Sudan's economy suffers as conflict takes centre stage

There are many positive developments taking place in the economy of  Sudan.

But, whenever the name of the country is mentioned, one will unconsciously recall the humanitarian crisis in Darfur and row over Southern peace deal.

Unfortunately, the negative image of the country is overshadowing the positive economic gains. 

Sudan started the liberalisation of its economy in February 1992. The economic policies pursued led, at the beginning to social and economic problems in the 1990s, the most important of which were widespread unemployment, high rates of inflation and deterioration of the income of the middle class. 

But, gradually the country started to reap the benefits of these policies through the macroeconomic stability that was achieved.  The economy grew by an average of six per cent annually in the period 1990-2001, inflation rate was reduced to one-digit, and the exchange rate of the Sudanese Dinnar against foreign currencies stabilised.

Macroeconomic stability and sound economic policies paved the way for attracting the badly-needed foreign investment.

The energy sector received the lion’s share from foreign investments. As a result, Sudan began to export oil for the first time in its history in August 1999. 

In an acknowledgement of the country’s oil potential, the Organization of oil Exporting Countries (OPEC) granted Sudan an observer status in 2001. Now the country produces around 500,000 barrels  per day and is third in sub-Sahara Africa after Nigeria and Angola and plans to be producing one million barrels per day of crude oil by the end of 2008.
As a result of these developments in the oil sector, the country attracted even more investments and the government was able to engage in an ambitious development programme. 

The government started the construction of Merwe Dam, a hydropower project that will produce 1,250 megawatts of electricity. It is supposed to be commissioned by the end of next year. 

The country’s Growth Domestic product grew from $14.9 billion in 2002 to $37.4 billion in 2006. 

Will be more than

The International Monetary Fund (IMF) projected in a report released in October 2007 that the country’s GDP will reach $46.7 billion (Sh2,988 billion) by the end of 2007. This will be more than the combined GDP of Kenya and Uganda.

The GDP growth increased from 5.4 per cent in 2002 to 8.6 per cent in 2005 and 11.8 per cent in 2006 .

The IMF projects that the GDP growth for 2007 will be 11.2 per cent.
The per capita GDP more than doubled from $436 in 2002 to $970 in 2006.

The impacts of these developments transcended the borders of the Sudan to the neighbouring countries. 

• Now there are more than 40,000 Kenyan citizens working in Sudan. 
• Kenya Airways is having daily flights to Khartoum beside three other private Kenyan companies and a Sudanese one that have flights to Juba and Khartoum.
• The Kenya Commercial Bank has opened a branch in Juba. 
• The commodities destined to Sudan through the Port of Mombasa exceeded 137,000 tons in 2006.
• A consortium of Sudanese companies led by Kenana Sugar Company presented in November 2007 the highest bid (Shillings 2.3 billion) to revive Miwani Sugar Company in Kenyan. In September 2007 the Sudanese company Nile Petroleum signed an agreement with the Kenyan company Zynmat Ltd to supply the latter with Sudanese oil products with concessional price.
• In 2006 Kenya ’s exports to Sudan totalled shillings 10.1 billion (approximately $150 million).
• Sudan has been connected through fibre optics cable to Ethiopia and Chad.
• The Agricultural Bank of the Sudan has opened branch in N’djamena since the 1990s. 
• A paved road linking Sudan to Ethiopia will be inaugurated before the end of this year. 
• A project to connect Sudan’s power grid to that of Ethiopia is in an advanced stage. Sudan secured a loan from India to construct the sector that lies in its territory while Ethiopia signed a finance agreement with the World Bank last month to finance the segment that lies in its territory.  Sudan Telecommunication Company (Sudatel), which is listed in Bahrain and Abu Dhabi stock exchanges, has in recent months paid $100 million to start mobile-phone services in Mauritania, before winning the $200 million licence for fixed-line and mobile services in Senegal.

Sudan is expected to continue its economic boom and may accelerate its pace. This can be attributed to the following factors:

• The upsurge in international oil prices, which is approaching one hundred US Dollars per barrel, in one hand and the increase in the country’s oil production, on the other hand means that the Government will find adequate resources to finance its development programmes. 

Sudan had proven oil reserves of five billion barrels as of January 2007 up from an estimated 563 million barrels of proven oil reserves in 2006 ( third in sub-Sahara Africa after Nigeria and Angola).

• The power sector in the country will get a big boost when the production of Merwe Dam comes on stream by the end of next year. 
• The reconstruction and development in Southern Sudan, Darfur and other war-affected areas will attract foreign investment to the country.

In spite of what has been achieved in the Sudan , there is a lot to be done. There are real challenges facing the country’s economy but they can be surmounted if some actors in the international community play a positive role in helping the Sudanese to sort out their problems. 

The most important among these challenges are:

• The debt burden “$28 billion” on one hand and the existence of political obstacles that deprive the country from benefiting from international debt relief initiatives. The large economic disparities between the different parts of the country.
• The high economic expectation of the country’s population after oil exploration and the peace agreements.
• The tremendous challenge of rehabilitating and developing the war-affected areas.  Desertification, drought, deforestation and other environmental hazards.
• The weakness of infrastructures in some parts of the country, the daunting task of reintegrating internally displaced persons and refugees and widespread poverty especially in war -affected areas.