Sudan’s New Investment Environment: Towards Reintegration into the International Economy


Client Alert
31 May 2021 By DR. KILIAN BÄLZ

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On May 17th, 2021, France hosted a business forum on Sudan, marking Sudan’s removal from the US State Sponsors of Terrorism List, which will allow the country to reintegrate into the global economy. This occasion allowed the Sudanese transitional government to present its 2021 Investment Act (the “Act”) as well as its first public-private-partnership law (the “PPP Law”). Each showcases the country’s readiness and eagerness to welcome foreign investment.

The recent Sudan Business Forum held in France shed light on many investment opportunities within the country and on the eagerness of the Sudanese private and public sectors to welcome foreign investors. The Sudanese government took this opportunity to present its new legislative environment, and most importantly, the 2021 investment (encouragement) act and the newly created PPP law.

Sudan’s Transitional Government

Since the fall of al-Bashir’s regime in April 2019, the Transitional Military Council (“TMC”), which assumed power, and the Forces of Freedom and Change (“FFC”), which played a major role in the uprising, agreed to enact a transitional constitution that would start a transitional period of 39 months. The transitional government is led by a military member for the first 21 months, followed by a civilian for the last 18 months. At the end of the transition, elections will be held.

Currently, the Sovereignty Council and the Council of Ministers exercise legislative powers until the Transitional Legislative Council is formed.

The New Investment and Public-Private-Partnership Laws

Sudan’s Sovereignty Council and the Council of Ministers passed the Act and PPP Law in a joint session, and each is meant to create a business-friendly environment that will attract foreign investors. The two laws will come into force as of the date of signing by the Sovereignty Council. These laws are part of a set of reforms driven by the transitional government to achieve a
successful transition to an open, dynamic, and business-friendly economy. This set of reforms includes the unification of the exchange rate and the removal of fuel subsidies – two measures that are expected to reduce smuggling and corruption while stabilizing the Sudanese currency. The government also announced the enactment of a new banking law organizing a dual-banking system that will develop conventional banking alongside the current Islamic banking system. In the past, Sudan had banned interest in financing transactions on the basis that this contravened Islamic law. These rapid changes, as well as the lifting of US sanctions, have also led to the return of international aid, and to various countries writing off Sudan’s debt. It is also relevant to mention that since March 26th, 2018, Sudan is a contracting state of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, the most

important international convention in the field of arbitration.A New User-friendly Investment Law Designed for Businesses

The previous Investment Act of 2013 had provided for the equal treatment of investors regardless of their nationality, but it relied on complicated and extensive procedures. The Act aims to resolve these shortcomings by taking inspiration from both local and international

practices to build an environment conducive to investment in order to attract both national and foreign investors. It also seeks to create a more predictable, transparent and fair system that supports investment. 

Among the major changes introduced by the Act, the following should be particularly noted:

– The introduction of numerous tax exemptions, developed in Article 20 (including customs, business profits tax, and VAT, among others), until the end of the capital recovery period for projects that achieve an economic benefit.

– The creation of an investment register in Article 25 that will gather all investing entities’

data and store it in modern and secure systems.

– The issuance of an investment procedural guide, according to Article 26 of the Act, which will include all “the conditions, procedures, timeframes prescribed for land allocation, issuance of approvals, permits and licenses pertaining to investment activities” to clarify and facilitate procedures for all investors. This guide will be accessible online and will be updated periodically.

– The creation of a specialized insurance company envisaged by Article 27 that will insure investors against different risks (e.g., risks of nationalization, risks of war, domestic conflict and civil disobedience, risks of recession, etc.) for an annual premium.

Additionally, according to article 18 of the Act, a special exclusion list will be published that will detail the sectors and activities not available to foreign investors. Furthermore, pursuant to article 22, foreign investors will have to deposit at least USD 250,000 to obtain a license.

The minimum capital necessary for a foreign investor to invest in Sudan is yet to be defined.  Promoting the Participation of National and Foreign Private Companies in Public Projects The PPP Law organizes and promotes PPPs, thus encouraging private entities to invest and

participate in projects alongside Sudanese public entities. The law also intends to ensure transparency and integrity in procedures and equal and fair treatment for bidders.

It was 31 May 2021 Page 3  particularly well received by international companies at the conference who are interested in Sudan’s infrastructure sector. 

To ensure the development, management and implementation of PPP projects, a central unit with an independent budget has been created in Chapter IV of the law. Both the public and private sectors will be able to suggest PPP projects. Each PPP project will be assigned a tender

committee responsible for advertising and preparing the bidding process, according to article 17.

Regarding implementation guarantees, dealt with in article 25, the winning bidder will not have to guarantee more than 10% of the partnership contract value and will also be invited to establish a project company (article 29), except if certain exemptions apply.

Of particular interest is article 38, which states that the contract may be terminated before the expiry date, according to contractual provisions. 

Finally, it should be noted that Sudanese law will be applied to any such partnership contract, and the Sudanese courts will have jurisdiction (article 39). It is unclear whether this article enables contractual parties to submit their dispute to international arbitration. This uncertainty is problematic considering the importance of dispute resolution processes for companies. 


1 These laws are part of a set of reforms driven by the transitional government to achieve a successful transition to an open, dynamic, and business-friendly economy. This set of reforms 1 According to Article 11 (l) of the Draft Constitutional Charter for the Transitional Period, the

Sovereignty Council must sign the laws passed by the Legislative Council so that they enter into force. If no signature intervenes within 15 days, without the Sovereignty Council providing for any reason, the law will be deemed in effect. Therefore, the two laws should now be in force.

Additional regulations are expected to clarify certain aspects of these new laws. If you would like more information about this topic, then please contact us. 

Dr. Kilian Bälz
Partner
Berlin
kb@amereller.com

Morgane Fouillen
Research Associate
Berlin
berlin@amereller.com

 


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