Sudan

In-depth country-focused analysis on Sudan's economic, political and operational risk environment, complemented by detailed sector insight

Sudan

Our comprehensive assessment of Sudan's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Sudan, as well as the latest industry developments that could impact Sudan's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Sudan before your competitors.

Country Risk

Sudan Country Risk

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Core Views:

  • While hopes of genuine political reform have been raised of late, a peaceful outcome to the country's ongoing governance malaise in time for general elections in April 2015 remains unlikely .

  • Economic conditions in Sudan will improve over the coming quarters, but nonetheless remain challenging. We are forecasting real GDP growth of 3.5% in 2015 from an estimated 2.6% in 2014.

  • Sudan's inflation prospects have improved of late and we predict that price growth will average 21.5% year-on-year (y-o-y) in 2015 compared to an estimated 37.4% y-o-y in 2014. The wearing-off of high base effects (associated with the September 2013 currency devaluation), favourable agricultural production prospects and a greater degree of exchange rate stability will help to anchor inflation.

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Sudan Operational Risk Coverage (9)

Sudan Operational Risk

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BMI View: There are a number of high risks related to doing business in Sudan. Foreign companies are often a target for rebel militias and terrorists, while Sudanese forces have limited capacity to protect international interests. In addition, the business environment is fraught with legal risk and market forces are undermined by government intervention and corruption. Local labour is poorly skilled, while rising minimum wages and high labour tax put upward pressure on costs. Finally, international trade is hampered by long lead times and high costs of shipping, although overall logistics risk is mitigated by local energy security.

Sudan scores 25.8 out of 100 in the BMI Operational Risk Index. This makes Sudan one of the most high risk countries in the world for companies to operate in. The greatest level of operational risk stems from Crime and Security, followed...

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Sudan Crime & Security

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BMI View:  The risk of crime, terrorist attacks, and interstate warfare is acute in Sudan. Foreign workers and companies are a target for organised crime, anti-government insurgents, and international terrorists. Moreover, the complexity of the Sudanese security environment makes conflict resolution very difficult.

Sudan exhibits some of the highest risks for crime, terrorism, and interstate security, of any country in the world. With such pervasive security threats from domestic and international actors, the country performs badly for Crime and Security risk, scoring 8.2 out of 100. This makes it the fifth-most at risk country in the world.

The risk of interstate conflict involving Sudan is very high. While Khartoum has established good...

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Sudan Labour Market

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BMI View: The Sudanese labour market presents significant operational challenges to companies and poses significant risk to investors, which will face numerous downside risks including a poorly skilled workforce, rising minimum wage, low flexibility in the labour market, tight immigration controls, and uncompetitive tax on labour. A core weakness in Sudan's labour market is the education sector, which presents a threat to labour supply. This has a knock- on effect for the availability of labour, which is characterised by a low participation rate and poor competency levels. Sudan scores 27.1 out of 100 and ranks last out of the 44 Sub-Saharan African countries included in the...

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Sudan Logistics

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The major downside logistics risks in Sudan are poor land transport and heavy trade bureaucracy, which raise shipping lead times and elevate costs for companies. On the upside, Sudan has sufficient electricity supply at affordable tariffs, and high volumes of international trade which increase the overall size of the market.

Trade Procedures and Governance present the greatest challenges to investors out of the three pillars of the BMI Logistics Risk Index. The Extent of Transport risk is marginally lower, and is set to decrease if rail development succeeds. Meanwhile, Market Size and Utilities risk is the strongest facet of Sudan's logistics risk. The country ranks 13th out of 44 states in Sub-Saharan Africa (SSA) in BMI's Logistics Risk Index, with a score of 39.3 out of 100.

By regional standards, Sudan has low trade bureaucracy requiring fewer documents than regional...

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Sudan Trade & Investment

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Trade and Investment risk is Sudan is very high. The country remains under economic sanctions, the financial markets are under developed, and the legal risks to investors are acute. Meanwhile, competition in the open market is stifled by state-owned enterprises and politically aligned private businesses. These factors severely limit international trade, and are only partially mitigated by improvements to the tax regime and licensing procedures under the Investment Encouragement Act.

Sudan scores 24.6 out of 100 for Trade and Investment, ranking 158 th out of 170 countries globally, one place below Libya. Legal reforms have reduced the risk of Government Intervention. However, a mêlée of internal and external factors limit Economic Openness. With regards to Legal Risk, Sudan is among the world's highest risk nations.

Legal Risk is the primary deterrent to international investment in Sudan. First, the country...

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Sudan Industry Coverage (8)

Autos

Sudan Autos

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BMI View: According to data published by Renault , sales in the Sudanese auto market grew 20.8% in 2014, to 2,900 units. This was in line with our bullish outlook, although the rate of increase was faster than our forecasted growth rate of 15.0%.

