PRIVATE SECTOR-LED ECONOMIC DIVERSIFICATION AND ...

PRIVATE SECTOR-LED ECONOMIC DIVERSIFICATION AND DEVELOPMENT IN SUDAN

2016African Development Bank GroupEast Africa Regional Development & Business Delivery Office

SUDAN COUNTRY OFFICE

PRIVATE SECTOR-LED ECONOMIC DIVERSIFICATION

AND DEVELOPMENT IN SUDAN

THE AFRICAN DEVELOPMENT BANK GROUP

The production of this report has been coordinated by the African Development Bank

(AfDB). Designations employed in this publication do not imply the expression of any

opinion on the part of the institution concerning the legal status of any country, or the

limitation of its frontier. While efforts have been made to present reliable information, the

AfDB accepts no responsibility whatsoever for any consequences of its use.

Ag. Vice President: Janvier Litse

Regional Director (EARC): Gabriel Negatu

Resident Representative (ETFO): Josephine Ngure

Chief Regional Economist (EARC): Tilahun Temesgen

Senior Macroeconomist (ETFO): Admit Zerihun

Copyright 2016 — AFRICAN DEVELOPMENT BANK GROUP

Photo Credits: AfDB photo files

PUBLISHED BY

African Development Bank Group - Eastern Africa Regional Resource Centre (EARC)

Khushee Tower

Longonot Road, Upper Hill

Nairobi, Kenya

Phone: (254) 20 2712925/26/28

Fax: (254) 20 2712938

Email: [email protected]

Website: www.afdb.org

PLEASE UPDATE

THIS PAGE

AFRICAN DEVELOPMENT BANK GROUP | i

FOREWORD ......................................................................................................................................... iiiPREFACE ............................................................................................................................................ vACKNOWLEDGMENTS ............................................................................................................................. viEXECUTIVE SUMMARY ........................................................................................................................... viiACRONYMS AND ABBREVIATIONS..........................................................................................................x

1. ECONOMIC PERFORMANCE IN RECENT DECADES .....................................................................11.1 Social and Political Setting .....................................................................................................................11.2 Internal Conflict and Economic Sanctions ..............................................................................................31.3 Demographic Change and Labour Force Growth ...................................................................................61.4 Patterns of Development Since Independence.......................................................................................81.5 Implications for Incomes and Poverty...................................................................................................141.6 Challenges for Development and Diversification ...................................................................................16

2. STRATEGY FOR BROAD-BASED AND INCLUSIVE GROWTH ......................................................232.1 Private Sector-led Growth and Diversification .......................................................................................232.2 Resource Base of the Country .............................................................................................................252.3 Proposed Programme for Economic Diversification ..............................................................................322.4 Growth Prospects for the Decade Ahead .............................................................................................342.5 Economic Impact of the Programme and the Benefits .........................................................................37

3. TRANSITION TO A STABLE MACROECONOMIC ENVIRONMENT...............................................433.1 Key Challenges for Macroeconomic Management ...............................................................................433.2 Re-emergence of High Domestic Inflation ............................................................................................463.3 The Need for Fiscal Consolidation ........................................................................................................463.4 Monetary Policy and Exchange Rate Management .............................................................................493.5 Trade Policy External Imbalances and Debt .........................................................................................533.6 Macroeconomic Outlook for the Medium and Longer Term ..................................................................56

4. PROMOTING PRIVATE SECTOR-LED GROWTH ...........................................................................594.1 The Setting ........................................................................................................................................594.2 Current Profile of the Private Sector .....................................................................................................604.3 Private Sector Productivity and Competitiveness .................................................................................614.4 Investment Climate and Government Policies ......................................................................................644.5 Impediments to Private Sector Growth ................................................................................................654.6 Private Investment Requirements and Financing ..................................................................................71

5. PROMOTING AGRICULTURE AND RURAL DEVELOPMENT ........................................................775.1 Current Status of the Agricultural Sector ..............................................................................................775.2 Performance of Individual Sub-Sectors ................................................................................................805.3 Policy and Institutional Arrangements for the Sector ............................................................................885.4 Lessons from the Agricultural Revival Programme (ARP) ......................................................................905.5 Key Challenges for the Sector ..............................................................................................................91

TABLE OF CONTENTS

ii | AFRICAN DEVELOPMENT BANK GROUP


5.6 Action Programme for Agriculture .........................................................................................................985.7 Programme Investment Requirements and Financing ........................................................................106

6. ACCELERATING INDUSTRIAL DEVELOPMENT ..........................................................................1116.1 Current Status of the Industrial Sector ...............................................................................................1116.2 Status of the Food and Non-Food Agro-Industries .............................................................................1126.3 Prospects for the Manufacturing Sector .............................................................................................1206.4 Prospects for Other Industrial Sectors ...............................................................................................1266.5 Growth Prospects for the Industrial Sector .........................................................................................128

7. CHANGING ROLE OF THE OIL SECTOR ......................................................................................1317.1 Development of the Industry Since the 1970s ....................................................................................1317.2 Key Challenges Facing the Industry in Sudan .....................................................................................1357.3 Prospects for Oil Production and Exports ..........................................................................................137

8. INFRASTRUCTURE SERVICES: AN AGENDA FOR ACTION .......................................................1438.1 Current Status of Sudan’s Infrastructure.............................................................................................1438.2 Transport Infrastructure ......................................................................................................................1438.3 Electric Power and Energy .................................................................................................................1598.4 Water Supply and Sanitation ..............................................................................................................1688.5 Information and Communication Technology .....................................................................................1718.6 Infrastructure Expenditures and Financing..........................................................................................173

