Sudan

Bureau of Economic and Business Affairs
Report
July 5, 2016

This is the basic text view. SWITCH NOW to the new, more interactive format.


Executive SummaryShare    

Due to U.S. and international sanctions imposed on Sudan, the trade and investment environment is not favorable for American firms, despite limited exemptions. Endemic corruption, minimal ground and air transportation links, very limited banking services, high unemployment, multiple exchange rates, government misrule, and internal conflicts undermine commercial activity.

There is no American Chamber of Commerce in Sudan, although a U.S.-Sudan Business Council (USSBC) was formed in late 2014. There is no U.S. foreign direct investment, and the potential for American commercial activity with Sudanese entities must remain within the framework of the exempted areas that permits trade between the two countries. General licenses from the Department of Treasury exempt U.S. exports of: agricultural equipment, inputs, and livestock food, medicine, and medical equipment; certain educational activities and exchanges; and, information and communications technology products and services. Lucrative opportunities exist in these areas.

Sudan has emerged as an attractive market for U.S.-manufactured agricultural machinery such as tractors, pivot irrigation systems, and seeds. Sudan’s major dairies began purchasing thousands of American-breed dairy cattle in the past two years. Medicine and medical equipment as well as a variety of academic services remain in high demand; however, activities in these areas are minimal due to the difficulty in executing financial transactions with Sudan, even for legal activity. Since mid-2014, correspondent banks have closed accounts of Sudanese and those residing in Sudan, and have in many cases refused to conduct financial transactions if Sudanese individuals, businesses, or institutions are involved in the commercial transaction – including those transactions with licenses issued by the Treasury Department’s Office of Foreign Assets Control (OFAC). Banks and financial institutions abroad have declined to do business with clients who have any connection to Sudan. Some American firms avoid conducting business with Sudan because the benefit does not outweigh the costs of staying compliant to U.S. law. For these reasons, American and Sudanese businesses alike are deterred from pursuing permissible commercial activity.

Table 1

Measure

Year

Index or Rank

Website Address

TI Corruption Perceptions index

2015

165 of 167

http://www.transparency.org/cpi2015/#results-table

World Bank’s Doing Business Report “Ease of Doing Business”

2016

159 of 189

doingbusiness.org/rankings

Global Innovation Index

2015

143 of 143

globalinnovationindex.org/content.aspx?page=data-analysis

World Bank GNI per capita

2014

USD 1,710

data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

ADVISORY: U.S. Embassy Khartoum advises that certain limitations exist on the U.S. Government’s engagement with American businesses that export goods or services to Sudan. In particular, section 908(a)(1) of the Trade Sanctions Reform Act (TSRA) (22 U.S.C. 7297(a)(1)) provides: “Notwithstanding any other provision of law, no United States Government assistance, including United States foreign assistance, United States export assistance, and any United States credit or guarantees shall be available for commercial exports to …Sudan.” The export assistance restriction limits U.S. Embassy Khartoum’s ability to provide the kind of support that the U.S. and Foreign Commercial Service typically provides—including business matchmaking services, market research on specific products or services, export advocacy, and provision of information concerning business opportunities. See, e.g., 15 U.S.C. 4721. END ADVISORY

There are limited possibilities for American investors and export-import firms to conduct business in Sudan. U.S. and other economic sanctions, high taxes, and frequent changes to the investment code are all factors discouraging foreign direct investment. To date, gum Arabic is the only Sudan-originated product that is permitted to enter the American market, and U.S. purchasers of Sudanese gum Arabic must obtain an import license from OFAC. Additionally, U.S. sanctions prohibit Americans from engaging in any business transaction involving the Government of Sudan (GoS), including state-owned companies. At present, the Bank of Khartoum is the only Sudanese bank not designated under OFAC sanctions.

