In Jamam refugee camp in South Sudan, close to the border with Sudan, two four-year-old boys are playing war. Each has a carefully constructed tank made of mud, syringes and razor blades. Awab Allah, in a filthy denim jacket, loads the empty syringe casing with lengths of straw. He flicks the razor blade on his tank deftly, so it hits the back of the straw, making the missile fly through the syringe. It is a direct hit on his friend Adam's tank. The boys laugh. "They are good fighters," Awab's brother Musab says. "They have seen so much war."

In South Sudan, it is a year since independence day, a moment of almost overwhelming hope for both the fledgling country and the African continent. But as the world's youngest country celebrates its first birthday on Monday, 9 July, it is suffering from acute growing pains. As many as 4.7 million people – more than half the population – do not have enough to eat or face imminent serious food shortages, according to new UN figures. This is partly the legacy of food crises that date back through decades of conflict, but aid agencies say more people are now going hungry than any time since the peace agreement.

In the Sudanese border states of South Kordofan and Blue Nile – assigned to the north by the independence agreement, but once allied to the South – people have been dying under aerial bombardment from Government of Sudan Antonov planes and there are reports of a 'scorched earth' land offensive.

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A year ago, South Sudan's oil was the literal fuel in the engine of the economy, with 98 per cent of the country's wealth coming from the oilfields. In January, South Sudan shut down oil production and turned off the tap. In Upper Nile, the oilfields lie abandoned, the pipelines rusting. South Sudan used to produce 30,000 barrels of oil a day, but objected to Sudan in the north charging it an extortionate $34 a barrel to transport. Since the shutdown, food costs have risen by 120 per cent. The effect on the north has also been paralysing, with student protests last week in the capital, Khartoum, over rising tuition fees as part of national cuts to offset loss of oil revenue.

Returnees are flooding back to the South. Some are returning to their new country by choice, but thousands of others have been ordered to leave by Sudan. More than 400,000 people arrived home between October 2010 and the first week of June this year, some with almost nothing. Meanwhile, hundreds of thousands of people are displaced by fighting in northern Bahr el Ghazal.

Close to the border at Jamam and other camps, there are 162,000 Sudanese refugees from across the border in Blue Nile. They are safe for now from the guns and bombs that have caused them to flee their homes, but face a dire shortage of water. UNHCR (the UN Refugee Agency) says their situation is now "critical".

In Jamam 1 Camp, Dan Morsal is telling us, through a translator, about the night last December his youngest daughter, Amina, was born. "Early the next morning the bombs came. We ran from the house with our newborn baby. A bomb fell on our house. A direct hit. We lost everything but our children. Our neighbour was also hit, and they did not escape, the man and his wife. Only the orphaned children survived."

The air attack was backed by a land offensive, soldiers shooting at the fleeing families. Dan and his wife, Hawa, fled into the forest with their newborn baby wrapped in a shawl and their other four children.

"To run after giving birth – I was suffering," Hawa says. "I could only run a tiny bit, and then I had to rest. I was thinking, this baby is going to die. She can't survive because of what is happening to us."

The family walked for more than a month with a tiny baby and four other children. "We had to stop and rest in the middle of the day because the children were so tired," Dan, aged 32, says. Somehow their little daughter survived, and his wife slowly recovered when the family reached the camp. His sister, Radir Morsal, 19, gave birth seven days ago in the camp to a baby born a refugee. His other sister has no husband and 18-month-old twins.

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"We are praying for peace so we can go home to our homes and be safe," Dan says. "But for now it is better being a refugee. At home people were killing, they were bombing, they were shooting. Here we are not hearing the sound of the gun or of bombs. But our children suffer – there is no school for them to learn in." Instead, his seven-year-old son is selling charcoal in the makeshift refugee market, an entrepreneurial assortment of scattered stalls selling groundnuts and offal to each other, and cigarettes to soldiers and aid workers.

The refugees here have found safety, but they are not yet fully safe. There is very little water in this part of Upper Nile, and the host community – the families who already live here – also depend on it to survive. The powdery 'black cotton soil' makes it almost impossible to drill down for water. Oxfam has rehabilitated three bore holes left by the departing oil companies, but the amount of water is not enough – people in Jamam are getting only eight litres of water, half the international standard for displaced populations. "To put it in perspective, you use eight litres of water every time you flush the toilet," explains Pauline Ballaman, Oxfam's humanitarian programme coordinator. "And four litres if you brush your teeth with the tap running."

