Saudi-Sudanese investments and the bureaucratic jungle

I have received an invitation from Sheikh Mahfouz Bin Mahfouz, a Saudi businessman, to attend a Saudi-Sudanese conference in Riyadh next month. 

Its goal is to foster commerce and encourage investments in Sudan, especially in infrastructure and agriculture.  We do need each other. Saudi Arabia has a lot to offer in rebuilding the war-torn Sudan and meeting its market needs. Our private capital can utilize the huge and largely untapped opportunities in the neighboring African country. 

Sudan has been called the “food basket” of the Arab world for ages. While most Arab countries lack water resources, Sudan has far more than it needs. 

The Nile River, with its two branches, the White and the Blue, meeting in Khartoum, brings life to a land the size of Europe. It was called the Sudan (black in Arabic) because of the color of its soil. The generous Nile brings the fertile soil from its origins in Uganda and Ethiopia to enrich the land on its banks. Egypt, too, used to enjoy this gift before its late president Gamal Abdel Nasser built the Aswan Dam in the 1960s, preventing the fertile soil from being carried northward.

After independence from Great Britain in 1956 and its separation from the Kingdom of Egypt and Sudan, civic progress and development in Sudan were slowed by civil wars and political turmoil. 

Today, with the end of the long war between the South and North and the relative calm of the Darfur conflict, the Sudanese government is finally giving its full attention to building and enriching the improvised country.

On the other hand, the world, and especially our part of it, is facing serious water and food shortages. With global warming and the increase in population, everyone is looking for guaranteed food resources. Saudi Arabia has been working on this problem for many years now. King Abdullah’s Agriculture Initiative calls for private investments in Asian and African countries, starting with neighbors like Ethiopia and Sudan. Many investors, like Sheikh Mohammed Hussien Al-Amoudi, have answered the King’s call. With generous government loans and support, they have heavily invested in developing agriculture in Sudan’s non-Arab neighbor, Ethiopia.

So, is it about time we go further north to develop Sudan? On the surface, it makes prefect sense. The country has all the basic ingredients: water, fertile soil, roads, ports, airports, electricity, human resources, and peace. 

When I visited Sudan in 2002, with Prince Mohammed Al-Faisal, chairman of Faisal Bank, the country had a weak infrastructure and poor services. It has developed considerably since. Then, it was engaged in civil wars in the south, west and east of the country. Today, it is much more secure and peaceful. However, two problems persist — bureaucracy and injustice. Like many Third World countries, laws are not always respected. And when they are followed, it is not always for the best.

Too much red tape frustrates and chases away local, let alone foreign, investors. Obstinate bureaucrats who ignore, delay or refuse to implement even court and executive orders are formidable obstacles. 

In 1989, for example, a Saudi investor and his Sudanese partner organized a successful Saudi export fair in the capital, Khartoum. It was hailed as a gate which would lead to stronger commercial ties. However, when the fair ended the organizers were not allowed to retain possession of their show materials, as promised, and therefore lost millions of dollars. They sued and won a court verdict to get government compensation. The president ordered immediate implementation. More than 20 years later, the investors still have not been paid. 

Such incidents frighten enthusiastic Saudi investors. They may have the best of intentions and want to invest in a dear, neighboring Arab country, but if they cannot be certain of a fair, welcoming and orderly business environment, they will not risk their precious time, hard labor and valuable cash. 

My advice to the Sudanese is to provide such an environment before inviting in investors. Providing regulations and a commission with all the needed power to implement them will certainly help. The free transfer of hard currency, in and out, is a must. And all unsettled cases should be resolved. Without such steps, I really cannot recommend Saudi investment in dear Sudan. No one should risk hard-earned capital in a bureaucratic jungle.