Market Brief on Sudan

Background on Sudan
Sudan was embroiled in two prolonged civil wars during most of the remainder of the 20th century. These conflicts were rooted in northern economic, political, and social domination of largely non-Muslim, non-Arab southern Sudanese. The first civil war ended in 1972 but broke out again in 1983. The second war and famine-related effects resulted in more than four million people displaced and, according to rebel estimates, more than two million deaths over a period of two decades. Peace talks gained momentum in 2002-04 with the signing of several accords. The final North/South Comprehensive Peace Agreement (CPA), signed in January 2005, granted the southern rebels autonomy for six years followed by a referendum on independence for Southern Sudan. The referendum was held in January 2011 and indicated overwhelming support for independence. A separate conflict, which broke out in the western region of Darfur in 2003, has displaced nearly two million people and caused an estimated 200,000 to 400,000 deaths. Sudan also has faced large refugee influxes from neighboring countries primarily Ethiopia and Chad.

Southern Sudan is a landlocked autonomous region in the southern part of the Sudan. It held and successfully passed an independence referendum in January 2011. Juba is its capital city. It is bordered by Ethiopia to the east; Kenya, Uganda, and the Democratic Republic of the Congo to the south; and the Central African Republic to the west. To the north lies the predominantly Arab and Muslim region directly under the control of the central government, with its capital at Khartoum. Southern Sudan includes the vast swamp region of the Sudd formed by the White Nile, locally called the Bahr al Jebel.

The region's autonomous status is a condition of a peace agreement between the Sudan People's Liberation Army/Movement (SPLA/M) and the Government of Sudan represented by the National Congress Party ending the Second Sudanese Civil War. The conflict was Africa's longest-running civil war.

A referendum on independence for Southern Sudan was held on 9–15 January 2011. The final results were announced on 7 February with 98.83% of the electorate opting for secession. The President of Sudan, Omar al-Bashir, accepted the results and has issued a Republican Decree confirming the outcome of the referendum. Southern Sudan became an independent country on 9 July 2011 and is named the Republic of South Sudan.
1.1 Economy
Sudan began exporting crude oil in the last quarter of 1999 and the economy boomed on the back of increases in oil production, high oil prices, and significant inflows of foreign direct investment until the second half of 2008.. Sudan's real GDP expanded by 5.2% during 2010, an improvement over 2009's 4.2% growth but significantly below the more that 10% per year growth experienced prior to the global financial crisis in 2006 and 2007. While the oil sector continues to drive growth, services and utilities play an increasingly important role in the economy with agriculture production remaining important as it employs 80% of the work force and contributes a third of GDP. In the lead up to the referendum on southern secession, which took place in January 2011, Sudan saw its currency depreciate considerably on the black market with the Central Bank's official rate also losing value as the Sudanese people started to hoard foreign currency due to the uncertainty associated with the referendum.

Southern Sudan

Sudan exports timber to the international market. South Sudan hosts the largest teak plantation in Africa, some of the states with the best known teaks and natural trees for timber are Western Equatoria and Central Equatoria in Southern Sudan.

One of the major natural features of the Southern Sudan is the River Nile whose many tributaries have sources in Sudan.

The region also contains many natural resources such as petroleum, iron ore, copper, chromium ore, zinc, tungsten, mica, silver, gold, and hydropower. The country's economy, as in many other developing countries, is heavily dependent on agriculture.

Agricultural products include cotton, groundnuts (peanuts), sorghum, millet, wheat, gum arabic, sugarcane, cassava (tapioca), mangos, papaya, bananas, sweet potatoes, and sesame.

Southern Sudan produces 85% of Sudanese oil output. The oil revenues according to the Comprehensive Peace Agreement (CPA), are to be split equally for the duration of the agreement period.

Exports – The value of Sudan’s global exports in 2010 was US$ 9.77 billion. The main export commodities are oil and petroleum products; cotton, sesame, livestock, groundnuts, gum arabic, sugar.

