World's Most Oil-Dependent Country Looks to Coffee
South Sudan has turned its attention to coffee from oil.
— -- The world's most oil-dependent country is hooked on coffee.
The United States Agency for International Development (USAID) announced today that it's investing $3.18 million to revive South Sudan's coffee industry from scratch in conjunction with coffee giant Nespresso and the nonprofit development group Technoserve.
The world's newest nation (it became independent through a referendum in 2011), South Sudan has been plagued by conflict and plunging oil prices for the last two years.
Excess oil supply is among the factors that have caused oil prices to drop in the last year. Oil prices fell more than 30 percent last year. That's a problem for a country whose exports are almost entirely oil (the country also exports scrap vessels, tanned sheep hides and raw cotton though at very small amounts compared to oil). The World Bank said oil exports comprise 60 percent of South Sudan's gross domestic product (GDP).
Though the country has a long coffee history, the local industry was largely destroyed during the civil war that took place from 1983 to 2005. Nestle's Nespresso has already invested over $2.5 million since 2011 in South Sudan's coffee farmers to revive "high-quality" coffee production, which includes planting trees and developing sophisticated commercial channels to export it. Nespresso said more than 700 farmers have already been integrated into its sustainability program. The first coffee export through Nespresso was sold in France last year. The company's plans to have invested over $3.4 million by the end of this year.
By 2019, Nespresso, USAID and Technoserve want to train 1,500 South Sudanese farmers, of whom at least 25 percent will be women, and triple their coffee income.
Though the country has experienced significant turmoil in recent years, Riek Machar, an ethnic Nuer and leader of South Sudanese rebels, and President Salva Kiir, a Dinka, signed a peace deal last year and are slated to form a unity government this month, according to the Associated Press. This has encouraged businesses like Nespresso to invest again in South Sudan.
"Bear in mind South Sudan is roughly the combined size of Portugal and Spain, so it's not as though there's fighting everywhere," Professor Christian Stadler of the Warwick Business School in the U.K. told ABC News.
Though Stadler said he's cautious toward aid initiatives that aren't related to disaster relief, he said he has a "positive view" of today's announcement in light of Nespresso's involvement.
"A lot of initiatives don't consider the economics and market," Stadler said. "That's not a problem with this one. Nespresso does it in part to portray a positive image but they have a long-term interest in developing a positive, quality supply."
Aleksandar Tomic, an economics professor at Boston College, said he agreed, noting that Nespresso's partnership is more important than USAID's $3.18 million investment. He said Nestle and TechnoServe have already succeeded in bringing Sudanese coffee to Western markets.
Tomic said it's imperative to monitor the deployment of resources so that farmers -- and not government officials -- reap the benefits. And while USAID's investment is "commendable," it shouldn't be viewed as a "one-shot, silver bullet" that will revive the coffee industry in South Sudan, he said.
"This is just a beginning of a tough road to navigate in order to reach the goal of having a strong, export-oriented coffee industry in South Sudan," Tomic said. "The success of the project will hinge not only on long-term commitment from USAID, Nestle and TechnoServe, but also on their ability to navigate South Sudan's institutional framework."