PEST Analysis: Sudan

C ountry Report | 12 Jul 2021

Sanctions and social unrest have characterised Sudan, which has experienced political
instability. The economy is expected to recover relatively strongly, but will be blighted by
high inflation and unemployment. Rapid population expansion is expected to raise consumer
market appeal. However, health indicators are worsening, whilst poverty could curtail
consumption. Internet use is on the rise, as are mobile subscriptions, but the state’s
autocratic tendencies are a barrier to access.
PEST ANALYSIS
PEST analysis (political, economic, social and technological) describes a framework of macro-
environmental factors assessed as a strategic tool for environment scanning, understanding
risks and opportunities, market growth or decline, business position, and potential and
direction for operations, helping companies to become more competitive.

Chart 1 Main PEST Points in Sudan

Source: Eurom onitor International

POLITICAL ENVIRONMENT
Sum m ary 1 Political Env ironm ent Analy sis in Sudan
Opportunities Challenges
Low tax burden: With a ‘Repressed’ for Economic Freedom: Sudan is one of the worst-
top individual income tax performing countries in the Index of Economic Freedom 2021,
rate of 15.0%, Sudan has placing it amongst the ‘repressed’ group of countries. Judicial
a relatively low tax effectiveness and government integrity are two of the most
burden. Indeed, the tax problematic pillars for Sudan. The judiciary is subject to political
burden equates to only influence from the executive branch of government.
8.0% of total domestic
income, resulting in this
pillar being one of the
best performing in the
Index of Economic
Freedom in 2021. A
relatively low tax burden
is a boon for
consumption, which can
help to support economic
development.

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 Opportunities Challenges
Political instability impacting peace: Political instability is a
regular feature in Sudan, with the latest uprising by the
populace leading to a military coup that removed the long-
standing Islamist leader Omar Hassan al-Bashir in 2019. Given
that Islamist governments have been in power since
independence in 1956, the electorate is increasingly demanding
a more secular style of governance, particularly in light of a
mishandled economy that has led to soaring inflation and food
shortages. Consequently, the country’s Global Peace ranking is
negatively affected by political volatility and mass protests that
have resulted in fatalities at the hands of the security forces,
translating into an economic cost of violence that is the 10th
highest globally. The substantial economic impact of terrorism
also weighs heavily on Sudan’s ranking in the Global Terrorism
Index, which achieved a very poor ranking in 2020.
Corruption is rife: With a ranking of 174th globally in the
Corruption Perceptions Index 2020, Sudan demonstrates that it
has a major issue with graft and that it is one of the world’s
most corrupt nations. Endemic corruption is an impediment to
the smooth running of business operations and raises their
costs.
Extremely high public debt: Years of sanctions and economic
mismanagement, along with heavily subsidised fuel, have
resulted in extremely high public debt that rose to over 300% of
GDP in 2020. Such a high debt burden is causing further
instability for Sudan that has been at risk of defaulting on its
debt obligations. However, an agreement to clear some of
Sudan’s debt under the World Bank and International Monetary
Fund’s (IMF) Heavily Indebted Poor Countries (HIPC) plan, which
could see around USD5.0 billion of Sudan’s debts written off,
could open the way for the country to be able to tap
international debt markets at cheaper rates. Bridging loans
granted by the IMF and developed countries are facilitating debt
relief.
Source: Euromonitor International

Chart 2 Political Environment Dynamics in Sudan

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Source: Eurom onitor International from the Heritage Foundation/International Monetary Fund
(IMF)/Governm ent Finance Statistics (GFS)/Institute for Econom ics and Peace/Transparency International/W orld
Bank /Eurostat/national statistics
ECONOMIC ENVIRONMENT
Sum m ary 2 Econom ic Env ironm ent Analy sis in Sudan
Opportunities
Strong forecast economic rebound: As a result of
the negative impact of the Coronavirus (COVID-
19) pandemic, coupled with a destabilising
political environment, Sudan’s economy
experienced a deep recession in 2020, as
commodity prices dropped and trade reduced
considerably. Having said that, Sudan is expected
to experience greater political stability going
forward and when combined with assimilation in
the international community, through the lifting of
sanctions and the US’s removal of the country
from the States Sponsor of Terrorism List (SSTL),
this could result in increased economic output
that will be driven by higher consumer
expenditure and investment, as well as greater
mining and agricultural sector activity.
Consequently, the Sudanese economy could
outperform the Middle East and Africa average
over the medium to long term.
Challenges
Suffers from hyperinflation: Owing to
the devastating devaluation of the
currency that more than halved over
2019-2020, inflation spiked by over
160% in that timeframe. Food shortages
also further added to inflationary
pressures, which were exacerbated by
currency weakness resulting in the
state’s inability to secure food supplies
as the government had insufficient
foreign currency reserves. The removal
of fuel subsidies is likely to continue to
exert pressure on prices, although
inflation is expected to fall back
considerably in the medium term with
the help of tighter monetary policy.
However, it is anticipated to remain
above the Middle East and Africa
average in the medium to long term.
Highly undiversified export base: With
mineral products accounting for almost
70.0% of total goods exports in 2020,
Sudan demonstrates that its export
base is extremely undiversified. The high
percentage of exports derived from
hydrocarbons also exposes the country
to global oil price fluctuations and
demand shocks, such as the one
witnessed during the COVID-19
pandemic.
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 Opportunities Challenges
Unemployment to remain elevated: In
2020, the unemployment rate spiked to
over 26.0%, owing to the deleterious
impact of the COVID-19 pandemic on
the employment landscape. Over the
medium to long term, unemployment is
expected to remain elevated and be
significantly higher than the Middle East
and Africa average. Particular groups
that will disproportionately suffer from
joblessness are women and the youth.
Source: Euromonitor International

