US easing of sanctions welcomed by businesses
Increase in smartphone users
Sudan is opening up to the internet economy, thanks to the easing of US sanctions.
The country has experienced a growth in e-commerce businesses, such as online shopping platforms and an Uber-style taxi app Mishwar.
According to the most recent data from Internet World Stats, internet users made up 29% of the population in 2016 – a notable rise from the 9.3% in 2009.
This number is expected to boom even further as Sudan’s young e-commerce entrepreneurs drive customers out of the shops and into the online marketplace.
“The reason why e-trade at large is a new phenomenon is that we’ve been allowed to get in touch with the world once again,” said Yousif Ahmed El Tinay, CEO of Sudan’s United Capital Bank.
The country, which sits on the crossroads between Sub-Saharan Africa and the Middle East, has gone through decades of isolation.
In 1997, the US imposed economic, trade and financial sanctions on Sudan. This made Sudan increasingly reliant on its oil revenue – which accounted for over half of Sudan’s government revenue and 95% of its exports.
But when the south seceded in 2011, Sudan lost three-quarters of its oil reserves, according to an IMF report, which – combined with the sanctions – sent the economy into dire straits and record low GDP Annual Growth Rate of 1.4% in 2012.
“Sanctions have kept us cut (off), not in touch with the world, (which) has meant we have not been able to have access or direct access to the advanced technologies offered,” said El Tinay.
But the US government’s decision to lift the trade embargo in October 2017 – giving the country access to previously frozen assets and allowing US goods to be purchased – has brought hope to the nation, despite some restrictive measures remaining. Sudan is still listed on the US state sponsors of terrorism, alongside Iran and Syria.
Open for business
“We have welcomed very positively the lifting of US sanctions and we think this is a great opportunity for such businesses to grow,” said Mazen Magzoub, who co-founded the Sudanese shopping platform, Dukkan, along with Ubabadah Atta in 2016.
It had dawned on Atta that he couldn’t purchase anything from international brands and websites because they don’t deliver to Sudan.
“That’s when the lightbulb moment happened,” he said.
He and Magzoub made it their mission to provide items – such as clothes, books and electronics – using online payment and delivery services.
“We knew there’s a market for this,” Atta added.
However, the country’s e-commerce entrepreneurs still face some major hurdles – for instance, how to steer Sudanese people from using cash to paying online?
“Consumers are not really used to purchasing online,” says Magzoub. The Sudanese are used to the conventional over-the-counter purchases, and to sway them, e-commerce businesses must earn their trust.
Take Mishwar, Sudan’s equivalent to Uber, which launched in 2015.
Founder Tarig Seifeldin Hamad described the struggle in making it catch on.
“At this time, people barely had smartphones,” he said, “so when you want to explain to someone you need a smartphone and you need an app and the app can do this, it’s difficult.”
It was only when people saw it in action that the taxi app took off. “We had five trips one month,” said Hamad, “the next we had 100, and then 1,000.”
The use of smartphones in Sudan is on the rise, reflecting the wider use across the continent.
According to a 2016 report by GSMA, the number of smartphone connections in Africa almost doubled since 2014 to reach 226 million. It predicts a further half a billion smartphone connections by 2020.
These connection rates will no doubt boost e-commerce. McKinsey predicts that online shopping could account for up to 10% of retails sales (with a value of around US $75 billion) by 2025, as more Africans gain access to the internet.