Oxfam are concerned that the area where Jamam started with only emergency sanitation, is a floodplain and that rising waters could bring acute sickness – even cholera – to the camp.

Meanwhile, at Kilometre 18, a transit camp home to 13,000 people, Médecins Sans Frontières (MSF) – which is treating the sick and malnourished arrivals – says there is only eight days' water left. Food and tents are trucked in on mud-drowned roads that four-wheel drives cannot even negotiate when it rains.

It is a precarious situation, all 13,000 people need to be moved urgently, but the roads are deteriorating rapidly due to the onset of the rainy season. Oxfam and others are working around the clock to create a new camp at Batil, 60km away. It needs boreholes, latrines and water points. UNHCR is airlifting tents from Nairobi and food from the new capital city, Juba. "If people are not moved before the rains, then there could be a situation with no humanitarian access," explains Ballaman. "No food, no water, no medical access, no tents, the water supply will dry out. It is possible, then, the refugees will have to move themselves on foot, with all the risk that poses to the most vulnerable refugees."

MSF now has a small medical team sleeping at KM18 in case the roads become impassable. "We are getting 25 kids a day with malnutrition," says Dr Erna Rijnierse. "These people are suffering. But two weeks ago people were walking in and dying every day. There are not so many now. That is progress – but we must move these people."

Currently, people are being moved at a rate of up to 2,000 a day. But when we were there, the road was closed for a full day by mud – and the trucks moving people and bringing in supplies are among the factors making the roads worse. "For weeks there have been rumours of 8,000 to 15,000 more people headed for the border," says Ballaman, "but they have yet to materialise."

In KM18 transit camp, Jarden Kawaga is stirring two battered, blackened cooking pots of lentils and beans under emergency plastic sheeting, fanning the fire with a metal plate. Her family are new arrivals and have only been here for 10 days. Her husband, Hamuna, says they came from Kukol following aerial bombardment. "There were many, many bombs," he said. "Some people were burnt in their houses. We ran but they followed us and were shooting. We had to hide under rocks and in holes by the roadside." His three-year-old son, Abdul, is crying. The amount of food seems meagre for the extended family gathered under a plastic sheet. "The governor of our province asked president Bashir when we will have rights and a vote on our future? Then the attacks came. We ran away to save our lives."

Eighteen kilometres away, in Jamam, the 'paramount chief' of all refugees in Upper Nile district, Afendi Bade Alun, is sitting on a brown plastic chair in a well-swept, thatched tukul hut.

"In November, the soldiers collected the young women and children and took them to Derang," he says. "They started raping some of the ladies until they died. This was when people began to flee. Many died on the way. Many are still coming. Those who are left behind, some have been killed or arrested and imprisoned. Many are trapped in the Ingassana Mountains. Those who have cattle, they shoot them and steal their cattle."

The chief claims the government in Khartoum is attempting to ethnically cleanse Blue Nile – an idea hotly denied by the president of Sudan. No foreign observer has been to the Ingassana Hills since the Sudanese offensive began in May. "The fighting is because the Government of Sudan is trying to get rid of two tribes from Blue Nile – Ingassana, and Burung," chief Afendi says. "They will replace them with their own tribes because there is oil under the land."

A rebel force – once part of the Sudan People's Liberation Army that fought for independence in the South – called SPLA-North, is engaged in active insurgency in Blue Nile, but the refugees say this isn't about being on the frontline of the new war. They report sustained attacks by Government of Sudan forces on civilians. In four decades of conflict in Sudan, the Ingassana have never before been caught up in fighting. But the new SPLA-North rebel leader, Malik Agar, is an Ingassana.

For anyone familiar with South Sudan's past, these reports are a nightmarish echo of the time before the Comprehensive Peace Agreement, as if time is being sucked backwards. They are a brutal reconstruction of what happened to people in the South for decades – and of the violence still happening in Darfur. If reports of atrocities are confirmed, they would be consistent with the war crimes for which Sudan's president, Omar Bashir, has been indicted by the International Criminal Court.

