DUBAI: Political uncertainty and fear of conflict will deter several Gulf firms from investing in southern Sudan as it prepares for a referendum next month that will likely lead to the creation of the world’s newest nation.
The semi-autonomous south — due to vote on its future on Jan. 9 — suffers from an almost total lack of infrastructure, but concerns over the region’s stability will overshadow huge investment opportunities there, executives from major Gulf companies said.
"There will need to be a lot of infrastructure development required before the aviation sector can really be developed in southern Sudan," said Adel Ali, chief executive of United Arab Emirates-based Air Arabia.
The low cost carrier, which began services to Khartoum in 2004 and doubled the number of flights to the Sudanese capital in 2008, has no plans yet to begin operating in the south.
"Very little has been done in terms of aviation so one would assume there is a lot of potential," Ali said adding more clarity on a new government’s investment plans would be needed before an aviation hub could be set up in the south.
"I think once these plans are in place, it will be at least two or three years before you could see any real investment there from the aviation industry."
Gulf States have been involved in Sudan, either through investments or political mediation, for years.
Firms such as Saudi-based National Agricultural Development Co (Nadec) have invested in farmland in Sudan — part of a Gulf drive to boost food security — while UAE telecoms firm Etisalat and Kuwait’s Zain also operate there.
A company owned by a Saudi Arabian prince is planning to invest around $5 billion in telecoms, construction and industrial projects in Sudan, Sudanese state media reported earlier in December, as Khartoum’s government tries to diversify its economy and attract fresh investments from the Middle East.
Meanwhile Qatar, the world’s largest exporter of liquefied natural gas, has played the role of diplomatic arbiter and peace broker in Sudan’s Darfur conflict.
But much of the Gulf’s investment is focused in and around Khartoum and the north while the south lacks basic infrastructure such as paved roads linking its states’ capitals. Dirt roads crisscross the country, but these quickly deteriorate in the rainy season.
Security Concern
"I believe it is too early for us," said Philippe Dessoy, Middle East general manager for construction firm Besix’s subsidiary, Six Construction, in Qatar.
"I am sure there will be good opportunities to develop infrastructure there but the security situation is still unclear," he said.
Tom Barry, chief executive of Arabtec Construction, a unit of Dubai’s Arabtec Holding, the UAE’s largest builder, said the firm does not want to extend its expansion plan into countries where there may be political instability.
Relations between north and south Sudan have been tense in the build-up to the referendum and analysts have warned that both armies have been re-arming, stoking a fear that the two sides could return to war.
"We always try to invest in those countries that are stable so from that point of view it’s a challenge," said Sudhaker Tomar, managing director of Dubai-based Hakan Agro DMCC, one of the largest food trading firms in the Gulf region. "We estimate the population (in the south) to be about 13 million. There is big demand for the food sector there."
Hakan Agro is already doing business in southern Sudan where it supplies poultry and meats and buys oilseeds.
"We are already in the south but we are looking for potential partners be they government, semi-government or private investors," he said.
