First Published: 2017-10-07

Sudanese eye economic revival as US lifts sanctions
Economic conditions in Sudan have been mired by sanctions first imposed by Washington in 1997 over Khartoum's alleged support for Islamist militant groups.
Middle East Online

Sudanese are now imagining a brighter future.

KHARTOUM - Up until a few years ago, Sudanese engineer Ahmed Abdallah used to manage his family's expenses on his $400 monthly salary but he has since had to take out loans to make ends meet.

With the US State Department's announcement Friday of an end to some of its toughest economic and trade sanctions on Sudan, Abdallah and his fellow Sudanese are looking forward to a brighter future.

"We've been barely able to survive as my salary cannot cover even our essential needs," the private sector employee said at his home in an impoverished neighbourhood of Omdurman, the twin city of Sudan's capital Khartoum.

"At times when several needs come together, it just becomes impossible," he said as his four children played outside the family's mud and brick house.

Economic conditions in Sudan have been mired in persistent fiscal deficits, high inflation and the trade embargo imposed by Washington in 1997 over Khartoum's alleged support for Islamist militant groups.

On Friday, Washington announced that the embargo will be lifted from October 12, ending Sudan's two decades of isolation from Western markets.

The financial sanctions had put restrictions on international banking transactions, exchange of technology and spare parts, and other cumbersome trade regulations have hampered economic growth.

Hundreds of factories have either closed or barely function, as importing equipment or machine parts directly from manufacturers is cumbersome given the restrictions on transferring funds overseas.

Sudan's economy suffered a further body blow when the south split from the north in 2011 after a bitter civil war, taking with it the bulk of the country's oil revenues.

President Omar al-Bashir summarised the situation last week when he said the US embargo had "weakened the state and its institutions".

For millions of Sudanese like Abdallah, it has been a fight for survival as inflation soared to 35 percent -- the result mainly of high energy prices -- putting even basic food items out of reach for some.

- 'Access to new technology' -

Experts say the lifting of sanctions will help revive Sudan's dilapidated economy.

"Sudan lost access to new technology, because although the sanctions were imposed by the United States, even Europe and some Asian and Arab countries followed them," said Mohamed El Nair, professor of economics at Khartoum's University of El Mughtaribeen.

"Removing sanctions will help Sudan access new technology and international banking, in turn helping better manage its imports and exports."

Although details of Washington's decision are awaited, its impact will be felt across several sectors but especially transport, education and healthcare, he said.

Sudan's aviation sector is expected to benefit hugely, El Nair added, as Airbus and Boeing had refused to provide Sudanese airlines with new planes or spare parts for existing fleets.

But the lifting of sanctions alone will not revive the economy, he said, adding that Khartoum must take measures to boost productivity.

"It has to cut expenses, fight corruption and improve the overall investment environment," El Nair said.

Prior to the secession of the south, Sudan used to attract about $5 billion in foreign investments annually. That figure has now slumped to below $2 billion on a moderate economic growth of 3.5 percent in 2016.

- Bold reforms needed -

The International Monetary Fund has called for "bold and broad-based reforms" to kick-start economic growth.

"More needs to be done to turn the tide toward sustained macroeconomic stability and broad-based growth," it said in a recent report.

Traders in Khartoum expect their business to pick up.

"Our business fell after the price of meat rose 45 percent from last year," said Tareq Diab, manager of a Khartoum-based butcher.

Even sectors like meat production will be impacted by the lifting of sanctions, he said, as it needs new technology and imported livestock.

For Abdallah the lifting of sanctions means new jobs for tens of thousands of unemployed youths.

"New companies from France and America will come to Sudan, which means new jobs, new investments," he said. "This will increase my salary too."

Until that actually happens, it's a "balancing act" for his wife Shahinda Adel when managing household expenses.

"Our income is limited, so I just tell my children the truth that I won't be able to buy everything they want," she said.

 

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