South Sudan on the Verge of Collapse: Economic Crisis Threatens to Reignite Civil War

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Video originally published on January 6, 2025.

South Sudan is experiencing perhaps its worst economic crisis since gaining independence in 2011, a catastrophe that threatens to unravel the fragile peace that has held since 2018. The rupture of a critical oil pipeline in neighboring Sudan has devastated an economy that depended almost entirely on petroleum exports for government revenue. With inflation soaring to 120 percent, soldiers going unpaid for nearly a year, and nearly a million refugees flooding across the border from Sudan's civil war, the young nation stands on the precipice of societal collapse. The oil wealth that once kept competing elites from restarting their brutal civil war has evaporated, leaving South Sudan's 11 million people facing acute food insecurity, economic devastation, and the very real possibility that violence will once again consume their country.

Key Takeaways

South Sudan's economy contracted by approximately 25 percent in 2024 after the Petrodar Pipeline ruptured in February, cutting off two-thirds of the nation's oil exports that account for 85-90 percent of government revenue.

General inflation has spiked to 120 percent with staple goods like bread increasing tenfold in price, while the local currency has collapsed against the dollar, making medicines and energy unaffordable.

Soldiers have gone unpaid for almost a year and have resorted to setting up illegal checkpoints to extort money from citizens, signaling dangerous breakdown in military discipline.

Nearly 930,000 refugees from Sudan's civil war have fled to South Sudan, with another 300,000 expected in 2025, overwhelming the country's limited infrastructure in a nation of only 11 million people.

The 2018 peace agreement that ended a brutal civil war (which killed 400,000 people) was held together primarily by oil revenue sharing among elites rather than genuine reconciliation, making the current economic crisis an existential threat to stability.

The World Food Program estimates that 57 percent of South Sudan's population will face acute food insecurity during the lean season in 2025, even without a return to civil war.

The Catastrophic Pipeline Rupture

Since achieving independence from Sudan in 2011, South Sudan has relied almost exclusively on oil exports to sustain its economy. The country placed all its economic eggs in one basket—specifically, two pipelines that carried crude oil across Sudan to export terminals on the Red Sea. These pipelines accounted for between 85 and 90 percent of government revenue, making them the lifeblood of the young nation's finances.

In February of the previous year, disaster struck when the Petrodar Pipeline ruptured near Khartoum, Sudan's capital. This pipeline alone accounted for two-thirds of Juba's exports, making its failure a catastrophic blow to South Sudan's economy. Under normal circumstances, repairing such infrastructure would be relatively straightforward. However, circumstances near Khartoum have been anything but normal since April 15, 2023, when a massive civil war erupted between the Sudanese Army and the paramilitary Rapid Support Forces. The fighting has been so intense that repairs to the pipeline have proven impossible, leaving it offline for months and cutting off the majority of South Sudan's revenue stream.

Economic Devastation and Humanitarian Crisis

The statistics emerging from South Sudan paint a picture of economic catastrophe. The International Monetary Fund estimates that the economy shrank by approximately one quarter across 2024. General inflation has exploded to 120 percent, while the price of staple goods like bread has increased tenfold. The local currency has collapsed against the dollar, rendering everything from simple medicines to energy unaffordable for ordinary citizens.

The consequences of this economic implosion are visible throughout the country. Blackouts have crippled essential services, affecting everything from government ministries to hospitals. The healthcare system, already stripped bare by years of elite plundering, has been pushed to the breaking point. Energy shortages compound the misery of a population already struggling with hyperinflation and scarcity of basic goods. The economic crisis has transformed what was already a difficult existence for most South Sudanese into a desperate struggle for survival.

A Nation Built on Fragile Foundations

To understand why this economic crisis poses such an existential threat to South Sudan, it's essential to recognize just how fragile the country has been since independence. Between 2013 and 2018, a brutal civil war engulfed the nation of 11 million people. The bloodletting was so severe that approximately 400,000 people are estimated to have died—a death toll not far behind the half-million estimated to have perished in Syria's parallel conflict during the same period. A similar number of people fled the country entirely, seeking refuge elsewhere.

