Investment in Sudan: Between the Crossroads of War and Reconstruction

Sudanhorizon – Nazek Shammam

“I couldn’t continue. The challenges were overwhelming, and capital is timid. So I decided to cancel the entire project and return to where I came from.” With these brief words, Mohammed Abdullah brought an end to both his investment project and one of his lifelong dreams of establishing a plastics factory south of the Sudanese capital, Khartoum. Although he laid the project’s foundations after the war, the obstacles and challenges he encountered brought it to an early end.

Speaking to Sudanhorizon, Abdullah said that “the scale of the investment challenges in Sudan after the war makes it extremely difficult for any investment project to succeed.”

He added: “The government does not want to do anything for investors. Instead, it expects them to do everything themselves, starting with providing electricity—which has become extremely expensive after the war—in addition to multiple taxes and fees, and the lack of coordination among the institutions responsible for investment.”

Like Abdullah’s project, Sudan’s post-war investment landscape appears surrounded by both longstanding and newly emerging challenges.

According to previous World Bank reports, Sudan ranks poorly in terms of the ease of doing business, a key factor in enabling investment projects to move forward and contribute to the country’s economy.

The central challenge facing investment in Sudan lies in balancing the country’s vast natural resources with the ability to utilise them effectively.

A Sudanese investor—who requested anonymity—said the institutional and structural obstacles confronting the investment environment after the war fall into two categories: pre-existing challenges, such as the weak efficiency of parts of the civil service, poor coordination among government institutions, and bureaucratic complexity.

He told Sudanhorizon that these problems long predated the war but had been significantly worsened by it.

He also pointed to challenges directly resulting from the ongoing conflict, including the government’s loss of control over production areas. He noted that an estimated 40% of Sudan’s territory remains outside government control and under the presence of the Rapid Support Forces (RSF), including regions rich in agricultural and livestock resources that are crucial to the national economy.

He highlighted the severe damage to Sudan’s energy infrastructure—including electricity generation, transmission, and distribution—as well as the crisis facing the banking sector after banks suffered looting and destruction of assets. Previously issued financing has also been disrupted because factories and goods were looted or destroyed.

The investor also noted the sharp depreciation of the Sudanese pound, which has fallen from around 500 pounds per US dollar before the war to approximately 5,550 pounds, meaning that the recovery of old debts now amounts to only about 10% of their previous value.

He further cited weak banking capital, high financing costs that restrict liquidity for businesses, external pressures on supply chains, and rising shipping and insurance costs due to regional conflicts. These difficulties have been compounded by declining purchasing power, prolonged interruptions in public and private sector salaries, and the erosion of real wages caused by soaring inflation.

Among the most significant obstacles to investment, he identified overlapping authority and conflicting powers between the federal government and state authorities, along with multiple taxes and levies imposed by various bodies without a clear legal or legislative basis.

He added: “There is also a clear lack of coordination between the Ministries of Investment and Industry on one side and the Customs Authority on the other. Investors are granted approvals and customs exemptions for their equipment and requirements, but customs officials often refuse to honour those exemptions.”

He also criticised the weakness of the civil service and what he described as “crippling bureaucracy,” saying that inefficient staff and extremely slow processing of even routine procedures create a distorted investment environment.

The investor stressed that attracting investment while the conflict continues remains extremely difficult, as armed conflict discourages the inflow of capital needed to stabilise the economy, strengthen the Sudanese pound, and reduce inflation.

He predicted that post-war investment would likely be dominated by investors seeking high-return, short-term opportunities to recover their capital quickly, rather than patient, long-term investment, given the uncertainty surrounding the business environment.

Among his proposals were the establishment of an Investment and Reconstruction Commission, integrating infrastructure reconstruction with investment planning so that both proceed simultaneously. He also recommended prioritising the electricity sector through the development of large-scale solar energy farms, which can be completed relatively quickly and generate returns within a short period. He called for activating public-private partnership laws, unifying government fees, and ending arbitrary levies through firm government action.

However, Acting Secretary-General of the National Investment Authority, Nour Al-Daim Babiker, said legislative and administrative incentives are already in place through the implementation of a one-stop investment system, with all fees unified into a single electronic payment.

Babiker told Sudanhorizon that Sudan now provides equal treatment to both domestic and foreign investors and has abolished the requirement for foreign investors to have a local partner.

He also highlighted the government’s digital transformation initiative under the “Zero Paper, Zero Meetings” approach, whereby the one-stop investment service is being converted into a fully electronic platform to process transactions, monitor applications, and integrate with tax and customs authorities without bureaucratic procedures.

Babiker maintained that investment inflows have continued despite the war and rejected claims of a decline in investment activity. Instead, he expressed optimism that investment would increase further during the recovery period, particularly in light of anticipated updates from the World Bank.

He identified promising investment opportunities in agriculture, livestock production, mining, manufacturing, solar energy services, digital transformation, transport, and healthcare.

He also said Sudan offers guarantees against sovereign risks, including protection from nationalisation, confiscation, or administrative seizure except through a court ruling accompanied by immediate compensation at market value. Investors are also guaranteed full freedom to repatriate profits and capital abroad without limits or prior approval from the Central Bank of Sudan.

Meanwhile, institutional development expert Al-Numan Yousif argued that improving Sudan’s investment climate must begin with building a productive economy by limiting the state’s role to setting policies, legislation, and regulations while leaving investment activity to the private sector.

Yousif emphasised the importance of reforming the legislative framework by reviewing and harmonising existing laws rather than simply introducing new ones. He also called for eliminating conflicting regulations and creating a unified legal framework governing investment.

Finally, he urged the government to transform the one-stop investment system from a frequently repeated slogan into a genuine institutional reality and to adopt digitalisation as a national policy.

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