How to Do Business In Sudan?

Doing business in Sudan involves navigating a complex regulatory environment and being aware of the current political and economic challenges. However, the government has expressed a desire to encourage foreign direct investment (FDI), and certain sectors offer considerable opportunity.

Here is a breakdown of key aspects for doing business in Sudan:

1. Business Registration and Legal Structures

Foreign investors are generally treated equally to domestic business owners, with the government encouraging FDI. You will need to choose a legal structure for your business and register it.

Common Business Structures:

• Limited Liability Company (LLC): This is a popular choice, limiting the owner’s liability to the capital invested. It requires a minimum of one shareholder and one director, who can be of any nationality.
• Public Limited Company (PLC): Requires a minimum of 7 shareholders and 3 directors (up to 15).
• Partnership: Allows for limited or general partnerships.
• Branch Office or Representative Office of a Foreign Company.

Key Requirements & Steps for Registration:

1. Name Reservation: Apply to the Commercial Registrar for approval of your proposed business name.
2. Documents: Prepare necessary documents, which typically include:
   • Memorandum and Articles of Association.
   • Business Registration Form.
   • Identification Documents for Directors and Shareholders.
   • Proof of office space (purchase or lease).
   • Power of Attorney (if applicable).
3. Capital Deposit: The Investment Encouragement Act of 2021 requires foreign investors to deposit at least $250,000 to obtain a business license. (Note: This is a requirement for a license under the Investment Act, and separate from general company formation capital requirements, which are often lower).
4. Registration and Licensing:
   • Register your company with the Commercial Registrar.
   • Obtain a license from the Ministry of Justice and/or other competent authorities depending on the sector.
5. Tax Registration: Obtain a Tax Identification Number (TIN).
6. Investment Registration: The Ministry of Investment and International Cooperation is the government’s investment promotion agency and offers a “single window” service for potential investors.

2. Investment and Regulatory Environment

The Sudanese government offers incentives to attract foreign investment and has introduced reforms to modernize commercial laws.

Key Features for Foreign Investors:

• 100% Foreign Ownership: The government permits 100% foreign ownership of a company in most sectors.
• Investment Incentives: Depending on the project, the Ministry of Investment and International Cooperation may offer tax incentives, customs exclusions, and land grants.
• Repatriation of Profits: The Investment Act of 2013 enshrines the right to repatriate capital and profits, provided the investor has an investment account at the Central Bank of Sudan.
• Non-Discrimination: The law establishes equal treatment for foreign and domestic business owners.

Challenges and Restrictions:

• Political and Economic Instability: Ongoing political turmoil creates economic uncertainty, foreign exchange shortages, and inflationary pressures, which are major challenges for businesses.
• Currency and Repatriation: Despite the legal right to repatriate, the country faces a severe foreign exchange shortage, and foreign companies must have Central Bank permission to repatriate profits and foreign currency.
• Restricted Sectors: Foreign investment is restricted or closed in certain areas, including most telecommunications and media, some parts of the transportation sector (railway, freight, inland waterways), electrical power generation, and financial services.
• Bureaucracy and Corruption: Businesses may face a burdensome bureaucracy and endemic corruption.
• Local Partnership: Officials often strongly encourage foreign investors to engage with a Sudanese partner when entering the market, even though it is not legally mandated for full ownership.

3. Key Investment Sectors

Sudan is rich in natural resources, and its strategic location positions it for regional trade. The most promising sectors for investment include:

• Agriculture and Livestock: Sudan has vast amounts of arable land and water resources, making this a core area for investment in crop production, processing, and livestock.
• Mining and Natural Resources: This is a major area of interest, primarily for gold, as well as other non-precious metals, oil, and natural gas.
• Infrastructure: There is a significant need for modernization and expansion in various infrastructure sub-sectors, including:
  • Energy (Power)
  • Transport (Roads, Ports, Air transport)
  • Information and Communication Technology (ICT)
  • Water and Sanitation
• Industry/Manufacturing: Opportunities exist in manufacturing, including pharmaceuticals, and a general need for industrial parks and development.

Recommendation

Given the complex and dynamic business environment, particularly the ongoing political instability and macroeconomic challenges:

1. Seek Local Expertise: Engage with local legal counsel and business consultants experienced in Sudanese commercial law and regulations from the outset.
2. Contact Authorities: Work closely with the Ministry of Investment and International Cooperation for guidance on investment procedures and incentives.
3. Conduct Due Diligence: Perform a thorough feasibility study and political economy analysis to understand market risks, regulatory landscape, and local customs.