The payments provider Visa plans to set up a local presence in Sudan as the country’s transitional government pushes to digitise and reintegrate the economy, after decades of sanctions and isolation under ousted former president Omar al-Bashir.
The San Francisco-based company is working with eight financial institutions in the African country, including United Capital Bank, which issued the first Sudanese Visa card earlier this year. Last December, the US rescinded Sudan’s 27-year listing as a state sponsor of terror, bringing an end to long-running stringent export and investment restrictions.
“Sudan is a fast-growing, emerging economy that is clearly undergoing many positive changes since its reintegration,” Andrew Torre, Visa’s regional president for the Central and Eastern Europe, Middle East and Africa region, tells fDi.
“When we look at these changes and the potential they offer, we are extremely optimistic about Sudan’s transformation and future,” he adds. Visa has also reached an agreement with Zain Sudan, a mobile telecom operator, as it seeks to leverage Sudan’s 76% mobile penetration rate and appetite for digital payments.
After “positive discussions” with government partners and the private sector, Mr Torre says building a local presence “is the natural next step” to advance digital payments in the African country. Visa currently supports 70 million merchants in more than 200 countries worldwide.
Sudan’s transitional government, which was jointly formed by civilian and military leaders after Mr al-Bashir was deposed in 2019, has committed to liberalise the Sudanese economy as part of a $56bn debt relief program agreed with the IMF in June this year.
“There are several positive steps being taken by the government that are helping to set the foundation,” says Mr Torre. He highlights that the recent decision to float the Sudanese pound led to around $500m flowing into the formal financial system in less than four weeks.
Sudanese prime minister Abdalla Hamdok, an economist who was appointed by protest leaders in 2019, has hailed the recent Visa card launch as a symbol of Sudan’s reintegration into the global economy. His transitional military–civilian power-sharing government has been trying to pull Sudan out of a deep economic crisis, which saw the country’s gross domestic product fall from $64.46bn to $32.25bn between 2015 and 2019, according to World Bank data.
“A lot of legislative actions have been made by the transitional government to accommodate the current foreign investment and international business development in Sudan,” explains Yassir Ali, a managing partner at AIH Law Firm, based in the Sudanese capital, Khartoum.
The transitional government enacted a new law in April to develop a dual-banking system, which will permit conventional banking alongside the current Islamic banking system. It has also passed a new investment act and the country’s first public–private partnership law, aimed at creating a business-friendly environment to attract foreign investors.
These reforms were presented at an international conference for Sudan held by France in May, where Sudanese officials showcased projects worth billions of dollars in energy, mining, infrastructure and agriculture.
Mr Ali says that the new investment act, which replaces the old investment act of 2013, introduces new provisions and establishes additional investment authorities. It aims to create a more predictable, transparent and fair system for investors.
Despite these legislative reforms, however, onlookers point out that Sudan has made little progress on economic liberalisation and risks more political instability.
Ed Hobey-Hamsher, a senior Africa analyst at risk intelligence company Verisk Maplecroft, says that civilian and military factions in the transitional government are prioritising retention of political power over short-term economic reforms.
“The ongoing power struggles between the president of Sudan’s Sovereignty Council, general Abdel Fatah al-Burhan and [Mr] Hamdok will further destabilise the transitional government and increase the risk of its total collapse,” he says.
But even with economic reforms “being rolled out at a snail’s pace”, Mr Hobey-Hamsher notes that this hasn’t deterred some Western companies from seeking first-mover advantage in Sudan. Western financial institutions still face significant barriers to enter the Sudanese market, adds Mr Hobey-Hamsher, given that the former 30-year exclusion on conventional banking has allowed Islamic financial institutions to establish a firm grip on the market.
Despite these risks, Mr Torre is confident about the steps Sudan is taking to modernise its economy and points out that more than 60% of Sudan’s population is under the age of 24.
“Considering Sudan has the fourth-largest population in the Middle East and North Africa ... the appetite to be part of global commercial systems is only set to grow,” he says.