Bha) Sudan Private Sector Landscape Assessment (Psla
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USAID BUREAU FOR HUMANITARIAN ASSISTANCE (BHA) SUDAN PRIVATE SECTOR LANDSCAPE ASSESSMENT (PSLA) March 2021 This study is made possible by the support of the American people through the United States Agency for International Development (USAID.) Its contents are the sole responsibility of SSG Advisors, LLC d/b/a Resonance and do not necessarily reflect the views of USAID or the United States Government. It was produced in collaboration with the US Global Development Lab’s Center for Transformational Partnerships and the Bureau for Humanitarian Assistance. TABLE OF CONTENTS Executive Summary 4 Introduction 7 1.1 Context and Background 7 1.2 Methodology 10 1.3 Limitations 14 2. Private Sector Landscape in Sudan 14 2.1 Overview of Business Enabling Environment and Private Sector Constraints 14 2.2 Characterization of the Private Sector in Sudan 16 2.3 State of Private Sector Engagement in Humanitarian Assistance 23 2.4 Common Themes and Cross-Cutting Findings in PSE 27 3. Opportunities and Recommendations 32 3.1 Ways of Working with the Private Sector 32 3.2 Opportunity for Ecosystem-focused Partnerships that Amplify Impact 34 3.3 Opportunities To Engage with the Private Sector 35 Annex 1: Private Sector Survey Analysis 39 Annex II: Sudan PSLA Contacts 39 Annex III: PSLA Interview Notes 39 Annex IV: Interview Guide 39 2 ACRONYMS BHA USAID Bureau of Humanitarian Affairs (Formerly FFP and OFDA) COVID-19 2019 Novel Coronavirus or 2019-nCoV CRS Catholic Relief Services CSR Corporate Social Responsibility DO Development Objectives FAO Food and Agriculture Organization FDI Foreign Direct Investment GAM Global Acute Malnutrition GDP Gross Domestic Product HRP Sudan’s Humanitarian Response Plan ICT Information and Communications Technology IDP Internally Displaced Populations KIIs Key Informant Interviews MSMEs Micro, Small, and Medium-Sized Enterprises NCA Norwegian Church Aid NGOs Non-Governmental Organizations PEPSE Promoting Excellence in Private Sector Engagement (USAID project) PSE Private Sector Engagement PSLA Private Sector Landscape Assessment RISING Recovery in Sudan for Improved Nutrition and Growth project (USAID-funded) SDG Sudanese Pound SDGs United Nations Sustainable Development Goals SMEs Small and Medium Enterprises SOW Scope of Work SST State Sponsors of Terrorism UN United Nations UNICEF United Nations Children's Fund USAID United States Agency for International Development USD U.S. Dollar WASH Water, Sanitation and Hygiene WFP World Food Program WHO United Nations World Health Organization 3 Executive Summary The humanitarian and development communities are beginning to engage the private sector more effectively, recognizing the skills, networks, and expertise companies can bring to disaster responses. Simultaneously, business leaders are seeking ways to partner with the development community to channel their capabilities and resources toward sustainable development. Given these shifts, the US Agency for International Development (USAID) Bureau for Humanitarian Assistance (BHA) sought support from the Promoting Excellence in Private Sector Engagement (PEPSE) project to conduct a private sector landscape assessment (PSLA) in Sudan. The main objective of the PSLA was to gain an increased understanding of the private sector landscape in Sudan, as well as private sector perspectives on challenges and opportunities relevant to USAID/BHA’s objectives in Sudan. In completing this assessment, the PSLA team spoke with companies across industries, including agriculture, finance and banking, energy, transportation and logistics, consumer goods, and communications and Information and Communications Technology (ICT). In addition to virtual interviews, the team also designed and distributed a digital survey to collect feedback from additional companies within Sudan. Private Sector Landscape in Sudan The Sudanese private sector faces several political, regulatory, and institutional challenges to its business enabling environment. These include the lasting impacts the Sudanese Revolution had on businesses, particularly MSMEs, many of which did not recover from the resulting business interruptions. And while the United States has lifted most of its sanctions on Sudan, companies still feel its long-term effects. Other challenges include poor infrastructure, most notably the lack of access to energy, and recent business lockdowns due to COVID-19. The Sudanese private sector has historically been dominated by large family-owned conglomerates and public sector companies, a select few of which have thrived in recent years by taking advantage of the lack of competition due to US sanctions. The base of wealth and growth strategy for most of these conglomerates is agriculture. This