Kenya, Uganda look to exploit business potential in Sudan after peace

NAIROBI, Jan 20, 2005 (LiquidAfrica) — A Week after the historic signing of the Sudan Peace accord in Nairobi, manufacturers in Kenya have started making concrete plans to exploit the vast Sudan market, while their Ugandan counterparts are also positioning themselves to exploit the business potential in the country.

The Kenya Association of Manufacturers (KAM) says a technical working group has already been set up and the Kenya Bureau of Standards will soon sign a memorandum of understanding with the Sudan Revenue Authority (SRA) and the Southern Sudan Manufacturers Organisation (SSMO) on mutual standards.

KAM plans to invite officials of SRA and SSMO to visit Kenya to see the country’s manufacturing standards.

However, constraints such as poor infrastructure in southern Sudan, legalisation of commercial documents, compliance to the rules of origin and standards specifications, availability of market information including potential buyers and distribution outlets, language, conformity to packaging requirements and the acquisition of entry visas by both Kenyan exporters and Sudan importers could limit the immediate realisation of Kenya’s full export potential to Sudan.

Kenya, Uganda and Sudan are both members of the Comesa trading bloc and a peaceful Sudan will see more Kenyan and Ugandan manufacturers seeking market opportunities in their northern neighbour.

Similarly, improved infrastructure will also see Sudanese entrepreneurs exploring trading opportunities with both countries.

Currently, Kenya exports a limited number and volume of goods to Khartoum, which include car batteries, tyres and cement, and with the new-found peace, it is expected that the volume and variety of exports, mainly to Southern Sudan will increase gradually.

Sudan, the largest country in Africa, has registered a sluggish economic performance over the past decade despite her being richly endowed with natural resources, which include oil, small reserves of iron ore, copper, zinc, tungsten, mica, silver and gold.

Despite years of war, the country has developed an impressive oil and sugar export business that have made the country a force to reckon with in the region.

Analysts say that interest in Sudan’s oil is one reason behind the proposal to build a 1,182 km railway line between Juba in Southern Sudan and the port of Mombasa.

The construction work is projected to start in July this year at an initial cost of Euros 3.2 billion ($4.16 billion).

Once constructed, the railway line will be the main import-export route for Southern Sudan and can be used by the Sudan government to ship up to 70,000 barrels of oil a day and other goods to Kenya.

Without a railway line and an oil pipeline link to Kenya, it would be uneconomical for Kenya to import oil from Sudan.

An export manager of a Kenya based multinational said: “For an area like Southern Sudan that has been ravaged by war for more than two decades, I am confident that with the newly signed peace pact, there is bound to be a great demand for industrial goods and building materials once people start resettling.

I can tell you most manufacturers in the region have eyes set on the Sudanese market.”

He said Kenyan manufacturers of steel, cement, household and industrial goods will be the immediate beneficiaries of the new market as Southern Sudan begins its reconstruction.

The south lacks basic infrastructure like roads, manufacturing plants, schools and health services as the region was discriminated against by the Islamic government in Khartoum.

Soon after returning to Sudan from Nairobi last week, President Hassan Omar el Bashir, speaking at Juba, the main city in Southern Sudan, pledged to develop the infrastructure in the region, which his government had neglected during the 21 years of war.

President Bashir said, “The war budget will now be directed towards improving education, health and water services in the region.

” He said the new coalition government would focus on building roads linking southern towns with each other as well as with neighbouring Kenya and Uganda.

A road link between Kenya and Sudan will greatly boost the volume of bilateral trade between the two countries.

However, despite the interest and investment enthusiasm that the peace pact has elicited in the manufacturing circles, a market analyst with Old Mutual Asset Managers (EA), Abdi Hassan, says the real challenge lies in its sustainability.

“With donors coming in to fund the reconstruction process in Sudan, Kenyan investors have shown a lot of interest in Southern Sudan. However, they don’t know if it will be sustainable,” Mr Hassan said.

He said Kenya, which has been the centre of relief operations to Southern Sudan, was likely to witness a shift from relief-oriented to actual growth-oriented business.

But apart from opening up investment opportunities, peace in Sudan will also boost security in the region.

While Ugandan manufacturers also seek to exploit the new markets, it is the prospect of an end to the 18-year old rebel war in the north of the country that has captured the imagination of the people.

Speaking at the signing ceremony, President Yoweri Museveni said peace in Sudan would go a long way in ending the Kony rebellion.