Potential investors should bear in mind that U.S. sanctions generally prohibit U.S. persons from importing or exporting goods, services, or technology from or to Sudan, and generally prohibit U.S. persons from engaging in financial transactions with the Sudanese government, among other prohibitions. Certain types of transactions, specified by economic sector or geographic regions within Sudan, are generally licensed, such as the export of certain agricultural commodities, medicines, and medical devices to certain areas of Sudan. In mid-February 2015, the Treasury Department issued a General License D on information and communications technology (ICT), including handheld mobile devices and U.S.-manufactured computers, laptops, and notebooks.

In addition, otherwise prohibited transactions may qualify for OFAC licenses. American investors interested in business opportunities in Sudan are strongly encouraged to review the Code of Federal Regulations chapter on “Sudanese Sanctions Regulations,” Chapter 31 C.F.R. Section 538. Information on how to apply for an OFAC license is found at http://www.treasury.gov/resource-enter/sanctions/Pages/licensing.aspx.

OFAC’s page on Sudan is found at http://www.treasury.gov/resource-center/sanctions/Programs/pages/sudan.aspx.

Investors should be aware that even when operating pursuant to an OFAC license, many U.S. businesses face difficulties in transferring money to Sudan as international financial institutions exercise extreme caution in processing transactions related to Sudan. Since mid-2014, correspondent banks have closed accounts of clients in Sudan and refused to conduct financial transactions if Sudanese individuals, businesses, or institutions were involved—including ones with OFAC licenses. Those who decide to pursue permissible commercial activity should be advised that the issuance of an OFAC license can take several weeks.

For companies operating with appropriate licenses, Sudan is becoming a large market for a variety of agricultural harvesting equipment and inputs. Sudanese farmers represent a significant source of demand for new seeds adaptable to Sudan’s hot and dry climate. Exports of agricultural equipment and other inputs such as seeds require a specific license. General commercial exports to Darfur and the “Two Areas” (South Kordofan and Blue Nile States) have a general license exempting these specified regions from U.S. sanctions. Currently, about 16.8 million hectares are under cultivation in Sudan; however, 84 million hectares are suitable for agriculture. Rain-fed traditional farming practices continue to dominate, but large-scale mechanized farming is growing, especially along the Nile and its tributaries. There is a robust market for American-manufactured pivot irrigation systems, water pumps, and well-drilling equipment. Sudan’s major dairies began buying thousands of American-breed dairy cattle in the past year.

Sudan has a formal private sector, led by the Sudanese Businessmen and Employers Association. The private sector is dominated by numerous large, often family-owned industrial, agricultural, and consumer products conglomerates. Many Sudanese corporate leaders studied in the West and are fluent in English. While there is no U.S. Chamber of Commerce in Sudan, in late 2014 a small group of Sudanese business leaders believed to have no connection with the government formed the USSBC. The USSBC emphasizes its activities on people-to-people engagement to draw awareness to the consequences sanctions has had on the Sudanese people and the private sector.

Although considered among the fastest growing economies in Africa, Sudan presents one of the most challenging business environments in the world to the would-be investor. Sudan ranks 159 out of 189 countries on the June 2015 World Bank-International Financial Corporation’s “Doing Business Report – Ease of Doing Business.” It is ranked 165 of 167 countries on Transparency International’s 2015 Corruptions Perception Index, ahead of only North Korea and Somalia. On the 2015 UN Human Development Index (HDI), Sudan is ranked 167 out of 187 countries. An estimated 47% of Sudan’s population lives on less than $2 per day, according to the HDI.

Political risk is also of concern. In addition to regional instability with countries bordering Sudan, the central government is involved in two internal conflicts: in Darfur and in the “Two Areas” of South Kordofan and Blue Nile States. Sudan and South Sudan have yet to demarcate their common border and continue to dispute the sovereignty of the territory of Abyei. Armed UN peacekeeping missions (UNAMID and UNISFA) are located in Darfur and Abyei.

