Craftsman engaged in jewelry making, Omdurman
Courtesy Embassy of the Republic of Sudan, Washington

The development of modern manufacturing received little direct encouragement in Sudan during theÍÍÍÍ condominium period. British economic policies were aimed basically at expanding the production of primary products, mainly cotton, for export. Imports and traditional handicraft industries met the basic needs for manufactured goods. Indirectly, however, the vast Gezira Scheme cotton-growing project induced the construction of ginneries, of which more than twenty were in operation by the early 1930s. A secondary development was the establishment of several cottonseed oil-pressing mills. During World War II, small import substitution industries arose, including those manufacturing soap, carbonated drinks, and other consumer items. These operations did not survive the competition from imports after the war's end. Foreign private interests invested in a few larger enterprises that included a meat-processing factory, a cement plant, and a brewery, all opened between 1949 and 1952.

At independence the Sudanese government supported an industrial development policy to be effected through the private sector. To facilitate this process, Khartoum adopted the Approved Enterprises (Concessions) Act of 1956, to encourage private Sudanese and foreign investment. The act placed few restrictions on foreign equity holdings. By 1961, however, the government had concluded that the private sector lacked interest or funds to establish enterprises important to the national economy, and so it entered the manufacturing field. The first government project was a tannery opened that year, and this was followed in 1962 by a sugar factory. In 1962 Khartoum formed the Industrial Development Corporation (IDC) to manage government plants. During the decade, several additional government enterprises were built, including a second sugar factory, two fruit and vegetable canneries, a date-processing plant, an onion-dehydrating plant, a milk-processing plant, and a cardboard factory. During this time, the private sector also made substantial investment, which resulted in factories making textiles and knitwear, shoes, soap, soft drinks, and flour. Other private enterprises included printing facilities and additional oil-pressing mills. Among the largest private undertakings was the foreign-financed and foreign-built oil refinery at Port Sudan, which opened in 1964. Well over half the private sector investment during the decade came from foreign sources.

Government participation in the manufacturing sector increased dramatically after the 1969 military coup and the adoption of a policy aimed at placing the country's economic development in government hands, although private ownership continued. During 1970 and 1971 Khartoum nationalized more than thirty private enterprises. In 1972, however, to counter the drop in foreign private investment that followed, Nimeiri announced that private capital would again be acco 173rded fa favorable treatment, and the government passed the Development and Promotion of Industrial Investment Act of 1972, containing even more liberal provisions than precoup legislation.

As the economy remained dependent on private capital, as well as capital investment from developed nations, the government incorporated further incentives for the favorable treatment of such capital in a 1974 revision of the industrial investment act, and added provisions against arbitrary nationalization. Moreover, in 1972 Khartoum denationalized some enterprises nationalized earlier, and returned them to their former owners under an arrangement for joint government-private ownership. One of the largest of these enterprises was the Bata Shoe Company, which was returned in 1978 as a reorganized joint company in which Bata held a 51 percent interest and the government 49 percent. The most successful such enterprise, however, was the Bittar Group, which in 1990 had become the largest undertaking in Sudan. Begun in the 1920s, nationalized in 1969 but returned to its owners in 1973, it has diversified into products ranging from exports of vegetable oils to imports of wheat, sugar, and insecticides. The firm has been active in a wide range of projects involving agriculture, electricity, and such industrial products as household and office equipment, soap, and detergents.

Throughout the 1970s, the government continued to establish new public enterprises, some state-owned, others in conjunction with private interests, and some having foreign government participation, especially by the Arab oil-producing states. The new plants included three sugar factories, among which was the Kinanah sugar-milling and refining factory two tanneries a flour mill and more than twenty textile plants. A joint venture with United States interests built Sudan's first fertilizer plant south of Khartoum, which was in operation by 1986. Private investment continued, particularly in textiles. About 300 million meters of cloth were produced annually in the 1970s, but output fell to 50 million meters in 1985. In 1988, the textile industry functioned at about 25 percent of capacity. The latter figure reflected the effects of the civil war, the dearth of hard currency for spare parts to maintain machinery, and the debt crisis.

Since independence Sudan's modern manufacturing establishment has emphasized the processing of agricultural products and import substitution. The production of foodstuffs, beverages, and clothing has accounted for a large part of total output. Significant import substitution industries included cement, chemicals, and dry battery manufacture glass-bottle-making petroleum refining and fertilizer production. In the late 1980s, estimates of the contribution of modern manufacturing to GDP varied from about 7 to 8 percent a year, including mining (compared to about 2 percent in 1956). Employment in the sector had risen during that period from possibly 9,000 in 1956 to 185,000 in 1977, including wage earners in government enterprises. Almost three-quarters of large-scale modern manufacturing was located in Al Khartum, attracted by market size, higher per capita income, better transportation and power infrastructure, and access to financial and government services.

Total manufacturing output, however, had not met expectation by the end of the 1970s and steadily declined in the 1980s. Overall output in some subsectors had grown as new facilities began operating, but the goal of self-sufficiency had generally not been attained. Shortages of domestic and imported raw materials, power failures, transportation delays, lack of spare parts, and shortages of labor ranging from qualified managerial staff and skilled workers to casual laborers had been drawbacks to effective operations and increased output. Losses of skilled labor and management to the Persian Gulf states have been particularly debilitating. In the 1980s, many factories operated below capacity--frequently at well under 50 percent of their potential. In some instances, low production also was related to poor project planning. For example, the government cannery at Kuraymah in Ash Shamali was already constructed when scientists found that the surrounding farming area could not produce the quantity of crops the plant could process. The milk-processing facility at Babanusah south of Khartoum had a similar record of poor planning. Efforts to improve the transportation and power infrastructure, whose deficiencies have been major contributors to the manufacturing problems, and rehabilitation of existing plants were among the basic goals of the 1977-82 Six-Year Plan of Economic and Social Development (see Economic Development Foreign Aid , this ch.). That plan was never effectively implemented. Some progress has been reported, but in 1990 the production problems faced earlier by manufacturing persisted.

Data as of June 1991