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UK Sudan Trade & Investment Forum
CTC GROUP PRESENTATION
DOING BUSINESS IN SUDANA PRIVATE SECTOR PERSPECTIVE
December 2017
Sudan | Diversely rich country
GDP $95.6 BILLION
• LARGEST ECONOMY IN EAST AFRICA (6TH IN AFRICA)
39.6M POPULATION
• OVER 50% ARE BELOW 25YRS
$2,140 GDP PER CAPITA
• HIGHEST IN EAST AFRICA
200 MILLION ACRES OF ARABLE LAND
100 MILLION LIVESTOCK POPULATION OIL & GAS RESERVES
MINING – 2ND GOLD LARGEST PRODUCER IN AFRICA
VAST UNDERGROUND WATER RESERVES POWER & IRRIGATION – THE RIVER NILE
▪ 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]
Economy | Background
FX Timeline | 2010-2016
-
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
20.00
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16
CBOS Published Rate (USD)
Open Market (USD)
Jul ‘11Independence of South Sudan
Apr ‘12Economic impact of South
Sudan cessation - losing 90% of govt revenues
Sep ‘13Government lifts subsidies on fuel as part of austerity measures
Jul ‘14Inflation peaks at 47%
2016Severe difficulty in accessing hard currency pushes USD to close at SDG 19.65
2010‘Oil Economy’ period of currency stability helps Sudan through global financial crises
SDG 3.32
SDG 6.74
SDG 8.15
SDG 8.99
SDG 11.70
SDG 4.65
SDG 2.64
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
• 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.
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2,000
3,000
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6,000
7,000
Alg
eria
Egypt
Lib
ya
Moro
cco
South
Sudan
Sudan
Tunis
ia
US
D M
illi
on
FDI Sudan 2012-2014
2012 2013 2014
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
• > 1,000 staff operating exclusively in the
Agricultural sector
• Largest private sector company operating in the
field of agriculture in Sudan and has been active in
the sector for over 60 years
Independent, Socially Responsible, Engaged private
sector:
• Dedicated to doing business “the right way”
• Believe in the potential and Invested in the future of the
country
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
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
following 13 months
Visiting CTC Digital Nursery – Krt North Meeting leaders of the political opposition
Meeting Minister of Foreign Affairs Speech at the National Assembly [Parliament]
CTC Group Focus on Agriculture: Technology Transfer Centres
TTC NETWORK
Khartoum | Sinnar | Medani | Al Gadarif | Kadugli | Al Obied
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
Technology Transfer Centres
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
Seed Preparation
Post-Harvest
Harvesting Stage
Land Preparation & Irrigation
FertilizationPest & Weed Control
Mechanized solutions
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
❖ Higher yields/Feddan
❖ Lower cost/Feddan
❖ Better quality (export)
❖ Expansion of planted areas
❖ Farming becoming profitable
❖ Improved bank terms for Farmers
❖ Created auxiliary job market
❖ Many prefer Farming to Mining
130
266
400
0
100
200
300
400
500
2001 2013 2015
Sorghum Yield per Feddan
16Years
of Progress
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
reforms implemented to stabilize economy and ensure
sustainable growth
Focus on key sectors:
• agriculture,
• agri industry,
• encouraging export oriented business
“The authorities have endeavored to maintain
fiscal restraint while preserving social spending,
and are focusing on addressing key structural
impediments in the economy to encourage private
sector activity and attract FDI” –
IMF Sudan Country Report No. 16/324
Series of investment reforms to encourage foreign
direct investment and the ease of setting up business
The Sudanese Investment Law is designed to encourage
and protect foreign investment with special consideration
on nondiscrimination as well as having a superiority
status over other laws.
Sector Investment Incentives
AgricultureBanking
Exemptions: VAT + CustomsBPT reduced from 30% to Zero
Any size of land
PetroleumInfrastructure
Industry
Exemptions: VAT + CustomsBPT reduced from 30% to 10%
MiningIndustry
Exemptions: VAT + CustomsBPT 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
Need to manage expectations
Source: BMI Research Sudan Country Risk Report Q2 2017
▪ The economy in Sudan is unlikely to significantly
improve over the short to medium term on the back of
Sanctions Relief, largely on account of on going
designation as State Sponsor of Terrorism (SSTL)
which will limit debt relief and borrowing capacity in
capital markets
▪ Banks likely to ‘watch and see’, focusing on risk-
based approach rather than wholesale de-risking, with
small / middle sized regional banks leading the way
▪ Without meaningful improvement in governance,
FDI is likely to remain lower than what is needed to
drive significant economic growth to ensure broad based
prosperity
-
5.00
10.00
15.00
20.00
25.00
30.00
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18
CBOS Published Rate (USD)
Open Market (USD)
Jul ‘11Independence of South Sudan
Apr ‘12Economic impact of South
Sudan cessation - losing 90% of govt revenues
Sep ‘13Government lifts subsidies on fuel as part of austerity measures
Jul ‘14Inflation peaks at 47%
2016Severe difficulty in accessing foreign currency is pushing USD higher vs SDG
2010‘Oil Economy’ period of currency stability helps Sudan through global financial crises
Jan 2017Optimism towards lifting
of US economic sanctions begin to push USD lower
Jul 2017Decision to delay sanction relief creates panic
Dec 2017USD peaks at SDG27
FX pressures continue
Sudan | Unique Opportunity
• Agro and Livestock Industries – enhancing export value e.g. agro-processing
• Oil & Gas
• Extractive Industries – UK’s long history in the continent/industry
• Consultancy & Design Services
• Education
• Power Generation
• Financial Services
• IT services and e-commerce infrastructure
• Unique Opportunity - Market reintegrating with the Global economy after 20 years
Agriculture | Value add locally
Sales
Logistics
+
Distribution
Processing
+
Value Add
Farming
• Cultivation of Crops and
livestock
• Seed propagation
• Equipment & Inputs
• Irrigation
• Training & Development
(Best Practice)
• Processing or
manufacturing
increasing the value
add that stays in
Sudan
• Port Facilities
• Storage
• Cold Chain
• Air, Rail and Road
• Marketing & Sales
regionally
• Commodity Exchanges
• Finance and Insurance
• Agriculture: 31.3% of GDP
• Employs 80% of the occupation force directly and indirectly
• Represents $29.9bn in value today
• Potential to increase 4.8 times if more value add is achieved locally before exports leave our shores.