Khartoum, (Sudanow) -Investors have contributed over 28 billion USD in Sudan from 2000 to 2010, according to the Undersecretary the Ministry of Investment, Adwad Al Karim Ballah, of this sum, the official adds, 21 billion went to the petroleum sectors while the remaining 7 billion USD sought other domains, thus comes the question, why investment in the Sudan and is there new areas that have yet to be explored and what are the incentives and regulations and potentials that could attract more investment in the country. Our reporter Fikriya Aba Yazid, explores the possibilities in her following report.
Sudan enjoys huge and diverse natural resources, matter which makes it a center of interest for investors. Many reasons have come together to serve as impetus for investment in the Sudan, including a rapidly growing economy, huge development opportunities, not to mention the country’s unique
geographical location at the center of the African continent.
Sudan also has a huge banking system network with local and foreign banking experiences besides government policies supportive of investment and investors as the government has developed an encouraging investment climate to attract foreign investors to Sudan. To this one could cite an open opportunity to invest in the domains of
agriculture, industry, energy, mining, petroleum, transport, economic services and others.
But whatever be the investment chances the country enjoy, the government has worked to facilitate investment procedures and offering privileges for foreign investors ranging from securing the needed licenses and relevant procedures in the shortest possible time together with provision of qualified human component and specialized financial and banking institutions.
The government, as well, has adopted economic and financial policies encouraging investment and enacted laws that formed a strong base for establishment and protection of foreign investments in the country.
Such policies included involvement of the private sector, freeing the prices, liberalization of external trade, encouragement of exports, cancellation of state and local taxes on agricultural products, reduction of taxes on shareholding companies, introduction of tax amendments to encourage capitals movements and facilitation of the customs procedures including application of a new tariff on the main commodities benefiting from tax exemptions and fees reduction on some food materials in addition to cancellation of customs on computers and computer accessories as well as lifting the past partial restrictions on foreign currency transactions
Flow of Foreign and Arab Investors increases:-
In the wake of the above mentioned investment privileges and according to the Sudanese Ministry of Investment, flow of foreign and Arab investment increased in 2010 from two to three (2 to 3 ) billion U.S Dollars until October 2010, in particular from Asian countries, top of them was China. Most of these investments focused on oil, gas and infrastructure sectors. As for the Arab investments registered in the Bank of Sudan during 2000- 2010, the Ministry indicates that they totaled around 2 to 3 billion U.S Dollars. However, according to feasibility studies for the same period, Arab investment in the country amounted to around 2 to 30 billion Dollars, 2,2 billion in the agricultural sector, 14 billion in the industrial sector, and 14 billion in the service sector, where in 2011, the Arab investments in the country jumped to about 30 billion Dollars.
Some Arab countries’ investments in Sudan were huge as Kuwait’s investments amounted to 6 billion Dollars, while the investments of the United Arab Emirates (UAE) registered around 2 billion Dollars by end of 2010, with an increase of one hundred million U.S Dollars compared to its investments in 1995.
The reports further indicated that the implementation of the investment projects at all sectors until the beginning of the last quarter of 2010 registered %80.
The volume of foreign investment in the country amounted to around %70 during 2010 compared to 2009, while the investments at the economic service sector registered around 1.334 million Dollars, %60 and the agricultural sector 305 million Dollars, %80.
The volume of the approved investments during the third quarter of the fiscal 2010 and according to the feasibility study of the investors in the industrial sector amounted to around 453 projects besides 574 projects in the service sector and 523 projects in the agricultural sector, setting the total licensed projects at 1550.
Views of a number of economic experts and specialists varied with regard to the status of investment north Sudan after separation of south Sudan, where some have speculated that the investment process would experience great transformations under real problems that could lead to its deterioration in a clear manner.
However, the Ministry of Investment, at a press conference at its premises earlier, sent assurances that the investment process on the north would not be affected by the separation of south Sudan after the ninth of July.
