September 11, 2013 (KHARTOUM) – The Sudanese investment minister Mustafa Osman Ismail has pledged to resolve all problems facing Chinese investments in the country particularly regarding the repatriation of profits abroad.
- Sudan investment minister Mustafa Osman Ismail attends a news conference at the end of the International Donor Conference for Reconstruction and Development in Darfur, in Doha on April 8, 2013 (STR/AFP/Getty Images)
Foreign investment companies operating in Sudan are suffering from the shortage in hard currency and continue to complain about losing millions of dollars when buying it from the black market.
Last June, the Sudanese branch of the Mobile Telecommunications Co (Zain) said that it lost more than $60 million due to unfavorable exchange rate of the Sudanese pound relative to other major currencies.
The Sudanese pound is now trading at 7.5 to the dollar on the black market which sharply contrasts the official exchange rate of 4.4.
Ismail said in press statements on Wednesday upon his return from Beijing where he attended the Shi Min International Fair, that transit fees collected by his government exporting from South Sudan’s oil would solve the problem of the hard currency needed by foreign companies.
Khartoum expects to earn $500 million in revenue annually from transit fees of South Sudanese crude.
Ismail said that the exhibition he attended offered a good opportunity for displaying the Sudanese products adding that Sudan could export its products including cotton and peanuts to China.
China has been Sudan’s largest foreign investor particularly in oil and telecommunications after western firms shunned the East African nation due to conflicts and sanctions.
Sudan’s economy was hit hard since the southern part of the country declared independence in July 2011, taking with it about 75% of the country’s oil output. As a result Sudan had been unable to come up with hard currency needed by individuals or businesses who want to import or send profits overseas.
A report by Reuters cited growing difficulties facing Chinese investments as a result of the deteriorating economy.
"We hardly have any projects in Sudan anymore and are now moving staff to Kenya where business is much better," the head of a mid-sized private Chinese building company told Reuters.
"Sudan is no longer an important market for us," said the businessman who requested anonymity as he fears problems with the Sudanese government, which still owes his company money for construction work for ministries in Khartoum over the past two years.
The report interviewed handful of Chinese entrepreneurs in Sudan who recounted how their fortunes went south in recent years. Some have even resorted to legal action in order to get their money from Sudanese partners.
China’s exports and imports to and from Sudan, which totaled $11.5 billion in 2011, amounted to just $3.3 billion in the January-November period of 2012, Reuters quoted official Chinese data.
The drop in oil trade accounted for much of that decline. But even while the oil industry has been shut down trade has continued to fall. In the first five months of this year, Chinese exports to Sudan fell 8 percent from a year earlier to $1.7 billion, the data shows.