Kenya to tap Sudan market after sanctions fall

Farmers pick tea at Gichiche village in Nyeri County on November 11, 2019. 

Photo credit: File | Nation Media Group

What you need to know:

  • While Sudan has been a major buyer of Kenya’s tea, buying about 12 million kilograms a year, the scarcity of dollars often restricted smooth transactions.
  • For Sudan, the expected influx of American investment and aid, as well as loans by international financial institutions, could revive its ailing agriculture, industries, mining and trade, as well as the national Sudan Airways.

Kenya is hoping the end of sanctions the US had imposed on Sudan could stabilise its tea market and open up investment opportunities for Nairobi’s firms.

The US announced this week that it was dropping sanctions imposed on Khartoum 23 years ago after it designated Sudan as a State sponsor of international terrorism.

The decision came after Sudan agreed to pay victims of Al-Qaeda terrorist attacks in Nairobi and Dar es Salaam, Tanzania, some $335 million in compensation.

Nairobi says the lifting of sanctions will enable free business interactions in the region.

“We have been trading with Sudan under many formations including Comesa,” Johnson Weru, the Trade Principal Secretary, told the Nation, referring to the Common Market for East and Southern Africa, a trading bloc of 14 countries in the region.

“We shall definitely improve our trade especially on products that we mutually cumulate.”

Sudan and Kenya belong to Comesa. But while Sudan has been a major buyer of Kenya’s tea, buying about 12 million kilograms a year, the scarcity of dollars often restricted smooth transactions.

When long serving Sudanese President Omar al-Bashir was toppled last April, Kenya’s tea sellers complained of sluggish sales, owing to a shortage of dollars.

Payment restrictions

Under the sanctions regime, Sudan was allowed to buy food, medical products and other essential goods but barred from accessing the global payment systems, slowing down transactions.

Sudan was also barred from accessing credit, investment and business dealings with Western companies.

The removal of sanctions could return Sudan to those payment systems, allowing banks, for instance, to directly settle payments for their clients for goods purchased in Kenya.

For Sudan, the expected influx of American investment and aid, as well as loans by international financial institutions, could revive its ailing agriculture, industries, mining and trade, as well as the national Sudan Airways which could not buy spare parts under the sanctions regime.

Abdul Wahab Gumaa, an economic analyst in Khartoum told the Nation that Sudan could now tap into new technology and investments from abroad to rescue its ailing economy.

“After the lifting of US sanctions and removal of Sudan from the [list of State sponsors of terroris,], chances of recovery and growth of the Sudanese economy are realistic [and could come soon],” he said.

“American companies have the necessary technologies to mobilise Sudan’s resources. We can enumerate the expected role of US companies to push growth from negative to positive.”

Global trade

Former US President Bill Clinton fingered Sudan in 1993 for hosting al-Qaeda leader Osama bin Laden, and Washington imposed a set of economic sanctions on Sudan from 1997.

Accordingly, Sudanese financial assets were frozen, the export of American technology to Sudan prohibited and American investors, companies and individuals barred from dealing with Khartoum. 

The sanctions also meant that Sudan’s rail service became derelict with old wagons. General Electric used to service them but it was barred from doing business with Sudan once sanctions checked in.

With the delisting, Gamaa argued, American firms could also help service the archaic oil wells and plants.

“The integration of the Sudanese economy with Africa has become possible especially as the continent implements the African Continental Free Trade Agreement.

Abu Al-Gasim Ibrahim, a Sudanese economist, says removing Sudan from the list of countries sponsoring terrorism will open up areas of economic cooperation with the outside world.

“It is known that the United States of America has been inhibiting many European, American or Asian investors, and even the Gulf, from coming in.

“Now, many Arab and non-Arab investors are assured that no sanctions will be imposed on their funds.”

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