Investment Authority

3.1 LICENSING AND FACILITATION PROCEDURES FOR

AN INVESTMENT PROJECT IN SUDAN :

1. The investor shall submit a technical and economic feasibility study of the project.

2. The investor shall fill in a special form of application pertaining to claims for licensing, privileges or facilities for an investment project against payment of prescribed fees. The form shall be issued by the investor’s services section in the Ministry.

3. The Investment Authority in the Ministry shall review the application form and consult the competant technical organs if necessary.

4. Upon receipt of the provisional approval from the Ministry of Industry

and Investment, regarding the particular project, the investor shall then

its specific field of licensing only.

5. Upon approval of the business name or company, the investor shall

submit all the relevant documents to Ministry of Industry and Investment

in order to be issued the license which covers the facilities granted and

location of the plot where the premises of the project in question shall be

sited.

6. Upon completion of all licensing procedures and issuance of the license, the investor may then import the project’s requirements from abroad in accordance with “an itemized requisition list” which the ministry must consent to in advance.

7. The Ministry of Industry and Investment shall then contact the customs authority , upon clearance of the project’s imported items through the customs’ Coordinator in the Ministry.

8. The Ministry of Industry and Investment shall also contact the taxation

authorities to exempt the project from tax duties in accordance with the

granted privileges.

OPPORTUNITIES AND REASONS FOR INVESTING IN SUDAN

The Sudanese government has set in motion a plan which created a political system responsive to the religious, cultural, and ethnic diversities putting the country on the road to full democratization. .This is part of programs based on a nation-wide dialogue conferences which produced proposals for a federal system of government taking into consideration the vital interests of minorities and eradicating all symptoms of discontent. It is felt that people will get involved with more enthusiasm in reconstructing if they could expect more of a say in running their country.

The adoption of those programs created an atmosphere of stability and injected a sense of moderation in the turmoil of Sudanese politics .

Those developments went hand in hand with changes that have been made to open up the economy and move towards privatization.

Following the economic reforms policies, the government announced a comprehensive National Strategy identifying six areas critical to Sudan’s development. Infrastructure is at the top of the list. Roads and transportation in- general are under modernization to open up more of the country for economic development. Running the country’s factories at high capacities and putting those not operating back to work are top priorities. There is great emphasis on the development of basic industry to supply the manufacturing , transportation and the agricultural sectors with a domestic source of spare parts.

Boosting the nations exports remains a key goal, and Sudan is widening its scope to develop industries that have export potential . This area is wide open for foreign investors.

Sudan is a country full of promise. Foreign investors and overseas companies could be involved almost in every area, but agriculture remains to be the primary engine of growth. The aim is to achieve food self-sufficiency first, then to produce export crops to raise foreign exchange.

The government also plans to allow foreign investors to hold long term leases on agricultural land.

Key to such investment is the expansion of Sudan’s ability to irrigate its land. Of the irrigated lands in Africa, over 60 percent are in Sudan. 13 million hectares are currently under irrigation , but much more of Sudan’s land could be useful for some form of agriculture.

Sudan’s rain -dependent crops is an area open for investment. Sorghum ranks as Sudan’s leading export after cotton . Other largely rain dependent crops include gum -Arabic, sesame and ground nuts.

Livestock, accounting for nearly 15 percent of export earnings, is also largely dependent on rain.

Sudan’s environment, with its warm dry climate and sandy clay soils has proved to be perfectly tailored for producing cotton. Sudan’s plans for development also call for an increase in sugar production where self sufficiency has currently been achieved and the country began a huge export drive.

The fishing industry is an area where investors can make quick returns because it has great potential as an export source. Plans are now being developed to work the Red Sea coastline separately or in joint ventures with neighboring countries.

The River Nile is one of the greatest sources of fish top, among the world’s rivers. There is great demand for freezing plants and fisheries to set the industry in motion.

Sudan has vast mineral deposits that have not been fully exploited. Gold is currently being exported in a joint venture with a French mining company. Other mineral deposits available for extraction by foreign and local investors included chromites, mica, gypsum, marble, granite, China clay, silica, and manganese and Copper.

