Sudan and South Sudan

Sudan and South Sudan: Tale of Two Countries

While landing in Khartoum, it is hard to ignore the new high rises and unexpected façade of a real estate boom. Surely it must be a façade because this is Khartoum. For those who have traveled between Frankfurt and Addis Ababa, the two-hour stop to refuel in Khartoum simply seems odd. Sudan simply does not look nor sound like the country to take a stroll off the plane said the Western passenger next to me on a recent layover in Khartoum. That sentiment is shared by many others, especially when the only other noticeably sizeable plane on the runway is marked U.N.

To me though, it is exactly the kind of place I would want to take a stroll through – the very place that has been under U.S. economic sanctions since 1997; that was once home to Osama Bin Laden after his expulsion from Saudi Arabia; and is known for Darfur and recent conflicts with South Sudan.

Yes, Sudan might not be the first place you think of when you say investment. It does not stand out among the other countries drawing interest in the often discussed East Africa region. Rather, it plays second fiddle to emerging South Sudan. It is not too much of a surprise considering that Sudan did not just lose a piece of land in South Sudan’s independence — it lost access to dollars through the loss of access to oil reserves in South Sudan. But there is still hope for a country still finding its way.

The reach of sanctions is immeasurable. It was revealed last year when Sudan’s president Omar al-Bashir invited investors to observe a $1 billion sugar factory launch — the company providing the plant software was bought out by a U.S. company, who immediately refused to commence the satellite technology necessary to run the factory. Accordingly, the launch was cancelled.

The Friendship palace hotel in Khartoum. Photo Credit: Flickr
The Friendship palace hotel in Khartoum. Photo Credit: Flickr

Nonetheless, Sudan has recently attracted interest from investors in the Middle East. The country raised its exports above $2.4 billion in 2012, which was a 60 percent increase over 2011. Exports of cattle to Middle Eastern and North African countries played a major role in this growth. Officials expect to see exports to increase to at least $3.2 billion in 2013.

With investors lurking around Khartoum in search of more agricultural and industrial projects, Sudanese predictions about exports may soon become a reality. Still, the country will face an uphill battle. Foreign investors still cannot legally convert the country’s bond payments and dividend payments from its stock exchange into dollars, leaving many to do business the old informal way of carrying cash in suitcases. If foreign investment is to grow, something will have to change.

South Sudan: The Other Side of the Coin

Want to know what it is like to get a head start financially as a country? Ask South Sudan, a country that gained independence and three-quarters of former Sudan’s oil production in 2011. The gains did not come easy. The battle for independence left many dead and concluded with Sudan saying it wouldn’t allow South Sudan’s oil to pass through its country. Sudan’s strategy eventually backfired when it realized it needed dollars and effectively access to the big oil business coming from South Sudan.

South Sudan’s oil business has bred much-needed ancillary investment in the country, specifically infrastructure and services. If you were to make a short stop at local lounge or restaurant frequented by foreigners in Ethiopia’s capital, Addis Ababa, you’re almost guaranteed to meet one who is on a short layover en route to South Sudan’s capital,  Jubba. The new country, especially its new capital, is starved of electricity, roads, railways, and housing after the civil war completely decimated what little existed before. Surrounded by four of the world’s fastest-growing economies, this infrastructure is imperative in order for South Sudan to enjoy the benefits of its location.

Services, including warehousing, transport and logistics, just barely meet the basic needs of this emerging economy. Investment in these services is attractive primarily for the oil sector they support, but also for the larger role that South Sudan will play as it integrates into the larger East African region.

The Old Governor’s House Port in Sudan. Photo credit: Flickr
The Old Governor’s House Port in Sudan. Photo credit: Flickr

Financial and business services are also quite sub-par at the moment. If travelling to South Sudan, best you carry dollars because the financial system, particularly its internal infrastructure and connection to the international banking system, is just gaining its footing.

While the needs of South Sudan suggest a place that many tourists may still avoid, its investment opportunities are rich and plentiful. From oil and gas services to construction materials, and fast moving consumer goods, there is a need for private investment. Additionally, the government openly states its pro-business mindset and works adamantly to translate such talk into law.

While Sudan and South Sudan are both struggling to find their way after the civil war, South Sudan currently has a leg up on attracting foreign investors. Still, as both countries are in a new infant stage post-conflict, the ink on their post-conflict storylines has yet to dry.

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