Sudan Economy

27 January 2010
PDFPrintE-mail
Sudan Home Page
Economia
Politica
Approfondimenti
Notizie Utili

MACROECONOMIC PANEL
The economy of Sudan continues to focus on agriculture than to occupy more than 60% of the workforce, feeds most of the small manufacturing and accounts for 40% of national income to education.

Although some forms of mechanized farming have long since entered the reality of Sudan and fate are large plantations, state-controlled and oriented exclusively to export products, they remain marginal to the culture of this people that is linked to subsistence farming in which it is difficult to transfer technological innovations.

Traditional agriculture is also characterized by low profitability and large fluctuations in production, as determined by the difficult weather conditions and suffers from the lack of specialized education of farmers, lack of transportation and lack of communications infrastructure.

In essence, in Sudan, the production of foodstuffs, although it is grown in recent times, is unable to cope with the increase in domestic demand resulting from population growth and the country is forced to resort to import large quantities of food , whose distribution is also hampered by insufficient and poor condition of roads.

To this we must add that often the prices imposed by government policy and therefore the absence of adequate profit margins do not encourage internal exchanges but instead make more profitable marketing of subsistence crops to speculation. So it is that neighboring countries offering lower prices, illegally importing huge quantities of food from Sudan.

As for industrial crops for export, however, cotton (whose average production is around 100 000 tonnes annually over fiber and over 300 000 tonnes of seeds, tropical classic product already exported to the United Kingdom and other European countries ) was accompanied by peanut (of which Sudan is the second largest in Africa), sesame and sugar cane (in part also for domestic consumption), perennial crops that are well suited to the environment of Central and Eastern Sudan.

The cotton cultivation is a suitable environment in the fertile alluvial soils of the Gezira, although the last decade, the irrigated land have increased their lot size and other plantations of cotton were added, including those of New Halfa (Khashm el Girba).

The Gezira is an important agricultural district, built in 1911 as a colonial enterprise private, nationalized in 1951 and today still in the state. Located at the intersection of the White Nile to the Blue Nile in the central region of Sudan, has the shape of a triangle bounded by two rivers converging at the top and can be considered a true agricultural enterprise, which employs 22% of arable land the country.

More than half of this land is irrigated methodology of perennial irrigation, made possible by the construction of a massive dam that holds back the waters of the Blue Nile near the town of Sennar, south of Khartoum, collect them in a basin.

The Sudan Gezira Board is the government body that manages the area, acts as an intermediary between the state and farmers working small territorial units as tenants, provide them with fertilizers, seeds, agricultural equipment and shall therefore necessary to transport crop. The main benefit induced by the Gezira district is to have contributed greatly to expanding production of long staple cotton, also this project has brought the farmers who work a higher standard of living than any other agricultural area of the country and even many urban areas.

Traditional agriculture, widespread mainly in central areas in the Western and Southern country, is aimed mainly sorghum (5 million tons), millet (almost 800 000 tonnes), wheat (640 000 tonnes), maize, potatoes, cassava and rice, while among the fruit crops are important ones and the banana-palm, particularly common in the oases of the North.

The farm is a major export item and despite the drought has limited the ability of the expansive area, the abundance of livestock is increasing: in 2003 there were 38.3 million head of cattle, 47 million sheep, 40 million goats, over 3 million camels, donkeys and among more than 700 000 horses, 38 million poultry.

Less important is the fishing industry, but represents a food support for local farming peoples. Practiced in inland waters, especially in wetlands of the South, along the Nile and Red Sea coast, annually provides almost 60 000 tonnes of fish.

26% of Sudan is covered by forests and woodlands. They are rich in valuable wood, including mahogany and ebony, but exploitation is limited because of inadequate transport. Overall, the country annually are obtained about 20 cubic meters of timber. The main forest products and gum arabic (Hashabiah), which occupies an important place also in exports, is obtained dall'Acacia senegal, common in the savannas of Kordofan, Darfur, Blue Nile and Kassala State.

