The matter of military owned companies, and security companies in Sudan in general, have always been became an even greater matter of contention in Sudan after a recent interview the Sudanese Minister of Finance gave to Bloomberg.
Khartoum: AlTaghyeer: Elfadil Ibrahim
Many in Sudan were surprised by statements attributed to the Sudanese Minister of Finance Jibreel Ibrahim, regarding moving forward with the privatization of military-owned companies with the exception of those that produce weapons.
Talking about the privatization of military or security-related companies was once a matter that caused problems between the partners of the transitional period; the military component and the forces of Freedom and Change.
Ibrahim’s statements included all the military commercial companies that he said would be put up for public subscription, with the exception of weapons-manufacturing companies, which he said would be put up “soon”.
The number of military owned companies in Sudan is estimated to be 220 –from unofficial statistics– with a capital of ten billion dollars, according to former Minister of Industry Ibrahim al-Sheikh.
The companies operate in the areas of food security, chemicals, limited medical technical services, insurance, trade, agriculture, livestock, gold, banks and construction, as well as the Red Sea Shipping and Services companies, White Nile Leather industries, Borouge Ltd., Yarmouk Industrial Services Ltd. (weapons manufacturing entity), Zadna International Investment Ltd., Miles Media Production, and others.
Standards and Conditions
Analyst and economic researcher Babiker Ahmed Abdullah says that privatization is in line with the free economic policies pursued by Sudan at the present time.
Privatization however, says Abdullah, has basic criteria that must be applied in order for companies be part of the economic renaissance, the most important of which are free competition, offering market shares, and selling at a fair price.
As for the political aspect, Abdullah told AlTaghyeer that Dr. Jibreel Ibrahim is leading the country towards an already attempted privatization endeavor, first tried by the ousted and overthrown National Salvation regime the first rescue, which did not accurately reflect “privatization.”
The previous experience took place in a way that exhausted the Sudanese economy, he says, with government enterprises that were privatized in the first years of the ousted regime having not been evaluated fairly due to most of them being sold for free.
“Those privatized companies were allocated to personalities affiliated with the Islamic movement for purposes of “economic empowerment” in line with the regime’s authoritarian approach,” the economic researcher said.
“However, most of what was privatized or allocated from government companies was helping in the production process with specific activities. The new owner of those companies took full advantage of the accompanying free assets, and tax and customs privileges granted to them, and then changed the company’s direction in most cases from production towards trade. The previous regime’s first experiment in privatization resulted in the first destruction of production in Sudan.”
He believes that this was a “win-win” matter; the process of exchanging benefits between some leaders of the Keizan [the leaders of the annihilated regime], the Rapid Support Forces, and the armed movements, so that the Keizan could launder their money to buy shares, with the allocation of shares for the RSF and some leaders of the armed movements, and perhaps the sale [of the government enterprises] will take place on easy terms and bank loans or specific exemptions.”
Babiker asserts that the presence of Muhammad Hamdan Daglo – leader of the Rapid Support Forces— and Dr. Jibreel Ibrahim, who are “thirsty for power and money,” at the top of the pyramid of the economic and political reality in Sudan, assures that any decision issued with their blessing will not be passed unless they have the “lion’s share in it,” and that many of Jibreel’s decisions were issued to benefit his “beneficiary” brothers in the current regime.
Babiker concludes by saying that the Sudanese citizen was never a direct beneficiary of these companies, nor were the army members themselves, therefore, privatizing these companies represents a change of roles for the ownership and leadership of the companies only, while the economic reality remains as it is.
“The bottom line is that the matter goes beyond military companies and other government companies, in a manner and style similar to the economy of the Sudan of the nineties, which means that Jibreel still retains that old book with no clear definition of privatization.”
But there remains a question that needs to be answered: Does this have anything to do with the former regime’s illogical patents that previously had something to do with these companies?
A security source ruled out that the process of selling the shares of these companies would take place in the same manner described by the Finance Minister, saying that “most of the military companies’ capital comes from pension funds, similar to the Social Security Fund. The sale process will not be as smooth as described by the Finance minister.”
The source added to AlTaghyeer that the decision will find strong opposition within the Sudanese armed forces, who some of its employees consider the sale of military owned companies would contribute to weakening the army, and would force the army to wait for the Ministry of Finance to provide it with its special needs that it was financing from its investments; a matter which the army’s senior generals would not accept.
He pointed to future fears of the impact of the Democratic Transition Law passed by the US Congress in the year 2020, which tightens control over military companies, and may issue warnings or impose penalties on them in light of Washington’s classification of the October 25th 2021 happenings as a “coup d’etat”, much like the sanctions recently imposed recently on the Central Reserve Forces, and thus the continuation of the current political situation.
Due to the law possibly targeting military companies later, Babiker says that the talk of selling and privatizing those companies perhaps came as a precautionary measure.
The economic researcher, Dr. Abdullah Ali Ahmed, believes that the decision to privatize army companies is correct from an economic point of view.
He told AlTaghyeer that any decision to privatize government companies was a positive decision, giving the private sector an opportunity to work better in terms of competition.
Dr. Ahmed added that the decision requires a certain climate within the framework of restructuring in the transitional period, saying that “the question remains, is the current climate appropriate for this matter? And how much does the state benefit from privatization? There are also more questions regarding transparency, a clear economic structure, and a vision that accommodates the issue of privatization.”
The economic researcher said that the companies’ presentation should be carried out with transparency, preceded by other controls related to a real evaluation of these companies through a third-party asset office, which contributes to determining the true value of companies, evaluating its profits/losses, and preventing fraud and corruption.
He questioned whether the priority in this matter was “privatization, or converting these companies to public shareholding?” and said that the common denominator between the two was providing required information related to the size and number of these companies and evaluating them in a transparent manner.
Dr. Ahmed called for a taking retrospective looking into previous experiences in privatizing government companies in the year 1992.
“Textile factories, the Sudanese Telecom Company – Mobitel and the Gum Arabic Company,” he named a few examples to be looked-back into in order to avoid the mistakes that accompanied the sale of those companies.