Chart 3 Economic Environment Dynamics in Sudan

Source: Eurom onitor International from Eurostat/O ECD/United Nations (UN)/International Monetary Fund
(IMF)/W orld Econom ic O utlook (W EO )/International Financial Statistics (IFS)/International Labour O rganisation
(ILO )/UNCTAD/International Merchandise Trade Statistics/national statistics

SOCIAL ENVIRONMENT
Sum m ary 3 Social Env ironm ent Analy sis in Sudan
Opportunities Challenges

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 Opportunities
Expanding population: Extremely high
(albeit falling) fertility rates are
expected to support strong population
growth of 51.2% in Sudan over 2021-
2040, which is forecast to outstrip
expansion of 47.0% for the Middle East
and Africa average in this timeframe.
Consequently, a total population of
nearly 68.0 million in 2040 should raise
Sudan’s consumer market appeal,
particularly if political stability is
achieved in the country. Pent-up
demand in consumption could be highly
attractive to consumer-facing
businesses going forward.
Ageing not an issue: Although the
elderly population cohort is expected to
expand rapidly in Sudan over 2021-
2040, an old-age dependency ratio of
only 8.0% at the end of that period
illustrates that the country has a very
young population. Therefore, little
pressure is expected to be placed on
state finances in the form of pensions
provision and care for the elderly.
Additionally, a demographic dividend
could increase competitiveness versus
more ageing regional peers. However,
this would only be possible in the
presence of adequate jobs creation for
the youth.
Source: Euromonitor International
Chart 4 Social Environment Dynamics in Sudan
Challenges
High poverty rate: In 2020, 44.1% of the
Sudanese population lived below the national
poverty line. This significant figure is likely to
create challenges for consumer spending and limit
expenditure on discretionary categories,
particularly those occupying luxury segments.
Consequently, consumption is expected to largely
be restricted to essential categories like food and
non-alcoholic beverages. Having said that, as the
economic situation of the country stabilises,
consumer expenditure in absolute USD terms is
expected to more than triple by 2040 versus 2020
levels, although inflation is expected to constrain
real growth that is forecast to be below the
Middle East and Africa average over 2021-2040.
Worsening health indicators: Although life
expectancy is rising and will be on par with the
Middle East and Africa average by 2040, modern
and more sedentary lifestyles are expected to
lead to an increase in non-communicable diseases
such as heart disease and diabetes. Indeed, the
prevalence of diabetes is forecast to rise from an
already-high figure of 16.2% of the population
aged 20-79 in 2020 to 19.6% in 2040, the second
highest in the region that year.
Rural population to dominate: Although rapid
urbanisation is occurring in Sudan, with the urban
population forecast to grow by a massive 95.5%
over 2021-2040, its share of the total population
is expected to be 46.0% by the end of this
timeframe, highlighting the still-influential
presence of a large rural populace. This could
create challenges for the authorities, particularly
in the area of inadequate infrastructure that is
required to be upgraded to link the rural
population with the rest of the country in order to
provide them with better economic opportunities.
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Source: Eurom onitor International from United Nations (UN)/Eurostat/O ECD/W orld Bank /International Diabetes
Federation/national statistics
Note: Social classes present data referring to the num ber of individuals with a gross incom e A - over 200%, B -
between 150% and 200%, C - between 100% and 150%, D - between 50.0% and 100%, E - less than 50.0% of
an average gross incom e of all individuals aged 15 .

