Sudan has returned to the African startup funding table after 27 years of international economic isolation, mostly sponsored by the US. Fawry, Egypt’s top financial services company, became the first venture investment company to set up shop in the Northeast African country a week ago, leading a $5 million investment round in Asloug.com, a classifieds and marketplace startup.
Fawry’s investment followed a major agreement, last year, by the country to pay $335m to the victims of the 1998 bombings of the US embassies in Kenya and Tanzania, which were carried out by al-Qaeda. The agreement had as one of its objectives, to remove Sudan from the list of state sponsors of terrorism. This invariably allowed the country to rejoin the global financial system after nearly three decades as a pariah.
But the first sign that Sudan has truly been reintegrated into the global financial system is the issuance, in April this year, of the country’s first local Visa card by the United Capital Bank (UCB).
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Visa, which has its headquarters in San Francisco, is going even further, with plans to open a local presence in Sudan as the country’s transitional government works to digitize and reintegrate the economy.
“We are pleased to be part of Sudan’s growth journey in the global economy, and we have been working closely with our partner, UCB, to provide their Visa cardholders with a reliable, convenient, and secure payment option that is accepted globally,” Ahmed Gaber, Visa’s General Manager for North Africa, said, at the issuance of the first visa card. “Sudan is a promising market that is witnessing many positive economic developments, and we look forward to continue bringing Visa’s world class payment technology to support our partners and the Sudanese government in their drive towards achieving financial inclusion and economic growth for Sudan,”
Investment In asloug.com Is The First Telltale Of Sudan’s Gradual Economic Comeback; And Represents An Early Mover Advantage For Investors
For a country with the cheapest internet data rate in Africa — about ₦27 ($0.068) to access 1GB of data for 30 days, if you are in Nigeria —investment in asloug.com by Fawry and a host of other investors was relatively a less difficult one, for obvious reasons.
Sudan has over 30% of its 44 million population (representing about 13.70 million people) using the internet. Although with a meagre GDP per capita of $595, the country’s economic growth is largely predicated on its booming youth population. The average age in Sudan is 20, with 63% of the population being just under 24 years of age.
These indices help to explain why alsoug, a platform where sellers can list everything from real estate and autos to services and commodities, has already garnered over two million downloads since its launch in 2016.
Therefore, the fact that Fawry, which had previously focused on Egyptian startups such as delivery platform Bosta, fast-growing F&B platform Elmenus, and social commerce marketplace Brimore, has chosen Sudan as its first international investment destination speaks to the post-Pariah hope for economic certainty.
“I hope this investment is the first of many and that the huge potential of the tech sector in Sudan is fully realized in the coming years,” Alsoug co-founder and CEO Tarneem (Nina) Saeed said, about the investment.
However, it must be noted that the investment by Fawry and other investors is all shades of economic and political strategies and calculations. The company which is one of the pioneers in digital payments in Egypt is looking to replicate its Egyptian success in Sudan. Although it presently runs a payments app through Sudan’s Faisal Islamic Bank, Fawry plans to engineer the expansion of asloug.com’s products beyond its current constitution — classifieds and marketplace — to payments via the Cashi payments infrastructure.
“Fawry’s strategic partnership with alsoug leaves it ideally placed to help guide the platform’s rollout of a countrywide payments system, a feat which Fawry has already managed through a scalable, robust, and best-in-class technology platform,” Fawry’s CEO Ashraf Sabry was quoted as saying.
Another interesting insight into Fawry’s strategic entry into Sudan could be gleaned from its choice of team to invest in. Asloug is led by a well-connected female founder, Nina Saeed. Saeed is the CEO of the Saeed Industrial & Commercial Group, one of Sudan’s oldest and most reputable industrial conglomerates. She was previously a lawyer with Allen & Overy LLP’s Projects, Energy and Infrastructure Group and a graduate of the London School of Economics and Political Science. Saeed has also provided advice to a number of international institutions, including the World Bank. She is also the executive director of the US-Sudan Business Council, a non-profit private sector organization dedicated to enhancing and encouraging meaningful engagement and exchange between business and civil society in Sudan and the United States.
A New Investment Law May Make The Ultimate Difference
Although the gradual rebirth and liberalization of the Sudanese economy is essentially premised on its commitment to a $56bn debt relief program agreed with the IMF in June this year, Sudan’s latest investment law enacted this year and which replaced the old investment act of 2013, may make the ultimate difference.
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What Does The New Investment Law Provide?
The new investment law, among other things, provides that:
- All the investments established in the Sudan, shall enjoy just and fair treatment.
- Sudan shall ensure to the foreign investors a treatment similar to that of the national investors.
- Invested funds shall not be subject to any arbitrary measures, or any discriminatory decisions.
- In collaboration with the competent agencies, investment projects will be exempted from customs tariffs on capital equipment imports.
- The investment project will be excluded from business profits tax for a period of not more than five years from the start of commercial production, unless the regulations stipulate otherwise.
- The value added tax exemption for investment project capital equipment will be based on a list approved by the Ministry.
- Non-Sudanese investors will be granted residency for the length of the project, subject to the terms of the laws governing it and any rules that may be enacted.
- Administrative fees or returns on investment projects will not be imposed unless the country’s Ministry of Investment and International Cooperation approves them.
The investment law has the potential to significantly improve the economic climate in the Northeast African country. Sudan was ranked 171st out of 190 economies in the World Bank’s Doing Business 2020 report, which rates countries based on their ability to provide a business-friendly environment. Rwanda is placed 38th, with Ethiopia coming in at 159th.
Where Does The Future Go From Here?
Whether or not the future remains bright for other startups founded by less-connected Sudanese locals would be left for time to test. Nazar Arabi, a co-founder of GO Digital Services and a former MTN Sudan employee, feels that this future is possible.
“Sudan has the potential to become the start-up hub of Africa,” Arabi was quoted as saying. “Today, 35 million Sudanese (77%) use mobile phones, including 8.5 million smartphones, and 34% of the country has 4G coverage. South African telecoms giant MTN, which is present in the country, had nearly 9.8 million subscribers at the end of March 2021. However, Kuwait’s Zain is in first place with 16.6 million subscribers in 2021, ahead of Sudatel (also present in Senegal), which is majority state-owned.”
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Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer