 INTRODUCTION |
It is a fact that there has been a war in the South of the Sudan for decades costing millions of lives thus hindering the development of the whole country. It is also true that the Sudan is one of the most poor African countries. However, it is a less-known fact that during the past years the country has managed to maintain its economic stability and that its major macro-economic indicators are showing positive trends as the Governor of Bank of Sudan, Dr. Sabir M. Hassan states: "I think IMF is very impressed with the performance of the Sudan, because it is one of the few countries which has succeeded in implementing the targets of the economic reform program without any external financial assistance". An unusual African example is also that in the year 2001 there is no deficit financing, which spreads optimism into the international business community. The proven self-sufficiency has reflected into the Sudan's investment climate placing the country among the first African countries to receive foreign direct investment in the last three years despite of the given negative aura in the media.
Natural and human resources, as well as peacefulness have a lot to do with this recent change in the investment climate. It is worth mentioning that only about 20% of the land is cultivated and that the Sudan is considered to be one of the three countries, among Australia and Canada, to be capable of solving the food insufficiency problem in the world. Now there is a new sector; the oil, which is booming years after its initial discovery, and current trade surplus derives from the oil exports. However, the significance of the oil should not be underestimated, but as many say, it should neither be overestimated. Still currently it is agriculture that gives employment to most of the Sudanese. Trying to specify the future shape of the Sudanese economy on the bases of the current situation and economic indicators it seems like these two economies; agriculture and oil, will together be creating the future backbone of the Sudanese economic development.
What comes to the human resources, it is not so known that the Khartoum University used to be a sister university to the Cambridge University; the heritage from the British rule. Mainly due to this the nation's human resources are huge, but unfortunately not utilized to the ultimate extent because a substantial number of those highly educated Sudanese are living abroad in the Gulf and the Middle-East. It is estimated that alone in the Saudi-Arabia there are 5 million Sudanese, most of them acting as the best local doctors, among other highly skilled professions. This significant damage to the country's current progress is why the government recently set up The Sudanization Plan, which means that its aim in is to return most of those Sudanese back to their original home country in the next five years and have them to contribute to the national economy as the need now is higher and more demanding.
As it seems, Sudan has a lot of potential in terms of recent economic achievements, natural and human resources, and government willingness. It has been clear for a while that it is mainly the political situation and the need to normalize the relations with some countries and international institutions that hinder the development of the economy.
Furthermore, the Sudan has been heavily affected by the US embargo effective since 1997, and the war in the South remains an equally complicated problem. Certainly these two issues are interrelated and must be solved together, and the US will definitely play a role of a major mediator.
It will be interesting to see how the new oil economy will affect the current situation: will the rest of the world follow the Asian model where politics and economic are separated, or will the US lead boycott succeed in a serious damage. The change in the US administration from Clinton to Bush has though been considered as a positive sign. It was even announced at the beginning of September in 2001 that the US President George Bush is to name his special diplomatic envoy to the Sudan in a very near future after years since the last ambassador left the country. What comes to the war in the South, the visit of the Libyan leader Gaddafi to the Sudan in July 2001, as well as the Libya-Egyptian Joint Initiative for National Reconciliation in the Sudan dating to the same summer have rose optimism within the international community and peace observers. The committee set to review the development of this peace initiative stated in September 2001 that it is satisfied with the process and has high hopes for solving the decades lasting war. |
Main prioritization period took place in 1990-5, during which for example Sudatel was privatized; the national telecommunications company that became a model example of the privatization. It was in July 2001 that the monopoly on the telecommunications was finally fully broken opening long-waited doors to foreign investors. During that period in mid-90's some other major companies were established like The Sudanese Free Zone and The Sudan Master Technology (owner of GIAD, the industrial complex, which is considered to be one of the greatest achievements of the El-Bashir government). The former in summer 2001 decided to take a step towards a transformation into a public shareholding company, which according to its General Manager Mohamed Abbas Mohamed is an appropriate option as it will raise capital and attract more investors. Furthermore, the company will be liberated from government restrictions which will give room to expand company's own projects, increase the sphere of its operations and create more employment opportunities. According to the General Manager Mohamed Abbas Mohamed the company will expand its commercial activities and rehabilitate the Green Village Hotel up to international standards. To further develop its trade actions, the company is planning to create a free zone market in Geili and rehabilitate the Red Sea Free Zone Area, and to promote trade transactions with neighboring countries like what was initiated already with Ethiopia at the Red Sea Free Zone.
Throughout the years since the privatization started it has been emphasized that the privatization and its continuation are the priority instruments in achieving economic development and results. The Council of Ministers in summer 2001 further stressed the need for continuation of implementing privatization policy. It was highlighted that social aspects, like creating jobs, expanding the base of employment and removing economic planning bottlenecks, must be also taken into consideration since they have fundamental consequences on the development of the society as a whole.
Moreover, the Minister of Finance and National Economy, Dr. Abdul Rahim Hamdi, announced in June 2001 that after evaluating the first quarter performance of the general budget of the year 2001 the country still has to create development programs to curtail the poverty affecting such a majority of the population. In general the 2001 budget is aiming at increasing production rates, boosting oil production for export, and reinforcing exploration activities and signing new contracts in the oil industry. Minister Hamdi confirmed that there are further negotiations under way between the government of the Sudan and various international commercial institutions to invest in the oil production, and those offers will be evaluated between the ministries of Finance and Energy as well as the Central Bank.
The main foreign investors in the Sudan currently are the Malaysians, the Chinese, and the Koreans, but there are also strengthening links between the Indians and the Japanese; the latter which after following the US policy is now taking a step towards returning to the Sudan to benefit from the promising business opportunities. The relation with the Asian institutions and businessmen started around the year 1995, when there was the first Sudanese link with Malaysia through a delegation of the Sudanese ministers of finance and trade who went to Malaysia to promote some projects. Since that time the Malaysians have come to the Sudan, and now they are the main shareholders in oil projects (Petronas), and recently a company called Dar Ikhtisas participated in a substantial power generation project. The Grand Holiday Villa is also a Malaysian run hotel, mainly serving the needs of the oil companies and their employees. In the tourism sector there is an other newcomer called Primeplan; a fairly Kuala Lumpur based company whose delegation visited the Sudan a few times in the summer of 2001. Taking into consideration the substantial number of expatriates living in Khartoum, Primeplan decided to proceed with ambitious plans in contributing to the social life of the town by building an aqua park, villas, residencies, a golf course, a modern business center, a holiday resort and a recreation park. They are also looking into developing a strategically located Tuti island in the River Nile, and buying shares at the Palace Hotel, located as well by the River Nile and currently owned by the Korean Daewoo company. The relationship between the Sudan and China started too around the mid-90's, mainly in regard to oil exploration, refinery and petrochemicals industry by the China National Petroleum Company. Moreover, 50% of the Khartoum Refinery is owed by the Chinese. The Koreans are active through the Daewoo company in hotel business (Hotel Palace), car assembling, and textile industry.
Out of multinationals there are Shell and British-American Tobacco among few others, but the investment climate has not been considered safe, stable and ethical; to some, enough from the perspective of many investors. Noticeably it has only been last approximately three years that the exchange rate has been stable. Historically and at the time being the Sudanese economy is still very much run by family businesses, to mention some there are names such as Haggar, Aboulela, El Roubi, Hago, Abouda and Elnefeidi. |