TECHNOLOGICAL ENVIRONMENT
Sum m ary 4 Technological Env ironm ent Analy sis in Sudan
Opportunities
Internet users to more than double:
The percentage of the population
using the internet is expected to
jump from 43.0% in 2020 to 94.0%
in 2040. The strong increase is
expected to make Sudan attractive
to technology companies, which will
be able to expand their products
and services, such as social media
platforms like TikTok and Facebook.
However, the conservative nature of
Sudanese society could attempt to
slow the infiltration of social media
platforms, which could transform the
social landscape if unchecked and
lead to the adoption of more
Western ideals. E-commerce could
also begin to gain a foothold in
Sudan, as internet usage expands.
Challenges
Significant fall in fixed lines in use: As an increasing
number of the Sudanese population began to use
mobile technology for their communications needs,
coupled with a drop in capital investment in
telecommunications in this period, the number of fixed
telephone lines in use contracted over 2012-2020.
This is also due to the prohibitive costs of owning a
fixed line to access the internet, which has further
pushed the Sudanese population to abandon the fixed
line network in favour of mobile telephony.
Nevertheless, given that the majority of the
Sudanese population is expected to continue to
reside in rural areas, communications gaps could be
frequent between urban dwellers and their rural
counterparts until sufficient coverage by 4G networks
is achieved, which was only 47.0% of the population
in 2020 and not expected to reach 97.0% until 2040.
Furthermore, 5G technology is not expected to be
launched in the country until at least 2026.

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 Opportunities
Massive forecast rise in mobile
subscriptions: By 2040, 82.6 million
mobile telephone subscribers will be
active in Sudan, a more than 100%
increase since 2020. The possession
of multiple SIM cards per head of
population is due to the falling price
of handsets, particularly
smartphones, and less costly
network tariffs. Improved
connectivity through a mobile
network is also expected to add to
the solid growth in mobile
subscriptions, whilst using mobile
devices for work purposes can
explain multiple mobile subscriptions
per capita.
Source: Euromonitor International
Challenges
Political instability interrupts access: The
considerable influence of the state over
communications is a hindrance to internet access in
the country. In recent years, particularly during the
upheaval caused by the military coup in 2019,
internet access was suspended in Sudan and lasted
over a month. This is a major impediment to the free
flow of information and demonstrative of the
restrictive nature of Sudanese society. Additionally,
imposing limits on internet access could negatively
impact the country’s competitiveness in the long run.

Chart 5 Technological Environment Dynamics in Sudan

Source: Eurom onitor International from International Telecom m unications Union

(ITU)/Eurostat/O ECD/UNESCO /W orld Econom ic Forum (W EF)/national statistics

Statistical Summary
2015 2016 2017 2018 2019 2020
Inflation (% 16.9 17.8 32.4 63.3 51.0 163.3
change)
Exchange rate 6.03 6.75 10.67 24.33 46.06 114.53
(per US$)
GDP (% real 4.0 3.6 4.7 2.8 1.3 -3.6
growth)
GDP (national 505,760.7 605,408.6 815,855.5 1,176,630.1 1,753,595.1 4,468,479.4
currency millions)

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 2015 2016 2017 2018 2019 2020
GDP (US$ 83,933.5 89,671.3 76,447.9 48,363.5 38,071.6 39,015.3
millions)
Birth rate (per 33.3 32.9 32.5 32.2 31.8 31.5
'000)
Death rate (per 7.4 7.3 7.3 7.2 7.1 7.0
'000)
No. of 7,243.0 7,480.4 7,723.5 7,972.0 8,225.3 8,483.2
households
('000)
Total exports 3,169.0 3,093.6 4,061.0 2,227.9 1,698.2 1,763.6
(US$ millions)
Total imports 9,508.7 8,323.4 9,163.0 5,514.2 4,294.4 4,398.1
(US$ millions)
Urban population 13,185.8 13,596.3 14,027.6 14,480.9 14,957.2 15,458.2
('000)
Population aged 41.5 41.2 40.8 40.5 40.1 39.8
0-14 (%)
Urban population 33.9 34.1 34.4 34.6 34.9 35.3
(%)
Population aged 55.1 55.3 55.6 55.9 56.2 56.5
15-64 (%)
Population aged 3.4 3.5 3.5 3.6 3.6 3.7
65 (%)
Male population 49.9 49.9 49.9 50.0 50.0 50.0
(%)
Female 50.1 50.1 50.1 50.0 50.0 50.0
population (%)
Life expectancy 62.7 62.9 63.1 63.3 63.5 63.7
male (years)
Life expectancy 66.2 66.5 66.7 66.9 67.2 67.4
female (years)
Infant mortality 46.2 45.3 44.4 43.5 42.6 41.8
(deaths per '000
live births)
Adult literacy 75.9 76.2 76.5 76.7 77.0 77.2
(%)

Imports and Exports

2020 Share 2020 Share
Major export destinations (%) Major import sources (%)
Exports (fob) to Africa and the 60.1 Imports (cif) from Asia Pacific 41.2
Middle East
Exports (fob) to Asia Pacific 32.8 Imports (cif) from Africa and the 30.8
Middle East
Exports (fob) to Europe 6.5 Imports (cif) from Europe 21.4
Exports (fob) to North America 0.6 Imports (cif) from North America 3.3
Exports (fob) to Latin America 0.1 Imports (cif) from Australasia 1.9
Exports (fob) to Australasia 0.0 Imports (cif) from Latin America 1.5

© Euromonitor International 2021

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