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Doing Business in Sudan

Since 1997 the United States government has enforced economic sanctions on Sudan, by keeping American businesses from working with Khartoum and the al-Bashir government. This was due to the fact that Sudan was placed on the list of “state sponsors of terrorism”. Of course, this was a number of years before the genocide in Darfur took place and for the most part, American businesses have largely stayed out of the country. However other countries, notably China have not followed suit and this has allowed indirect investment by Americans or American firms to take place.

I’m not going to argue what is perceived by some to be the questionable role of China in African development (although I may in a future post), but for now, focus on American indirect investment in Sudan. One of the most common investment opportunities lie in Chinese oil companies such as PetroChina or China National Petroleum Company (CNPC) and it’s not breaking news that the man considered to be the greatest investor in American history and someone who unwaveringly supports the US economy, Warren Buffet has invested in PetroChina. He did so in 2007 and although he refuted allegations that the company did business in Sudan he divested later that year citing financial gains (suspect for a man that has consistently stressed a long-term investment strategy).

As the debate as to whether the conflict in Darfur as ended still goes on, you may be surprised (or not) to know which companies or investment firms are still supporting business in Sudan (Fidelity, BlackRock, Vanguard, HSBC, JP Morgan Stanley etc.). It took serious pressure from a number of NGO’s, led by Investors Against Genocide to cause the divestiture from businesses doing work in Sudan by one of the United State’s largest financial institutions, TIAA-CREF. For a company that plans retirements for those in 501(c)3s, religious, educational and charitable organizations, this may seem surprising. And it just happened in January 2010. For what it’s worth, TIAA-CREF actually attempted to pressure the Chinese oil giants with a divestiture of their $58 million investment in 4 companies, if the companies did not “get their acts together”. Of course, $58 million split four ways is hardly a blip on the radar for a company like PetroChina, which currently has a market cap of $207+ billion. Good effort nonetheless.

While investment based on social and environmental considerations, along with rather than simply based on financial gains is gathering momentum, it’s clearly a sector of financial planning that has a long way to go. Fortunately, both outside interests as well as internal stakeholders are beginning to hold companies responsible for their investment strategies and companies doing business in Sudan (particularly Chinese companies) are becoming more and more a part of this emerging conversation. Are these types of investments illegal? No. Unethical? Maybe. And that’s an issue that many companies must determine the value of.

Image Credit by mjrcx23 under a CC license

Written by Jonathan Banco

Jonathan has worked in both journalism and various facets of small business development over the past eight years. Most recently, he graduated from the Monterey Institute of International Studies (graduate school of Middlebury College) in 2010 with an MBA and an MA in International Development Policy. His interests include SME development and its role in economic growth, particularly in Sub-Saharan Africa as well as how CSR/Sustainability measures impact both business operations and the communities in which businesses operate. While at MIIS he worked as a summer fellow involved in small business consulting in Accra, Ghana and was an active member of the MIIS Net Impact chapter. As a life long traveler, Jonathan has been fortunate to have lived in, worked in or visited over 20 countries on 5 continents and he truly hopes that he will be able to continue this trend.


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