Sudanese Private Sector Demands Mechanism for Transaction with IDB
Although the Sudan has been one of the 45 members of Islamic Development Bank (IDB) since 1975, that is, two years after its inception, the volume of the projects financed by the Bank was not up to expectations of the Sudanese private sector and therefore this sector demands the establishment of a mechanism to enable it o deal with the IDB institutions.
According to Dr. Yassin Humaidah, Secretary-General of Commercial Chambers Union, most of the IDB financing was directed to the benefit of the public sector and the Bank’s credits during 2005-2010 redoubled from 25.61 to 49.16 million US dollars.
But businesspersons in Sudan have been much interested in ways for obtaining funds from IDB institutions in Jeddah for setting up on individual or partnership basis but could not figure out how to do so due to lack of information as mentioned by participants in the economic Forum of the Sudanese private sector and IDB.
Bekri Yusuf, Secretary-General of The Sudanese Businessmen Union (SBU), told Sudanow that an agreement between the IDB and SBU, supposed to be signed during the forum, to be submitted to IDB meetings after passage by the Bank’s legal department, was postponed. The agreement allows maximum utilization by the private sector from the IDB service after approval by the SBU of the projects.
Engineer Widad Yagoub, Businesswoman and Chairperson of the Board of Directors of the Family Bank, called upon the IDB to open an office within the SBU that allows the Sudanese private sector to get familiar with the financing services and institutions it can deal with.
She indicated that the Family Bank benefitted from the financing services offered by the IDB amounting to a million US dollars appropriated to the human resources development.
Samia Shabu, Chairperson of the Board of Directors of the Sudanese Center for Businesswomen Development, said Sudan did not benefit much from the IDB financing services, particularly the private sector. “We are submitting during the meetings in which we participate a number of projects for financing,” she said.
Mona Nabre, member of the Businessmen Secretariat of the National Congress Party (NCP), made several questions on how to get financing. She said: “Until now we haven’t found any person who could inform us on how to obtain financing from the IDB. We will follow up meetings of the Bank as there is no specific institution we can deal with.”
Many of the participating business men and women have numerous questions that remain unanswered. Ms. Hajjah, who owns schools in Abu Siid, Omdurman, wondered about guarantees that the feasibility studies they send through the SBU or Chamber of Commerce would reach the IDB, suggesting that they deal with the IDB direct, not through any intermediary.
Taking part in the debate of the private sector forum at Rotana Salam Hotel in Khartoum was for presidential candidate Mahmoud Jiha who pointed out that the total funds appropriated by the Bank for financing the member states are too small to suit a huge years’ long Islamic institution, comparing it with the European Union. He called upon the IDB to concentrate on opening borders between the member states, unifying currencies and cancelling the custom barriers.
Ahmed Abdulla Ahmed, private sector, criticized the Bank support to the capitalists and suggested that the finance should be offered to owners of the small projects or be directed to projects that enhance development, alleviate poverty and curb high cost of living.
Parliamentary Agriculture and Animal Resources Committee Hashim Haju suggested formation of an Islamic institution for development of the agriculture to be seated in Sudan which possesses vast cultivable areas with plentiful irrigation water and is capable of meeting the food demand of the Arab and Islamic states.
“Such an institution will offer several solutions to the food security problem, bridge the food gap, lead to affluence and eliminate poverty,” Haju said.
Former Minister Ahmed al-Majzoub, Habib Makhtoum and Osman al-Hadi all commended the Bank’s role and distinguished performance. They called for more support and assistance to the private sector by training and rehabilitation to be aware of what is required of it during coming five years, in addition to assisting the private sector in implementing the five-year strategic plan.
Ever since the market economy policy there has been a tug-of-war between the private sector and the government, with some elements of the private sector accusing the government of monopolizing such economically successful sectors as sugar and communications and also monopolizing some industries through public sector companies and, through those companies, taking hold of most of the external regional and international financing.
The heat of criticism heightened at the opening of the private sector forum which was held simultaneously with the 37th session of the IDB Board of Directors hosted by the SBU at the Rotana Salam Hotel in Khartoum in march 2012.
SBU Deputy Chairman Ali Abersi, speaking at the opening session, wondered about Sudanese companies that benefitted from IDB finances, saying: “there isn’t a single company that was financed by IDB.”