The ministry has reiterated that it would increase the volume of investments to contribute to changing the political situations after the separation which would, in turn, lead to lack in some resources; matter which pushed the State to look for great strategic projects, particularly that investment is the savior of any country and not just Sudan.
The ministry has worked to prepare an investment map for 2010- 2011, %80 of which was completed, focusing on the agricultural sector and via committees that were formed by recommendations from the Presidency of the Republic and chairmanship of the Vice-President Ali Osman Mohamed Taha in addition to investment committees that work to encourage the processing industries for support of agriculture and utilization of Sudan’s rich resources and vast agricultural lands in Gezira together with the formidable animal resources in Kordofan and Darfur to encourage the country’s exports and feed the general Treasury with hard currencies.
General investment barriers:
Despite the big figures reflecting the volume of investment in the country, yet there are some general barriers obstructing the investment process. These barriers include the issue of lands and their high prices besides some legal barriers, namely with regards to imposed fees by different administrative authorities such as the localities, the states and the center and contradiction of these fees with the Investment Act. There are also barriers with regard to application of the insurance and banking system. Some also pointed to barriers regarding some of the political and economic policies adopted by the State to attract investment which affect the investor’s influence, particularly with regard taxes, customs, pricing and monetary policies and the inflations.
There are, as well, other factors that basically concern the investor such as lack of active financial facilitations, scarcity of well-trained labour and lack of industrial base. Additionally, there are international barriers represented in the international economic sanctions which affect purchase of the investors’ products besides prevention of the big investment companies from dealing with some countries and some political systems not to mention the ban against some big Sudanese banks and the restrictions on the commodities when they arrive at the different ports.
All these barriers cripple the investment process and limit the ability of venturing the investment field in the concerned country. There is also the lack of industrial, agricultural and economic service information for the investment companies, which means a gap in industry, capability or efficiency, matter which necessitates preparation of a primary study to help the investor determine the projects he needs.
Other barriers include prolonged procedures for foreign investors, bureaucracy of performance, instability of the investment laws and legislations and weakness of the local market.
Proposed solutions for investment issues;
There are proposed solutions to resolve the investment issues. They include the importance of entrusting one particular authority to deal with the investors with regard to facilitation of issuing the investment licenses, working out an investment map to indicate the investment lands which should be free of any ownership issues, i.e. should be government-owned lands, providing an annual guidebook for any investor willing to invest at any of the different investment sectors, whether agricultural, industrial or service sector and developing the banking systems. Additionally, the proposed solutions also include the importance of preparing a feasibility study for the cost of the product, providing qualified cadres for the investment institutions together with qualified auditors and financial supervisors at the concerned investment institution, protecting the investment projects against confiscation, informing the citizens with the activities of foreign investments what these investments provide for them of job opportunities, encouraging the citizens to welcome the investors at their areas, stabilizing the economy, imposing one tax on the different investment activities and one tax on the products or services of the investment projects, uniting the exchange price and combating the black market to protect the profits of the investors.
The solutions further include employing modern promotion and media means to advocate for the investment and its potentialities in Sudan, namely via the different media including newspapers, electronic sites and others, supporting and developing the capital market in the country to cope with the modern styles, protecting the environment, tackling the natural barriers, developing the infrastructures, uniting the laws and legislations to facilitate the task of the investors and increasing the privileges given to them, particularly the foreign investors.
Higher Council for Investment works to prepare attractive investment climate:
Sudan’s Higher Council for Investment is one of the mechanisms established at a recommendation by the President of the Republic. It is entrusted with preparing an attractive investment climate, approving the State’s general policies in field of investment, determining the priorities, setting up directives according to an investment map, revising all the investments laws, facilitating the procedures and removing the internal and external barriers.
In this respect, Dr. Musttafa Osman Ismail, Adviser to the President and Raporteur of the council stated that the council has coordinated with the authorities of concern and the World Bank (WB) office in Khartoum to remove the investment barriers mentioned in a study prepared by the Sudanese Ministry of Finance and the WB.
