Country: South Sudan Source: Conflict Sensitivity Resource Facility Please refer to the attached file. Audrey Bottjen, Imatong Employment Solutions team, and the Conflict Sensitivity Resource FacilityExecutive SummarySouth Sudan has a diverse private sector, from sole traders and producers working in rural and urban markets to small and large local, national and international companies with different scales of investment. Both the private and aid sectors have shaped, and been shaped by the new national economy that has emerged directly out of the massive state-building projects, extractives industries, and aid investments of the 2000s, as detailed below.There are many challenges for the private sector working in this fundamentally politicised economy, where political and military actors have been involved directly in both private enterprise and its regulation since the 1980s. There are different risks for different scales and locations of business, but common to all is the fundamental question of the ability to realise profits in an uncertain environment. Some (often local) companies are focused on long term investments that will weather shocks; many enterprises are focused sharply on short term maximisation of profits. Sector development is uneven because of the costs and risks of formal incorporation, rising taxations, and the dollarisation of the economy: the wholesale import sector, for example, is overwhelmingly international due to the scale of dollarised investment needed. The uneven geography of conflict and environmental destruction since 2013 has also created a matching geography of risk: companies therefore invest where they have safe access and connections.This creates challenges for the humanitarian, development and diplomatic sectors. An uneven geography of private investment, including private education and healthcare services, creates rising internal inequalities and divisive frustrations that contribute to armed conflicts over markets and territories. Few functioning standards of labour law, and commercial interest in maximising profits in a high-risk context, combine to incentivise wage depression and exploitative employment practices, especially of desperate workers displaced by war or suffering from economic and environmental crises.There are clear incentives for private and aid sectors to work more closely together – but also common problems in doing so. The aid sector is risk-averse, and deals primarily with established and often large-scale suppliers who have the financial, political and legal resources to provide stable contracting; these are often powerful national or international companies whose profits are exported. Our research also showed a wide lack of awareness of the aid sector’s own existing partnerships beyond project-based aid contracts, such as office and domestic rents and services. High levels of distrust within the private sector and between the private and aid sectors prevents a shared information economy.Both the aid and private sectors are invested in promoting development in South Sudan. Alongside practical considerations for programmes and operations, this report challenges aid sector policymakers to consider their core policy on the state and the market: how can the private sector be supported to shape a geographically and socially fair market economy? And what is the role of the state, and the importance of a social contract, in an expanding market economy?