Weak enforcement of tax laws is costing South Sudan millions of dollars annually in oil revenue, a finance ministry official warned, highlighting the fragility of the country’s public finances.
Benjamin Ayali Koyongwa, undersecretary for planning at the Ministry of Finance, said on Friday, February 6, that inconsistent application of tax provisions and gaps in customs procedures are reducing the amounts collected by the government. “Some tax rules are not applied consistently,” Koyongwa told reporters, noting that the lack of enforcement affects both domestic oil-related taxes and import duties. He did not provide exact figures on the losses or specify which rules were most often ignored.
Koyongwa also pointed to weaknesses in customs procedures. Some importers pay duties in local currency using exchange rates that fail to reflect prevailing market levels, further reducing revenue. Non-oil tax collection remains minimal, he added, with value-added tax (VAT) currently accounting for less than 1% of total public revenue.
Heavy Dependence on Oil
Oil remains the backbone of South Sudan’s economy, providing nearly 95% of exports and 90% of government revenue, according to the French Treasury. This heavy reliance exposes the budget to production fluctuations, price volatility, and governance weaknesses, leaving the country vulnerable to economic shocks.
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The government is aware of the risks and plans to introduce an expanded VAT regime by July 2026 to broaden the fiscal base. However, officials acknowledge that non-oil taxation still plays only a marginal role in overall revenue collection, reinforcing the need for reforms in enforcement and compliance.
Revenue Management and Governance Concerns
International reports have highlighted longstanding challenges in managing oil income. In September 2025, the Ecofin Agency, citing the United Nations Commission on Human Rights, reported that more than $2.2 billion was diverted between 2021 and 2024 under the “Oil for Roads” program, which was intended to fund national road construction projects. This revelation fueled criticism over transparency and effectiveness in oil revenue management.
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Koyongwa emphasized that strengthening tax enforcement and customs procedures could recapture lost funds, supporting public services and infrastructure projects. “We need to ensure that revenues from our main economic resource are fully realized,” he said, underscoring the importance of sound fiscal management.
Economic Contraction and Poverty Risks
South Sudan’s economy is under severe pressure. The International Rescue Committee reported on February 6, 2026, that GDP contracted by 30% in 2025, marking the fifth consecutive year of economic decline. Conflict in neighboring Sudan has disrupted oil exports, causing daily revenue losses estimated at $7 million.
The World Bank has warned that widespread poverty remains a critical challenge, with 76% of the population living below the national poverty line as of 2022. The combination of export disruptions, weak tax enforcement, and limited non-oil revenue collection has created a precarious fiscal situation.
Experts argue that without a broadening of the tax base and improved compliance, South Sudan will continue to struggle to fund essential services and development projects. Strengthening the legal framework for taxation, improving customs enforcement, and ensuring transparency in oil revenue management are seen as essential steps to stabilize the economy and reduce reliance on a single, volatile sector.
Looking Ahead
Authorities are under pressure to implement reforms swiftly. Introducing a more effective VAT system, closing gaps in enforcement, and enhancing transparency in oil revenue management could mitigate some of the fiscal risks. However, analysts caution that unless structural weaknesses are addressed, the country will remain vulnerable to economic shocks, leaving millions of South Sudanese at continued risk of poverty.
As South Sudan seeks to recover from years of conflict and economic contraction, ensuring that the government fully captures revenue from its most valuable resource will be critical to building a more resilient and sustainable economy.