includes scaling up and diversifying products by expanding their business to livestock, meat production, and processing. The PSLA team observed an increased reliance on the contract farming model for conglomerates to cope with increased demand for crops and limited access to developed agricultural land. Micro-, small, and medium-sized enterprises (MSMEs) in Sudan are more diversified than conglomerates, but also experience more vulnerability to disasters. The PSLA team learned that MSMEs suffer from governmental policies that have a bias towards conglomerates, limiting MSMEs’ access to finance and rendering them vulnerable to shocks and business interruptions. At the same time, opportunities for MSMEs in the technology and solar energy sectors are emerging, with little competition from major conglomerates. PSLA interviews also uncovered company relationships with and perceptions of the Government of Sudan. Despite overall positive responses regarding the transitional government, companies argue the government needs a clearer framework to facilitate private sector development and business enabling environment. Some of the private sector’s primary complaints about the Government of Sudan include the failure to provide foreign currency through the banking system, unclear and unstable trade policies, land ownership and tenure issues, and infrastructure issues. 4 When asked about areas the Government of Sudan could further address, the most universal request was stabilizing the economy and currency and improving the business enabling environment. Many conglomerates have had generally positive partnership experience with development partners, particularly in the agriculture and food security sector. While MSMEs have had less exposure to the humanitarian and development communities, they understand the opportunities for collaboration that could contribute to Sudan’s long-term development but also support their business growth. Private sector interviewees responded with openness to the idea of partnering with USAID/BHA, due in large part to the private sector’s familiarity with humanitarian issues in Sudan and their willingness to advance common humanitarian and development goals. Sudanese companies are beginning to increase their focus on CSR efforts, which enables a platform for partnership with USAID/BHA. Common Themes and Cross-Cutting Findings in Private Sector Engagement (PSE) To gain a broad representation of the Sudanese private sector as it relates to potential humanitarian sector alignment, the PSLA team documented recurring feedback from interviewees related to the private sector’s relationship to and engagement with development initiatives and humanitarian assistance in Sudan, which is summarized below: ● Flooding is a primary disaster concern for the private sector, and many companies focus their CSR efforts on flood relief. ● The lack of energy access is a major barrier for reaching and developing remote areas. ● The lack of access to finance is a challenge for all sectors, but especially for small-scale farmers and MSMEs. ● The lack of access to skilled workers is a challenge for larger companies. ● A strong market push towards livestock presents a potential shift to future investment. ● Advancements in the technology sector create opportunities for innovative humanitarian solutions. ● A lack of sustainable storage infrastructure and warehousing is a major obstacle for supply chains. Opportunities and Recommendations The PSLA highlighted several opportunities for both ways USAID/BHA can best approach the Sudanese private sector for potential partnership, as well as shared-value partnerships that advance the business goals of companies while also supporting USAID/BHA prioritized development objectives. These opportunities are summarized below. Ways of working with the private sector ● Build trust to develop partnerships. Try to understand the world views and motivations of the private sector. ● Find a common language. Establish an understanding of USAID/BHA’s mandate and objectives, ask questions when there is uncertainty, and explain partnership rationale. ● Include the private sector in the co-design process, either as a resource partner or as an implementing partner. 5 ● Set clear expectations and maintain transparency around timelines. Ensure clarity and transparency around processes, timelines, and contractual expectations. Short- and Medium-Term Opportunities ● Leverage RISING model to expand resilience. Build off the existing RISING partnership model to expand the humanitarian areas it covers. ● Support microfinance / agricultural finance. Facilitate the expansion of agricultural finance to rural and marginalized small-holder and contract farmers; encourage finance companies to meet the 12% legal microfinance requirement; connect finance companies