Sudan: The Path Forward — Why PE Struggles and VC Could Step In
Sudan’s instability hinders private equity, but venture capital in technology, agriculture, and renewable energy offers growth potential
By Amira Mustafa
For private equity (PE) to thrive in developing countries, including sub-Saharan Africa, which currently attracts less than 1% of global PE, several conditions must be met: a stable and transparent political and regulatory environment, robust infrastructure in transport, energy, and digital systems, and deep, accessible domestic financial markets. Skilled labour, targeted investment incentives, and strong market connectivity further enhance the investment climate. Above all, good governance and clear legal frameworks — including well-defined property rights and reliable contract enforcement — are essential to building investor confidence and supporting sustainable, long-term growth.
The Importance of Macroeconomic Stability
Beyond these conditions, macroeconomic stability is critical. Prudent policy, coupled with sound management of foreign exchange reserves, helps reduce currency volatility, which can quickly erode returns. Equally important are mechanisms to mitigate exit risk. Investors are unlikely to enter a market without assurances that they can exit — by selling stakes and repatriating gains — when the time comes.
Why Fragile States Like Sudan Are High-Risk Markets
Fragile states emerging from conflict and prolonged international sanctions — such as Sudan — represent the highest-risk markets. Political instability, inadequate infrastructure, weak institutions, and underdeveloped markets create volatility, limited market depth, and low institutional trust. These factors deter private equity investors, who typically require strong returns and are unwilling to assume high operational and financial risk without substantial de-risking mechanisms, such as blended finance.
The conflict in Sudan — often mistakenly labelled a civil war — has been fuelled and exacerbated by external intervention backed by powerful Western allies. Sudan has been isolated under prolonged international sanctions, which weakened its financial institutions and cut it off from access to capital and financial markets. These dynamics make it highly unlikely that the country will attract significant blended finance from developed nations.
Sudan: Why Venture Capital Beats Private Equity
Based on these factors, private equity is not suited to Sudan’s current stage of development and is unlikely to effectively address its challenges in the medium term. Instead, venture capital presents a more promising avenue, particularly in sectors—renewable energy, technology, and agribusiness—that can support domestic reconstruction and bolster exports, thereby strengthening the current account and foreign exchange reserves. Such initiatives would benefit from China’s capital, technological expertise, and strategic interest. Moreover, VC-supported sectors create new opportunities for entrepreneurship. By focusing on venture capital in these sectors, Sudan can lay the foundations for sustainable economic growth and a resilient post-conflict future.
Amira Mustafa is a Sudanese-British consultant and business leader, with engineering and economics education with deep expertise in risk analysis, infrastructure consulting, and academic contributions. She has directed consultancy firms since 2009 and has led Menara Analytics as Founder and Director since 2016.