UK Sudan Trade & Investment Forum CTC GROUP PRESENTATION DOING BUSINESS IN SUDAN A PRIVATE SECTOR PERSPECTIVE December 2017
Sudan | Diversely rich country GDP $95.6 BILLION • LARGEST ECONOMY IN EAST AFRICA (6 TH IN AFRICA) 39.6M POPULATION • OVER 50% ARE BELOW 25YRS $2,140 GDP PER CAPITA • HIGHEST IN EAST AFRICA MINING – 2 ND GOLD LARGEST PRODUCER IN AFRICA 200 MILLION ACRES OF ARABLE LAND VAST UNDERGROUND WATER RESERVES POWER & IRRIGATION – THE RIVER NILE 100 MILLION LIVESTOCK POPULATION OIL & GAS RESERVES
Economy | Background ▪ Unilateral American sanctions for 2 decades 1997 - 2017 ▪ European and American public opinion greatly affected by the Western media ▪ Darfur crisis after Nifasha Agreement of 2005 ▪ Limited impact of sanctions until 2011 Post Separation of South Sudan 2011: ▪ Loss of 80% + of foreign currency earnings + rapid currency devaluation ▪ Large penalties imposed on international banks dealing with Sudan ▪ Sanctions become in effect Multilateral ▪ Effect compounded by banks “ overcompliance ” and “ derisking ” ▪ Significant reduction in the number of banks dealing with Sudan ▪ Greatly increased effect of the American sanctions on the economic position of Sudan 2013 onwards ▪ Significant impact on Sudanese civil society at multiple levels [health / education / income levels etc]
Sudan | Economy Source: World Bank 2016
FX Timeline | 2010-2016 20.00 2016 CBOS Published Rate (USD) Severe difficulty in 18.00 accessing hard currency Open Market (USD) pushes USD to close at SDG 19.65 Sep ‘13 Government lifts 16.00 subsidies on fuel as part of austerity measures Jul ‘11 14.00 Independence of South Sudan Jul ‘14 Inflation peaks at 47% 12.00 Apr ‘12 10.00 Economic impact of South Sudan cessation - losing 90% of govt revenues 8.00 2010 ‘Oil Economy’ period of currency stability 6.00 helps Sudan through global financial crises 4.00 2.00 SDG SDG SDG SDG SDG SDG SDG 2.64 3.32 4.65 6.74 8.15 8.99 11.70 - Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
Doing Business in Sudan Challenging Business Environment: Weak Governance and Regulatory Framework • Impact of sanctions and their after effects on Banking and Financial transactions • Currency devaluation – repatriation of profits • Ranks low on TI Corruption Perception Index • Poor infrastructure and support services • Land Ownerships Laws •
Foreign Direct Investment 7,000 2012 2013 2014 6,000 5,000 4,000 USD Million 3,000 2,000 1,000 0 Algeria Egypt Morocco South Sudan Sudan Tunisia Libya -1,000 -2,000 FDI Sudan 2012-2014 FDI in Sudan has steadily grown over the last ten years. • FDI 3.4% of GDP, second highest FDI to GDP in the region • FDI mainly in extractive industries - oil and mining 74% of FDI 2000 and 2010. • China, Malaysia, and India, account for more than 95% of FDI inflows in oil sector. •
CTC Group • Founded in 1956 as The Central Trading Co. Ltd - 60 years + of doing business in Sudan • Managed to navigate 2 decades under challenging external / internal environment • Diversified multi-sector, multi-company Group • >1,500 local + expat employees Independent, Socially Responsible, Engaged private • > 1,000 staff operating exclusively in the sector: Agricultural sector Dedicated to doing business “the right way” • • Largest private sector company operating in the Believe in the potential and Invested in the future of the • country field of agriculture in Sudan and has been active in the sector for over 60 years
40years + relationships with leading multinationals • Creative solutions to overcome challenges and sustain relations with partners: Manage currency devaluation risk by setting up tools for “hedging” SDG Focus on exports to manage currency availability / payment risk Implement ethics policies to manage reputational risk Setup complete supply chain infrastructure to manage logistics risk Corporate governance, management systems and succession planning to manage continuity risk
Working to improve the image of Sudanese Private Sector • Strongly believe in the vital role of the private sector in addressing national problems : Nov 2015 CTC Group sponsored and hosted the first ever privately funded US Congressional Visiting CTC Digital Nursery – Krt North Meeting leaders of the political opposition Delegation visit to Sudan in partnership with HDI Delegation with high ranking members of congress Visit at critical time in US – Sudan relations For the first time in decades had the opportunity to “see for themselves” Assess first hand impact of sanctions on private sector / civil society Engaged in US – Sudan dialogue throughout the Meeting Minister of Foreign Affairs Speech at the National Assembly [Parliament] following 13 months
