 10,000 fee for helping
promote the event, and said they would close down the conference if
he did not pay.
4. (SBU) After Mr. Reid departed, the Chamber of Commerce officials
requested a meeting with the A/CG and explained that they had tried
to get in touch with Reid repeatedly and were unable to until just
before the event. They said the USD 10,000 fee was a standard and
legitimate fee for conferences, and that in exchange they provided
radio and television spots and worked to attract members of the
local business community. They lamented that because Reid did not
work with them until the last minute, they were unable to get a good
turnout from local businesses. They also commented that it was too
soon for an investment conference in Juba and they were afraid they
scared away more business than they attracted. Both the Chamber of
Commerce and some UN officials also accused Reid of corruption,
saying he was pocketing thousands of dollars from the high
conference fees. Reid admitted he had inadvertently hired some
dishonest people for his Southern Sudanese staff.
5. (SBU) The A/CG commented to both the Ministry of Commerce and the
Chamber of Commerce that Southern Sudan must establish rule of law
over rule by force, and it must establish a clear regulatory
framework for businesses. Until that time, most of the investors
they are likely to attract are either small companies with little
ability to deliver, or criminals looking to exploit the south.
Solid, legitimate businesses may show patience for a lack of
capacity, but will quickly pull out if they are threatened by armed
men who act with impunity, are forced to pay surprise "fees" to
different groups, and are required to employ family members of
influential people. The A/CG warned that if this situation is not
resolved by the time U.S. sanctions are lifted, it is likely many
American businesses would quickly move in, and then quickly move
out, never to return.
HUME