Investment Opportunities in Sudan's Agricultural Sector - Geopolitical Analysis & Forecasting

Investment Opportunities in Sudan's Agricultural Sector

October 16, 2013

Zachary J. Rose

Female Sudanese woman in farm

Geopoliticalmonitor.com

Agriculture has historically been the cornerstone of Sudan’s economy.  A large country with vast amounts of fertile land, it has long been common knowledge that Sudan contains tremendous potential for a sustained agricultural focus.

Sudan has approximately 300-400 million acres of fertile land. Its crop portfolio is incredibly diverse, including cereals such as wheat and rice, oil-seeds, beans, lentils, and others. It produces cotton, hemp, fodder, and forestry resources as well. Moreover, the land in Sudan is suitable for animal husbandry, with its horticultural offerings of vegetables and fruits, and it is also rich with herbs that are used in fragrances and medicines.

Sudan has long relied on the agricultural sector as the foundation of its GDP. In the years between 1999 and 2010, agriculture accounted for anywhere between 31-50 percent of the country’s total GDP. This proportion has been trending down over the past decade. Though the early 2000s saw an average GDP percentage of about 45%, the past few years have been closer to 30%. Nevertheless, the sector continues to be a large one, and it currently employs 80% of the Sudanese workforce.

The shrinking share of agriculture in Sudan’s GDP resulted from growing petroleum and service sectors. With government support focused elsewhere, the productivity of the agricultural sector began to decline in relative terms. However, given recent political changes stemming from the independence of South Sudan, a new strategy has become necessary – or rather, an old one. Khartoum has begun actively re-prioritizing the exploitation of its agricultural endowments.

This move is being encouraged by nearby African and Arab states. Recent investments and pledges of support from surrounding countries have set Sudan up to become a major agriculture producer. Saudi Arabia for example, with its relative lack of water supplies, is intending to rely more heavily than ever on African food imports, largely from Sudan. Early in 2013, Gulf nations contracted a Chinese firm to expand the Roseires Dam on the Nile, substantially increasing Sudan’s ability to irrigate farmland.

This new direction suggests a positive investment climate for foreign investors. Strategically positioned to trade with surrounding nations, Sudan is being increasingly noted as an investment destination and breadbasket for the region. According to a paper published by the Food and Agriculture Organization of the United Nations, present circumstances and Foreign Direct Investment (FDI) policy trends reflect a promising, emergent climate for sustained investment in Sudanese agriculture.

Indeed, the report goes on to highlight the diversity and magnitude of the agricultural resources in Sudan awaiting investors:

As touched upon before, policies and amendments being adopted by Khartoum are affecting the investment climate in a positive way. The Investment Encouragement Act of 1999 was updated in 2003 and, in tandem with even more recently amended laws, allows for special exemptions from taxes and other barrier reductions for foreign investors seeking to participate in agricultural projects.

This huge and diversified spatial view of Sudan’s natural endowments should not only attract foreign direct investments, but in fact provide a long and diversified menu of investment opportunities for foreign investors to choose from. The vector of profitable agricultural investment undertakings ranges from crop production to animal production, fodder, poultry, organic vegetables, fruits, and even tropical flowers.

Of particular interest to investors might be areas designated as strategic, or “least developed,” which have been designated high priority by the aforementioned laws and are therefore subject to special accommodations. To date, the majority of activity in Sudan’s agricultural sector has been concentrated in three regions: the Khartoum area, the central provinces, and in the north. The other regions, particularly to the east and west, have been neglected in comparison, with 86% of FDI going to the most developed regions. Much of this has to do with the infrastructure and supports available in these areas, which make operations much more efficient and potentially lucrative. However, the under-developed, priority areas may also tempt investors who possess the capacity to exploit them given the incentives being offered and a relative lack of competition.

In addition to these strategic, targeted zones, the Ministry of Investment has published a list of proposed and early-stage projects in the more active northern and central regions, which present several opportunities for foreign investors:

The following projects are located in the Northern state

The Integrated Agricultural Mechanization Project
is a broad undertaking, localized in the northern region. It seeks to further develop the technological and mechanical capacities and agricultural practices throughout the region. Direct investment is desired by the government to develop this undertaking.

The West El-Goled Project is a proposed undertaking in the relatively agriculturally active Northern state of Sudan. The proposed project area would be roughly 50,000 acres on the west bank of the Nile, south of Dongola city. Potential crop yields include wheat, legumes, and fruits. It is proximate to a major airport in Dongola, and would be readily irrigated from the Nile or a nearby reservoir.

Another proposed project in the Northern state is the El-Khoy Project. On the bank opposite of the El-Goled Project, the El-Khoy project is located off the eastern bank of the Nile and would be roughly 200,000 acres. Preliminary studies have been completed for this project, too, which can yield citrus fruits, date palms, assorted vegetables, legumes, and wheat. Adjacent to the Nile, it would be easy to irrigate and is also close to the airport in Dongola city.

In this region as well is the proposed Wadi El-Khoy project, focusing on animal husbandry for international export and domestic markets. Sheep, goats, and camels in particular would be raised through this project. It would involve an area of approximately 250,000 acres, and like the other nearby projects, it would take advantage of proximity to the Nile for its supply of water and irrigation potential.

The following projects are located in the southern and central regions

The White Nile state, south of the capital, has seen the early stages of implementation of the El-Seela Project. This undertaking, utilizing an area of approximately 150,000 acres, presents crop opportunities for cotton, wheat, legumes, sunflower, and a variety of fruits and vegetables, including the highly exportable galia melon. The central location of the El-Seela project allows it to benefit from developed infrastructure such as major national roads.

East of the White Nile state is the state of Sennar, which contains further opportunities for agricultural investment. The Blue Nile Sugar Project would use approximately 75,000 acres of land to cultivate and produce sugar cane. Agricultural operations are already taking place, but the government of Sudan is seeking to transition the land to sugar production, and require investors to provide some of the necessary agricultural inputs.

A further project in Sennar is the El Rammash Project, which is already operating. Currently it produces cotton, sunflower, and sorghum grasses, but as in in the Blue Nile Sugar Project, the government seeks a transition to sugar cultivation and requires investor support to obtain the necessary farming inputs.

Also in Sennar is the proposed Cuziera Project. In the area proposed for this undertaking, approximately 60,000 acres, a community of local farmers and inhabitants work the land in uncontested, dispute-free territory. Including these inhabitants in employment and land sharing agreements, the Sudanese government proposes to increase this area’s production of traditional, rain-fed crops such as cotton, sorghum grasses, sunflower and groundnut. The land could also be used for animal husbandry as well.

In the capital Khartoum region, there are plans to establish the El-Ferdous Project, which would yield vegetables, fruits, cereals, and feed. It would be established on a relatively large stretch of land, approximately 260,000 acres large, irrigated from either the Nile or underground water sources in the Nubian basin. Its central location near populated areas would assist significantly in the distribution of its outputs.

Gezira state is the site of a relatively modest proposed investment opportunity. The Sharq-El Nil Project would use a total area of 20,000 acres, and would produce feed products and red meat to supply to local and regional markets.

On the southern border of Gezira, just north of Sennar, are 32,000 acres proposed to be used for the West El-Hosh Project. Currently farmers work this site producing sorghum and millet, but the land could be used to cultivate, process, and can vegetable products.

Zak Rose is a contributor to Geopoliticalmonitor.com

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