The other Sudan

The violence in Darfur has claimed hundreds of thousands of lives. As the West remains reluctant to invest in Sudan, the African country is looking to the Middle East to fill the vacuum.

Sudan is home to Africa's worst humanitarian crisis, as years of violence in the western region of Darfur have already claimed around 400,000 lives, according to the UN.

As a result of the conflict, the West remains reluctant to invest in the country while US firms have been barred from operating there since 1997.

Now that vacuum is being filled by Middle East money that is beginning to pour into the country as it seeks to develop its oil wealth. The UAE has already invested upwards of US$1.9bn in Sudan, which is expected to climb above US$2.72bn by the end of the year.

On a state visit to the UAE last week Omar Al Bashir, president of Sudan, was forced to deny accusations that his government is responsible for the unfolding human rights and humanitarian emergency in Darfur. Bashir refutes the death tolls as "a big lie" purported by the Western media, while his government insists that less than 10,000 have died.

He watched as Salah Ameer Al Shamsi, chairman of the UAE Federation of Chambers of Commerce and Industry, and Saud Mamoun Berair, chairman of the Sudanese Business Union, inked a deal that should allow the UAE to tap significant investment opportunities in the North African state.

The new UAE-Sudanese business council is designed to boost bilateral relations between the two countries, and find new ways of enhancing inter-Arab business cooperation.

"As a result of political stability and economic prosperity, we have created the right environment for investment in Sudan," Al Bashir told Arabian Business. "As you know Sudan is one of Africa's most attractive investment sites, and there is the potential for more investment because the country's great natural potential, especially in the field of petroleum."

Without the big US oil companies, Sudan has turned to national oil companies from Asia and China in particular to take up the slack, investing billions in Sudan's oil industry.

"There are a large number of companies that are exploring certain areas in the centre, north and east of Sudan," explains Al Bashir. "Already, some of these companies have reached positive results, which will motivate others and attract more investors, increasing our revenues.

"Even in the south now we have certain areas where work has resumed and companies have started to prepare for further exploration," he continues. "These are promising oilfields and all of them have signs of good production."

Last year, crude production passed the 500,000-barrel per day (bpd) mark and in July the country's oil ministry confirmed that Sudan is currently exporting around 425,000 bpd of crude.

The African country has set a target of doubling its crude oil output to one million bpd before 2010, and so it should not be long before Middle East firms are offering to invest some of the region's unmatched liquidity into Sudan's oilfields.

"The space is still open for more companies, either through partnerships or through certain areas that have not been licensed yet," confirms Al Bashir. "After China, the Arab countries are our strongest investors and in particular we have had a strong relationship with the UAE for a long time."

In Sudan, the UAE has already invested into a variety of sectors including agricultural products and farming, industry, oil exploration, property, tourism and financial concerns. There are already four UAE banks operating in the African state, for example, and this relationship will deepen as the two countries' private sectors enter into more strategic alliances.

"There is a great deal of demand from the UAE, and the US$1.9bn figure should double or treble over the next few years," says Eisa Adam Ibrahim, president of the Sudanese Business Council, an NGO that works to attract UAE investment into Sudan, as well as serve the needs of Sudanese companies operating in the UAE.

"The most important opportunity is that the country needs a lot to be built in terms of infrastructure," he continues. "We need everything, the whole lot: roads and railways across our 1 million sq miles of land, and improvements to the transport links that already exist."

While the infrastructure opportunity is key to Sudan's future, so too are the other sectors in which the UAE has become heavily invested - and in the financial space, moves are already afoot to consolidate the UAE's strong position in Sudan.

In December, it was reported that Dubai Islamic Bank unit Bank of Khartoum planned to buy smaller Sudanese rival Emirates and Sudan Bank. Dubai Islamic, the third-biggest Gulf Islamic lender by market value, would own 28% of the enlarged lender.

The relationship works both ways, too. Just last month, Al Salam Bank Sudan - the largest and most influential bank on Khartoum's stock market - announced that it plans to place shares on the UAE stock market.

Al Salam Bank Sudan was the first bank in Sudan to set up a fund dedicated to real estate investments, and it is anticipated that the UAE placement will allow the bank to strengthen its position in the region, and on the international stage.

In the property and tourism sectors, Qatari Diar has launched the Al-Difaf Khartoum project in the Sudanese capital. The project is intended to be one of Khartoum's most distinguished developments, stretching over 206,500 sq m by the Nile.

UAE real estate developer, RAK Properties, has also announced plans to expand into Sudan and other North African nations during 2008.

"Sudan has a lot of opportunities as it is huge and very attractive when it comes to natural resources," continues Ibrahim. "There are millions of hectares of land suitable for agriculture, and there is also oil, gold, coal, and copper available."

According to Ibrahim, the role of the council is to streamline investment from the UAE into Sudan, and to ensure that potential investors have the right information at their fingertips.

"There are excellent laws for encouraging foreign investment into Sudan, and it is made very easy to transfer money without any restrictions," he explains.

"There are also privileges including exemptions from tax, customs and excise duties for those who come to invest in Sudan, and the ministries are available to help investors once they are in the country," he says.

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