South Sudan: new skyscraper, bad timing Blog by Katrina Manson on The Financial Times, 16/05/12 - Just as South Sudan’s finances are running out and investors are thinking about packing up and leaving, an “ultra-modern” office block might seem the least viable investment going. But try telling that to the developers behind the $17m project, UAP Holdings. The 12-storey Equatoria Tower is set to be the tallest building in Juba, the southern capital more famed for dust and containers that double as homes than high rises, or anything approaching modern. “It’s needed…we have looked at the market and we have seen people would like permanent offices and we think the economy is going to pick up. Banks are looking for space,” Patrick Kanyingi, UAP’s managing director in Juba, told beyondbrics, saying the company believes private sector will take most of the 70,000 sq feet, due for completion by the end of 2013. The company says the project will deliver “a landmark commercial office development” to the world’s newest country. Jacob Aligo, Central Equatoria state finance minister, said at a financing signing last week: “This building is going to change the skyline of our country and the city of Juba”. The Central Equatoria Development Corporation has a 30 per cent share in the local development company, UAP Properties Limited, while UAP Holdings has 70 per cent. The timing of the project is painfully out of whack. The project contract was signed last September, five months before Juba shut down the South’s entire oil production and lost 98 per cent of its revenues into the bargain. Dwindling revenues have already led to inflation, currency depreciation and startled even the most frontier-friendly of foreign investors. “Of course the situation is now different but our outlook is the situation is going to balance out,” says Kanyingi. The project has been saved by a $5m loan financing agreement from the World Bank’s private sector arm, the International Finance Corporation, signed this month, in addition to $5m from Swedfund, Sweden’s state-owned development finance institution. Kanyingi says his own company’s arrangements with two Kenyan banks based in Juba, KCB and Equity, have kept it going as dollars dwindle on the local market, and that both Chinese contractors are on time. “We don’t get money as quickly as possible but it’s not stopping us,” he said, saying there are no delays so far. A second $4.5m residential real estate development by the company will finish 15 two-bedroom apartments before the end of the year. Kanyingi says he thinks senior company executives and diplomats will move in, although they have not yet settled on the rental price. Several ambassadors hole up in hotels that currently charge hundreds of dollars a night. Lars Thunell, executive vice president at the IFC, who also inaugurated a hopeful one-stop investment shop in Juba this month, said the building was a symbol that the country is “on its way” and would make it is easier for companies to run businesses. Daring. Big buildings are often a harbinger of financial doom.
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