9. ROLE OF OTHER KEY SERVICES IN PROMOTING GROWTH ..........................................................1779.1 Key Challenges for the Decade Ahead ...............................................................................................1779.2 Expanding the Role of the Financial Sector ........................................................................................1789.3 Programmes for Skills Development in the Labour Force ...................................................................193

ANNEXES ......................................................................................................................................198Annex 1: DemogrAphic DAtA .......................................................................................................................198Annex 2: mAcroeconomic Accounts AnD DAtA ..............................................................................................200Annex 3: mAcroeconomic projections ........................................................................................................233Annex 4: progrAmmes for privAte sector Development ...............................................................................240Annex 5: Development progrAmmes for Agriculture ....................................................................................241Annex 6: progrAmmes for inDustriAl Development .......................................................................................264Anne 7: BAsic DAtA AnD projections for the oil sector .............................................................................265Annex 8: BAsic DAtA for infrAstructure ......................................................................................................271Annex 9: BAsic DAtA for services sectors ..................................................................................................283

REFERENCES ......................................................................................................................................288

AFRICAN DEVELOPMENT BANK GROUP | iii

Demand-driven analytical work is an important pillar of the African Development Bank (AfDB)’s advisory work in African countries, as it remains vital in informing policy decisions at this crucial juncture in Africa’s eco-nomic transformation. This study, ‘Private Sector-Led Economic Diversification and Development in Sudan’, was commissioned as a direct response to the need for intellectual guidance on Sudan’s adjustment to the economic and social challenges emanating from South Sudan’s secession in 2011. Indeed, the secession was hailed as a major political milestone that had a poten-tial to usher the two countries into peaceful co-exis-tence and future prosperity. However, this long-awaited outcome is yet to be achieved, in spite of tremendous efforts. For Sudan, the secession is noted to have trig-gered an unprecedented fiscal crisis, resulting largely from the loss of oil revenue and shrinking domestic market. This shock underscored the need for a robust adjustment strategy to offset its impacts and restore macroeconomic stability, especially in the medium to long-term. It also heightened the debate on the respec-tive roles of the private and public sectors in promoting economic diversification and generating broad-based growth that is inclusive and job creating.

For the AfDB therefore, a study on the role of the pri-vate sector in economic diversification and job cre-ation was an opportunity to advance our lead role in providing policy advice to Regional Member Countries (RMCs). The request could not have been more time-ly, given the strategic focus of the Bank’s Long-Term Strategy (2013-2022) on inclusive growth, whose implementation puts strong emphasis on five priority areas or the High that is, Light Up and Power Africa, Feed Africa, Industrialize Africa, Integrate Africa, and Improve the Quality of Life for Africans, By design, it is

imperative that the roll out of the High 5s in RMCs be guided by thorough economic and sector analyses that informs the identification, preparation and successful implementation of well-targeted interventions. Building on synergies with the Sustainable Development Goals (SDGs), the operationalization of the High 5s strongly recognizes economic diversification as an indispens-able pathway to fully unleashing Africa’s economic po-tential. This goal, which is hitherto a tall order for many RMCs, is of utmost importance to Africa’s economic transformation.

It is in this context that Sudan’s stride towards a private sector-led economic diversification and development is viewed as both timely and relevant. In Sudan, as in many other African countries, diversification is both an eco-nomic and social imperative. The economic imperative takes cognizance of the urgent need for the country to identify alternative sources of growth to achieve mac-roeconomic stability, especially fiscal sustainability and maintaining the external balance. The social imperative comes from the urgent need to accelerate progress in addressing poverty and reducing regional inequalities, by exploiting the diverging regional economic and pro-duction potentials, and tapping fully into domestic, re-gional and international markets. The robust analysis in this report lays a solid foundation for Sudan to achieve this principal goal. Its forward-looking approach also adequately prepares the country to deepen reforms, which is key for attracting investments once the coun-try effectively reengages with the international financial community. It recommends that the country prepare a comprehensive economic diversification strategy that includes domestic, spatial and regional dimensions, which can lead to multiple specializations and strength-en regional, sector and market linkages, and position

FOREWORD

iv | AFRICAN DEVELOPMENT BANK GROUP


the country to adequately address its development challenges.

It is particularly pleasing to note that the Government has started taking practical steps towards operation-alizing the study findings, notably through setting up a public-private sector dialogue forum that is now being mainstreamed in existing institutions. This move will not only create avenues for improving the business envi-ronment but will also enrich Government’s policy dia-logue with development partners, which is important for coordination and better targeting of development assistance to improve’ the business environment for private investors. I commend the Government of Su-dan for taking this laudable initiative of responding ef-fectively to the macroeconomic challenges engendered by the secession, through this analytical piece and the policy actions that have ensued.

I have no doubt that the Government will continue this engagement as it treads towards unlocking the country’s huge production potential through private

sector-led economic diversification. The African Devel-opment Bank will continue its support, within limits of the existing constraints, while encouraging Sudan to accelerate efforts towards arrears clearance and nor-malization of relations with the international community.

Dr. Khaled Slierif

Vice President

Regional Development, Integration anil Business Delivery (RDVP)

AFRICAN DEVELOPMENT BANK GROUP | v

Over the past decades, Sudan’s economy has been subject to several domestic and external shocks and thus volatility in economic growth. The most recent one, the secession of South Sudan in 2011, unleashed five major impacts: first, reduction in population and size of domestic market; second, downsizing of the coun-try’s natural resources base including oil; third, loss of economic growth momentum; fourth, substantial inter-nal and external macroeconomic imbalances; and fifth, adverse social impacts on the lives and living condi-tions of the people. Government’s immediate resort to fiscal and macroeconomic adjustments proved to be sedative and transient, given that this was a structural shock of a more permanent nature. The ensuing na-tional debate on the respective roles of the private and public sectors in generating broad-based inclusive and growth, revealed the need for a detailed economic di-versification study to guide the process.

