Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
Distribution and Sales Channels
Sudan’s distribution system is heavily reliant on overland truck transportation which relies on a national road network. This road network’s total length is approximately 30,000 kilometers, of which only 20 percent is paved.
Sudan has 4,725 kilometers of narrow gauge, single-track railways that serve the northern and central portions of the country. The main line runs from Wadi Halfa on the Egyptian border to Khartoum and southwest to El-Obeid via Sennar and Kosti, with extensions to Nyala in southern Darfur and Waw in South Sudan. Other lines connect Atbara and Sennar with Port Sudan, and Sennar with Ad Damazin. A 1,400-kilometer line serves the al Gezira cotton-growing region. Service on some lines may be interrupted during the rainy season.
Port Sudan is the primary entry and exit point for foreign trade. The port handles all types of cargo, including break bulk, dry bulk, liquid bulk, and containers. Port Sudan contains an international airport and is connected to Khartoum by a paved roadway. The 1,600-kilometer Greater Nile Oil Pipeline connects Port Sudan with the oil fields of South Sudan.
Sudan has two international airports in Khartoum and Port Sudan.
Using an Agent or Distributor
It is advisable to obtain a local partner to advise on local market conditions and to assist in navigating Sudanese governmental bureaucracy. The World Bank published in 2020 a useful guide outlining the steps needed to open a business in Sudan:
Establishing an Office
According to the United Nations Conference on Trade and Development (UNCTAD), Sudan has put in place a relatively open investment legislative framework and many laws are in line with international good practices. However, their implementation is often impeded by the absence of secondary legislation, insufficient institutional capacity, and lack of coordination between different levels of government. Sudan’s investment authority lists the process by which businesses must register to operate in Sudan at: http://www.sudaninvest.org/English/Default.htm.
The website outlines procedures for companies that seek to invest, including forming and ending business relationships and license applications. There is no online business registration process. According to the World Bank’s Ease of Doing Business 2021 Report, starting a new business in Sudan takes 34 days. A foreign company seeking to start a business must:
- Apply for registration with the Commercial Registrar and reserve a company name
- Notarize the memorandum and articles of association
- Notify the taxation chambers
- Register with the Commercial Registrar
- Apply for a tax identification number with the taxation chambers
- Register for VAT with the taxation chambers
- Register with the labor authorities
- Enroll employees in social security with the Social Insurance Fund
- Obtain a company seal from the Sudan Currency Printing Press Company.
Sudan’s Investment Law (National Investment Encouragement Act, 1999, Amended (2013)) establishes standards for business conduct and obligations. The law and its executive rules are applied to both Sudanese and foreign investors. The investment authority maintains oversight for “responsible business conduct” and provides information on regulations, services, and the various departments to which the investor could contact on its website: http://www.sudaninvest.org/English/About-Ministry.htm.
Franchising opportunities are available in Sudan. In 2017, Wayback Burgers opened its first restaurant in Sudan, followed by KFC and Pizza Hut in 2018. Other U.S. branded companies have started exploring franchise opportunities in Sudan. Competition was fierce for the Pizza Hut/KFC franchise rights, with five large Sudanese companies involved in the bidding. Participants in the bidding acknowledged that a successful bidder required significant resources in order to maintain an efficient supply chain capable of importing quality, refrigerated, and fresh food products.
Sudan’s communication system is aging, with limited internet, telecommunications, and mail service throughout the country. Telecommunications penetration is expanding. Road networks in most of rural Sudan are primitive. Direct marketing would be challenging in Sudan.
U.S. Legal Requirements
Pursuant to Executive Order 13761, section 908(a)(1) of the Trade Sanctions Reform Act (TSRA) (22 U.S.C. 7297(a)(1)) has been waived with respect to Sudan. That waiver removed restrictions on export assistance that limited U.S. Embassy Khartoum’s ability to provide the kind of support that the Embassy and the Foreign Commercial Service typically provided, including: business matchmaking services, market research on specific products or services, export advocacy, and provision of information concerning business opportunities. See 15 U.S.C. 4721. American investors interested in understanding more about the 2017 lifting of U.S. economic sanctions on Sudan are encouraged to visit the U.S. Department of the Treasury’s website: https://www.treasury.gov/resource-center/sanctions/Programs/pages/sudan.aspx.
Express delivery companies provide service to Sudan. DHL, TG Express, and Parcel Force are among the companies that ship to Sudan. DHL standard delivery from the United States to Khartoum takes three to four days, with longer times for more remote regions of the country. Persons seeking to ship to Sudan should visit the selected courier’s website for information on relevant customs procedures.
Companies should perform appropriate due diligence on their business partners and agents. The Department of Commerce’s International Company Profile (ICP) service is a background check on the reliability of potential trading partners. Along with a recommendation from on-site Commerce personnel, an ICP report includes the following information on a prospective client: principal owners, year established, size, sales, financial information, trade references, general reputation, type of organization and territory covered and a personal visit by an officer in order to give a professional opinion on the company. On May 23, 2022, the U.S. government issued a business advisory highlighting the growing reputational risks to U.S. businesses and individuals associated with conducting business with Sudanese SOEs, including military-controlled companies. Investors should perform a due diligence review of any potential commercial partner to confirm their ownership.
A U.S. exporter can obtain this information, as well as detailed answers to specific questions about the prospective partner, in a confidential report. In addition, the commercial officer at the U.S. Embassy may be able to provide a recommendation on the suitability of the profiled company as a business partner.
For more information on the ICP, please visit: https://www.trade.gov/.