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FACT FILE
Country name: Republic of Sudan
Population: 39,379,000 (July 2007 estimate)
Land Area: 2,506,000 km2
Languages: Arabic (official), also in use is English and about 115 tribal languages
Currency: Sudanese pound and Dinar
Capital: Khartoum
Sudan is the largest and one of the most diverse countries in Africa, a home to deserts, mountain ranges, swamp land and rain forests. It borders the Red Sea and is located between Egypt and Eritrea. Sudan has plenty of natural resources, but its main resource is petroleum. Other resources are iron ore, copper, chromium ore, zinc, tungsten, mica, silver and gold.
Sudan has over recent years revived a struggling economy with sound policies and infrastructure investment, but still faces formidable economic tasks, starting from its low level of per capita output. From 1997 to date, Sudan has been implementing IMF macroeconomic reforms. In 1999, Sudan began exporting crude oil and in the last quarter of 1999 recorded its first trade surplus, which, along with monetary policy, has strengthened the exchange rate. Increased oil production, revived light industry, and expanded export processing zones helped improve nominal GDP growth at 22.2% in 2004 (17% in 2003); real GDP grew at 5.2% in 2004 (5.6% in 2003). Agricultural production remains Sudan’s most important sector, employing 65% of the work force, contributing 38.6% of GDP. Nevertheless, about half of the country’s farming remains rain-fed and thus susceptible to drought.
Three sectors dominate Sudan’s economy: agriculture (38.6% of GDP as in 2005; sub sector: agrarian, livestock); services (33.6% of GDP; sub sector: financial services, commerce and hospitality); and industrial (27.8% of GDP; sub sector: petroleum, manufacturing, electricity and water and building and construction).
The external debt is one of the major challenges facing Sudan today. Total external debt as of December 2005 amounted to $27.7 billion (100% of GDP). However, the debt burden will gradually ease in coming years on the basis of rising government revenue.
According to a study made by PFC Energy, Sudan could collect as much as $30 billion in total oil revenue by 2012.
Infrastructure Investment
Sudan is initiating a 42-month engineering, procurement and construction contract for the construction of Khartoum New International Airport. A contract worth an estimated $530 million covers the core facilities of the Greenfield Airport, which is to be located at Omdurman, 40km southwest of the capital. The Saudi Binladin Group came in as the low bidder for the contract, as reported in January 2007. Germany’s Dorsch Consult is the project manager. The three-phase project is expected to be completed in 2008.
Sudan is also planning major housing development projects, a prime example of which is the Al-Mogran real estate development to be located near the capital. The new township is set to cover more than 1,600 acres at the confluence of the Blue and White Nile rivers and will comprise commercial, residential and leisure facilities.
With regard to upgrading work on the country’s transport facilities, the Sudan Railways Corporation is working with international partners on the proposed Port Sudan-Khartoum railway project. This will see the railway converted into a double track by Chinese contractors. A loan from China of $1,200 million is enabling funding of the construction.
In the south of the country, Sudan is working with US Agency for International Development (USAID) on major projects for the reconstruction and rehabilitation of roads, water and sanitation networks, as well as public buildings and power in Southern Sudan, Abyei, the Blue Nile state and Southern Kordofan.
Growth
A year of spectacular growth for the country was experienced in 2005 with nominal GDP growing at 28.2%. Exports grew by 27.7% to reach $4,825 million, imports also grew by 65.8% and registered a figure of $5,946 in 2005. Economy registered a trade deficit of $1,121 million.
The deficit is explained by huge growth in imports on the back of increased demand in aftermath of very fast growth in economy since 2001. As a result of rapid growth in economy and economic reforms taken by the government, Sudan Dinar (SDD) strengthened by 5.7% in 2005 as compared to year 2004.
The country began exporting crude oil in 1999 and recorded its first trade surplus in the final quarter of the same year. While increased oil production, revived light industry and expanded export-processing zones have boosted GDP growth, agricultural production, which is susceptible to drought and weak world prices, still employs 65% of the workforce and provides over 38% of GDP. Agriculture remains an important sector and means that a large proportion of economic success is dependent on favourable weather conditions. The most important agricultural exports are oil seeds, especially sesame, cotton, and livestock.
Exports
The main export commodities in Sudan are animals, cotton, cut flowers, fish, gum Arabic and olibanum. Other export commodities include gold, vegetable oil, crude vegetable materials, groundnuts, gum Arabic and sugar. The main import commodities are automotive components, building materials, agricultural fertilizers, food ingredients, medicines. Sudan also exports oil and petroleum products. As at January 2006, it was estimated that Sudan holds proven conventional reserves of 563 million barrels of oil. Oil exploration has been concentrated mostly on the central and south-central regions of the country because of unrest elsewhere. It is estimated that the Red Sea area in eastern Sudan, the Blue Nile Basin and the north-western region of the country hold huge potential reserves.
The acceleration in GDP growth in 2004 and in 2005 as compared to previous years is attributed to the soaring oil prices worldwide. Per capita GDP has increased from $374 in 2001 to $790 in 2005. The Sudanese real GDP growth was sharp enough in 2005 to beat that of MENA economies. Sudan achieved a real GDP growth of 8.0%, while MENA economies achieved 5.4% during the year.
Agriculture approximates to about 38.6% of GDP, services 33.6% and industrial contributed 27.8% of the GDP in 2005, (on the latest figures available from the central bank). Manufacturing which is a sub-sector of industry made 6.7% of GDP in 2005, as opposed to 7.1% in 2004. The export of goods has been increasing as a proportion of the GDP: 12.7% in 2001 to 17.4% in 2005.
External Trade
Sudan has identified a number of economic policies to pursue in order to aid development within the country. The liberalization of the economy has been earmarked as a key objective, with restructuring through the privatization of public corporations, ending a monopoly of a number of production and service sectors. Sudan has established a number of regional agreements in order to encourage investment and create trade opportunities with other nations:
Sudan is a member of the COMESA (Common Market of Eastern & South Africa) trade bloc and is presently looking to join the World Trade Organization. It is also seeking to join the Arab Free Trade Organization in 2007. It has also strengthened relations with regional and international organizations and corporations related to investment.
All these agreements are likely to bring increased trade with the other countries. As a result both export and imports have risen considerably during the period 2001-2005. Exports increased from $1,698.7 million to $4,825.0 million during 2001-2005.
Export Partners
Sudan’s major export partners are Japan 49.6%, China 32%, Saudi Arabia 3.1% (2006). China imports a major part of its petroleum needs from Sudan. Sudanese exports are thus heavily dependent on China, which makes it vulnerable to economic changes in China.
Import Sources
The top import partners of Sudan are: China 18.2%, Saudi Arabia 9.2%, UAE 5.8%, Egypt 5.3%, Germany 5.2%, India 4.6% and France 4.1%. Sudanese imports unlike its exports are well diversified and not dependent on just one country, which should give it ability to absorb variations in supply from any particular country.
Agriculture
This remains the mainstay of the economy. The sector contributed about 35.5% of GDP as of 2006 and employed two thirds of the working population. Agriculture also drives activity in the service sectors such as transportation, agro-industries, and commerce that make up a large part of the rest of the economy. About a third of the total area of Sudan is appropriate for agricultural development. Cultivable land is estimated to be around 200 million feddans (84 million hectares). Abundant rainfall in the south permits both agriculture and grazing grounds for the large herds owned by nomadic tribes. In the north, along the banks of the Nile and other rivers, irrigation farming prevails. Principal cash crops are gum Arabic, cotton, sesame, peanuts, sugarcane, dates, coffee, and tobacco. The principal diet crops are sorghum, millet, wheat. Cotton is the principal export crop (2.5% of the total exports in 2004) and an integral part of the country’s economy. In 2004, agricultural products accounted for 13.7% of imports and 12.7% of exports.
Investment has been made over the years in mechanized, irrigated and rain-fed cultivation.
Though emphasis on cotton growing on irrigated land has decreased, it remains the most important crop. Peanuts and wheat have become major crops, with large amounts of sesame also being grown. Rain-fed mechanized farming has continued to produce most sorghum and short-fibre cotton, while increased production in both sectors has meant increased domestic supplies and greater export potential.
Fishing has traditionally been carried out for subsistence by the local people. An unknown number of smaller operations have also used the country’s reservoirs in the more populated central region and the rivers to catch fish for sale locally and in nearby urban centres.
