Because of recent conflict and uncertainty, South Sudan’s capital Juba is far from an obvious place for large property developments. However, insurance company UAP Old Mutual sees new opportunities opening up as security improves and crude oil production increases. How we made it in Africa spoke to Kris Mbaya, the firm’s managing director for South Sudan, on the sidelines of the Africa Oil and Power conference in Cape Town. Here are edited excerpts.

UAP Insurance has been active in South Sudan since 2006. Give us an overview of your property investments in the country.

I’ll give you a quick overview of our East African operations before I come to South Sudan. UAP Old Mutual is in five East African countries – that is Kenya, Uganda, Tanzania, Rwanda and South Sudan. In all these markets we have a very strong property investment arm. At the moment, in Nairobi, we have the county’s tallest building – a 33-storey tower in the Upper Hill area; and in Uganda we have the Nakawa Business Park.

In South Sudan we have the 15-storey UAP Equatoria building, which comprises 8,500m² commercial office space. We started construction in 2011, and the building was completed in 2015 – there was a slight interruption in construction during the crisis. In addition to this, we have invested in an accommodation block – high-class two-bedroom apartments in a very good residential area.

For our readers not that well acquainted with the inner workings of the insurance industry, can you explain why an insurance firm is involved in property investments?

Insurance is about taking risk premiums, investing them, and paying claims. So when you take the premiums, then you need to invest it, and in South Sudan at the moment the capital markets are not developed. There are few [institutional] investment opportunities – we don’t have treasury bills or a stock market. However, due to many years of conflict, the property market in South Sudan is relatively underdeveloped. There is high demand for property from companies that are coming into South Sudan – they need space to grow their businesses. So for us property is an investment channel for the insurance business.

Are your property investments in South Sudan purely financed from local insurance premiums?

Premiums from South Sudan account for a very small component of our investment in the UAP Equatoria Tower. Our holding company in Nairobi actually invested quite a large amount in this tower. We also have two partners – the IFC and Norfund – for this particular development. And this was just the second project in a pipeline of quite a number of developments. So as the security situation improves, we will start bringing online the projects that we put on hold.

Which areas of South Sudan’s property industry hold untapped opportunities?

We have quite a number of hotels that are being built, so the hotel industry is quite saturated. But there is still an opportunity for commercial space. And this is the reason why: if you look at the current oil production of 130,000 barrels per day, and you look at the size of the economy – you can imagine what would happen if you go to 500,000 barrels per day. The ripple effect is huge. There will be many corporates coming into the country to support the oil industry.

Secondly, in terms of residential [property] there is still a huge opportunity because, as the city grows, people need apartments and high-rise buildings for accommodation.

Are most of the property-development opportunities restricted to Juba at the moment? What about other towns?

Juba is the capital city where most of the businesses are headquartered. But in the next five to 10 years, the states will start coming up. It is a chicken-and-egg case. The government needs money to start taking services to the states, but they can only do that when they collect taxes, and they can only collect taxes when companies come and set up. But we will get to a stage where other cities and towns will present opportunities.

What is your response to people saying there is too much risk and uncertainty associated with doing business in South Sudan?

Uncertainty is the business we do – we are in risk assessment. So long as you have a way of mitigating that particular risk, then you accept the risk, and make your returns. But it you look at the dynamics of insecurity – you cannot say it is only South Sudan facing the challenge of insecurity. The uncertainty that is there is temporary. And it is in all markets – look what happened during the Arab uprising. No-one knew it was coming – but it came and went. So it depends on your risk profile and the willingness of your shareholders to take risks. But there is an advantage in being a first-mover.