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Arab investments boost Sudan’s banking sector

Article - June 1, 2015

Thanks to growing Arab investments in the Sudanese financial sector – which now comprises of 15 Arab owned banks – the industry is fast expanding, facilitating greater trade and investment in the country as well as providing greater financial access to the Sudanese public

The role of Arab banks, represented by investors from Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Jordan, Lebanon and Egypt, is not only in the banking sector, also helps to facilitate Arab investment across the whole of Sudanese industry, from agriculture to infrastructure, services and energy.

While Sudan’s banking sector remains relatively small by international and regional standards, with the help of Arab banks, it is growing rapidly.  The government’s recent series of reforms to strengthen the financial system has also helped to improve the performance of the banking sector. New financial policies have helped to create a better business environment, and in turn helped build a more efficient financial market to promote economic growth.

Like many of the Arab banks that have set up in Sudan, one which has helped to secure Arab investment in Sudan is the Saudi-Sudanese Bank, based in Khartoum.  The bank, which is 22% Saudi owned (with shareholders that include Saudi Airlines), provides correspondence, foreign trade and investment services, as well as other commercial banking services.

“This bank opened here in 1983,” says General Manager, Abdel Alim Elamin Mohammed. “Since then, I think Saudi investors have been seeing Sudan as one of the focal points of their investment. I think this idea is still there now. Whenever we find foreign customers from the Arab world, we do as much as we can to help them with investment and financing. It is about providing guidance and supporting their investment.”

Byblos Bank Africa – which started operations in Sudan in 2003 with its Lebanese shareholders – is another example of one of the many successful Arab banks in Sudan which have specialized in facilitating foreign investment and trade.  Byblos’s main lines of business are in commercial banking (mainly short-term trade finance operations for selected large local and multinational companies) and correspondent banking.

“Our major business target in Sudan is international trade and trade financing,” explains General Manager of Byblos Bank Africa, Fouad Negga Takhlo. “We have worked throughout these years with the major key players in industry. We have helped with importing raw materials, financing, and we have done good business throughout the years here in Sudan.”

He continues: “We can service the foreign companies operating in or with Sudan, and any foreign investor can benefit from the bank's services which are equivalent in terms of quality to those provided by international banks.”

Aside from facilitating foreign investment, one of the main priorities for Arab banks has been to help increase access to finance in Sudan. To help fulfill this goal, the Central Bank of Sudan established a microfinance unit in 2007, which since then has required all commercial banks operating in the country to have established microfinance offices and allocate 12 percent of total loans to microfinance lending operations.

The Bank of Khartoum – Sudan’s biggest and oldest bank with over 70 branches and 150 ATMs around the country – has become one of leaders of microfinance in Sudan.

“We are the leader of the biggest portfolio in microfinance, so we have a lot of successful stories about alleviating the poverty within Sudan,” says Deputy General Manager of the Bank of Khartoum, Faisal Abbas Fadl. “That success in microfinance let us establish a specialized company called Irada.  Irada is specialized in the microfinance project, and we have experienced great progress with it over the last three or four years.”

Aside from its leading role in microfinance, the Bank of Khartoum has this year done even more to bring greater access to finance. In a national initiative between the banking and telecommunications sectors, Zain Group, a pioneer of mobile telecommunications across the Aran world and Africa, announced in 2014 that its mobile operation in Sudan had launched the country’s first ever mobile financial service called ‘Hassa.’

The Sudanese banking industry hopes that the long overdue provision of the service will see Sudan join the rest of sub-Saharan Africa – where a mobile banking revolution has taken place over the last few years – and contribute to an increasing number of around 2.5billion “unbanked” people who are turning to their mobile phones to pay bills, transfer money and receive salaries.