This study is therefore a demand-driven economic and sector work which seeks to inform policy at the highest level and provide the country with a milieu of options as it embarks on economic diversification to achieve macroeconomic stability and long-term growth. Its objectives are to identify alternative sources of growth and generate a pipeline of bankable projects for pri-vate sector and donor financing. It identifies investment opportunities for diversifying the country’s econom-ic base focusing mainly on two sectors: i) agriculture and agro-industry, and ii) the non-oil mineral sector. The agriculture and agro-industry sector is laden with economic opportunities for the development of agricul-tural value chains and the emergence of a new class of agri-preneurs with viable businesses in agriculture, employment creation and poverty reduction. The non-oil mineral sector, which has become increasingly im-portant in the Sudanese economy, has a potential to generate foreign exchange earnings to partially com-pensate for the loss of oil revenue.

The analysis provides a range of options for the Gov-ernment of Sudan (GoS), development partners and investors to support private sector-led economic diver-sification and growth. It also identifies a pool of bank-able projects in key agriculture-related sub-sectors in conformity with the country’s Medium Term Develop-ment Strategy especially the Five Year Development Plan, the Agricultural Revitalization Program (ARP) and the interim Poverty Reduction Strategy Paper (I-PR-SP). It also examines the nexus between agriculture and other private sector investment options, notably in the financial sector, manufacturing and industry, infra-structure (including ICT), trade and the social sectors. The investment opportunities in these priority sectors are matched by a matrix of potential financing options, thus creating a framework for intensifying dialogue on Public-Private Partnership (PPP) in these priority sec-tors.

As part of our strategy to step up engagement in transi-tion countries, the Bank will remain steadfast in its sup-port to the country’s development agenda, ensuring that such interventions contribute towards the opera-tionalization of the Long–Term Strategy 2013-2022 and the achievement of the High 5s. I encourage the Gov-ernment of Sudan to continue to deepen policy reforms and create the enabling environment to implement the recommendations of this insightful study.

Dr. Gabriel Negatu

Director-General, East Africa Resource Centre (EARC)

PREFACE

vi | AFRICAN DEVELOPMENT BANK GROUP


A comprehensive study like this usually benefits from the expertise of several people and this one is no ex-ception. First, the Bank would like to express its grat-itude to the Lead Consultant, Mr. Russell Cheetham who compiled the various components of the report, including financial, infrastructure, agriculture, private sector, private sector profile, political economy and macroeconomic aspects and synthesized them into a single report. The Bank is also grateful to the authors of the aforementioned components, including Dr. Robert Dauda Korsu (financial sector), Godfrey Matata Onyan-go (infrastructure), El Fadil Ismail (Agriculture), Dr. Omo-tunde Johnson (private sector), Dr. Amin Sid Ahmed (private sector profile), Professor Mohamed Ahad (po-litical economy) and Dr. Elfatih Shaeeldin (macroeco-nomic aspects).

This study would not have been possible without the team spirit and cooperation of the Sudan Field Office which responded swiftly and generously to the Gov-ernment of Sudan’s request to embark on this study. In this regard, we would like to thank Mr. Suwareh Dar-bo, the Task Manager of the study and co-task man-

agers, Mr. Kenneth Onyango and Mr. Yousif Eltahir for coordinating the study and reviewing various sections of it under the overall guidance and able leadership of the Resident Representative, Dr. Abdul B. Kamara. Dr. Kamara not only guided the study but also provided valuable inputs and important insights into it. We would also like to thank the various sectoral ministries and de-partments for their collaboration and assistance in pro-viding data and information as essential inputs into the study. In particular, we would like to thank the Ministries of Finance and Economic Planning, and the ministries dealing with agriculture, infrastructure and private sec-tor matters.

Finally, many thanks to the peer reviewers of the dif-ferent components of the report, including Damian Onyema Ihedioha, Principal Agro-Industry Specialist, OSAN1; Rafael Jabba, Chief Investment Officer, EARC/OPSD; Mr. Tilahun Temesgen, Chief Regional Econo-mist, EARC; Mr. Linguere M. Mbaye, Consultant, EDRE and Mr. Girma Berhanu Bezabeh, Principal Transport Engineer, OITC2.

ACKNOWLEDGEMENTS

AFRICAN DEVELOPMENT BANK GROUP | vii

Sudan has a very substantial natural resource base that includes agricultural land, water, non-oil minerals and petroleum. Further development of the non-oil resource base can provide the foundation for successful eco-nomic diversification, whose need in Sudan has been recognised for some years now. However, with the oil boom during the 2000s, progress on this front has been very limited.

Following the secession of South Sudan in 2011, Su-dan has had to confront a wide ranging set of issues that have included a decline in the importance of oil as a key source of growth for the economy, a heavy external debt burden, international sanctions, and more recent-ly, a highly volatile macroeconomic environment char-acterised by major economic imbalances, and contin-ued internal conflict. The conflict in South Sudan poses a threat to continued oil flows. This chain of events has underscored the importance of restoring macro-economic stability and the adoption of programmes that will ensure that the non-oil economy becomes the major source of growth in the decade ahead.

Proposed Strategy for Diversification: A multi-pronged strategy is now required for a successful tran-sition to a well-diversified economy with a growth that is led by the private sector, and which is broad-based and inclusive. The greatest potential for new sources of growth in the near and medium-term are in further in-vestment by individual farmers and medium and large-scale commercial entities in agricultural production and value addition for the domestic and export markets. It will also be important to develop the non-oil mineral wealth of the country and the growing range of indus-trial activities in the medium and longer-term to diversify the economy further. This Report outlines a seven-point programme for diversification: (i) There must be early progress on establishing mac-

roeconomic stability as an essential foundation for substantial increases in private sector-led eco-nomic activity. The government has embarked on a stabilisation programme that has already begun to show results. It will take several years of prudent

management of fiscal, monetary and foreign ex-change policies to restore a stable macroeconomic environment that then improves the operating envi-ronment for private investment.