International air service to Khartoum is limited. Egypt Air, Ethiopia Airlines, Flynas, Kenyan Airways, Saudia Airlines, Turkish Airways, Bahrain’s Gulf Airways, and several Emirati-based carriers (Etihad, Emirates, Fly Dubai, and Air Arabia) are among the major carriers that serve Khartoum; no American carrier is permitted to fly to Sudan. Tunisia Airlines is scheduled to begin operations in the summer of 2016. Two private domestic airlines service Port Sudan, other regional Sudanese cities, and Juba, South Sudan. International airlines continuously review decreasing the number of weekly flights traveling to Khartoum because of the difficulties they face repatriating money and the weakening of the Sudanese Pound.

In response to the loss of oil production and revenue following the secession of South Sudan in 2011, Sudanese officials are attempting to recover revenue by expanding existing oil and gas production, increasing mining operations (particularly gold mining), and reviving the agricultural and livestock sectors that had been the mainstay of the Sudanese economy prior to the advent of crude oil exports in 2000. As a result, Sudan’s agricultural revival through the GoS five-year plan increased the demand for agricultural inputs which are exempt from U.S. sanctions. Sudanese conglomerates are moving toward corporate farming primarily of fodder exports to the Gulf States.

Sudan emphasizes its desire for more foreign direct investment. Sudan has officially introduced two significant investment reforms in the last three years: lowering both the corporate tax rate and capital gains tax, and improving the timeliness of customs clearances. However, interlocutors have informed the GoS places the tax burden primarily on large businesses that pay much higher than their official tax rate.

Trade missions, mainly from Saudi Arabia, Qatar, Kuwait, and the United Arab Emirates, visit Khartoum on a regular basis, often accompanied by public announcements of signed agreements and purported deals. Most foreign investment to date is related to natural resources, particularly in petroleum and gas exploration and extraction, and agriculture. China, Malaysia, Brazil, and India have made major investments in the oil sector, and Arab Gulf states and Brazil, and Egypt have made major investments in Sudan’s agricultural sector primarily in animal fodder.

In January 2013, the Economic Development Sector of the Council of Ministers passed the National Investment Encouragement Act of 2013, later adopted by the National Assembly. This act ensures that foreign investors enjoy the same protections as Sudanese nationals. Foreign investors, however, do complain that they are often asked for bribes to establish businesses or undertake economic projects in Sudan. There is often a difference between treatment provided by law and treatment received in practice. Investors face noteworthy corrupt activity in their encounters with midlevel government bureaucrats for the provision of administrative services such as issuing licenses, certificates, and documents.

Despite the legal protections guaranteed under the National Investment Encouragement Act of 2013, there are foreign investment restrictions in the transportation sector, specifically in railway freight transportation, inland waterways barge service, and airport operations. Most telecommunications and media, including television broadcasting and newspaper publishing, are closed to foreign capital participation. Foreign ownership is also restricted in the electrical power generation and financial services sectors. In addition to those overt statutory ownership restrictions, a comparatively large number of sectors are dominated by government monopolies, including, but not limited to, those mentioned above. Such monopolies, together with a high perceived difficulty of obtaining required operating licenses, make it more difficult for foreign companies to invest.

2. Conversion and Transfer PoliciesShare    

Facing a severe foreign exchange reserves shortage, the Sudanese government tightened conversion and transfer policies. Domestic businesses have no assurance of obtaining needed levels of foreign currency for international transactions unless importing from a list of government approved commodities. The government strictly controls incoming hard currency from exports and business owners wishing to retrieve cash can only make withdrawals denominated in Sudanese pounds. Foreign companies operating in Sudan must have the Central Bank of Sudan’s permission to repatriate profits and foreign currency. The Investment Act of 2013 enshrines the right to repatriate capital and profits, provided the investor has opened an investment account at the Central Bank of Sudan before entering into business. To avoid banking delays, many Sudanese firms complete a significant amount of transactions outside of official channels or complete transactions abroad in U.S. Dollars, Euros, Riyals, or Dirhams to avoid delays.