The peace agreement eventually reached in 2018 did not represent a genuine reconciliation between South Sudan's ethnic groups or a resolution of the underlying tensions that had sparked the conflict. Instead, President Salva Kiir employed a simpler, more cynical strategy: he cut opposition leaders in on a slice of the obscene wealth that energy exports were generating. Rather than building lasting institutions or fostering genuine accommodation between competing factions, the peace was essentially purchased with oil money. As long as the petroleum revenues flowed, the elites had sufficient incentive to maintain the ceasefire. The moment that money disappeared, however, the foundations of peace would crumble.

Elite Plundering and Systemic Corruption

While oil money kept the main factions from restarting large-scale conflict, it also enabled what Amnesty International has described as the wholesale "plundering" of the nation by its ruling class. The elites systematically looted state resources, enriching themselves while the population suffered. At its most egregious, this corruption left hospitals stripped of any equipment or medicine that could be sold on the black market.

DW has reported movingly on the human cost of this plundering, documenting doctors reduced to using CPR to try and keep premature babies alive after neonatal wards were left completely bare of equipment. The systematic theft of medical supplies and equipment represents just one facet of a broader pattern of elite predation that has hollowed out South Sudan's institutions and left the population vulnerable to even minor disruptions in services or supply chains.

Endemic Violence in the Countryside

Even as the 2018 peace agreement prevented the main warring factions from resuming large-scale combat, it failed to address or temper violence in South Sudan's countryside. While the primary belligerents mostly abided by the terms of the deal, killings linked to land disputes and kidnapping for ransom became endemic throughout rural areas. This persistent low-level violence created a situation where insecurity was a constant feature of life for many South Sudanese, even during the supposed peacetime.

By the time the Petrodar Pipeline ruptured, South Sudan had become a basketcase where grinding poverty was driving increasing cycles of violence, while the only thing preventing the elites from restarting full-scale civil war was the steady shower of oil money. The country resembled a teetering Jenga tower being miraculously kept aloft by a single brick—the petroleum revenues. The question now is what happens when that one remaining block is suddenly kicked away.

Warning Signs of Impending Collapse

At the time of analysis, South Sudan appears frozen in the moment where the tower is falling but has not yet shattered into a million pieces. Civil war has not yet restarted, but the warning signs of coming catastrophe are already evident and deeply concerning.

Perhaps most worrying is the fact that the nation's soldiers have not been paid for almost a year. When armed forces go without pay for extended periods, the risk of mutiny, defection, or simple predation on the civilian population increases dramatically. The Economist reports that many soldiers have already resorted to setting up illegal checkpoints in the capital to extort money from passersby. This breakdown in military discipline and the transformation of security forces into predators rather than protectors represents a dangerous step toward complete state failure.

Elite Maneuvering and Internal Conflict

Simultaneously, South Sudan's elites have begun maneuvering against one another as the oil money that kept them cooperating dries up. President Kiir has started firing ministers and heads of the army, actions that have already led to shootouts between factions loyal to different parts of the establishment. These violent confrontations within the ruling class suggest that the fragile elite consensus that maintained peace since 2018 is rapidly disintegrating.

In a desperate attempt to raise revenue, the Wall Street Journal reports that the government has even started taxing trucks importing international aid. This extraordinary measure—essentially taxing humanitarian assistance meant for the country's suffering population—demonstrates both the depth of the government's financial crisis and its willingness to prioritize short-term revenue generation over the welfare of its citizens.

The Refugee Crisis from Sudan

Hanging over all of South Sudan's internal problems like a raincloud of pure misery is the ongoing civil war in neighboring Sudan. The Sudanese conflict has been so apocalyptic that it has displaced a record 12 million people. According to the United Nations, over 930,000 of these displaced persons have fled to South Sudan, with another 300,000 expected to arrive in 2025.