(ii) The proposed programme will require a substantial increase in the level of public and private invest-ment in the economy. Close attention has to be given to creating an environment that is condu-cive for investment by the private sector, includ-ing, for example, timely and cost effective business processes, appropriate regulatory oversight of business activity, and improved arrangements for private sector access to land for agricultural and industrial use.

(iii) Successful diversification will require programmes that promote domestic and offshore private invest-ments in the production of food and raw materials, and in manufacturing. These will require explic-it efforts to expand farm access to basic inputs, such as improved seeds and fertilizer, along with improved access to domestic and international markets.

(iv) The programme will also require substantial public and private investment in the physical infrastructure of the country that, at present, is seriously deficient. Such investment would need to be accompanied by programmes that accelerate the development of transport and communications services, and an improved supply of electric power and water.

(v) A large part of the required investment will have to be financed from the domestic market. This will necessitate the introduction of policies and pro-grammes that promote improvements in the mo-bilisation of domestic savings to secure a much larger share of such resource in the form of finan-cial assets that are held by banks and other entities responsible for domestic financial intermediation.

(vi) Sudan will have to expand its access to offshore financial resources, including IFIs and bilateral aid programmes that can provide ODA, and private capital markets. Addressing the problems associ-ated with the heavy debt burden of the country will be an important first step. A high priority must be

EXECUTIVE SUMMARY

viii | AFRICAN DEVELOPMENT BANK GROUP


attached to agreements with creditors in relation to Sudan’s debt servicing obligations, and to es-tablishing the conditions necessary for debt relief under the HIPC initiative. However, continued ap-plication of economic sanctions will limit the extent to which Sudan will be able to mobilise resources in international markets, a reality that underscores the importance of further development of the do-mestic capital market and exports that can gener-ate foreign exchange earnings.

(vii) The Government will need to take early action on a series of programmes that build capacities in the public sector at the national and state levels for the provision of basic services that support the proposed expansion in private business activities. These include skills development programmes for the labour force, improved government capaci-ties to implement programmes for development of infrastructure and other key services such as agricultural research and extension services, and complementary programmes that support the local business community.

The Proposed Programme Brings Substantial Economic and Social Benefits: The proposed diver-sification programme would provide large numbers of people with opportunities for productive employment and improved livelihoods. Building the policy frame-work and institutional capacities for successful diver-sification will take some time, however. It is for these reasons that the growth rate for non-oil GDP would rise steadily from recent levels of about 3 percent a year to 5 percent a year by 2020, and about 6 percent a year during the 2025-30 period. The non-oil economy would account for more than 90 percent of Sudan’s GDP during the 2014-30 period. Three broad benefits would flow from the proposed programme for diversi-fication:(i) The proposed broad-based and inclusive pro-

gramme of economic growth provides employ-ment and income opportunities for both rural and urban populations. GDP per capita increases by 3-4 percent a year during the 2014-30 period from about US$1,750 in 2013 to US$3,000 by 2030 (at 2012 constant prices). With broad-based growth of 5-6 percent a year from 2018 onwards, the non-oil economy creates substantial employment op-portunities for new entrants into the labour force, while contributing to a steady reduction in the 15

percent level of unemployment that has prevailed for more than a decade.

(ii) The programme contributes to poverty reduction. Economic growth of 5-6 percent a year from 2018, together with improvements in basic social ser-vices, could bring the incidence of poverty down from 47 percent of the population in 2012 to about 30 percent by 2030. The total number of people below the poverty line would decline from about 17.5 million in 2012 to 15 million by 2030.

(iii) The programme would create substantial new business opportunities in Sudan. Total investment expenditures during 2014-30 are projected to be about US$390 billion (at 2012 constant prices). Actions can be taken by government to ensure that domestic business and labour market benefit from these opportunities rather than accrue primarily to offshore suppliers of these goods and services.

Increased Investment is the Key Driver for the Programme: Annual fixed investment (at 2012 con-stant prices) would need to increase from about US$13 billion in 2014 (17.5 percent of GDP) to about US$37 billion by 2030 (24 percent of GDP). Private invest-ment in agricultural and industrial production and in in-creased provision of related services would account for about 87 percent of the total fixed investment during 2014-30. The main constraint on investment levels is the mobilisation of funding for the programme. The proposed level of investment will require an increase in the national savings rate from 17 percent of GDP in 2014 to 21 percent by 2030. The current shortfall in national savings is being made up with increased in-flows of offshore capital. FDI has been about 4 percent of GDP in recent years, but net inflows of other capital have been quite limited, in part because of outflows of capital for debt service and other claims.

Uncertainties about the Proposed Programme: There are two major uncertainties related to successful programme implementation. One is whether the cur-rent levels of national savings and access to external capital can be increased to the levels required for the proposed investment programme. The other relates to the pace at which capacity building programmes for the public sector can be executed to support improved productivity of private sector activities in the agricul-tural and industrial product markets, and to improve the operating environment for private business and

AFRICAN DEVELOPMENT BANK GROUP | ix

investment. The Report examines an alternative low growth scenario with limited progress on diversifica-tion. It also considers a high growth scenario with more rapid diversification. Continued economic sanctions are assumed to apply in both cases. The Low Growth Scenario assumes there are extensive delays in sealing agreements with creditors concerning the debt arrears, that oil revenues are lower than in the Moderate Growth Scenario, that there is slow progress in improving do-mestic savings performance and that offshore inves-tors are cautious about investing in Sudan.