In the first half of 2009 Sudan was affected significantly by the global downturn and in particular the decline in oil prices, the export of which is the leading sector of the economy.

Oil production should continue to grow in 2009, hovered at about 485,000 b / g and then move, in 2010, about 562,000 b / d (b / d barrels per day).
Total external debt estimated in 2009 Sudan is about 36.7 billion USD, representing 70.3% of GDP, then growth compared to 33.7 billion USD in 2008.

The Sudan has taken eight years to work with the Bretton Woods institutions, carry out regular 'token payments' in repayment of arrears as a gesture of goodwill, but no payment is made for decades to Paris Club creditors.

In recent years it has selectively repaid some bilateral creditors (non-Paris Club) because alongside these new loans granted.

Current situation is also reflected in the new "Staff-Monitored Program SMP" covers the period July 2009 to December 2010, which will have as main objective the preservation of macroeconomic stability and the progress made over recent years, restoring a sustainable level of reserves foreign currency.

The economic policies announced by the Sudanese authorities are aiming at a more flexible exchange rate (the rigidity of that was a factor behind the exhaustion of foreign reserves), restrictive fiscal policies (reduction of tax exemptions, tax reform extending the income tax base, better division of fiscal powers between the federal government and the States).

It is therefore unlikely that, at least in the short term, it is possible for Sudan eliminate arrears to the IMF, the premise that the Sudan has access to debt cancellation.

Next to oil, the main sectors contributing to the value of exports are represented by Arabic gum,by meat and cotton.

After oil, agriculture is the most important sector of national economy, both in terms of GDP and employment,.

Cotton is traditionally the single largest agricultural production, although it was replaced by sesame as a primary source of export earnings. The sector is the fastest growing livestock which recovered after removal of the embargo on exports.

To counterbalance the strong exposure to fluctuations in the Sudan in the international market of agricultural products, government authorities supported by the IMF, are concentrating their efforts on increasing the added value of agricultural production.

Particular attention is given then the textile industry, long hampered by the low level of investment and under-utilization of productive resources. The revitalization of the textile sector should benefit, as well as the proceeds of oil sales, by the influx of foreign private capital.

With regard, however, imports they are principally made up of machinery, from manufactured goods, vehicles, wheat, food and chemical products sector.

China represents the largest market of Sudan (68% of exports), followed by Japan (19%), Indonesia (4%), South Korea (2%), Saudi Arabia (1.7%).

The main partners for imports are still China (27.9%), Saudi Arabia (7.5%), India (6%) and Egypt (5.6%).
Another important partner for Sudan is India, with which Khartoum since independence has had cordial and friendly relations, and be based on more fruitful collaboration.
Sudan is also closely tied to Persian Gulf countries, with which it maintains strong relations in all fields (economic-commercial, political, social, cultural). The most representative in terms of exports to Sudan are Saudi Arabia and the UAE.

The expansion that is experiencing the private sector demonstrated by the recent contracts and licensing for the provision of essential services to foreign companies (especially coming precisely from Persian Gulf countries), demonstrates the openness of government investment Foreigners, who have a key role in the country.

The projects in energy and telecommunications that are taking place during this period were driven by foreign companies that are committed to providing both the funding and the skills and experience to achieve them.



COMMERCIAL OPPORTUNITIES  FOR ITALIAN COMPANIES
After the signing of the Comprehensive Peace Agreement between north and south of the country - took place in January 2005 - and its gradual implementation, and it is necessary to carry out a promotion of Italian investments in Sudan.

Specifically, in addition to the oil sector, which certainly deserves special attention considering that led investments in this field determine the areas where investment opportunities are more attractive are agriculture, and those connected to it (food industry , sugar, ethanol production), as well as construction and production of construction materials.

In these areas, more than in others, it could make fruitful investments to increase production and productivity of existing businesses on the market, or intended for construction of new production facilities, technologically advanced, through the creation of joint holdings ventures with Sudanese companies.

