Black Affairs, Africa and Development
What companies need to know about doing business in Sudan
Sudan may not be a country that many foreign investors are rushing into, but with its geographic positioning for trade, and opportunities in agriculture and mining, the economy does hold potential for those willing to take on a challenge.
After years of civil war and conflict, Sudan allowed its south to secede to form South Sudan in July 2011, following a referendum held in the beginning of that year. The secession meant that Sudan lost around 70% of its oil fields, leading to further economic uncertainty.
Sudan is not the easiest business environment to navigate. Yet according to Adel Moustafa, the Sudan manager for DHL, the country holds good potential for investment in its agricultural and mining sectors, especially in terms of gold.
In 1997 the United States imposed economic and trade sanctions on Sudan. Moustafa told How we made it in Africa that this has meant that a lot of international companies are not investing in Sudan, “so as not to have a problem with the United States”.
However, in 2010 the US announced it was easing sanctions on agricultural equipment and services, which allowed a few US companies to request permission to obtain commercial export licences.
Tapping into Sudan’s business opportunities
Sudan has large areas of cultivatable land, and its agricultural sector employs roughly 80% of the workforce. The country’s geographic positioning has meant that Middle Eastern countries, who suffer from drought and have to import their food, are investing in Sudan’s farming potential.
According to research by Standard Bank, water scarcity in Saudi Arabia has led to the Saudi government deciding to phase out local wheat production and by 2016 it will no longer purchase locally grown wheat. The Middle Eastern country is looking to invest in agriculture elsewhere, with almost 70% of all concluded and planned investments in offshore agriculture being in Africa.
Moustafa noted that some of the top opportunities for business lie in the exportation of Sudan’s commodities, such as sesame and hibiscus.
There is also notable potential in gold mining, with recent discoveries creating a sense of hope for the Sudanese economy. “When we talk about mining, there is huge potential in Sudan, because the country has done a lot in exploring gold deposits last year, and this year we are talking about almost US$2 billion worth of gold that we are going to discover. So, yes, we have a lot of potential in Sudan.”
China is a leading foreign investor, and there are a number of Chinese companies, like Huawei in the ICT sector, operating in Sudan.
In addition to the capital Khartoum, Sudan has a number of other important business centres, such as Al Qadarif, which is well known for being the hub for sesame trade globally and lies on the road that connects Khartoum with Gallabat on the Ethiopian border. Port Sudan, located on the Red Sea, is also strategically positioned for business and trade as it is currently the only sea port in Sudan.
Potential for good business, but companies need to understand the local market
“You can do a lot of business in Sudan but on a small or emerging scale,” explained Moustafa. “We have a lot of people doing a lot of good business here… It you talk about the country and the people in general, we are very peaceful people; it is very safe if you talk about the main cities outside of the Darfur zone… I would say you can do business in Sudan but you need to understand the customs, the market, the economy and the law.”
Moustafa noted that in many sectors there is not much competition, which means that companies with superior products or services can easily gain a foothold in the market.
Some of Sudan’s leading conglomerates include the DAL Group, which operates in agribusiness, engineering, real estate, medical services, education and automobiles, where it represents brands such as Mercedes-Benz and Mitsubishi Motors. The Central Trading Company (CTC) is also well established in Sudan across a variety of sectors, including agrochemicals, telecommunications, manufacturing and electronics.
Moustafa said that businesses can overcome some of the challenges of operating in the country by allowing frequent negotiations with the government authorities concerning policies and by attracting and investing in the newly graduated. He advises all foreign companies to make contact with the Ministry of Investment and any aligned ministry for prospective business.
“What you see in the media will give you the impression that there is no way to do anything in such a country… but when you talk about infrastructure, telecommunication, roads, railways, there have been huge improvements in spite of all the obstacles and challenges we have… and this is very unique,” said Moustafa.