With a continuation of the current low levels of public and private investment, GDP growth would be about 4 percent a year during the 2014-30 period. In the High Growth Scenario, the pace of diversification is more rapid than in the Moderate Scenario. Fixed investment increases to 29 percent of GDP by 2030. GDP growth increases to 7 percent a year by 2030, compared with 6 percent in the Moderate Scenario. Since the bulk of the additional financing for the programme has to come from the domestic market, the key issue is whether Su-dan can raise national savings from the current 17 per-cent of GDP to 27 percent by 2030.

x | AFRICAN DEVELOPMENT BANK GROUP


AAAID Arab Authority for Agricultural Investment and DevelopmentABS Agricultural Bank of SudanAfDB African Development Bank GroupADF African Development FundADI Agro Industries Development InitiativeAICD Africa Infrastructure Country DiagnosisAML Anti-Money LaunderingAOAD Arab Organisation for Agricultural DevelopmentARC Agricultural Research CorporationARIA Assessing Regional Integration in AfricaARP Agricultural Revival Programmebcm Billion cubic metersb/d Barrels per dayBDC Business Development CentreCAA Civil Aviation AuthorityCAADP Comprehensive Africa Agriculture Development ProgrammeCANARTEL Canar Telecommunications CompanyCBoS Central Bank of SudanCBS Central Bureau of StatisticsCISA Credit Information and Scoring Agencycif Cost, insurance, freight (for imports)CIS Commodity Inspection Services (company located in Sudan)CFA Cooperative Framework AgreementCMI Chr Michelsen InstituteCNPC Chinese National Petroleum CompanyCOM Council of MinistersCOMESA Common Market for Eastern and Southern AfricaCPA Comprehensive Peace AgreementCPIA Country Policy and Institutional Initiative (of World Bank)CPSS Committee on Payments and Settlement Systems (in Sudan)CSA Sudan Customs AuthorityDBI Doing Business Indicators (of World Bank)DCFB Densified Complete Feed BlocksDFID Department for International Development (UK)DJAM Dafur Joint Assessment MissionDNLR Distribution Network Loss ReductionDRC Democratic Republic of CongoDRC Domestic Resource CostDTMRB Densified Total Mixed Ration BlocksDSIS Direct Supervision and Implementation Support (of FAO)DTIS Diagnostic Trade Integration StudyDWT Dead Weight TonsEAC East African Community

ACRONYMS AND ABBREVIATIONS

AFRICAN DEVELOPMENT BANK GROUP | xi

EAPP East African Power PoolEASSy East Africa Submarine Cable SystemECA Economic Commission for Africa (of the UN)ECR Export Competitiveness RatioERCU Emergency and Rehabilitation Coordination Unit (of FAO)EU European UnionFAO Food and Agriculture OrganisationFDI Foreign Direct InvestmentFFAMC Fiscal and Financial Allocation and Monitoring Commissionfob Free on board (for exports) FRC Food Research InstituteFTA Free Trade AreaFYP Five Year PlanGDP Gross Domestic ProductGEF Global Environmental FacilityGFS Government Financial StatisticsGMC Government Musharaka CertificatesGMS Global Media Services (of Sudan)GNU Government of National UnityGoS Government of SudanGOSS Government of South SudanGRAS Geological Research Authority of SudanGWh Gigawatt Hoursha HectareHAACP Hazard Analysis Critical Control Point HCEANR Higher Council for Environment and Natural ResourcesHDI Human Development IndexHH HouseholdHIPC Heavily Indebted Poor CountriesHYV High Yield VarietiesIAIS International Association of Insurance SupervisorsICAO International Civil Aviation OrganisationICR International Competitiveness RatioICT Information & Communications TechnologyICTS International Container Terminal ServicesIDP Internally Displaced PersonIFAD International Fund for Agricultural DevelopmentIFC International Finance CorporationIFIs International Financial InstitutionsIGAD Inter-Governmental Authority on DevelopmentIMF International Monetary FundIPO Initial Public OfferingI-PRSP Interim Poverty Reduction Strategy PaperISA Insurance Supervisory AuthorityISO International Organisation for StandardisationISP Internet Service ProviderJAM Joint Assessment Missionkm Kilometreskm2 Square Kilometres

xii | AFRICAN DEVELOPMENT BANK GROUP


kph Kilometres per hourKSE Khartoum Stock ExchangeKtoe Kilo-ton of oil equivalentKV KilovoltsKWh Kilowatt Hour KYC Know Your CustomerLAPSSET Lamu Port South Sudan Ethiopia Transport corridorLCD Litres Consumed per DayLPI Logistics Performance Index (of World Bank)m3 Cubic metresM&E Monitoring and EvaluationMAN Metropolitan Area NetworkMoAF Ministry of Agriculture and ForestryMoAI Ministry of Agriculture and IrrigationMoARF Ministry of Animal Resources and FisheriesMDG Millennium Development GoalMDTF Multi-Donor Trust Fund (in Sudan)MoEM Ministry of Energy and MiningMoFEP Ministry of Finance and Economic Planning MoFNE Ministry of Finance and National EconomyMoI Ministry of IndustryMIS Market Information SystemMoLFR Ministry of Livestock, Fisheries and Rangelands mt Metric TonMoTRB Ministry of Transport, Roads and BridgesMoWRE Ministry of Water Resources and ElectricityMW Megawattn.a. Not availableNAIP National Agricultural Investment PlanNBFI Non-Bank Financial InstitutionNBHS National Baseline Household SurveyNBI Nile Basin InitiativeNBS National Bank of SudanNCC National Communications CorporationNEPAD New Partnership for Africa’s DevelopmentNGO Non-Government OrganisationNHA National Highways AuthorityNMPTF National Medium-Term Priority FrameworkNPC National Payments CouncilNPL Non-Performing LoanNSC National Steering CommitteeNSFAP National Food Security Action PlanNTC National Telecommunication NetworkNTMP National Transport Master PlanODA Official Development AssistanceOECD Organisation for Economic Cooperation and DevelopmentOFAC Office of Foreign Asset Control (of US Government)OMO Open Market Operationp.a. Per Annum

