Growing Sudan: Political Turmoil and the Future of the Economy

The Republic of the Sudan has been plagued by conflict and civil war for years. Once one of the largest countries in Africa, the country has split, with South Sudan seceding in January 2011 to end the Second Sudanese Civil War. Furthermore, Sudan’s former seventh president and dictator, Omar al-Bashir, was recently ousted in a coup d’état by the Sudanese military after holding office for 30 years. The current government is the Transitional Military Council directed by Abdel Fattah al-Burhan, after the appointed leader Ahmed Awad Ibn Auf was forced to resign due to protests.

South Sudan’s secession has caused major economic shocks that will reverberate in Sudan’s economy for many years. Sudan’s economy is heavily dependent on natural resources, such as oil, which have steered its GDP for many years. The country depended on oil production and exportation for the growth of its economy; however, from the secession, South Sudan acquired 75 per cent of the oil pipelines that run from South Sudan to the North, which caused a major decrease in crude oil production. As of 2010, Sudan’s GDP had been growing at a rate of 3.5 per cent annually. However, the growth rate was affected dramatically, by -2 per cent, as a result of South Sudan’s secession in 2011. Moreover, due to the secession and the introduction of a new currency, Sudan’s inflation rate has increased drastically, furthering the effects of immense poverty in the country, with nearly half of the population living below the poverty threshold. As of 2019, Sudan is facing 49.5 per cent of price inflation, which is projected only to increase by 2020, meaning that even more people will be unable to afford necessities. This is a great cause for concern because the effects of poverty on a nation, such as civil unrest, can be detrimental for businesses looking to operate in the country.

The Sudanese government has been looking for economic growth alternatives after South Sudan seceded and has explored developing its agriculture, mining and oil production. Agriculture accounts for 80 per cent of the labor force and 40 per cent of GDP in Sudan; however, only an estimated 15 to 20 per cent of Sudan’s cultivable land is being used, which could be promising for entrepreneurial ventures in this sector, as there is room to grow. Furthermore, Sudan is the second largest gold producing country in Africa. With United States sanctions being lifted, many companies are flocking to the country to mine gold.

Although this is promising for economic growth in the country, it also includes risks. Gold mining has become a way of survival for the Sudanese. The Sudanese government is pushing for foreign investment and foreign companies to mine gold. This has led to protests, such as those sparked by the government deal in October 2018 assigning rights to Miro Gold, a Russian company, to start mining at the gold mine in the Wadi Alsingair region.

Furthermore, other companies such as Orca Gold, a Canadian public company with interests in exploration and mineral properties in Africa, have shown interest in Sudan to take part in the gold rush, thus opening new opportunities for jobs in this sector from foreign investment. This gold rush can provide a way of living for many and opens new entrepreneurial opportunities for SMEs that were at first barred by United States sanctions.

Sudan’s natural resources have provided a way of life for the people, but does come with environmental costs. The country is suffering from deforestation, competition regarding overly consumed natural resources, pollution and poor sanitation, among other environmentally hazardous conditions, which have long-term negative impacts for the country. The United Nations provides a “State of the Environment and Outlook Report”, where UN Environment is working with the Ministry of Environment, Natural Resources and Physical Planning of Sudan to develop this report as part of a larger programme, Adapt for Environment and Climate Resilience in Sudan (ADAPT), to present evidence that educated policy decisions will prove essential for clean environmental and humanitarian practices. SMEs can support these clean environmental practices to launch a business in a “Green Africa.”

Although the World Bank has assigned Sudan the low rank of 162 for the ease of doing business, some opportunities are yet to be pursued by entrepreneurs in this struggling economy. SMEs are important to a nation’s economy because they provide innovation and can create a competitive market. However, due to political corruption, violence and lack of regulation, it could be a risky endeavour. Should the country be able to stabilize its government, Sudan could have a high potential for SMEs to start operating in the agriculture and mining sectors.

Bibliography

Articles

“Blood and Gold: Now Sudan’s Land Wars Have Spread to Mining.” Middle East Eye, https://www.middleeasteye.net/news/blood-and-gold-now-sudans-land-wars-have-spread-mining

Pike, John. “Military.” Sudan – Economy, www.globalsecurity.org/military/world/sudan/economy.htm.

News Items

Burke, Jason, and Zeinab Mohammed Salih. “Sudan Dares to Dream: First Bashir Fell, Then the Spy Chief.” The Guardian, Guardian News and Media, 13 Apr. 2019, www.theguardian.com/world/2019/apr/12/sudanese-protesters-jubilant-after-military-leader-rapidly-replaced.

Other Internet Sources

International Monetary Fund, Consumer Price Inflation for Sudan [SDNPCPIPCHPT], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/SDNPCPIPCHPT, June 12, 2019.

“Overview.” World Bank, www.worldbank.org/en/country/sudan/overview.

“State of the Environment in Sudan.” UN Environment, www.unenvironment.org/explore-topics/disasters-conflicts/where-we-work/sudan/state-environment-sudan.

“Sudan.” Ifad.org, www.ifad.org/en/web/operations/country/id/sudan.

“World Development Indicators.” DataBank, www.databank.worldbank.org/data/reports.aspx?source=2&country=SDN.

jl.johnnylowe

My name is Johnny I am a university student completing my degree in Economics.

View all posts by jl.johnnylowe →