A year ago, in the brand new capital Juba, with its stink of petrol and fresh paint, those years of war and famine seemed a world away. The guerrilla leaders had shed their flip-flops for smart uniforms burdened with medals and 4x4s with tinted windows. Women sang and ululated, there was dancing in the street, goats were slaughtered across the country, the party went on for days.

This was not meant to be the South Sudan narrative a year from independence, just 12 months from the blaring horns, the military parades, the dancing and jubilations in Juba. After five years of a fractured peace as part of the Comprehensive Peace Agreement, South Sudan is sliding backwards into war and a crisis of food and water caused once more by conflict and political failure, not a fundamental lack of resources. Once again, it is reliant on aid agencies to keep its millions of new citizens alive.

Meanwhile, Salva Kiir, the guerrilla leader-turned president has demanded the return of £2.6 billion stolen by public officials since independence; 75 senior officials have been suspended by parliament on corruption charges.

In South Sudan, big aid donors are growing restless. If the country shuts off its own oil supply, should they really be the ones to plug the gap? In South Sudan, people will tell you the country had no choice but to shut off the oil. Its old enemy in the north was extorting it, and it could no longer sit through business as usual as Bashir's special forces torched and bombarded villages in Blue Nile and South Kordofan where the oilfields lie. It has cut off its oil to spite its neighbour, but its own people are suffering deeply in the process.

Inheriting some of the world's worst indices on poverty, education and health, the new South Sudan was supposed to be a prosperous country where a child could – after four decades of conflict – finally go to school. Instead, we heard unconfirmed reports of teachers in Bahr el Ghazal joining the army because their salaries had been stopped by the financial crisis resulting from the oil shutdown.

On the two-day journey from Juba by plane, road and riverboat, up to the camps on the border, the markets we passed through were empty or poorly stocked. Against rising inflation, food shortages are acute – which is also affecting humanitarian supplies. In a national hospital, one of the doctors admitted the health budget had been slashed to ribbons. "There will be no new hospitals now," he said. "No new buildings. The health budget is cut." He spoke almost indifferently, used to years of operating with nothing. Talking to so many people, it is almost as if the brave new world of independence was only ever a pipedream.

I spent last year's independence day away from the marching bands and the grand proclamations from the South's new president, Salva Kiir, in his trademark cowboy hat, and from a statesman-like president Omar Bashir – who only months later was referring to the South Sudanese government as "insects" who should be crushed. I was inside the country's only maternity hospital, witnessing the 'Midnight's Children' – the babies born with the new dawn – blink their way into life.

Born at the stroke of independence, shortly after the BBC World Service declared the time and celebratory gunshots rang out across Juba, was little Independent Moses Nunuh. "He will grow up to be someone very special," his mother, Josephine, told me, "because of the hour of his birth."

Born to Josephine, a former child soldier, and an ex-SPLA soldier called Moses, Independent seemed a potent symbol of fresh hope, as bright and new as the special, nylon 'Independence' sashes worn by the midwives. Last week, we went back to find his family in a dusty suburb of Juba. But outside the family's thatched tukul was a telltale, child-sized mound of red earth.

"The boy died," his father told us quietly. "I will not celebrate independence this year." He couldn't look at the photograph we had brought for him of his newborn son wrapped in his mother's brightly-coloured shawl. Independent Moses, like one in 10 babies in South Sudan, had not reached his first birthday, dying of Africa's biggest killer, diarrhoea. "Independent was my son," Moses says. "He is dead. There is nothing to celebrate."

In Jamam refugee camp, Dan Morsal's 19-year-old sister, Radir, cradles her newborn baby under the shade of a tarpaulin shelter. Outside, in the mud, their sons' friends are modelling a new toy, a childishly-shaped but still recognisable helicopter gunship complete with missiles.

"Yes, we have hope," Dan says. "Our little Amina survived the journey. Perhaps one day when the Ingassana Mountains are part of South Sudan she will become a doctor or a teacher. If she can go to school, she can have hope."

In South Sudan, among its refugees and returnees, and ordinary people struggling to survive food shortages and the economic crisis, in the face of every single hostility – war, drought, famine, disease, abandonment, bombs, brutal violence – somehow people find a way to keep on surviving. Against human instinct, against every piece of logic, and every last bit of material evidence, they still hope.

Ros Wynne-Jones is the author of 'Something is Going to Fall Like Rain' (Acorn), a novel about aid workers in South Sudan; oxfam.org.uk/southsudan