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

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: Sudan has the potential to become a major conduit for regional trade to landlocked countries such as Chad and South Sudan. However, the country's appeal as a trade hub is constrained by an underdeveloped land transport system and lengthy trade procedures, which increase shipping lead times and transport costs considerably. Despite these drawbacks, Sudan is slowly rebuilding key components of its road and rail network to facilitate trade flows, while other logistics advantages like affordable electricity costs partly mitigate transport risk. As a result, Sudan scores 37.3 out of 100 for Logistics Risk, placing 17th out of 44 states in the Sub-Saharan Africa region.

Sudan's economic growth is largely dependent on oil, mineral and agricultural exports; following the...

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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...

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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 BMI ...

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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...

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Food & Drink

Sudan Food & Drink

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Economic conditions in Sudan remain challenging. The effects of the September 2013 currency devaluation (including soaring inflation), restrained government spending and a weak security environment will see real GDP growth come in at just 2.6% in 2014, according to our estimates. We are slightly more positive on the country's growth prospects in 2015 but expect that real GDP growth - at a projected 3.8% - will remain well below potential.

The improvement will be due, in part, to easing inflationary pressure as the government keeps monetary and fiscal policy tight. This will provide some support to Sudanese consumers, who have seen their incomes eroded by surging inflation over the last 12 months. Increasing domestic oil production will provide a boost to exports as the country strives to fill the gaping hole left by oil-rich South Sudan's 2011 secession.

While we expect conditions to improve over the next 12 months,...

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Infrastructure

Sudan Infrastructure

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BMI View:   We do not expect market conditions to improve drastically over 2015 in either Sudan or South Sudan.  Conflict has 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, although they remain highly vulnerable to any souring of relations. 

While current events in Sudan and South Sudan overshadow their relationship with each other, oil trade between the two remains the key to any kind of sustainable growth with the respective construction...

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Oil & Gas

Sudan Oil & Gas

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BMI View:  Fighting has derailed the country's fragile production recovery, adding further downside pressure to its bearish long-term production outlook. With the government claiming loose control of the major oil fields, output could start to revive within the quarter. However, given the fractured and volatile nature of the conflict and the heavy rebel presence in the oil-producing states, we anticipate more lasting production outages.

Headline Forecasts (Sudan 2012-2018)
  2012e 2013e ...

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Pharmaceuticals & Healthcare

Sudan Pharmaceuticals & Healthcare

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BMI View:  The already depreciating Sudanese pound will come under further strain should oil prices continue their decline as oil exports account for around 70% of total exports in the country. We are already forecasting short-term negative growth in US dollar terms for the pharmaceutical market which could come under increased scrutiny should prices decline further. Our long-term outlook is more positive due to the government's plans to develop the pharmaceutical sector and expand access to healthcare.

Headline Expenditure Projections

  • Pharmaceuticals: SDG2.05bn (USD438mn) in 2013 to SDG2.32bn (USD379mn) in 2014; +12.9% in local currency terms and -13.5% in US dollar terms.  Forecast revised...

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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 5.2% year-on-year (y-o-y) to 7.6TWh and consumption will grow by 5.2% 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...

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Telecommunications

Sudan Telecommunications

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BMI View: Our Q115 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 are characterised by relatively low mobile penetration rates, partly due to a combination of low urbanisation and low spending power in rural areas to support a strong business case for network expansion to those areas. While this guarantees long-term subscriptions growth for mobile operators in these countries, we expect then to focus on data services and other non-voice services in the short-term to drive revenue growth.

Key Data

  • Average mobile market growth in the six countries in Q314 was 2.4%. South Sudan recorded the highest growth...

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