Sudan Catalyzer Program Implementing Partner, December 2023 Tender, Sudan - 94237715

Procurement Summary

Country : Sudan

Summary : Sudan Catalyzer Program Implementing Partner, December 2023

Deadline : 12 Jan 2024

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Notice Type : Tender

TOT Ref.No.: 94237715

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Competition : ICB

Financier : World Bank (WB)

Purchaser Ownership : Public

Tender Value : Refer Document

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Tender Details

Request for proposals are invited for Sudan Catalyzer Program Implementing Partner, December 2023.

Closing Date: 12 Jan 2024

Type: Consultancy

AECF (Africa Enterprise Challenge Fund) is a leading non-profit development organisation that supports innovative enterprises in the agribusiness and renewable energy sectors with the aim of reducing rural poverty, promoting resilient communities, and creating jobs.

We catalyze the private sector by surfacing and commercializing new ideas, business models and technologies designed to increase agricultural productivity, improve farmer incomes, expand clean energy access, reduce greenhouse gas emissions, and improve resilience to the effects of climate change. We finance high-risk businesses that struggle to access commercial funding; we are committed to working in frontier markets, fragile contexts, and high-risk economies where few mainstream financing institutions dare to go.

To date, we have supported over 400 businesses in 26 countries in Sub-Saharan Africa, impacted more than 30 million lives, created over 27, 000 direct jobs, and leveraged US $771 million in matching funds.

Background Information
Program Title: Sudan Catalyzer

Duration: 18 months for Phase I

Sectors: Agriculture, Agribusiness, Renewable Energy, Digital Technology, and IT

Funding Partner: KfW

With an area of approximately 1.9 million square kilometers, Sudan is the third-largest country in Africa and home to a rapidly increasing population of 41 million. Demographic changes are characterized by rapid urbanization, with more than a third of the population now living in urban areas. Rural-urban migration is being driven in part by conflict, drought, and desertification, as well as by the search for better economic opportunities and access to basic services. The current conflict is leading to significant internal and external forced displacement.

The economic and financial sanctions previously imposed on Sudan held back the emergence of the private sector through restrictions on trade and financial transactions. Additionally, these sanctions have constrained the economic activity of enterprises by limiting their access to international markets.

In April 2023, the country was plunged into violence between the Sudanese Armed Forces (SAF) and the Rapid Support Forces (RSF) militia that was in the process of being absorbed into a unified military. This has led to extensive, but so far regionally localized, destruction of economic and social infrastructure along with forced migration, human rights abuses and economic collapse. Many SMEs have been cut off from markets and access to finance and have seen key staff leave and assets destroyed. Of those that remain, many have had to relocate from their original locations to establish new operations in safer parts of the country. Both companies that are relocating and existing companies require access to finance and advisory support to assist them in re-tooling their business systems, markets, and suppliers to the new realities that they face.

Even prior to this outbreak of violence, much of the optimism of the peaceful 2018 revolution has been rolled back with the return of military rule in October 2021. The power structures of the former regime have largely returned, with the security structures dominating the business sector. As a response to this, most donors and other international partners have substantially reduced or ceased their engagement with the country, leading to external assistance being cut off and significant impediments to trade and other external engagements with the country. Despite these challenges, some segments of the private sector manage to navigate the highly politicized ecosystem without being completely subverted into the patronage networks of the ruling military elite. Any support to the private sector must, however, take into careful consideration the reality that even if the government is not directly involved there is the risk of manipulation by the existing power structures.

The removal of Sudan from the US list of state sponsors of terrorism and the normalization of the ties with the international community raised hoped of an economic resurgence that has largely been dashed by the military takeover of the civilian administration in late 2021. Most international donor partners and private investors remain unwilling to engage with the current political leadership and invest in the country. This means that the private sector and SMEs in Sudan operate within a challenging macro and micro economic environment. At the macro level, regulations of doing business continue to constrain the private sector with Sudan-s ranking in the 2020 World Bank Doing Business report being one of the lowest, 171 out of 190 economies. This is additionally complicated by a highly nepotistic business landscape where well-connected individuals and entities connected to the state dominate key sectors; a largely non-functional public administration; and collapsing economic environment of hyperinflation and currency devaluation. At the micro level, companies that are not well-connected struggle to raise formal finance, exposure to international markets and best practices is limited and staff capacity is low. Modern advisory services to address these weaknesses remain nascent.

Investing in SMEs as a short- and longer-term solution to economic development in Sudan

Despite the challenges that Sudan is experiencing in private sector development, the country presents numerous investment opportunities and there is a growing entrepreneurial perspective particularly with the youth[1]. The government of Sudan was a pioneer in the field of microfinance and banking sector legislation directs banks to provide short term funding for start-ups and early-stage enterprises. In addition, new business incubators and innovation labs have sprung up responding to a much-needed demand to solve some of Sudan-s biggest problems by connecting the country-s local talent to the global entrepreneurship community. Thus, there are opportunities for Sudanese entrepreneurs and startups in different stages to learn and attract investment. Several donors (UNDP, AfDB, UNIDO, World Bank, as well as bilateral assistance from UK, Germany, The Netherlands and others) have and/or are investing in public-private sector partnerships in the country, including supporting programmes targeted at micro-entrepreneurs and working to create a more enabling policy and operating environment for the private sector and particularly SMEs. This includes a joint initiative between UNIDO-ITPO and IFC on the development of an SME law, national SME strategy and an SME investment fund; the establishment of an Enterprise Development Committee by UNIDO and Accelerator Labs by UNDP, GIZ and the Qatar Fund. A survey conducted by UNDP in July 2019 found that youth employment and partnering with the private sector were among the key priorities for the development of the country.

Many of these initiatives have ceased or been scaled back with the return of the military regime and the return to open conflict in 2023, leaving SMEs at all levels with very limited access to finance and constrained abilities to source the kind of advisory support necessary to build a thriving modern economy. Given the importance of SMEs in the private sector to bring modern technological and business innovations to a society that has been closed for a generation, it is essential that those companies with the potential to scale and which are not connected to the military regime are supported.

The Sudanese private sector landscape can be split into four broad categories:

Survival or traditional micro enterprises providing subsistence style existence for their owners. These businesses are often formed from traders moving to simple manufacturing using outdated technologies to produce low quality outputs for local markets. Despite being the largest proportion of SMEs in the country, they are self-financed and operate largely independently of the regulatory structures. They have little capacity and willingness to expand and would be unable and unwilling to take on external concessional capital from the Sudan SME Catalyser.

Independent SMEs driven by the middle class and operating emergent, professional enterprises that are unconnected to the ruling elite and face unfair competition from other businesses that are able to exploit these connections. They have solid education and business acumen but still lack access to the structures of a functioning market economy, such as formal finance. This group represents a key target for the Sudan SME Catalyser, particularly in the smaller ticket sizes.

Family conglomerates of well-established multi-generational private enterprises that have found ways of operating in the complex political environment yet managing to maintain largely free of its most pervasive effects. These businesses have large and diverse business structures and have family-based management with international exposure and access to capital and are most likely to be developing innovative business ideas. They have the potential to take on larger sized tickets and are more likely to be able to provide matching funds, but care must be taken to ensure that they are operating independently of the regime.

Politically connected companies represent most of the largest private and state-owned enterprises and parastatals in the country. They are completely controlled by the political and military elite who use public resources to generate advantages in many aspects of business, from using public assets for private gain to accessing scarce resources and navigating the political and administrative landscape. These companies are more active in key sectors of the economy that the Sudan SME Catalyser is deliberately avoiding but are also present in the key sector of agriculture. They will be explici

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