Sudan has significant proven oil reserves. The growing world - wide demand for petroleum products makes a country like Sudan- with a landscape that clearly indicates its potential as a site for oil exploration -a priority target. Sudan’s 967.500 square miles are trisected by three major intercontinental rifts, sedimentary full in the basins formed by those fault zones in some parts exceed three miles in thickness. Oil discoveries were made in the interior and eastern sectors within a relatively short span of time, in addition to gas-condensate discovery in the Red Sea . Geological research has also verified the existence of marine deposits that

nearly cover an area of 92,000 square miles. These geological findings should further encourage those interested in conducting oil exploration in Sudan.

Now five international companies are working in oil exploration in western and southern Sudan. The production of oil now reached 150,000 barrels a day. A consortium of Companies from different parts of the world have already invested in the longest pipeline from southern Sudan to Basheir port in the Red Sea investing over million dollars in that line . Also two oil Refineries have been built in Western Sudan and North of the capital Khartoum with a capacity of two and a half million ton per year costing 640 million dollars.

3.3 ELECTRICITY:

No economic growth can be achieved without basic infrastructure investment, especially in the electricity sector.

The electricity supply industry like in Sudan is often perceived as a public service, and utilities are consequently frequently publicly owned and operated. Historically therefore, most of the electric power investments have been financed in a “classic’way using sovereign equity and debt, either direct or through the state electric utility.

In addition, since often, imported equipment (turbines and boilers) constitute the main part of the power plant’s construction cost, export credits or foreign loans or aid have been largely utilized. But , because the Export Credit Agencies (ECAs) require either a government or a first rate bank guarantee for their financing, these loans add to the sovereign debt of the country.

Since 1995 the installed capacity of the National Electricity Corporation (NEC) has remained at about 630 MW. Of which 308 MW is hydroelectric and the remainder thermal capacity. In addition, fourteen isolated centers are served by thermal generating plants and local distribution networks. As a result, the NEC serves only about 20 percent of the population.

Most of the demand for electricity centers on the Khartoum area

and comes from the residential sector, which represents more

than 40 percent of the total consumption . Industry and

agriculture account for about 36 percent, and the government (12

percent) and commercial establishments (9 percent) consume

the remainder . Power use in industry has been restrained mainly by supply constraints and , to a lesser extent, by its unreliability, which has compelled all major firms to purchase backup power supply units.

Due to the huge increase of new capacity requirements, the

electricity sector can no longer depend on the government for new

investment, especially when the government have to cut public

expenses in order to balance the budget, control inflation and

address various requirements in the social sectors, as well as to

meet public debt reduction targets. The Government

Formulated the National Energy Plan with the following

objectives:

(a) to expand electric generation and services to regions and towns in order to promote economic and social activity and improve the quality of life for the people.

(b) to eliminate power shortages and under liability of supply, targeting to increase generating power capacity from 600 mw to 5000 MW within the coming 10 years.

(d) To provide electricity at the lowest possible cost to meet the needs of the growing economy.

(e) To gain energy from existing system by rehabilitation and improving system efficiency.

(f) To emphasize development and expansion of hydroelectric generation.

(g) To encourage interconnection with neighboring countries .

(h) To manage the existing load and future growth in demand to ensure better utilization of power.

In1999 an independent power producers and New Generation Projects General Secretariat was established to represent the National Electricity Corporation in dealing with Independent Power Producers .Foreign and local investors

are to be approached to play some role in one way or

another. Independent Power Producers (IPP) are to be welcomed in any negotiable form which may include:-

1. Build Own& Operate (Boo)

2. Build Own Operate and Transfer (BOOT).

3. Build Operate and Transfer (BOT).

4. Build Own and Lease (BOL).

5. Rehabilitate Operate and Transfer (ROT)

6. Rehabilitate Own and Operate (ROO).

Note:

For Further information on (IPP) feel free to contact the Secretariat General (IPPNGP) on the following address; independent Power producer & New Generation Projects General Secretariat,

99, Gama’a A venue

P.O. Box 1787-KHARTOUM, SUDAN.

Tel: 00 249 11 785007 ext. 150

Tel /Fax : 00 249 11 782351

E-mail: Amen 1 @ mail. nnecsudan .com

E-mail: ippngp@ mail . nnecsudan.com.