It is important to note, however, that vehicle sales still remain below their 2011 and 2012 levels due to the market's collapse in 2013. Over our 2015-2019 forecast period, we expect steady growth in sales of an average of 9.4% annually, which will see sales reach 4,551 units by 2019. However, given the low base at which sales are at now, the sector's story over the coming years will be one of recovery rather than expansion. The political crisis in South Sudan is also greatly limiting autos sales. BMI believes efforts to reach a lasting solution to South Sudan's political and...

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Defence & Security

Sudan Defence & Security

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BMI View: Sudan boasts one of the region's largest defence sectors but still imports a significant volume of military equipment and services from Russia, China and Iran. Over the longer term, as the country's defence sector improves and it becomes more self sufficient, we expect there to be an increasing volume of defence exports, largely to the wider African region. A key driver behind the expansion of its military capabilities will remain the deteriorating situation in South Sudan and the ongoing violence between warring factions, opposition groups and government authorities. However, even though the country is looking for new export partners, we...

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Food & Drink

Sudan Food & Drink

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Economic conditions in Sudan will improve over the coming quarters, but nonetheless remain challenging. We are forecasting real GDP growth of 3.8% in 2015 from an estimated 2.6% in 2014. This improvement will be due in part to easing inflationary pressures as the government keeps monetary and fiscal policy tight. In addition, the high base effects associated with the September 2013 currency devaluation are expected to wear-off. This will provide some respite to Sudanese consumers who have seen their purchasing power severely eroded in recent quarters. Economic activity is also likely to be supported by strong agricultural output and further robust growth in gold production.

Despite this improvement on 2014, growth will continue to be weighed down by persistent insecurity and what remains a fragile and uncertain political environment. While hopes of genuine political reform were raised in 2014, a peaceful outcome to the country's...

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Infrastructure

Sudan Infrastructure

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BMI View: Sudan and South Sudan face a multitude of issues with ongoing conflict having drastically eroded what little investor confidence there was in the markets and as such we forecast volatile and poor growth for both countries over our forecast period. Oil flows between the two countries will be a vital source of revenue but despite substantial potential we do not expect market conditions to improve drastically over 2015 as any improvement remains highly vulnerable to any souring of relations.

While current events in Sudan and...

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Oil & Gas

Sudan Oil & Gas

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BMI View: The outlook on Sudan and South Sudan's upstream sector has grown increasingly bearish. An unstable political environment and chronic weakness in both countries' security landscapes will drive repeated supply outages and chronic underinvestment. Exports will also come under increased strained, as a sustained fall in global oil prices, rising refined fuels import dependence and longer-term crude production decline all act to undercut revenues.

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Headline Forecasts (Sudan 2013-2019)
2013 2014e 2015f

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Pharmaceuticals & Healthcare

Sudan Pharmaceuticals & Healthcare

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BMI View: Access to healthcare in Sudan and South Sudan is poor and drug shortages are commonplace. The state is also heavily reliant on importing its medicines, though over the long-term we believe this reliance will decrease as the government is committed to developing domestic pharmaceutical production.

Headline Expenditure Projections

  • Pharmaceuticals: SDG2.06bn (USD353mn) in 2014 to SDG2.37bn (USD387mn) in 2015; +15.0% in local currency terms and +9.8% in US dollar terms. Forecast revised upwards from Q115.

  • Healthcare: SDG20.31bn (USD3.48bn) in 2014 to SDG22.85bn (USD3.73bn) in 2015; +12.5% in local currency terms and +7.4% in US dollar terms....

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Power

Sudan Power

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BMI View: The end of the long period of warfare provides an opportunity for investors to exploit the hydrocarbons base and ample sunshine to develop a generation capacity in Sudan and South Sudan. However, the commercial environment is hostile and the political environment remains highly unstable.

The outlook for Sudan's power sector is moderate. The end of the long period of warfare provides a window of opportunity for the country to exploit its ample sunshine and large hydrocarbons base to develop a domestic generation capacity. In this context, power generation in 2015 will increase by a respectable 4.1% year-on-year (y-o-y) to 7.5TWh and consumption will grow 4.1% y-o-y, to 5.9TWh. However, the commercial environment is hostile and continues to be dominated by the state-owned National Electricity Corporation, limiting the opportunity for...

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Telecommunications

Sudan Telecommunications

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BMI View: Our Q215 East Africa report analyses latest industry, regulatory and macroeconomic developments in the telecoms markets of Burundi, Ethiopia, Malawi, Rwanda, South Sudan and Sudan. The five markets present challenging business environments, including low spending power of majority of consumers, high cost of network deployment in rural areas and political instability in some countries. However, the relatively low voice and data penetration rates assures long-term subscriptions growth and, potentially, value growth should the economic situation in these markets improve in the coming years.

Key Data

  • Average mobile market growth in the six countries in FY14 was 9.2%. Malawi recorded the highest growth rate, estimated at 17.6%, while Sudan...

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