Sudan entered 2020 with reasons to be more optimistic for the future. The previous year former president Omar al-Bashir, stained by charges of genocide in Darfur and allegations of widespread corruption, was ousted from power after a 30-year reign. With economic sanctions having been lifted in 2017, hopes were raised that Sudan could attract foreign investment to help address food shortages, rising fuel prices and severely deficient infrastructure.
The Covid-19 pandemic put paid to any hopes of economic recovery however, while putting further pressure on its weak health services. Official data on reported cases and deaths are widely thought to reflect only a fraction of the true totals. The country is struggling to import vaccines and deliver them to front-line services.
According to the World Bank, net inflows of foreign direct investment (FDI) to the country totalled just $825m in 2019, the lowest level since 2002.
Sudan’s economy is centred on commodity exports, and according to the UN Conference on Trade and Development (UNCTAD), FDI to Sudan went primarily into oil and gas exploration and agriculture in 2019.
The secession of South Sudan in 2011 vastly reduced the country’s oil reserves, which had accounted for half of Sudan’s government revenues and 95% of its exports.
According to UNCTAD, Sudan relied on the exploitation of agriculture and agro-based manufacturing for 28.4% of its GDP in 2019. Only eight countries in the world are more economically dependent on agriculture, all of which are also in Africa.
Investors remain wary of entering Sudan
In March 2021, a clearing of arrears to the International Development Association (IDA) facilitated full re-engagement with the World Bank for Sudan after almost 30 years of estrangement. This will make IDA grants of almost $2bn available to the country to help reduce poverty and boost economic recovery. The debt was repaid by a $1.15bn loan from the US government to Sudan.
The US no longer prohibits its private companies from doing business in Sudan, but it still designates the country as a state sponsor of terrorism.
The US State Department says that a number of US companies made enquiries about investing in Sudan before the outbreak of Covid-19, although it advised caution due to continuing corruption and lack of transparency in the country. It claims the civilian-led transitional government that replaced Bashir in 2019 has been slow to pay some foreign companies already operating in Sudan.
There is ongoing unrest in the country, with further food riots and an attempted assassination of Prime Minister Abdalla Hamdok in 2020. Inflation was reported by Sudan’s Central Bureau of Statistics to be at more than 300% in early 2021.
The viability of Sudan as an investment destination in the near future will depend largely on the transitional government delivering free and fair elections before its term ends in 2022.