To understand the scale of this challenge, consider how taking in approximately one million refugees during the migrant crisis shook politics and society in Germany. The shockwaves of that decision continue reverberating across the whole of Europe today. Germany is a highly-advanced country with the third-largest economy on Earth and a population of around 80 million—vastly better equipped to handle such an influx than South Sudan.

Now imagine applying that same pressure to a desperately poor, chronically fragile state like South Sudan, with a population of just 11 million and virtually no functioning infrastructure or services. The UN's Office for the Coordination of Humanitarian Affairs has described the impact in stark terms: "The sheer volume of arrivals is overwhelming South Sudan's limited infrastructure... Meanwhile, the conflict has destabilized markets in border states, causing prices of food and essential commodities to skyrocket, and heightening risks of secondary displacement to collective sites and urban centres."

Failed Attempts at Solutions

The South Sudanese government has not been entirely passive in the face of this crisis. Juba has approached states like the United Arab Emirates and Qatar seeking cash bailouts to keep the government afloat. Officials have opened discussions with China over building a new, alternative pipeline through Ethiopia and Djibouti that would bypass Sudan entirely. There have even been discussions with Kenya about the possibility of trucking oil overland to the coast.

Yet so far, none of these initiatives have led to any concrete improvements in South Sudan's situation. The diplomatic outreach has not secured the necessary funding, and the alternative pipeline projects remain in the discussion phase with no clear timeline for implementation. The overland trucking option, while theoretically possible, would be vastly more expensive and logistically complex than pipeline transport, making it an imperfect solution at best.

The Pipeline Repair That Wasn't

In October, there was a brief glimmer of hope when the Sudanese Armed Forces announced that they had repaired the broken pipeline and that oil flows could resume. Two months later, in December, South Sudan's director general for Petroleum Authority announced that pumping would restart in the nation's oil fields. For a moment, it seemed the crisis might be averted.

However, when AFP investigated these claims, they found no evidence that production had actually restarted, nor any concrete timeline for the pipeline carrying crude again. Instead, journalists discovered a letter from the Dar Petroleum Operating Company claiming that "a number of outstanding issues" need to be solved before pumping can resume. The vague language and lack of specificity suggest that the obstacles to restarting production may be more significant than official announcements indicated.

Long-Term Decline in the Oil Sector

Even if the pipeline were somehow turned back on immediately, the Economist predicts that the troubles in South Sudan's oil sector would hardly disappear. The country's petroleum industry has been in decline since 2011, with production steadily decreasing over the years. This long-term trend suggests structural problems beyond the immediate crisis of the ruptured pipeline.

Perhaps most concerning for South Sudan's long-term prospects is the recent exit of Malaysia's Petronas, a major foreign investor, in August of the previous year. The departure of such a significant player signals a loss of confidence in South Sudan's oil sector among international investors. Without foreign investment and expertise, the country will struggle to maintain existing production levels, let alone develop new fields or infrastructure. The combination of declining production, departing investors, and damaged infrastructure paints a bleak picture for South Sudan's economic future.

The Humanitarian Outlook for 2025

As 2025 gets underway, the humanitarian situation in South Sudan is dire and deteriorating. The World Food Program estimates that even without a return to civil war, 57 percent of the population will be "facing acute food insecurity" during the lean season. This represents more than half of South Sudan's 11 million people at risk of hunger.

Meanwhile, the International Rescue Committee warns that recent floods have placed nearly one million people at risk of waterborne diseases such as cholera. The combination of food insecurity, disease risk, economic collapse, and the influx of refugees creates a humanitarian catastrophe of staggering proportions. Even in a best-case scenario where large-scale violence does not resume, the suffering of South Sudan's population will be immense.

