Sudan’s oil wealth making life harder

By Tahani Karrar

October 31, 2007 (KHARTOUM, Sudan) — Middle-class Sudanese are learning the downside of an oil boom as an influx of foreign workers leaves many of them struggling to pay soaring rents.

“International companies and aid workers are now competing for property, each trying to outbid the other, and they pay in dollars,” says Yassir Kordofani, head of Yassir M. Kordofani Real Estate Agents in Khartoum.

Energy-producing countries in the Middle East and Africa are enjoying surging economic growth, thanks to record prices for crude oil. But that economic boom has been accompanied by higher inflation and property prices. Khartoum, Sudan’s capital city, is an especially striking example.

Most Sudanese are relatively poor and live in one-story mud-brick houses along dusty, unpaved streets that date from the middle of the 19th century, when British explorers founded Khartoum. But the central part of the city is modern and affluent, and houses the offices of many international companies and aid agencies.

Rents are skyrocketing in the central and most desirable parts of the city, which is home to 4.5 million people. An airy and spacious two-bedroom apartment in central Khartoum that rented for about $250 a month in 1999 before big oil companies arrived now goes for about $1,750 per month, Mr. Kordofani says.

Fatima Mohamed, a mother of two who works a 54-hour week at a local health clinic earning $400 a month, is one of many Sudanese who have been forced to live in poor housing in Khartoum’s suburbs because of the foreign influx.

Growing up in a mud-brick flat in an outer district of Khartoum, she dreamed that she would live in a modern apartment in the center after she graduated from university and got married. Her dreams are fading.

“Good places are only in Khartoum, and it is now very expensive because foreign workers want the same things,” Ms. Fatima, 48 years old, told Zawya Dow Jones. She pays $333 a month to rent her small two-bedroom apartment in a half-built development on the outskirts of the city.

Her situation is common among Sudan’s middle-class residents, who grew up believing a university degree would ensure a job, a house and a car. With no mortgage system in Sudan, Ms. Fatima has little chance of ever being able to buy a house.

University lecturer Hosam Hussein, 30, teaches civil engineering and wants to get married.

“I have some land outside Khartoum, but it will cost me at least $25,000 to build a simple house. I cannot afford this, so my new wife and I will have to live in my family home with my mother and seven brothers,” he says.

Thanks to record oil earnings, Sudan’s economy is growing at a steady clip, with gross domestic product expected to rise 11.2% this year, according to the International Monetary Fund. The fund expects inflation will average 8% this year.

Well-paid Sudanese professionals can expect to earn a maximum wage of $1,000 a month, while new apartments in downtown Khartoum can rent for $2,500 a month.

City Estates property agent Ibrahim Elsheikh, who has been selling property in Khartoum for 15 years, says many Sudanese are angry that the nation’s oil wealth is making life harder.

“There is a growing resentment against the international community,” Mr. Elsheikh says. “The Sudanese feel they are being driven out of their own land.”

China National Petroleum Corp. is the biggest foreign investor in Sudan, pouring $5 billion into the country’s oil industry, which supplies 7% of China’s demand. It helps run the Heglig and Unity oil fields, among Sudan’s largest. Since they arrived in 1996, Chinese oil workers have landed in growing numbers, with about 10,000 currently living in the country.

Malaysia’s Petroliam Nasional Bhd., or Petronas, and India’s Oil & Natural Gas Corp. also operate large oil fields in Sudan. But few Western oil companies operate in Sudan because strained political ties between the U.S. and Sudan led the Clinton administration to impose embargoes and bar American companies from trading with Sudan in 1997.

Sudanese women like Ms. Fatima are resentful that the oil these foreign companies produce will be shipped out of the country and only make her life worse. She notes that she won’t share in any of the profits that those exports will generate, but will have to deal with a higher cost of living they produce.

“When I was young I used to eat meat and fish every day of the week, but now we cannot even afford fresh milk,” she says.

(Wall Street Journal)