ROADS:

In 1998 Sudan’s road system totaled between 20,000 and 25,000 kilometers, comprising an extremely sparse network for the size of the country. Asphalted all -weather roads, excluding paved streets in cities and towns, amounted to roughly 3,500 kilometers, of which the Khartoum-Port Sudan road accounted for almost 1,200 kilometers . There were between 3,000 and 4,000 kilometers of gravel roads located mostly in the southern region where lateritic road -building materials were abundant . In general these roads were usable all year round, although travel might be interrupted at times during the rainy season.

Small private companies, chiefly owner-operated trucks, furnished most road transport. The government has encouraged private enterprise in this industry, and the construction of all weather roads has reportedly led to rapid increases in the number of hauling business.

HOUSING AND CONSTRUCTION:

The housing and construction sector builds houses, hospitals, educational institutions, roads and constructs bridges, airports et.. This sector faces great challenges in order to keep abreast with the fast steps of development and the overall investment resurrection which Sudan is currently undergoing.

There are great investment opportunities in this sector, by directly contributing in the building and construction works of the various educational institutions, hospitals, houses, bridges, airports etc..

3.6 COMMUNICATIONS:

International telecommunications were modern and provided high-quality links to the rest of the world. A satellite ground station near the capital working with the International Telecommunication Satellite Corporation’s (Intelsat) Atlantic Ocean satellite permitted direct dialing of telephone calls between Sudan and Europe, North America, and parts of Africa. In addition, a second satellite ground station was linked to the Arab Satellite communications Organization’s (Arab sat) pan-Arab communications network. The Arab sat network was used for live television broadcasts, news exchanges, and educational programming among the members of the League of Arab States (Arab League).

As per 1999, Domestic telecommunication has greatly improved with the establishment of Sudanese Telecommunication Company (Sudatel) as a public share-holding company with the aim of extending telecommunication services and modernizing equipments and network.

3.7 TOURISM

The potential for an expanding tourist industry makes Sudan

one of Africa’s greatest attraction. It promises a magnificent

holiday in a cheerful and hospitable atmosphere, where ancient

sites are so grand and well preserved. Wildlife could be sighted

from close range.

Sudan is characterized by green parks, open forests, waterfalls,

swamps, marine gardens and coral reefs. There are also the

archeological sites which house a diversity of temples, palaces, pyramids, ancient mosques and churches, fortresses and other monuments dating back to seven thousand years.

SUAKIN FREE-TRADE ZONE

The government has established a free-trade zone at the old town of Suakin in the Eastern State, and declared Osman Digna Port on the Red Sea a free-port for the following reasons:-

1. To promote, diversify and create new markets for the Sudanese Exports, and transform some of them from raw to finished or semi-finished products and advertise for them within the Free Zone.

2. To avoid the time-consuming process of importing commodities from abroad for the local market, thus the turnover shall be positively directed towards industry and commerce.

3. To attract Arab, Islamic, African and foreign capitals to Sudan.

4. To introduce modern production and marketing techniques .

5. To create work vacancies for the Sudanese nationals.

6. To establish a free industrial zone and a free Trade Zone.

The total area is designed to be 600 Km2, but the first phase started at one square km and has already drawn a number of foreign investors.

AL GAILI FREE ZONE:

located (60) km. North of Khartoum (Capital of Sudan). This area is demarked and now being planned to cover (20) sq.km. This area is significant for being:

* located within a fast economic booming circle accessed to the country’s main Oil Refinery Station.

* Linked with active business and industrial communities in Khartoum , the heart of the nation’s economy.

* Communicated with traffic networks of air, highways and railways

extending beyond Sudan’s boundaries into the African markets.

3.10 THE INVESTMENT ACT:

The new investment act and the economic policies are effective and important elements in helping Sudan rebuild its economy , scrapping all government monopolies. It is also decontrolling prices in the economy, mainly agricultural prices and export prices. The system is also changed to guarantee the investors the right to repatriate funds earned in Sudan.

The 1999 investment Act “Amended 2000” is the legal base for investment that gives it ease in procedure and flexibility in handling of investment affairs, thus encourages investment in projects that lead to promotion of the domestic income and expand the national economic base and realizes the goals of economic and social development particularly in the rural areas.

The 1999 Investment Act “Amended 2000” has also encouraged investment in the agricultural (animal and crop), the industrial, the mining, transport, tourism, warehousing, housing, contracting and basic services sectors for national, Arab and foreign private sectors besides the co -operative, joint- venture and public sectors without any bias or favoritism. The Investment Act also grants the investors additional privileges and facilities if their projects are among those that realize the objectives of the development plans. Some of these facilities are the following:-

1. Exemption from business profit taxes for not less than ten years as effective the year that follows commercial production or commencement of activities for strategic projects.

