JEDDAH, 12 December 2005 — Emerging out of two decades of civil war, Sudan is trying fiercely to enter the global trading club. Sudan’s picture was gloomy in the news for the last couple of years and the media focused mainly on the country’s troubles. Thus the people’s perception was affected as the focus shifted away from the economic improvement that Sudan accomplished in recent years.
Now that the civil war is over, the investment environment in Sudan is becoming healthier and deserves more attention from the media. The country’s economic policies, investment regulations, outward orientation, and economic performance are all good indicators of the successful path that Sudan is marching down.
In the past three years, the foreign direct investment (FDI) inflow to Sudan almost tripled from $574 million in 2001 to $1.5 billion in 2004, according to 2005 World Investment Report issued by the United Nations Conference on Trade and Development. Out of the $1.5 billion of inward FDI, $400 million came from Saudi Arabia alone. Among Arab countries, Sudan came in third in attracting investments as the Sudanese state minister for investments, Al-Somaih Al-Sidiq, announced at Sudan’s 1st investment forum in Jeddah. The performance of the Sudanese economy in attracting investments is truly impressive as the country jumped from the 62nd place in 2000 to the 18th in 2004 on the UNCTAD’s Inward FDI Performance Index.
The performance of the Sudanese economy is as impressive as its ability to attract foreign investments.
The GDP growth since 1995 averaged 7 percent and it was 7 and 8 percent in 2004 and 2005, respectively. The ability of the Sudanese government to reduce the inflation rate in the country is miraculous. According to the World Bank statistics, the inflation rate in Sudan was 130 percent in 1996 and it was reduced to 8 percent in 2002. This year the inflation rate is about 7.3 percent according to Al-Sidiq.
In addition, the Sudanese currency has been stable for the last five years. In 2000, the yearly average exchange rate for the Sudanese dinar against the US dollar was 257 dinar. In 2004, the yearly average was 258 dinar and over the period of 2000-2005 the exchange rate average was 259 dinar. According to the deputy minister of investment, Dr. Abbas Mohammed Abbas, the Sudanese government has reported a surplus in its current account balance for this year.
Regarding economic policies and investment regulations, Sudan is making a huge transition as the country tries to liberalize its economy. Following free market principles, the Sudanese government announced that its investment strategy includes the following economic policies and regulations:
• Developing its financial market;
• Privatizing state-owned enterprises;
• Limiting state monopolies over sectors;
• Allowing capital mobility;
• Allowing the transfers of profits to foreign investors;
• Giving tax exemption incentives for foreign investors;
• Guaranteeing that private companies will not be nationalized;
• Giving free lands to foreign investors for strategic projects; and
• Allowing the transfer of foreign capital in case of investor withdrawal from the market.
The Sudanese government is also trying to restore its position in international institutions after its absence during the war years. Sudan aims at regaining its seat in the International Monetary Fund. The country is also trying to join the World Trade Organization (WTO); its application is progressing in the organization. Sudan is one of 10 least developed countries trying to become a full WTO member.
Sudan has come a long way in free trade. The country is a member of the Common Market for Eastern and Southern Africa (COMESA) agreement. On Oct. 31 Sudan and nine other member states of COMESA (Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Sudan, Zambia and Zimbabwe) eliminated their tariffs under COMESA rules.
With all these efforts and economic indications, Sudan is showing to the world that it is coming back to secure its place after the war period. The government has finally realized the importance of joining the global economy, and for an economy endowed with resources such as Sudan, it is important for the world and Arab countries to re-evaluate its return.
Sudan needs to develop political stability in order to continue its path toward economic integration and restoring investor confidence. And it has come a long way in achieving this goal.