The presence of a rapidly widening gap between the black market and official exchange rates add to the difficulty and complexity of settling accounts and repatriating profits and foreign exchange. While Sudanese and foreigners are permitted to hold foreign currency accounts in private commercial banks, access to the currency can be delayed and/or limited without prior notification. Individuals and businesses often resort to obtaining hard currency on the black market. Local businesses may avoid holding significant cash in domestic deposit accounts all together. Sudanese authorities periodically crack down on dealers involved in unlicensed foreign exchange transactions. In 2014, in order to encourage the development of productive export industries, the Sudanese government prohibited banks from lending to real estate development and financing automobile loans.

The GoS can introduce changes to policies governing currency access and conversion without warning, and such changes generally become effective immediately upon announcement. While government agencies claim inflation had fallen to 12% in 2016 down from 36.9% in 2014, the existence of a widening gap between the official 6.5 SDG to the U.S. Dollar and 13.2 SDG black market rate discourages foreign direct investment in Sudan. Currently, there is no indication that the GoS will consider monetary policy to close the gap between the official and parallel market rate.

3. Expropriation and CompensationShare    

Sudanese investment law states that “just compensation” must be offered in the case of nationalization or confiscation of all or part of any investment for “the public interest.” No mechanism exists for determining compensation or defining specific public interests. The U.S. government is unaware of any outstanding cases involving the expropriation of property belonging to a U.S. citizen or corporation.

4. Dispute SettlementShare    

According to the World Bank’s publication “Doing Business 2015,” enforcement of a commercial contract in Sudan takes an average of 53 procedures and 810 days at a cost of 19.8 percent of the claim. These figures are unchanged for the last seven years. The World Bank reports that it takes 58 weeks to enforce an arbitration award rendered in Sudan (assuming no appeal). Embassy interlocutors report that while the judicial process is long and arduous, litigants can generally expect a fair ruling in the end.

Sudan’s investment law does provide for international arbitration. Sudan is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). However, Sudan has not signed the 1958 New York Convention. Sudan’s Arbitration Act of 2005 governs all arbitration matters, to include foreign investments.

5. Performance Requirements/IncentivesShare    

Investors must begin their projects within six months of receiving a license, submit reports every six months during the period in which the project receives special privileges, keep regular books and maintain records on the assets of the project exempted from customs duties and exempted imported materials, and present to the Ministry of Commerce and the State Minister, during the validity of the privileges, a copy of the annual report of the project approved by a certified auditor.

Sudanese investment law specifies certain sectors as strategic for the purpose of providing additional or special incentives. They are: (1) infrastructure—including roads, ports, electricity, dams, communications, energy, transport, contracting business, education, health, tourism, information technology services, and water projects; (2) natural resource extraction and exploitation; and (3) agriculture, animal (husbandry), and industrial production. Some of these strategic sectors require a minimum investment; the sum is dependent on the sector.

Investments in strategic sectors are exempt from tax on profits for a period of 10 years. The High Council on Investment may grant non-strategic investments an exemption not to exceed five years. The government may also extend benefits including free land and exemptions from other taxes and fees to strategic and non-strategic investments. Such projects may include, but are not limited to: investments in the least developed areas of the country; investments that assist in the development of export capabilities that contribute to rural development; that increase employment; that are charitable in nature; and that develop scientific and technological research.

U.S. citizens should note that investments in the aforementioned strategic sectors are occasionally permitted by Sudanese authorities as a joint venture with the GoS, which is prohibited under U.S. sanctions. U.S citizens should also take caution because those government agencies, such as the National Security Services and others, operate cash-generating front companies, usually in the business of high volume trade of commodities and bulk goods. The ownership of such companies are often hidden and/or registered under the names of private citizens hiding their affiliation to a government entity.

6. Protection of Property RightsShare    

Real Property

Foreign and domestic private businesses may register as a sole trader, partnership, limited liability Company (private or public), special concession, or branch of a foreign registered company.