The main export partners are China 58.29%, Japan 14.7%, Indonesia 8.83%, India 4.86% (2009)

Imports – The value of global imports in 2010 was US$ 8.48 billion. The main import commodities are foodstuffs, manufactured goods, refinery and transport equipment, medicines and chemicals, textiles, wheat
The main import partners are China 21.87%, Saudi Arabia 7.22%, Egypt 6.1%, India 5.53%, UAE 5.3% (2009)

1.2 Kenya’s trade with Sudan

Kenya’s trade with Sudan is significant. Kenya’s market share is 0.7% in the Sudanese market . The trade balance has been in Kenya’s favour over the years and the trade balance in 2009 stood at Kshs. 12.75 billion (US$ 164.85 million)

The trade balance in the Kenya – Sudan trade is heavily skewed in Kenya’s favour in the period 2004 – 2009. The balance of trade was increasing year on year except 2008 – 2009 when the total trade between the two declined.

Exports – Kenya’s total exports to Sudan were valued at Kshs. 12.77 billion (US$ 165 million) in 2009 up from Kshs. 4.29 billion (US$ 54.15 million) in 2004. Exports to Sudan expanded by an average annual growth rate of 24.96 % between 2004 and 2009. The main export products to Sudan include tea (28%) cigarettes (12%) and cement (4.5%) cumulatively accounting for 44.5% of the total exports to the market. Other products exported to Sudan include  vegetables, medicaments, vegetable fats and oils, articles of plastic, soap, electrical machinery and telecommunications equipment amongst others. There is a need for diversification of products in the market.

Imports – Kenya’s imports from Sudan stood at Kshs. 11.64 million (US$ 0.15 million) in 2009 down from Kshs. 192 million (US$ 2.42 million) in 2004. Kenya’s imports from Sudan mainly comprise of machinery, steel structures, pumps, machine tools, motor vehicles. Engines, telecommunication equipment and second hand clothes

Commodities with export potential to Sudan – From trade flow analysis, the following products from Kenya have export potential to Sudan; Tunas, Footwear of rubber or plastics, chemical raw materials, crown corks of base metal (bottle tops and corks) and plants, seeds & fruits used in pharmaceuticals/cosmetics. These are products Kenya currently exports to the world market but not to Sudan.

1.3 Kenya – Southern Sudan Trade
Kenya is currently focussing on expanding it’s trade with the Southern Sudanese market due to the immense potential of the region occasioned by the minimal penetration of the region by regional and international trading partners and also the cordial historical relationship of the two states during and after the fight for the cessation and independence of Southern Sudan.

1.4 Way Forward / Recommendations
Arising from the analysis, the following are the proposals to various stakeholders in the export sector both in Kenya and Southern Sudan.

Kenya/ Southern Sudan Governments

The Export Promotion Council (EPC) and the relevant Government Ministry /Agency mandated with the promotion of trade and investment in Southern Sudan should consider signing a Memorandum of Understanding (MOU) on trade and investment in order to facilitate enhanced trade and investment between the two countries


Foreign Missions in collaboration with the Export Promotion Council:

1.To organise product specific market expansion strategies such as trade fairs, trade missions and solo exhibitions in collaboration with trade support institutions (TSIs) in order to enhance penetration of the identified products in the Southern Sudan market. The trade promotion activities should also incorporate players in the services sector including but not limited to construction, banking, insurance and consultancy services.

2.The Council to organise for in-country market studies for the identified products in line with the goal of consolidation, expansion and diversification of Kenya’s exports. In addition, carry out studies of market access requirements for potential products, including tariffs and Non-Tariff Barriers, consumer preference, packing & labelling requirements and suitable distribution channels in collaboration with relevant TSIs.

3.To embark on the compilation of an importers database (for identified products available in Kenya) for dissemination to Kenyan exporters, in collaboration with EPC and Kenyan Trade Support Institutions. In addition, the Mission should facilitate collection and dissemination of trade leads/inquiries.
4.A comprehensive industry competitive analysis should be undertaken on the products with market presence in Southern Sudan to determine areas where Kenya has comparative supply capability in Southern Sudan.

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