CTC Group Focus on Agriculture: Technology Transfer Centres TTC NETWORK Khartoum | Sinnar | Medani | Al Gadarif | Kadugli | Al Obied
Technology Transfer Centres Facilitate the efficient transfer of agricultural technology to the farming community in Sudan’s major agricultural areas through: • Localization of modern agricultural technologies and facilitating their implementation • Building farmers’ capacities and developing their level of expertise • Smoothening the supply of inputs, machinery, implements, and spare parts • Providing agricultural advice to farmers by national and international experts • Act as a main hub for providing the needed after sales
Supporting farming community CTC Group established "Technology Transfer and Application Centres“ – first of their kind to be setup by the private sector to facilitate the efficient transfer of agricultural technology to the farming community throughout the agricultural cycle Mechanized solutions Post-Harvest Land Preparation & Irrigation Harvesting Stage Seed Preparation Fertilization Pest & Weed Control Agro-Technology Packages
With impressive results Al Rajhi Project – Northern State Total area: • - 1,140 feddan - 529 hectares Full Agrotechnology package: • - GAP – Good Agricultural Practice - Quality Seeds - Agrochemicals and FertiliserTractors - State of the art machinery Harvesters / Balers Harvest Averages: • - 22 bags per feddan - Up 40% on average yield increase
Also with small scale farmers Sorghum Yield per Feddan 500 400 400 266 300 200 130 100 0 2001 2013 2015 Higher yields/Feddan ❖ Lower cost/Feddan ❖ 16 Better quality (export) ❖ Expansion of planted areas ❖ Years Farming becoming profitable ❖ of Improved bank terms for Farmers ❖ Progress Created auxiliary job market ❖ Many prefer Farming to Mining ❖
Gum Arabic Processing • CTC Group is a specialist commodity exporter and has a strong focus on developing the exportation of Gum Arabic – Sudan exports 80% of world supply • Significant value addition through quality local processing and establishment of reliable supply chain infrastructure • In working with our clients, CTC Group setup a processing facility in Port Sudan to capture some of the value add locally while guarantee quality export to global markets
Economic & Investment Reforms Government commitment to structural and fiscal Series of investment reforms to encourage foreign reforms implemented to stabilize economy and ensure direct investment and the ease of setting up business sustainable growth Focus on key sectors: The Sudanese Investment Law is designed to encourage agriculture, and protect foreign investment with special consideration • on nondiscrimination as well as having a superiority agri industry, • status over other laws. encouraging export oriented business • Sector Investment Incentives “The authorities have endeavored to maintain Exemptions: VAT + Customs Agriculture BPT reduced from 30% to Zero fiscal restraint while preserving social spending, Banking Any size of land and are focusing on addressing key structural Petroleum impediments in the economy to encourage private Exemptions: VAT + Customs Infrastructure BPT reduced from 30% to 10% sector activity and attract FDI” – Industry Mining Exemptions: VAT + Customs IMF Sudan Country Report No. 16/324 Industry BPT reduced from 30% to 10% World Bank Ease of Doing Business Index: Sudan Ranked 160 / 189 in 2015 159 / 189 in 2016
Sudan | Post Sanctions “ Revival Beckons for Sudan as U.S. Lifts Economic Sanctions” - Bloomberg, 30th January 2017 Banking Community Engagement: • Have engaged in several forums inviting banking officials to interact with US officials including OFAC to clarify – “risks” of doing business with Sudan Reengagement by regional and international banks aligning with sanction removal – Employing a risk-based approach Vs. wholesale “ derisking ” – International Trade and Development Organizations: • Sudan to renegotiate debts and reactivate memberships – Potential availability of institutional funding and finance – Potential availability of Export Guarantees /Insurance for Sudan Business – International Business Community: • Reevaluate Sudan’s risk profile – move from sanctions risk to reputational risk – Reinitiate dormant/expired agencies impacted by sanctions as first step – Products that were previously restricted due to US content now open for business –
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