You're reading: World in Ukraine: Ukraine-Sudan trade still in early stages

While Ukraine is struggling to find foreign investors for its withered economy, Sudan in turn hopes that Ukraine can start exporting more products into Africa's third biggest country by area.

Both nations have similarities. They have populations close to 40 million, rely heavily on agriculture, and are developing their ports and information technology industries.

And both are at war.

This doesn’t mean, however, that bilateral relations are blossoming.

Although both countries are considered to be lower- to middle-income economies, Sudan’s 2016 Doing Business ranking is 159, roughly twice as bad as Ukraine’s, according to the World Bank. The standard of living in Ukraine is twice as high compared to Sudan, while its territory is four times greater than Ukraine’s.

Mykola Dymura, the head of the African-Ukraine business council of the Ukrainian Chamber of Commerce and Industry, says that although there is plenty of potential in bilateral relations, current ties are weak.

“The trade relationship… is basically at the initial stage,” Dymura says.

The main reason is the constant war and conflict inside Sudan that started in 1956, when the former Anglo-Egyptian colony gained independence. Russia’s war against Ukraine and deep economic recession have contributed to the loosening of ties. Bilateral trade dropped during the first half of 2015: exports by 18 percent, or to $48 million, and imports by 33 percent.

“There are continuous conflicts that sometimes turn into wars,” Dymura said. They’ve evolved over ethnic and religious differences and for oil and water resources. Sudan is predominantly Sunni Muslim, whereas South Sudan, which gained independence in 2011, is a mix of Christians, Animists and Muslims.

Still, Dymura said the path for Ukraine to the European Union lies through Africa. The logic is, most of Ukraine’s goods don’t meet EU quality standards, but they’re good enough for African nations like Sudan.

For example, MHP, Ukraine’s largest poultry producer, sells chicken in the Democratic Republic of Congo, whereas Tavria Cognac, a spirits producer, sells in Nigeria.

The State Statistics Service of Ukraine says that Ukraine-Sudanese trade totaled $80 million in 2014. However, the Sudanese Ambassador to Ukraine, Anas Eltayeb Elgailani Mustafa, said that the true volume is closer to $200 million.

Bilateral trade would be much more promising if the proposed Tripartite Free Trade Area – an ambitious free trade agreement that will unite 26 African countries totaling $1.2 trillion in production – is launched in 2017. This will allow companies like Tavria Cognac and MHP to enter Sudan’s market more easily.

Overall trade turnover between Ukraine and all of Africa in 2014 was $5.8 billion dollars, mainly consisting of Ukrainian exports going to North Africa. Sub-Saharan nations – whose combined population is close to 1 billion – only make up one-twelfth of the trade turnover, according to Dymura.

Sudan potentially can sell gum arabic, an emulsifier used in beverages, and oil to Ukraine. Sudan needs foreign investment to boost the extraction of capacities, however.

“We basically don’t import anything from Sudan,” Dymura added.
Ukraine, in turn, sells produce, agricultural machinery, fertilizers and household chemicals to the Islamic-oriented nation.

Sudan native Ahmed Abdalla, the CEO of GSP International Ukraine, a product inspection and outsourcing company, says that Ukrainian quality in relation to price gives the country’s products a competitive advantage on the Sudanese market.

He also noted that Ukraine is Sudan’s largest partner in the Black Sea region, with around 15 Ukrainian companies having some sort of operations in Sudan.

“The goal is to increase this to 30-40 companies in 2016,” Ahmed says.

A large part of Ukraine’s trade history with Sudan is not transparent, due mainly to the selling of weapons and arms. A United Nations weapons embargo is still in place against Sudan, and the country is still on the list of states that sponsor terrorism. In addition, Sudan’s pro-Russian stance at the UN – it didn’t vote for a resolution that condemned Russia’s annexation of Crimea – makes it unlikely that Ukraine will open a permanent embassy in Sudan any time soon.

“This is a problem,” Dymura said. “This of course delays the potential for establishing ties, (and building) relationships between Ukrainian producers and exporters and potential Sudanese importers.”

Ukraine also needs to improve its business reputation as well.

Ukrainian companies don’t have a good track record for delivering their products on time in Sudan, and many times will want advanced payment in full before delivery, Dymura said.

Aircraft manufacturer Antonov is one example. Planes are in high demand all over Africa, but to make a single multi-million dollar payment for one plane makes the process much more difficult, Dymura says.

Ruslan Harbar, the vice president of the Ukrainian African Research Center, says that three years ago a Sudanese delegations visited Ukraine with the intent to purchase five Antonov airplanes for about $100 million as well as initiating space technology cooperation.

“But Ukraine’s parliament didn’t ratify the deal,” Harbar said, referring to an agreement in which Ukraine would help Sudan launch a satellite.

Though Sudan is considered to be a high-risk market, Abdalla believes that investments could still come in.

“If we learn how to control these risks then we will have success,” he says.

Kyiv Post staff writer Ilya Timtchenko can be reached at [email protected].