Private Sector Landscape Assessment in Sudan

Simultaneously, business leaders are seeking ways to partner with the development community to channel their capabilities and resources toward sustainable development. The US Agency for International Development (USAID) Bureau for Humanitarian Assistance (BHA) sought support from the Promoting Excellence in Private Sector Engagement (PEPSE) project to conduct a private sector landscape assessment (PSLA) in Sudan. The main objective of the PSLA was to gain an increased understanding of the private sector landscape in Sudan, as well as private sector perspectives on challenges and opportunities relevant to USAID/BHA's objectives in Sudan. The Sudanese private sector faces several political, regulatory, and institutional challenges to its business enabling environment. These include the lasting impacts of the Sudanese Revolution on businesses, particularly micro, small, and medium-sized enterprises (MSMEs), many of which did not recover from the resulting business interruptions. While the United States has lifted most of its sanctions on Sudan, companies still feel its long-term effects. Other challenges include poor infrastructure, most notably the lack of access to energy, and recent business lockdowns due to COVID-19. The Sudanese private sector has historically been dominated by large family-owned conglomerates and public sector companies, a select few of which have thrived in recent years by taking advantage of the lack of competition due to US sanctions. The base of wealth and growth strategy for most of these conglomerates is agriculture, including scaling up and diversifying products by expanding their business to livestock, meat production, and processing. The PSLA team observed an increased reliance on the contract farming model for conglomerates to cope with increased demand for crops and limited access to developed agricultural land. Micro-, small, and medium-sized enterprises (MSMEs) in Sudan are more diversified than conglomerates, but also experience more vulnerability to disasters. The PSLA team learned that MSMEs suffer from governmental policies that have a bias towards conglomerates, limiting MSMEs' access to finance and rendering them vulnerable to shocks and business interruptions. At the same time, opportunities for MSMEs in the technology and solar energy sectors are emerging, with little competition from major conglomerates. The PSLA interviews also uncovered company relationships with and perceptions of the Government of Sudan. Despite overall positive responses regarding the transitional government, companies argue that the government needs a clearer framework to facilitate private sector development and business enabling environment. Some of the private sector's primary complaints about the Government of Sudan include the failure to provide foreign currency through the banking system, unclear and unstable trade policies, land ownership and tenure issues, and infrastructure issues. When asked about areas the Government of Sudan could further address, the most universal request was stabilizing the economy and currency and improving the business enabling environment. Many conglomerates have had generally positive partnership experience with development partners, particularly in the agriculture and food security sector. While MSMEs have had less exposure to the humanitarian and development communities, they understand the opportunities for collaboration that could contribute to Sudan's long-term development but also support their business growth. Private sector interviewees responded with openness to the idea of partnering with USAID/BHA, due in large part to the private sector's familiarity with humanitarian issues in Sudan and their willingness to advance common humanitarian and development goals. The PSLA highlighted several opportunities for both ways USAID/BHA can best approach the Sudanese private sector for potential partnership, as well as shared-value partnerships that advance the business goals of companies while also supporting USAID/BHA prioritized development objectives. These opportunities include building trust to develop partnerships, finding a common language, including the private sector in the co-design process, and setting clear expectations and maintaining transparency around timelines. Short- and medium-term opportunities include leveraging the RISING model to expand resilience, supporting microfinance and agricultural finance, and facilitating the expansion of agricultural finance to rural and marginalized small-holder and contract farmers.