However, restrictions on foreign equity ownership apply in many sectors, particularly in service industries. Businesses involved in railway and inland waterway freight transportation, airport operations, television and radio broadcasting, and newspaper publishing, are closed to full foreign participation. In addition, foreign participation is limited in the telecommunications and financial services sectors. The Investment Act of 2013 allows non-Sudanese participation in the communications and financial services sectors provided it receives prior approval from the National Telecommunications Service and the Central Bank of Sudan.

Sudanese law does allow for the foreign purchase of privately or publically held land in Sudan, but instances of such sales are rare. The government has provided land without transferring ownership to foreign companies as an investment inducement. Land may be leased in Sudan without restrictions on the amount or the duration. The lease may not be transferred without permission.

According to the World Bank, securing rights to property takes an average of six procedures over nine days and costs, on average, three percent of the property value. However, protecting property rights can be problematic. At times, security and civil authorities do not follow due process. The judiciary is influenced by other branches of government, exercises little independence, and is widely perceived as corrupt.

Intellectual Property Rights

The legislative framework on intellectual property rights (IPR) is adequate, but enforcement is uneven. Authorities have conducted raids on shops selling counterfeit pharmaceuticals and animal dips, but there is no nationwide campaign to enforce IPR. Likewise trademarks of popular American businesses, usually chain restaurants, are often used or changed slightly to reflect the original brand. Most, if not all, grocery and hardware stores display American and British name brands shipped from Dubai, Cairo, and Abu Dhabi, and many consumer goods from Egypt, South Africa, and South Korea. The Sudanese Consumers Protection Society, the only consumer protection society in Sudan, has held seminars and issued warnings about counterfeit goods/pharmaceuticals that threaten public health and safety. The Sudanese Businessmen and Employers Association have also complained about IPR violations. Some private law firms have taken initiatives to independently seek out local businesses abusing international trademarks and offering to represent foreign firms in court.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Embassy point of contact on IPR concerns is Aysa Miller, MillerAM@state.gov.

Local lawyers list: Embassy Khartoum’s legal information.

7. Transparency of the Regulatory SystemShare    

The World Bank’s June 2016 “Doing Business” annual report ranked Sudan 159 out of 189 countries for the process of starting a business. The report states there are 10 procedures required to start a business, with each procedure possibly taking up to one month to complete, which is higher than the average for Sub-Saharan Africa. Additionally, the report measured the ease of obtaining information about the regulatory process. While information about fee schedules for starting a business is available upon request, it is generally difficult to obtain and is not published in laws or decrees. There are no informational brochures, boards, or public notices on the topic in government offices or online, but it can be obtained from the High Investment Council upon request.

8. Efficient Capital Markets and Portfolio InvestmentShare    

Sudan maintains a fully integrated and compliant Islamic financial system (Sharia). The overall capacity of the financial system is relatively small and weak by international standards. The banking sector is comprised of 32 banks, including six foreign and four state-owned banks. Commercial banks do not indulge in financing except in gold as capital investors, and hardly any role in mining or oil and gas concessions which are dominated by foreign investors. Also, few banks have the capability to offer export facilities. The Central Bank of Sudan plays an active role by directing and controlling commercial banking activities and financing investors in the extractive industries. Sudanese banks still remain absent from small business finance in the extractive sectors.

NOTE ON ISLAMIC FINANCE & BANKING IN SUDAN:

Sudan is one of two countries with a fully integrated Sharia compliant financial system. Due to the nature of Islamic financing in Sudan, local banks operate as merchant banks holding on their balance sheets large quantities of assets such as industrial equipment, automobiles, real estate, and commodities. The holding of commodities can often lead to season scarcity of certain goods, depending on the international price. Popular Sharia compliant instruments offered to banking clients in Sudan include:

Qard – A non interest-baring current account.