The advantage that one might get from investments in the areas mentioned is evident when one considers that current domestic production can not cover the domestic needs for which the country must resort to imports.

The aim therefore is to increase the production of goods and services - not only through the creation of new enterprises but also by improving the productivity of existing ones so as to meet domestic demand and to make available a surplus for 'export.

Moreover, the wealth of raw materials and natural resources that the country can boast of representing the data most relevant to evaluating the potential of Sudan.

Currently, however, most of these potentials are untapped and the country fails to fully exploit these resources.

Therefore, the intervention of Italian investors could be very profitable for the country's growth.

Part of investment in the tourism sector, local authorities have also opened doors to countless Italian and European tourists who visit each year historical sites and the coastal area of Port Sudan where there are areas of outstanding natural interest, yet preserved (the most beautiful coral reef in the world).

Just in Port Sudan, a favorite destination for Italian divers, there is considerable scope for the establishment of infrastructure capable of absorbing - in a maximum security also the growing international demand.



INDUSTRY
The industry of Sudan is rather backward, lacking a real basic industry and principal activities include the processing of local agricultural products (shellers, cotton mills, sugar mills, distilleries, oil mills). Among the industries include a textile plant, a cement factory and a refinery.

Essentially the more developed industrial sectors are textiles, production of edible oils, cement, sugar, soap, petroleum refining and production of weapons.


EXTRACTIVE RESOURCES
The mineral resources are represented by oil and natural gas.


SECTORS IN EXPANSION
Considering the state of development of Sudan, it is considered necessary to conduct cooperation in commercial and industrial sectors with low technological content, for example, the extraction and processing of marble and granite, the tannery and the food industry .

Regarding the field of marble and granite points out that while a great wealth of raw materials (Sudan is rich in mines that are on permanent concession to local businesses) is not appropriate technological knowledge, so the Sudanese businesses fail to fully exploit the marble and granite of excellent quality abounds in this country. In addition to the shortage in mining, there is also a total lack of experience and technical capability for processing of raw materials that are often exported in raw Persian Gulf countries before being imported after processing.

It would be desirable, therefore, the development of forms of cooperation in this area with Italian firms, by contrast, can boast a great experience. In this context, could be envisaged also real training with the sending of Italian experts in Sudan and Sudanese sending apprentices in Italy.



INVESTMENT LAW
The Sudanese government in 1999 enacted the Investment Law (amended in 2003) with the intention of encouraging the inflow of Foreign Direct Investment (FDI) into the country, believing that could help the growth and economic development of Sudan .

Under that law, foreign investments made in areas defined as "strategic" enjoy special privileges and exemptions.

In this case, are regarded as strategic investments in the following sectors: infrastructure (roads, ports, dams), energy, transport, communications, education, health, tourism, information technology and water. Equally important are considered investment in extraction of groundwater and the riches of the seabed, as well as in agriculture and its related activities (farming and slaughter and food processing industry).

Finally, all are considered strategic investment projects carried out in several states of Sudan. In this regard it is worth emphasizing that in the wider context of reconstruction of the country - an indispensable step to achieve a stable and lasting peace - was established JAM (Joint Assessment Mission), composed of economists North and South Sudan and World Bank experts, who prepared a document "guidelines" on major reconstruction needs at all levels (especially infrastructure).

This document is also operational road map for foreign investors.

The exemptions enjoyed by investment projects carried out in the strategic areas relate to the payment of taxes on profits for a period of ten years from the date of commencement of commercial production or activity (the period is reduced to five years for projects investment made in non-strategic sectors), the duty on imported products in order to make the investment.