He said all previous efforts they made for obtaining finance by the Islamic Development Bank “have failed due to the bureaucratic procedures of the IDB institutions.”
The SBU criticized engrossing by the government of the funds offered by the IDB, complaining that the Sudanese private sector has not benefitted from IDB funds offered by the Bank to Sudan over the past years.
In response to this criticism, Finance and National Economy Minister Ali Mahmoud said the government is not interested in running the economic activity in the country. He said the government still pursues the policy of privatizing the public sector.
“If the private sector is interested in purchasing any company, we are ready to sell it. If Ali Abersi wants to buy Kenana Sugar Company, we are prepared to sell it to him, although this company is successful by all standards, just to show that we are disinterested in running the economic activity,” said the Finance Minister.
He advised the Sudanese private sector to benefit from all opportunities provided by the regional and international financiers, pledging to offer guarantees and recommend to those financiers the projects of economic viability to the Sudan.
IDB has several branches supporting the economic activities of the member states, which are: the Islamic Institution for Development of the Private Sector, the Islamic Institution for Investment Insurance and the International for Trade Financing.
The Jeddah-based IDB, since inception of its activity and until now, has financed about 68 projects in Sudan, 64 of which have been completed, in addition to 22 other projects presently under implementation. These projects covered all fields and sectors, including agricultural, social, industrial and infrastructural sectors, in addition to human and institutional capacity building, trade, special aid programmes and private sector.
The projects financed by IDB in Sudan since its inception until now which were completed and their accounts closed reached 40 in number with a total cost of 231 million US dollars. The projects which are still being implemented reached 24 in number, costing 826 million US dollars.
The Islamic Institution for Development of the Private Sector has financed several projects in the Sudan in a number of economic spheres, costing 72.85 million US dollars.
The Sudan is leading the member states in benefitting from the services of the Islamic Institution for Investment and Exports Insurance. With regards to the Exports Insurance, this Institution’s contributions were as follows:
It issued 12 insurance policies for the interest of exporters and banks in Sudan and made insurance approvals on Sudanese exports for the interest of exporters and banks for their external clients, totaling 91.7 million US dollars.The Institution also insured imports for Sudanese importers with 701 million US dollars.
As regards insurance of the foreign investment, the Institution received 23 orders totaling 798.6 million US dollars from investors from Iran, Saudi Arabia, Qatar, Yemen, Lebanon, Bahrain, Jordan, Turkey, Malaysia and the United Arab Emirates for insuring their investments.
Three foreign investment insurance policies costing 24.7 million US dollars have been issued.
In support of the Sudanese exports, the Institution signed in July 2009 an agreement with each of Shaikan nsurance and Reinsurance Company and Cattle Exporters hamber under which the Institution would offer reinsurance services on the documents issued by Shaikan Insurance Company for insurance of the proceeds of the livestock exports to Saudi Arabia. Following the signing of that agreement, there was a remarkable increase in Shaikan operation, leading to a considerable increase in livestock exports to Saudi Arabia for the 1430H pilgrimage.
As regards investments of the Sudanese investors abroad, the Institution received an order costing 4.5 million US dollars to cover investment in Saudi Arabia.
Jeddah-based IDB president Dr. Ahmed Mohamed Ali made reassurances to anyone who wishes to make investment through the Bank and its institutions which are: the Islamic Institution for Investment and Exports Insurance, the Islamic Institution for Development of the Private Sector, the Islamic Institution for Trade Financing, the Islamic Institute for Research Training and the Islamic Solidarity Fund.
In a message directed to the private sector, President Ali said: “The private sector in the Sudan and other member states has duties to carry out and I am sure they will do this successfully, supported by the guarantees offered by the Bank for investment and all investors, as the IDB institutions guarantee that the investors will not face any risks while doing any kind of investment in any country and the same guarantee applies to exports to any country.”
As regards financing the projects, IDB chief said: “The Sudan’s fortunes are bountiful and its resources are diverse requiring further exploration through financing selected projects.”
However, President Ali stressed that the Bank sides with the member states in confronting their challenges. “There are economic challenges facing the member states we endeavor to overcome, whether in Sudan or another member state,” Dr. Ali said.
He underlined that he Bank would continue with its role in Darfur region and would contribute to building a number of institutions in the region, following conclusion of the Doha peace agreement by the government of Sudan and other parties.
By KHARTOUM, (SUDANOW), 30/05/2012