Mudarib Contract – An investment account equivalent to a savings account, in which the client allows the bank to make investment decisions in economic activity to bring returns on the deposit. The client and bank usually agree to a 30/70 ratio on a profit and loss contract. Contracts are viewed to be in favor of the customer.

Murahiba – Mostly used for real estate and automobile loans. Banks purchase an item in full and resell to the customer at a negotiated profit margin. The customer acquires the asset by paying installments over time.

Musharika – A financing mechanism similar to a working capital loan in which a joint venture agreement is negotiated between the bank and customer whom agree on a fixed profit (or loss). Typically used for industrial and agricultural sectors whereby the bank purchases inputs (such as seeds) for a value-added activity to be performed by the client.

Salem – An instrument used for customers without cash such as small to medium size farmers. The bank purchases today a specified quantity of goods (or yield) and immediately credits the client’s account. After production, the client delivers the goods produced to the bank.

Other instruments popular in the Gulf States such as Ijara (rent-to-own) and Wakala (wealth management) are not widely available in the Sudanese market.

The government has an ownership stake in many of the remaining domestic banks. Sudan remains under-banked, with banking and other financial institutions concentrated around Khartoum. The rate of non-performing loans is high. Due to U.S. and international sanctions, correspondent banks decided to stop operations with Sudan because of the risk of being incompliant with U.S. sanctions. To avoid any connection with Sudan, both foreign and Sudanese companies frequently make transactions dominated in currencies other than U.S. dollars as to avoid a nexus with Sudan and to circumvent the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

9. Competition from State-Owned Enterprises (SOEs)Share    

Despite the government announcing a mass privatization campaign to begin in 2011, it actually has privatized few enterprises or corporations. The State indirectly owns enterprises through government officials, political parties, and private citizens in addition to direct ownership of enterprises by all levels of government and different agencies. The broad range of activities in which the government participates as direct or indirect owner of enterprises distorts competition in those markets, as the presence of state-owned firms provides a strong disincentive to private entry. These favored companies are often times granted government bids and tenders to trade in bulk with the right to purchase U.S. Dollars (USD) from the Central Bank of Sudan (CBoS) at the official exchange rate. Other companies have to purchase at the parallel market rate which has now reached a 200% increase. Some firms may not be able to compete and therefore must withdraw from the market, leaving the favored company free to charge exorbitant rates at huge profits. This undermines policies and competition that would allow newcomers’ entry into certain sectors. Major government contracts are often awarded first to a firm controlled by a government official and then subcontracted to a firm or firms that actually perform the work. Many state-owned enterprises, such as the national cellular carrier Sudatel, are owned in whole or part by ruling National Congress Party (NCP), military, police, and National Intelligence and Security Services (NISS) officials.

10. Responsible Business ConductShare    

Corporate Social Responsibility (CSR) activity in Sudan is robust among large and medium size businesses that advertise their activities in Sudan’s rural peripheries and in poor metropolitan areas. Firms that do not have ongoing CSR activities usually will embark on a large charity program during the month of Ramadan. American and international activist organizations and groups that advocate CSR and peace and justice in Darfur, target for protests and economic boycotts the multinational corporations with economic interests in Sudan. As a result, many institutional investors have divested their share holdings of companies that do business in Sudan. The Chinese government and the state-owned China National Petroleum Corporation have come under international criticism for their involvement in the Sudanese petroleum sector.

The GoS does not require companies to publicly disclose information relating to issues of corporate social responsibility. Firms and individuals must contribute a portion of their profits (2.25%) to zakat (charity) services. Labor and employment rights are not regularly enforced, and there is no consumer protection law. Although an independent Sudanese Consumer Protection Society exists, it primarily focuses on medicinal protections and lobbying the government over price issues and is not considered to have much influence at this time.

A number of large Sudanese-owned corporations have active and full CSR programs that compare favorably with those in U.S. companies. The results have been positive, and foreign investors should consider an active CSR program to build goodwill among local communities, their employees, and the national, state, and local governments.

11. Political ViolenceShare    

Sudan remains on the U.S. State Sponsors of Terrorism list. However, Sudanese authorities have taken steps to limit the activities of terrorist groups and, as a result, there have been no violent attacks on westerners since early 2008. Central, Eastern, and Northern Regions of Sudan remain relatively safe. However, violent conflicts between the government and armed rebel movements persist in regions of Darfur, Blue Nile State, South Kordofan, and the Nuba Mountains. U.S. Embassy Khartoum has implemented enhanced security measures to protect U.S. government personnel assigned to Sudan. The embassy facility was attacked on September 14, 2012, in protest of a film mocking Islam.

As a result of the over proliferation of weapons due to years of war, the threat of violent crime—including kidnappings, armed robberies, home invasions, rape, and carjacking—is particularly high in conflict areas. The GoS has limited capacity to deter crime in these regions. Some observers assert that the GoS encourages instability and criminal activity through its support of militias. In addition, militia and armed rebel groups have carried out criminal attacks against locals and foreigners. Foreign nationals have been abducted and held for ransom by criminal groups in Darfur, and there have been attacks on foreign business operations in the conflict-torn southern and western states, such as on road-building operations.

Violent flare-ups occur between various armed militia groups and Sudanese military forces with little notice, particularly in the Darfur region, along the border between Chad and Sudan, and in areas on the border with South Sudan. Clashes between Sudanese forces and armed opposition groups in Blue Nile and South Kordofan States, including the disputed area of Abyei, are real and immediate dangers to travelers and business operators. Likewise, clashes between feuding tribes over land resources tend to flare up unexpectedly. In addition, U.S. citizens found in these areas without permission from the GoS face the possibility of detention by government security forces. Violent anti-government demonstrations occur periodically, mostly in Khartoum.

Travelers can get updates by checking the U.S. Embassy website at http://sudan.usembassy.gov/.

12. CorruptionShare    

Sudan’s public sector is perceived as one of the most corrupt in the world, ranking 165 out of 167 nations in the 2016 Transparency International (TI) Corruption Perceptions Index. According to TI, Sudan is ahead of only North Korea, Afghanistan, and Somalia in the area of government transparency.

Over the past two years, the GoS has taken limited steps to combat official corruption. Sudan signed the UN Anticorruption Convention in 2005 and ratified it in September 2014. Sudan also signed the African Union Convention on Preventing and Combating Corruption, but has yet to ratify it.

In April 2014, a Sudan chapter of TI was formed. It has already begun presenting evidence of official corruption to the semi-independent “Financial Information Unit” (FIU—formlerly the Central Bank of Sudan’s Financial Intelligence Unit) for investigation. The FIU is empowered to present its findings to the Ministry of Justice for adjudication.

13. Bilateral Investment AgreementsShare    

Sudan has bilateral investment agreements with Germany, Netherlands, Switzerland, Egypt, France, Romania, China, Indonesia, Malaysia, Qatar, Morocco, Oman, Turkey, Yemen, Bahrain, Ethiopia, Jordan, Syrian Arab Republic, United Arab Emirates, Libya, Tunisia, Algeria, Kuwait, Lebanon, Chad, Republic of Djibouti, India, Vietnam, Bulgaria, and Italy. Sudan has bilateral taxation treaties with Egypt, United Kingdom, Malaysia, South Africa, Turkey, and Syria.

Sudan and the United States do not have a bilateral investment agreement or a bilateral taxation treaty.

14. OPIC and Other Investment Insurance ProgramsShare    

Sudan is not eligible for Overseas Private Investment Corporation (OPIC) programs because of comprehensive U.S. economic sanctions. Sudan has been a member of the Multilateral Investment Guarantee Agency (MIGA) since November 7, 1991. MIGA is not currently active in Sudan.

15. LaborShare    

Sudan has signed and ratified all major International Labor Organization conventions protecting workers rights but falls short in practice of international standards.

