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Political uncertainty raises fears of economic collapse in Sudan

Sudan protests [File photo]

Sales of the five business centres owned by Sudanese businessperson, Hashem Abul Fadel, have fallen by about 40 per cent following the political instability in Sudan. He and fellow business owners fear that continued political uncertainty will lead to the collapse of his country’s economy.

Sudan has endured significant tensions since 6 April, the date of the start of a sit-in outside the headquarters of the General Command of the Armed Forces demanding the overthrow of former President Omar Al-Bashir. The Sudanese Army overthrew Al-Bashir on 11 April, and the Military Council has since taken power. However, the demonstrators’ protest continued to demand the handing over of power to civilians before it was forcibly dispersed on 3 June, killing dozens of people.

After intense meditation from the African Union and Ethiopia, army leaders and forces of the protest signed with initials a power-sharing agreement on Wednesday. However, the continued instability since last December has harmed the country’s economy.

“Overall sales have fallen from 20 to 25 per cent and up to 40 per cent in specific sectors of my business activity,” Abul Fadel told AFP at his office in Khartoum.

Abul Fadel owns five commercial centres in the capital with investments of up to $ 1 million. Most of his activities are based on imports. He has finally resorted to purchasing less expensive goods or stopping investment in non-essential goods.

“Import volume has generally declined, and a large number of traders have stopped importing,” Abul Fadel stressed.

He pointed out that amid the absence of a government, “which declares its economic policy, as an investor, I cannot decide the current state of uncertainty.”

Read: Sudan: Protests renewed as differences within opposition on constitutional declaration surfaced

Businessperson Mohammad Hussein Madwi, who owns agricultural and manufacturing firms specialised in the distribution of paper and plastic, agrees with Abul Fadel. “Due to weak turnout and depreciation of the Sudanese pound, the import rate has been reduced by between 20 and 30 per cent,” Madwi said, adding that the movement has “almost stopped.”

The Sudanese pound has lost about 70 per cent of its value since the end of 2018 on the black market. Inflation rates reached 47.78 per cent in June, from 73 per cent in December, according to the Central Bureau of Statistics.

“I cannot buy it because there is no liquidity. I do not know for how long we will be able to live like this,” said Hanadi Mohammad – a mother of seven children – while shopping at the centre of Abul Fadel in northern Khartoum.

Despite the return to normal life in Khartoum and the reopening of shops, there is a decline in demand and weak purchase and selling movements in the markets.

“Prices have tripled since the end of 2018. We only go to shops that announce discounts, but our purchasing power is fragile,” said Emad Babiker, a family breadwinner, while pushing an empty shopping cart in front of him.

Protests mainly erupted in Sudan against the three-time increase in bread prices, before they quickly turned into a protest movement against Al-Bashir.

“The trade movement has been operating at a minimum since January,” said prominent economic journalist Khalid Tijani, pointing out that there are still operating sectors, “such as electricity, fuel and foodstuffs. However, if the current situation continues, even these things will not be available.”

“The economy has been witnessing a state of uncertainty because of the absence of an authority that takes care of it,” Tijani continued.

The Army and the protest leaders will continue negotiations to reach an agreement on a document that forms the constitutional framework.

US sanctions imposed on Khartoum since 30 years ago have weakened the already fragile economy.

For his part, Madwi expressed concern about “the collapse of the Sudanese pound and the doubling of inflation if the current stalemate continues.”

The amount of the current foreign exchange reserves in Sudan is not known. Sudan’s economy, which has been relying on imports and suffering from a trade deficit for years, is depleting this reserve. Also, foreign debts have accumulated to more than $ 55 billion.

READ: Did the UAE steal Sudan’s revolution?

In April, Saudi Arabia and the United Arab Emirates announced a three-billion-dollar financial aid package for Khartoum. This included $ 500 million for the Central Bank to strengthen its financial position, with the remainder to be spent in the form of foodstuffs, medicines and oil products.

Agriculture is a critical sector in the Sudanese economy and a significant source of income for the majority of its 40 million population. The current crisis has affected agriculture, as it has been impossible to import agricultural materials, including fertilisers and pesticides.

On Sunday, Saudi Arabia and the UAE have sent more than 50,000 tons of agricultural nutrients and farmers’ needs to save Sudan’s agrarian season, according to the Saudi Press Agency.

Faisal Mohammed, an importer of agricultural materials, said that “the volume of all imports has declined due to the unavailability of foreign currencies. Even in case of their availability, we are hindered with the decline of the value of the Sudanese pound, leading to the increase of products’ prices and the reluctance of buyers, which negatively affects the agricultural process.”

Sudanese businesspersons and investors have expressed their hope that reaching a political agreement will end the state of economic uncertainty.

“The political agreement between the Military Council and the (coalition) of Forces of Freedom and Change is the only way out of the current economic situation,” clarified Abul Fadel.

For his part, Madwi hopes for the completion of the “political agreement to avoid the scenario of economic collapse.”

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