He added that the council has also organized a number of conferences and workshops to prepare the suitable climate for investment.
Package of directives to ensure flow of investments:
The higher authorities of the State have attached great concern to the investment process in the country where the President of the Republic Field Marshal Omer Al-Bashir has issued a package of directives for the State leadership recommending provision of free lands for the serious investors, facilitation of procedures, and approval of a single window at the investment commissions. The president’s directives also included exerting further efforts to complete the infrastructures which contribute to attracting investment such as roads, transportation and hotels, besides preparing a feasibility study for the projects needed by the country to be presented for the investors willing to invest, each on his field; taking into consideration the timetable for projects implementation and not to reserve lands for any investor before making sure of his seriousness.
Addressing the recent meeting of the Higher Council for Investment at the Friendship Hall to review Khartoum’s State’s investment experience, president Al-Bashir directed provision of preferential privileges for the vital projects which the country needs such as wheat and sugar besides distribution of the investment opportunities according to availability of markets, potentialities and the suitable conditions, namely the security conditions, to encourage the investors and attract their investments in support of the country’s economy.
He further indicated that facilitation of the procedures, provision of privileges and presentation of the investment projects in a scientific and systematic manner together with consideration of all factors of success would lead to attracting the investor and giving him a positive impression to promote for investment in Sudan when he returns to his country.
Meanwhile, and to block the way before return to trading in government licenses and lands, president Al-Bashir directed the concerned authorities not to provide a licenses for any investor that fails to express seriousness via provision of whatever necessary to prove that seriousness and not to reserve any land for any project that his owner does not begin implementation of the project.
He further directed the concerned authorities to stop approvals on financial or personal compensation for any person using a government land and replace that with provision of service projects to serve the citizens at the concerned area.
Taha: Priorities of higher state council for investment to resolve all investment disputes:
Sudanese Vice-President Ali Osman Mohamed Taha has reiterated that of the priorities of the higher state council for investment is to resolve the disputes in all the investment issues and give the state a broad authority of privatization of projects or confiscation for public interest.
He added that strengthening the legal and political administrations together with the administrative authority which would resolve the disputes over lands and qualifying them to promote for investment inside and outside the country would be an essential issue in the priorities of the State Walis (governors).
Taha further reiterated the importance of providing detailed information on the country’s natural resources to be a reference for unified and coordinated information on all aspect of investment for both national and foreign investors.
He pointed to the importance of specifying the priorities of investment fields according to the country’s preferential priorities because Sudan is entering a phase that needs arrangement of the economic priorities embodied in the tripartite emergency economic program which necessitates reconsidering all the priorities of the development projects to give them encouraging privileges.
The Vice-President further stressed the importance of the investment projects which stand on diversified income sources, reduced imports, and encouraged exports, adding that such projects were the ones which should enjoy privileges and facilitation of procedures.
To this end, the county’s general budget for 2011 embodied alternatives to make up for the loss of oil revenues including encouraging of non-oil exports, particularly gum arabic, cement and gold, cancelling the fees on exports and providing exports facilitations to increase the State’s general revenues.
In the meantime, recent reports indicated that the gum arabic and gold exports were flowing regularly where the gold exports amounted to around 2 billion U.S Dollars last year and are expected to jump to 3 billion Dollars this year after the signing of around 50 gold exploration agreements in various States.
The volume of cement investments, meanwhile, jumped to about 2 billion Dollars and its surplus of about 4.5 million tons is expected to be exported this year.
After the Ministry of Finance has issued a decision reducing the fees on locally produced cement and increasing the fees ton imported cement to encourage cement exports, the local markets have almost become empty of imported cement and the cement prices dropped to 350 SDGs per ton.
The self-sufficiency on cement is likely to positively affect other relative industries such as ceramic as well as relating sectors such as the constructions, contracting and development, both at the levels of the center and the states, not to mention that exportation of the Sudanese cement would contribute foreign currency to the State’s general revenues and support the national economy.