AFRICAN DEVELOPMENT BANK GROUP | xiii

PAM Programme Alimentaire Mondial (World Food Programme)PCA Permanent Court of Arbitration (in The Hague)PDOC Petrodar Development and Operating CompanyPICS Productivity and Investment Climate SurveyPPP Public Private PartnershipPRSP Poverty Reduction Strategy PaperPRSP Poverty Reduction Strategy ProgrammePWSC Public Water and Sanitation CorporationQMS Quality Management SystemR&D Research and DevelopmentRAMS Road Asset Management SystemRCA Revealed Comparative AdvantageRMCs Regional Member CountriesRTG Rubber-Tyre Gantry craneSDG Sudanese PoundsSEDCO Sudan Electricity Distribution CompanySETCO Sudan Electricity Transmission CompanySFSC Sudan Financial Service CompanySHS Solar Home SystemSIFSIA Sudan Institutional Capacity Programme: Food Security Information for Action (of FAO)SMDF Sudan Microfinance Development FacilitySMEs Small Medium EnterprisesSMP Staff Monitored Programme (of the IMF)SPC Sudanese Petroleum CorporationSPC Sea Ports CorporationSPLA Sudan People’s Liberation ArmySPLM Sudan People’s Liberation MovementSRC Sudan Railways CorporationSSA Sub-Saharan AfricaSSDB Savings and Social Development BankSSG Sea-to-Shore Gantry CraneSSMO Sudanese Standards and Metrology OrganisationSUDATEL Sudan Telecommunications CompanySV Shipment ValueSWSC State Water and Sanitation CorporationTEUs Twenty-Foot Equivalent UnitsTFP Total Factor Productivitytoe Ton of Oil EquivalentTQM Total Quality ManagementTSA Transitional Financial Agreement (between Sudan and South Sudan)TVET Vocational Education and TrainingTWh Terawatt HoursTYP Ten Year PlanUN United NationsUNAMID United Nations Hybrid Mission in DarfurUNDP United Nations Development ProgrammeUNECA United Nations Economic Commission for AfricaUNEP United Nations Environmental ProgrammeUNFPA United Nations Population FundUNHCR United Nations High Commission for Refugees

xiv | AFRICAN DEVELOPMENT BANK GROUP


UNIDO United Nations Industrial Development OrganisationU.S. United States of AmericaVAT Value Added TaxVSAT Very Small Aperture TerminalWAN Wide Area NetworkWASH Water, Sanitation and HygieneWB World BankWEF World Economic ForumWEO World Energy OrganisationWES Water and Environmental SanitationWFP World Food ProgrammeWGI Worldwide Governance IndicatorsWTO World Trade Organisation

CURRENCY EQUIVALENTSCurrency Unit = Sudanese Pounds (SDG)

FISCAL YEARFiscal Year = 1 January–December 31

WEIGHTS AND MEASURES1 kilogram (kg) = 2.204 pounds (lb)1 000 kg = 1 metric tonne (mt)1 kilometre (km) = 0.62 miles (mi)1 meter (m) = 1.09 yards (yd)1 square metre (m2) = 10.76 square feet (ft2)1 acre (ac) = 0.405 hectares (ha)1 hectare (ha) = 2.47 acres1 feddan (fed) = 0.42 ha = 1.038 acre1 square km = 100 hectares1 metric ton = 1,000 kilograms1 metric ton of oil = 7.452 barrels of oil

AFRICAN DEVELOPMENT BANK GROUP | xv

xvi | AFRICAN DEVELOPMENT BANK GROUP


AFRICAN DEVELOPMENT BANK GROUP | 1

1.1 Social and Political Setting

1.1.1 The Republic of Sudan is located in the Nile Valley of North Africa. It shares borders with Egypt to the north, the Red Sea, Eritrea and Ethiopia to the east, South Sudan to the south, the Central African Repub-lic to the southwest, Chad to the west, and Libya to the northwest. The Nile River divides the country into eastern and western halves. Following the secession of South Sudan in July 2011, the total land area of Sudan was reduced from 2,376,000sq.km to an es-timated 1,886,068sq.km. The topography of Sudan is divided into three regions – the deserts, the semi-arid Sahel region, and the wetlands and rain forests. The deserts in the north – the Nubian Desert to the east of the Nile, the Libyan Desert, and the rugged uplands to the northwest of the Nile – comprise about 30 percent of the area of Sudan. Central Sudan is characterised by the semi-arid Sahel region of steppes and low moun-tains. The southern part of Sudan has wetlands in the upper Nile area. The tributaries of the Nile – the White Nile and Blue Nile – meet in Khartoum. Sudan is en-dowed with significant natural resource wealth, metals and oil, and substantial areas of land suitable for culti-vation and pastoral activities.

1.1.2 The population is currently estimated at about 39 million people, 66 percent of whom live in rural ar-eas.1 About 80 percent of the rural population is sed-entary, while the remaining 20 percent is largely no-madic. The largest metropolitan area, Khartoum (which includes Khartoum, Khartoum North and Omdurman), includes some 6-7 million people, of whom approxi-mately two million are displaced persons from the 1 As the discussion in Annex 1 indicates, there are a number of estimates for the current

population of Sudan.

southern war zone and drought-affected areas in the west and east. Sudanese Arabs account for 70 percent of the population of Sudan, with the rest of the pop-ulation being Arabized ethnic groups of Beja, Copts, Nubians and other peoples. There are more than 597 tribes in Sudan speaking more than 400 dialects and languages. Sudan is almost entirely Muslim with most citizens speaking Sudanese Arabic.

