Sudan looks to attract Middle Eastern investment in farmland

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Bloomberg | 17 December 2009

By Maram Mazen

Dec. 17 (Bloomberg) -- Sudan wants to attract foreign investors to cultivate vast tracks of land that are currently unused in Africa’s largest country, State Minister for Finance Tarek Shalabi said.

“We have millions of acres of land, very flat and unspoiled and it hasn’t really been even explored yet,” said Shalabi, 41, in an interview on Dec. 15 in the capital, Khartoum. “Sudan is a very good place for agricultural investment.”

Arab countries such as Egypt, Kuwait and Saudi Arabia have started to invest in Sudanese farmland as their own agricultural industries fail to keep pace with their rising populations. Elsewhere in Africa, Indian and other foreign companies are buying up land in a process critics have described as a “land- grab,” exporting food from countries that are not self sufficient.

Foreign investment may help push Sudan’s economic growth to 6 percent in 2010, from about 5 percent this year, Shalabi said. The government expects its budget deficit to be 4 percent of gross domestic product in 2010 “which is a very safe range,” he added.

Citadel Capital, an Egyptian private equity firm, secured 250,000 acres of land on the Nile in Sudan in February on a 99- year lease basis at 50 cents per acre a year. The company plans to grow crops such as maize, sorghum and sugar, Managing Director and co-founder Hisham El-Khazindar said in May.

Serious Look

“We are now looking very seriously into Sudan,” said Zouhair Eloudghiri, chief executive officer of Savola Foods Co., a unit of Saudi Arabia’s second-largest publicly traded food producer, Savola Al-Azizia United Co. “Sudan has a huge agricultural potential,” he said in an interview on Dec. 15.

Saudi Arabia has decided to end all wheat production by 2016 in order to save water, the U.S. Department of Agriculture said last year.

A 2005 peace agreement between the north and south of Sudan ended a two-decade civil war and helped bring billions of dollars in foreign investment from China, India and the Gulf region.

Sudan’s government depends on revenue from oil coming mostly from the semi-autonomous region of South Sudan. Under the 2005 accord, the south will vote in 2011 in a referendum on whether to secede and form an independent state.

The government sees more room for oil investments and welcomes U.S. companies should the administration of President Barack Obama lift economic sanctions banning investors from dealing with Sudan, Shalabi said.

“It’s up to the U.S. government to allow them or not,” he said. “But as for ourselves, we are very open for business.”

The government plans to finance most of its fiscal deficit by issuing Islamic bonds, known as sukuk, Shalabi said without giving details. Inflation may average 9 percent in 2010 compared with about 11 percent this year, he said.

The government may also sell several state-owned companies either through auctions or through “direct negotiations with strategic partners,” Shalabi said. He didn’t say which companies.
Original source: Bloomberg
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