With regard to the privileges, for the realization of an investment project in a strategic sector law provides for the grant of land free of charge or at a reasonable price if the investment is carried out in an area not strategic. The law also provides that the competent authorities may grant additional privileges to projects that meet the following conditions: direct investments towards less developed areas, assistance to develop export capacity in the country, investments that contribute to achieving an integrated rural development; investments that create jobs, encourage philanthropy projects, projects that encourage development of scientific research and technology projects to enable the reinvestment of profits.

Investors also enjoy the following guarantees:
• The investment projects will not be nationalized or confiscated and will not be acquired in whole or in part by the State for public interest, except what is required by law and in some cases just compensation.

• The property investment will neither be seized or confiscated and remission of money invested, if not the project or liquidation or disposal of both total and partial, will be performed in the same currency that has been imported.

• If you follow all procedures prescribed by law and the project is not done then, all equipment and machinery imported for the project and associated investment will be re-exported.

• The remission of profits and financing costs of foreign capital or loans will be made in the currency in which the capital or the loan has been imported, after the payment of statutory obligations due on the project.

• Imports of raw materials needed for the project and export of goods takes place after the automatic registration of the project on the Register of Imports and Exports.

No law can prevent the application of administrative privileges and immunities guaranteed by the Law on Investment.



THE TAX SYSTEM OF  SUDAN
The tax system of the country consists of direct and indirect taxes.

So there are 'taxes on business income, income from salaries tax, consumption taxes, production taxes, stamp duty and other taxes including a charge of development.

The VAT is 10%.



CUSTOMS DUTIES
Any product imported in Sudan, both from Italy, or by any other foreign country, is subject to a variety of duties and quotas character tariff ranging from 20 to 100% of the price of the property.

For example, vehicles are subject to duties of 30% if imported as vehicles for industrial use, while for cars for civilian use, the duty of up to 100%.

To avoid paying these charges placed at the entrance of the products in the country, the alternative is to form a company in Sudan, thus, in fact, can benefit from the rules of investment law passed in 1999 and amended in 2003 that includes a number of privileges and exemptions to encourage foreign direct investment.

In this case, that law provides for exemption from payment of customs tariffs on goods imported for investment.

For the sectors that most affect the 'commercial exchange with Italy (agricultural machinery, construction and electricity, iron and steel and metal processing, vehicles, chemicals, pharmaceuticals and technology) are not carried forward non-tariff barriers.

However, it showed the existence of customs procedures for importation are not clear and not always clear-cut, forcing most of the time our exporters to take on duties far higher than expected 12% VAT, import required from Sudan . This additional margin can reach 13-14%.



THE PROPERTY
Private property, including intellectual property rights, has a fully legal protection.

Are recognized and protected property rights over buildings and furniture.

There are indeed acknowledged the soil properties for which the government offers concessions.

AngolaBeninBurundiCameroonGabonKenyaMalawimonzambicoNamibiaCentral-African-RepublicCongo-BrazzavillecongoRwandaSao-Tome-&-PrincipeSudanTanzaniaUgandaZambiaZimbabwe

Registrazione

Il successo del nostro portale ha reso necessaria la creazione di uno spazio risevato ai nostri utenti. Da oggi registrandosi riceverete gratuitamente:

Log in e Password per accedere all'area riservata in piena sicurezza;
News Letter, per ricevere nella casella di posta le notizie più importanti, gli appuntamenti con ItalAfrica, gli Eventi che caratterizzano la nostra attività;
Magazine, per scaricare il periodico di Italafrica;
Faq per domande per chiarimenti generali;
Info e Supporto, per parlare con gli operatori di ItalAfrica centrale.

Registrazione gratuita      e mail2 

Area Utente

Iscriviti alla NewsLetter

Iscriviti alla NewsLetter per rimanere sempre aggiornato sulle ultime notizie dall'Africa
Inserisci la mail di iscrizione per cancellarti dalla Newsletter

We use cookies to improve our website and your experience when using it. Cookies used for the essential operation of the site have already been set. To find out more about the cookies we use and how to delete them, see our privacy policy.

I accept cookies from this site.

EU Cookie Directive Module Information