Shopping mall struggles to launch ‘business revolution’ in Sudan

By Ulf Laessing  /  Reuters, KHARTOUM

Sun, Dec 09, 2012 - Page 14

Shop assistants display expensive Italian baby clothes in a vast showroom as waiters in white shirts serve latte in trendy cafes and an army of cleaners mops the floors — Khartoum’s new al-Waha mall is a world away from the rest of Sudan.

Owners of the mall, with its shiny elevators and air-conditioning, promise a shopping revolution in a city where battered cars and donkey carts make their way down bumpy roads lined with street vendors.

There is just one problem: the place is almost empty.

“I haven’t had a single customer in the past 10 days,” said Kamal el-Din, the manager of a Chinese furniture shop on the lower ground floor. “Five more months like this and we will be closing.”

Riddled with ethnic conflict, poverty and hit by US sanctions over its human rights record, Sudan has never been an obvious place to do business.

Yet ambitious plans backed by Gulf Arab investors were drawn up when the economy started to accelerate — driven by petro-dollars — after the Sudanese government signed a peace deal with southern rebels in 2005.

New hotels such as the Saudi-built Rotana and expensive stores such as German sports retailers Adidas and Puma set up shop in Khartoum, a rundown city that had seen little development since gaining independence from Britain in 1956.

Hopes that growth would continue after South Sudan seceded in July last year were dashed when tensions with the South Sudanese government escalated this year. Unable to agree on fees for oil exports through northern pipelines, the landlocked south shut off its oil wells in January, throwing both economies into turmoil.

Annual inflation shot up to 45 percent in October after the Sudanese pound collapsed with the loss of oil, the main source not just of state revenue, but also of US dollars needed to buy food imports.

Prices for foreign goods have soared, deterring even wealthy customers from shopping.

Al-Waha’s majority owner, the Bank of Khartoum, a lender funded mainly by Gulf investors like Dubai Islamic Bank, hoped to copy the success of glistening shopping-cum-business-centers in Dubai, United Arab Emirates, and Cairo, Egypt.

Sudanese President Omar Hassan al-Bashir attended the mall’s opening ceremony on July 1, the 23th anniversary of his 1989 coup.

Yet the occupancy rate at the 17,000m2 building is just 35 percent, the Bank of Khartoum said.

“Coming soon” banners are everywhere in the shops and a tower reserved for a luxury hotel sitting on top of the mall is still vacant, as is the business tower, although the owners insist the first leases have been signed.

At a lease cost of US$15 per m2 prices at the few open shops, mostly foreign fashion retailers, include a hefty premium beyond the means of most Sudanese.

El-Din, a Chinese Muslim who took his Arabic name when he arrived in Sudan to study Islamic law two years ago, said the only people at his “Bedmate — forever with you” outlet are students from a nearby university who come to gawk at sofas, beds and armchairs costing between 7,000 pounds and 60,000 pounds (US$1,100 and US$10,000).

“This is like a museum for them,” he said.

So many “visitors” come that he has put a sign at the entrance asking them not to bring in food or drinks and to avoid trampling too much on the carpet.

“It’s a really nice place, something new, but expensive,” said Ibrahim Adel, a young man drinking orange juice in one of the mall’s elegant cafes. “I’ve been to the hypermarket downstairs because it’s cheaper than other places, but haven’t shopped elsewhere.”

However, business has picked up across from the mall’s main entrance, where dozens of one-room shops fill a cluster of crumbling buildings dating back to British colonial rule.

“We have a lot more shoppers coming since the mall opened because people only go there to look at the latest expensive foreign brands,” said Mahmoud Yahia, who runs a small fashion shop in a windowless, stuffy room with no air-conditioning.

“Once they get an idea about the latest fashion trends, they come here to look for the much cheaper Chinese version,” he said, grinning as he pointed to stacks of shirts, pants and suits with foreign brand names, but labeled “Made in China.”

The Bank of Khartoum hopes the economy will stabilize after Khartoum and Juba agreed in September to resume oil exports within months. Its Gulf shareholders have just decided to triple the bank’s capital to expand even more in Sudan.

The bank — Sudan’s oldest — owns 60 percent in the mall and the rest is held by the government, mall operator Mourjan said. Construction costs were about US$200 million. Al-Waha general manager Khalil Muhsen, a Palestinian who has worked for many years in the Gulf and Jordan developing shopping centers, remained optimistic.

Muhsen said the mall has 7,000 customers a day, though the few people inside seem to be mainly students or teenagers. The underground park for 600 cars is almost deserted.

“When we opened, purchasing power was at its lowest,” he said, adding that lease contracts for 60 percent of the mall’s space had been signed so far. “[But] we are within our plan. The occupancy rate will reach 80 percent by the end of next year.”

Muhsen said the challenges were not just economic — the concept of a mall with fixed prices for quality goods is new territory for many Sudanese who are used to haggling with vendors in an economy flooded with cheap Asian products.

He had to persuade the retailers to open on Fridays, a day when families have time to shop, but Khartoum is shut down.

“We need to educate customers and tenants, present them new ideas,” he said.