Sudan’s labor force was estimated at 12.2 million in 2010, with a participation rate of 51.4% for those aged 15-64. The unemployment rate in 2016 is 9.5%. Underemployment is also a significant social problem, as the economy is not creating sufficient jobs for graduating university students. Interlocutors reported that Sudan is experiencing severe brain drain, losing educated citizens including medical doctors, engineers, and IT professionals, who routinely emigrate to the Arab Gulf states, Europe, and the U.S. seeking better job prospects.

Sudan’s minimum wage is 425 Sudanese pounds per month (approximately 70 U.S. dollars at the official exchange rate). The work week extends from Sunday to Thursday and is eight hours per day and 40 hours per week. Per capita income is estimated at $1,450 per annum. Many private sector employees work a full work day on Saturday.

Foreign workers must have valid residency and work permits or face imprisonment and deportation. In practice, the majority of unskilled labor positions are filled by day workers, who are not reported or taxed.

In April 2016, Sudan declared South Sudanese as foreigners, suspending the September 2012 cooperation agreements between Sudan and South Sudan that granted South Sudanese “Four Freedoms” of movement, work, residency, and education in Sudan. A “Four Freedoms” preferential labor agreement exists with Egypt, and Sudan enforces the freedoms in general for Egyptians. However, in 2015 there were instances of detrimental deportations of Sudanese miners in Egypt and Egyptian fishermen off the coast of Sudan. The procedures for residency permits for South Sudanese who wish to remain in Sudan are unlike those for other foreigners. Implementation of the residency regulations for South Sudanese complicate the implementation process such as requirement of a Sudanese sponsor, follow-up with the Department of Aliens, valid passport, letter from working/study institutions, and tests for Hepatitis B and HIV. A South Sudanese person found having contracted either disease is immediately deported.

16. Foreign Trade Zones/Free PortsShare    

Sudan has established two free trade zones—Suakin on the Red Sea near Port Sudan and Aljaily near Khartoum. The governments of Egypt and Sudan are scheduled to inaugurate the Argeen border crossing located on the western bank of the Nile. The Sudanese side will house a Free Trade Zone. According to the Free Zones and Free Markets Law of 1994, industrial, commercial or service investments which are licensed in the free zones enjoy the following advantages:

  • Exemption of the projects from tax on profits for 15 years, renewable for an extra period depending on the decision made by the concerned minister;
  • Salaries of expatriates working in projects within the free zones are exempted from personal income tax;
  • Products imported into the free zone or exported abroad are exempted from all customs fees and taxes except service fees and any other fee imposed by the board of the Sudan Free Zones Company;
  • Real estate inside the free zones area is exempted from all taxes and fees;
  • Invested capital and profits are transferable from Sudan to abroad through any bank licensed to operate in the free zone;
  • Money invested in the free zones may not be frozen or confiscated.

Sudan was in the process of creating a free trade zone in Kosti, near South Sudan, but the mid-December 2013 outbreak of internal strife in South Sudan dramatically slowed trade between the two countries.

17. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

The GoS does not publish investment statistics on a regular basis. There is neither U.S. Foreign Direct Investment into Sudan nor Sudanese direct investment into the U.S. due to U.S. sanctions policy.

Table 2

Host Country Gross Domestic Product (U.S.D)

2015

$90B

2016

$109B

GoS Budget 2016

18. Contacts at Embassy Khartoum for Public InquiriesShare    

U.S. Embassy Khartoum’s switchboard telephone number is (249) 1-870-22000.
The combined Policital/Economic (Commerical) Section staffing includes:
Political-Economic Counselor, David L. Scott
Deputy Political-Economic Counselor, Rashidah Ellis, EllisP@state.gov
Senior Economic Officer, Aysa Miller, MillerAM@state.gov
Senior Economics/Commercial Specialist, Ateetala Hamid, HamidAM@state.gov