1.1.3 The President of Sudan is head of state, head of government and commander-in-chief of the Sudan People’s Armed Forces in a multiparty system. Legis-lative power is vested in both the government and the bicameral parliament – the National Legislature made up of the National Assembly (lower chamber) and the Council of States (upper chamber). The Sudanese legal system is based on Islamic law. Sudan is divided into 18 states within which there are 133 districts. Sudan is a member of the United Nations, the African Union, the Arab League, the Organisation of Islamic Cooperation and the Non-Aligned Movement, as well as an observer in the World Trade Organisation.

1.1.4 As Table 1.2 indicates, Sudan has the fourth largest economy in Sub-Saharan Africa, with a gross domestic product (GDP) of US$160 billion when mea-sured in purchasing power parity (PPP) terms. Its GDP is approximately the same as that of Angola. And with a gross national income (GNI) per person of US$1,740, it is classified by the World Bank as a lower middle in-come country.

1.1.5 Sudan is ranked at 166 out of 187 countries in the UNDP Human Development Report for 2014, and is therefore regarded as one of the countries in

1. ECONOMIC PERFORMANCE IN RECENT DECADES

2 | AFRICAN DEVELOPMENT BANK GROUP



the world where human development is less advanced. Poverty is widespread with over 46 percent of the pop-ulation living below the poverty line. The incidence and depth of poverty are particularly high in the rural areas and conflict zones, while urban poverty is also on the rise. There has been some progress in achieving the Millennium Development Goals (MDGs) by 2015, but much more needs to be done. Unemployment is high, particularly among the youth. A significant number of the youth are new entrants to the labour market, thus creating pressure for jobs and income generating op-portunities, and posing social and political risks.

1.2 Internal Conflict and Economic Sanctions

Impact of Internal Conflict

1.2.1 Since its independence from British rule in 1956, Sudan has been plagued by rampant ethnic strife and internal conflict. The most pronounced were the First Sudanese Civil War (1955-1972) and the Sec-ond Sudanese Civil War (1983-2005) that culminated in the secession of South Sudan in July 2011.2 These conflicts were rooted in economic, political, and social domination of largely non-Muslim, non-Arab south-

2 For a more detailed assessment of the political and social issues Sudan faced in the post-independence period, see Deng, Francis M. (2007), Sudan at the Crossroads. Massachusetts Institute of Technology, Center for International Studies, March 2007. This article also includes a list of references that address various aspects of the conflict in Sudan during this period and, the challenges associated with bringing peace to the country.

ern Sudanese by northern Sudan. Peace talks gained momentum in 2002-04 with the signing of several ac-cords. The final North/South Comprehensive Peace Agreement (CPA), signed in January 2005, granted the population of southern Sudan autonomy for six years, followed by a referendum on independence for South Sudan. The referendum was held in January 2011 and indicated overwhelming support for independence. South Sudan became independent on July 9, 2011. Sudan and South Sudan have yet to implement ful-ly the security and economic agreements signed on September 27, 2012 relating to the normalisation of relations between the two countries. The final dispo-sition of the contested Abyei region (located between Northern Bahr al Ghazal, Warrap, and Unity states) has also to be decided. A referendum was scheduled for January 2011 to determine whether Abyei would join Sudan or South Sudan, but this did not occur because of disagreements over voter eligibility. Although uncer-tainties over border demarcation and the ownership of Abyei remain, the Heglig and Bamboo oil fields are con-

Table 1.1: Selected Economic Indicators for Sudan

Indicator 1960 1970 1980 1990 2000 2010 2012 2013 2014

Population ('000)

Female 3,751 5,099 7,181 9,962 13,812 17,764 18,534 18,918 19,742

Male 3,777 7,237 10,047 13,918 17,888 22,313 18,661 19,046 19,446

Total 7,528 12,336 17,228 23,880 31,700 40,077 37,195 37,964 39,188

Population growth rate (% p.a.) 3.0 3.2 3.6 3.2 2.5 2.3 2.1 2.1 2.1

Urbanization (%) 10.7 16.5 20.0 28.6 32.5 33.1 33.4 33.5 33.7

Population less than 15 years (%) 44.9 46.1 47.0 45.5 43.7 42.1 41.4 41.1 40.8

Permanent households ('000) 4,744 5,127 5,328 5,541

Average persons per household 6.2 6.0 5.9 5.8

National income per person (US$) 480 530 330 1,210 1,580 1,550 1,740

Adult literacy (% of adult population) 13 61 71 73

Life expectancy at birth (years) 49 52 55 56 58 61 62 62

Under 5 child mortality rate (per 1,000 births)

172 152 141 128 106 83 79 77

Maternal mortality rate (per 100,000 births)

720 540 390 360 360

Source: World Bank Development Indicator database and Annex Table 1.2.

Table 1.2: Five Largest Economies in Sub-Saharan Africa, 2014

Country Population GNI GNI per capita

GDP at PPP

Nigeria 149 527 2,950 1,049

South Africa 54 367 6,200 705

Angola 52 117 5,300 175

Sudan 39 67 1,740 160

Kenya 46 56 1,280 133

Source: World Bank development indicators database.



sidered today to be in Sudan state of South Kordofan.3

1.2.2 The war in Dafur (2003-2010) that broke out in the western region of Darfur in 2003 displaced nearly two million people and caused an estimated 200,000 to 400,000 deaths. Violence in Darfur in 2013 result-ed in an additional estimated 6,000 civilians killed and 500,000 displaced. The UN and the African Union have jointly commanded a Darfur peacekeeping operation known as the African Union-United Nations Hybrid Mission in Darfur (UNAMID) since 2007. Peacekeep-ing troops have struggled to stabilise the situation, and have increasingly become targets for attacks by armed groups. Several regional administrative bodies have been established by peace agreements between the central government and rebel groups. Since South Su-dan’s independence in 2011, conflict has also broken out between the Government and the Sudan People’s Liberation Movement-North (SPLM-N) in Southern Kordofan and Blue Nile states, which has resulted in 1.2 million internally displaced persons (IDPs) or se-verely affected persons in need of humanitarian assis-tance.