The Ticking Clock Toward Conflict

The most ominous aspect of South Sudan's current crisis is the historical precedent for what happens when oil revenues are disrupted. The last time exports were halted, it was mere months before the country descended into the brutal civil war that lasted from 2013 to 2018. The oil money that has been keeping the elite happy and cooperative is steadily drying up, and with it, the primary incentive for peace.

Whether South Sudan's rapacious ruling class can maintain the peace this time remains to be seen, but the signs are not encouraging. The unpaid soldiers, the shootouts between elite factions, the desperate revenue-raising measures, and the complete absence of genuine reconciliation or institution-building all suggest that the country is sliding toward renewed conflict. The young nation's leaders have shown little interest in addressing the root causes of instability, instead relying entirely on oil wealth to paper over deep divisions. With that wealth now gone, the foundations of peace are crumbling.

For the long-suffering people of South Sudan, 2025 is already looking like a year when a new conflict may be on the horizon. After barely surviving one of the deadliest civil wars of the 21st century, they now face the prospect of watching their country descend once again into violence and chaos—not because of any failure on their part, but because their leaders built a state on the shakiest of foundations and a peace agreement held together by nothing more than greed and oil money.

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FAQ

Why is South Sudan's economy so dependent on oil?

Since independence from Sudan in 2011, South Sudan has relied almost entirely on oil exports carried through two pipelines across Sudan to Red Sea export terminals. These pipelines account for between 85 and 90 percent of government revenue, making petroleum the lifeblood of the nation's finances.

What caused the current economic crisis in South Sudan?

The Petrodar Pipeline ruptured near Khartoum, Sudan in February of the previous year. This pipeline alone accounted for two-thirds of South Sudan's oil exports. Repairs have been impossible due to the massive civil war that erupted in Sudan on April 15, 2023, between the Sudanese Army and the Rapid Support Forces, leaving the pipeline offline for months.

How severe is the economic impact?

The International Monetary Fund estimates that South Sudan's economy shrank by approximately one quarter across 2024. General inflation has exploded to 120 percent, the price of bread has increased tenfold, and the local currency has collapsed against the dollar. Blackouts have crippled essential services from government ministries to hospitals.

What was South Sudan's civil war and how did it end?

Between 2013 and 2018, a brutal civil war engulfed South Sudan's 11 million people, killing approximately 400,000 and forcing a similar number to flee the country. The 2018 peace agreement was not based on genuine reconciliation between ethnic groups, but rather President Salva Kiir cutting opposition leaders in on oil wealth, essentially purchasing peace with petroleum revenues.

How many refugees has South Sudan received from Sudan's civil war?

According to the United Nations, over 930,000 refugees from Sudan's civil war have fled to South Sudan, with another 300,000 expected to arrive in 2025. This represents nearly one million refugees entering a country of only 11 million people with virtually no functioning infrastructure.

What are the warning signs that civil war might restart?

Soldiers have not been paid for almost a year and are setting up illegal checkpoints to extort money. President Kiir is firing ministers and army heads, leading to shootouts between elite factions. The government is taxing international aid trucks. The oil money that kept elites cooperating since 2018 is drying up, removing the primary incentive for peace.

What solutions has South Sudan attempted?

Juba has approached the UAE and Qatar for cash bailouts, opened discussions with China about building an alternative pipeline through Ethiopia and Djibouti, and discussed trucking oil overland to Kenya. However, none of these initiatives have led to concrete improvements in South Sudan's situation.

Has the pipeline been repaired?

In October, the Sudanese Armed Forces announced repairs were complete, and in December, South Sudan's Petroleum Authority announced pumping would restart. However, AFP found no evidence that production actually restarted or any concrete timeline for resuming oil flows. A letter from the Dar Petroleum Operating Company stated that 'a number of outstanding issues' need to be solved first.

Sources

About the Author

Jackson Reed

Jackson Reed creates and presents analysis focused on military doctrine, strategic competition, and conflict dynamics.

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