2. Exemption from business profit Tax for not more than five years as effective the year that follows commercial production or commencement of activities for non strategic projects.

3. Total exemption from customs duties pertaining to imports related to the project’s requirements.

4. Projects that , direct investment towards the less development areas, assist in the development of export capabilities of the country ,strive to achieve the integral rural development, to create wide range of jobs, strive to encourage charitable legacy, strive to develop scientific and technical research., to reinvest the profits thereof, all such projects shall be granted preferential privileges.

The 1999 Investment Act “Amended 2000” also grants your project the following facilities

(a) Foreign capital proprietors may transfer their profits and initial financing costs or debts provided that all the legally-binding commitments pertaining to the project are met and settled. The back-transfer shall be in the original currency or currencies the capital was transacted in.

(b) Import of raw materials for the sake of the project without being restricted by the procedures of importers -exporters registrars.

(c) Transfer of expatriates’ savings, or those working for the project in accordance with the acts imposed in such cases.

(d) Freedom of movement, residence or transfer of the project’s expatriate employees is guaranteed in accordance with the prevailing laws.

Some of the most significant guarantees that the 1999 Investment Act grants the investor are:

(a) That the investor’s project shall not be liable to nationalization or confiscation.

(b) That the project’s funds shall not be distained, seized, freezed, confiscated, provisionally seized or sequestrated unless there is a warrant issued by a court for taking such a step.

(c) That any estates owned by the project shall not be expropriated whether in whole or partially except for the common cause in accordance with the law. In such case, the investor shall be justly compensated on basis of the market price of the estate at time of expropriation.

(d) Remittance of invested capital in its currency or currencies of origin in case the project has not started, or in case the project got liquidated or disposed of wholly or partially, provided that all legally- binding commitments were met.

( e) As Sudan is one of the signatories to several international and regional organizations concerned with investment disputes, this factor can also be added to the assurities and guarantees provided . For instance Sudan is a signatory to:

The 1980 Unified Agreement on Investment of Arab capitals, the 1974 agreement on Settlement of Investment Disputes Arising Between Host Arab States and Nationals of Other Arab countries, the 1965 Agreement on Settlement of Investment Disputes Between Host States and Nationals of other countries, the 1977 General Agreement on Economic, Technical and Trade Among Member States of Organization of Islamic Conference, or any other agreement in this regard, in which Sudan is a signatory partner in case a direct legal dispute arises from interpretation of the stipulations of any of the above mentioned agreements. (refer to the 1999 Investment promotion act). “Amended 2000”

.As a member of COMESA (Common Market for East and South Africa), ACF groups, new grand Arabs free trade area under progress ) , Multinational Investment Guarantee Agency (M I G A ) Arab Authority for Investment Guarantee (AAIG) and (LDC) member Sudan enjoys tax reductions and preference

3.11 THE INVESTMENT AUTHORITY:

The Investment Authority was established by a decision of the Council of Ministers as the organ responsible for setting up advertising and publicizing campaign for investment in Sudan. It is also put in charge of creating an ideal investment climate that attracts national, Arab and foreign capitals in the Sudan and eliminate all obstacles that might hinder them . Besides all that, it is the organ that draws encouraging investment policies, simplify procedures for investors, issue licenses of investment projects and the relevant facilities and guarantees in addition to follow up of the actual execution of the proposed projects, prepare investment maps and save the investors the trouble of data collecting by providing them with all the necessary information and data. The Authority shall also follow up all the procedures of the investment license at the various government circles on behalf of the investor.

The Investment Authority enjoys close relations and jointly co-operate with local, regional and international corporations and organizations concerned with investment such as:

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The Arab Organization for Investment Guarantee, The United Nations Industrial Development Organization (UNIDO), The International Investment Guarantee Agency and other Arab , Islamic, African and international organizations in which Sudan is a member.

While all this is happening there is an increasing sophistication in conducting operations in Sudan. Investors interested in business in the past find themselves tangled in a complicated bureaucratic web. Today you can relax, enjoy your stay in the country and let the Investment Authority do the Job for you.