South Sudan on Monday marks its first year of independence in sombre mood, the world’s youngest nation wracked by border wars with the North, internal violence and the shutdown of its vital oil production. With its capital in Juba, South Sudan became independent following decades of civil war. Its arrival in the international community was celebrated at the time, but conflict with the Sudanese regime soon resumed. The early euphoria of independence from former civil war foe Sudan on July 9 2011, has since given way to a harsh reality. While massive steps forward have been made, South Sudan remains one of the world’s poorest countries, where even the most basic infrastructure, such as roads, electricity and water distribution networks, still has to be built. Vice President Riek Machar has admitted to not having met the expectations of his people because of “the unforeseen difficulties we got ourselves into.” Border clashes with Sudan have brought the countries to the brink of war and left South Sudan coping with a massive humanitarian crisis as people flee the fighting. The South Sudan state of Upper Nile has been flooded with refugees crossing the border from Sudan. In total, aid agencies estimate that at least 150,000 refugees from Sudan are currently in South Sudan. The humanitarian problems have coincided with economic woes. The South Sudanese government lost 98 percent of its revenue when it halted oil production amid a dispute over transportation and processing fees with Sudan. South Sudan obtained around 70 percent of the formerly united country\'s oil reserves when it became independent last year. But the countries have been unable to agree on how much the landlocked South should pay to use infrastructure that remains in Sudan. South Sudan shut down production in late January after accusing Sudan of stealing $815 million worth of its oil. Sudan said it confiscated the crude to make up for unpaid fees. The shutdown has sent the economies of both countries reeling, but South Sudan has been hit particularly hard by the loss of income from virtually its only export. The young nation has also wrestled with corruption in its first year. In May, South Sudan\'s president wrote to more than 75 government officials and eight foreign governments in an attempt to recover $4 billion lost through corruption. The United States on Sunday sent its anniversary congratulations, while admitting that “significant challenges” lie ahead. Secretary of State Hillary Clintn, who was travelling in Asia, said in a statement that South Sudan had made strides in nation-building and on building a legal framework. However, she also noted that “conflict and unresolved issues with Sudan and domestic inter-ethnic tensions have led to increased fighting and economic hardship, which threatens to compromise the very foundation on which South Sudan’s future will be built”. Nobel Peace Prize laureate Desmond Tutu appealed for peace in the troubled fledgling nation. “God wants to make South Sudan prosperous and peaceful,” the 80-year-old retired South African archbishop told political, military and religious leaders in Juba. “We want to return to come again and celebrate your nationhood with you and see a South Sudan that grows its own food, and is eradicating poverty and ignorance,” Tutu said. Adult illiteracy stands at 73 percent, secondary school enrollment at six percent, and there is a glaring shortage of skilled professionals, although aid workers point out that South Sudan had to start from scratch after a 2005 peace deal. The country still has few tarred roads. In the capital Juba, electricity comes from private generators and the hospital is short of staff, medicine and beds. Many patients sleep on the floor in the stifling heat. Statistically, a South Sudanese woman has more chance of dying during childbirth than completing her secondary school education. Yet there is the odd rare sign of progress achieved either in the past year or in the six years of autonomy following the 2005 agreement with Khartoum that ended a two-decade long war and set up a referendum on independence. Donors fear these gains may be cancelled out by the combined effects of increased tensions with Khartoum and the halting of crude production in January, which triggered heavy fighting along their disputed border. The only sector spared from budget cuts is the army, which according to Alfred Lokuji, Dean of Rural Development at the University of Juba, gobbles up half the budget at the expense of sectors such as education and health. The anniversary festivities get under way at 8am (0500 GMT) at the mausoleum of John Garang, the rebel leader who died in a mysterious helicopter crash shortly after he signed the 2005 peace deal that paved the way for South Sudan\'s independence. President Salva Kiir is expected to give a speech during the ceremony, where dignitaries from around the world have gathered for the event. Among the high-profile guests are UN chief Ban Ki-moon, Africa Union head Jean Ping and political leaders from Kenya, Uganda and Ethiopia.