Industrial Sector
This sector contributed 24.8% of the GDP in 2006.
Petroleum sub-sector
The industry is regulated by the Ministry of Energy and Mining. The Ministry of Finance and Planning is also involved in the energy sector. Its representatives are members of the Petroleum Affairs Board which is responsible for final approval of petroleum contracts. However, control of the oil industry is exercised by state-owned Exploration and Production Authority. Although Sudan has been a producer of oil and gas for a number of years now, it is considered to be vastly under-explored. Oil reserves are estimated at between 600 million and 1.2 billion barrels with recoverable reserves estimated at greater than 800 million barrels. According to the Energy Information Administration (EIA), however, Sudan has proven oil reserves totalling 563 million barrels. The country is also rich in natural gas with reserves estimated at 3trn cubic feet (tcf). Exploration activity in Sudan began at the end of the 1950s in the coastal waters of the Red Sea and Sudanese continental shelf.
So far Sudanese oil exploration has been limited to the central and south-central regions.
The upstream oil industry is the key to the future economic advance of Sudan. Although the country is considered to be vastly under-explored, it has been a producer of oil and gas for a number of years.
Distribution and marketing of fuels products (downstream oil industry) is carried out by Agip, Exxon Mobil, Nile Petroleum, and Shell. Earlier in 1996 it was announced that the government had started negotiations with distributors to end the government monopoly on the importation of petroleum products other than aviation fuel for foreign aircraft. The distribution infrastructure consists of river, road, pipeline and railway systems, all of which are in need of improvement. There is a product jetty at Port Sudan and 55 storage depots with a total capacity of 285,000 cubic meters. A pipeline runs from the refinery at Port Sudan to the major consuming centre of Khartoum. Sudan is dependent on imported petroleum products as its domestic production and refining capacity is not sufficient to cater for its needs. The country has a small refinery at Port Sudan. Prices of all petroleum products are regulated and are subsidised.
Oil exports by Sudan increased sharply during 2003-2005 ($1,377 million in 2001 to $4,187 million in 2005). As a percentage of total exports oil’s share has increased from 81.0% in 2001 to 86.8% in 2005.
Oil production in barrels per day for Sudan has grown at a faster pace than that in any other part of the world in last three years. Sudan showed a year-on-year increase of 45.8% in 2005 as compared to 3.8% by OPEC and 1.7% by the world.
Malaysia and China are the major investors in this sector. With a 40% stake in Sudan’s oil industry, China has become Sudan’s largest investor, financing part of a major economic boom and in exchange exporting one-third of the oil output. China reportedly invested $20 billion in Sudan, apart from soft loans, grants and other forms of aid. According to a study made by PFC Energy, the Sudanese government could collect as much as $30 billion or more in total oil revenue by 2012.
Banking Sector
Growing regional investment is leading to the significant expansion of Sudan’s banking sector. Banks are expanding their branch networks across the country and looking beyond its borders. Emirates & Sudan Bank (ESB) starts operations in late February 2007 and has plans to expand within Africa and in particular is looking at retail banking opportunities in Algeria.
Dubai Islamic Bank holds a 55% stake in Bank of Khartoum, which is set to relaunch its retail business by mid-2006. The bank has 54 branches across Sudan and has undergone a complete restructuring since it acquired the government’s stake in mid-2005. In addition, Lebanese investment is also fuelling growth in the sector with Byblos Bank Africa, Byblos Bank’s Sudanese subsidiary, increasing its presence in the country. Two new branches are planned for Greater Khartoum, in addition to its headquarters in the capital and representative offices in Port Sudan and Juba. The bank, established in 2003, focuses on small businesses and offers trade and capital expenditure finance, as well as loans to the industrial sector.
Sudan Ministry of Industry
Mr Igbal Elyamani
Director of Investment
Tel: + (249)1 83 792957
Fax: + (2491) 83 792957
Website: www.industry.gov.sd
Sudanese Businessmen & Employers Federation
Gamhoria Street, Khartoum, Sudan
P.O. Box 1758 Khartoum, Sudan
Tel: + (249) 1 83 43 12 76 / 43 12 77 / 43 12 79
Fax: + (249) 1 83 43 12 81 / 83 12 82
Quelle: Ghorfa, Arab-German Chamber of Commerce and Industry e.V.
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