1.2.3 The United Nations High Commission for Ref-ugees (UNHCR) reports that there were more than 2.3 million internally displaced persons (IDPs) in Sudan in mid-2015.4 Meeting the emergency needs of these people for food and shelter, and in the longer-term ensuring their reintegration within Sudan will remain a major challenge for the Government and partners such as UNHCR, the World Food Programme (WFP), the World Health Organisation (WHO) and other interna-tional agencies. In the longer-term, explicit strategies and programmes will be required to facilitate the entry of IDPs into the labour force. There is a continuing need for close collaboration between the Government and these international agencies to address the livelihood, education and health needs of these people. In that connection, there may be merit in undertaking a review of the experience of other African countries in dealing with conflict and post-conflict interventions. Some of these experiences may provide valuable guidance for further development of programmes in Sudan.3 Oil was discovered in Abyei in 1979, which escalated tensions between the North and

the South. The Abyei Boundary Commission was authorised to define the territory, and in 2005, it ruled that the Heglig and Bamboo oil fields fell within Abyei. The North contested the ruling because it placed a significant portion of its oil reserves in the disputed territory. The dispute was later sent to The Permanent Court of Arbitration (PCA) in The Hague. In 2009, the PCA redefined the Abyei area and placed Heglog and the Bamboo fields outside of Abyei.

4 See the 2015 UNHCR country operations profile – Sudan, at www.unhcr.org/pag-es/49e483b76.html for details about refugee and IDP populations in Sudan.

1.2.4 Sudan also has faced refugee influxes from neighbouring countries, primarily Ethiopia, Eritrea, Chad, Central African Republic, and more recently, South Sudan. The UNHCR (2015) estimated that there were about 371,000 refugees and asylum seekers resi-dent in Sudan in June 2015. The influx of refugees from Eritrea and South Sudan is expected to continue. The Government has worked closely with the UNHCR to register refugees and address the needs of this popu-lation.

Economic Sanctions

1.2.5 Economic sanctions were imposed on Sudan by the United States in 1997 following the escalation of tensions between South Sudan and North Sudan, and the intense fighting between the Sudan People’s Liberation Army (SPLA) and Sudan’s armed forces and militias. At the outset, the sanctions banned trade, aid and bank transactions, under which the Sudan bank-ing sector was denied access to the US dollar clear-ing system in New York. The accounts and deposits of Sudan government banks with US banks were frozen. The Central Bank of Sudan (CBoS) adopted a policy of avoiding use of the New York dollar clearing system and instead used other correspondent banks or other currency clearing systems (for example, Euros, Saudi Riyals, and Dirham). These early sanctions increased the cost of doing business, but the private sector still managed to function. However, following the Septem-ber 2001 attack in New York Towers, the US spear-headed the implementation of Know Your Customer (KYC) and Anti-Money Laundering (AML) rules. Cen-tral banks, including CBoS, had to adopt those rules. The strict application of KYC and AML rules by major international central banks, together with institution of compliance departments inside each and every bank, led major international banks to adopt additional gov-ernance and transparency rules, and in some cases go to the extreme of avoiding transactions not only with governments of sanctioned countries, but also with pri-vate business or individual nationals residing in these countries.

1.2.6 Since the beginning of Peace talks between North and South Sudan in 2002 and up to 2005 when the comprehensive peace agreement was signed, the impact of the sanctions was not severe. In fact, during


the peace talks, the US government undertook to lift the sanctions if the peace accord was signed. Howev-er, when the Darfur crisis started in 2004, the US decid-ed against lifting the sanctions. In 2008-09, the impact of sanctions on private business activity and individuals became more severe when Barclays Bank of the UK started closing accounts of Sudanese private entities and individual nationals that had resident addresses in Sudan. The action by Barclays was later followed by Lloyds, NatWest, Standard Chartered, HSBC and oth-er banks.

1.2.7 In the United States, the Office of Foreign As-set Control (OFAC) of the Treasury administers and enforces comprehensive or selective economic and trade sanctions imposed on individual countries by the US government.5 It monitors international and banking transactions of all major international banks, especially with the sanctioned countries, and applies hefty financial fines on banks doing business with such countries. More recently in 2014, the European Union issued sanctions on Sudan, but these actions were not reported in the media as was the case for the US.6 The Sudan European Union Financial Sanctions regulations of 2014 follows the American model in its compliance requirements related to KYC, AML and terrorist financ-ing, with detailed provisions for information gathering and information disclosure on bank customers. As a re-sult of growing concerns about compliance with these requirements, several large international banks have been cutting off customers. According to The Econo-mist of July 5, 2014, some key international banks have dropped as much as a third of their correspondent re-lationships to avoid the risk of financial penalties being

5 According to the website of the OFAC, currently, there are comprehensive or selective sanctions against 18 countries, including Sudan.

6 See www.legislation.gov.uk/uksi/2014/note/made.

imposed by regulators on AML and KYC issues.7 The total fines imposed on international banks for violating US sanctions was reported by The Economist to be US$19.2 billion.

1.2.8 The number of international and regional banks willing to do business transactions with Suda-nese entities diminished considerably in 2014 as a di-rect consequence of the sanctions and the huge fines imposed. Also, there are now undeclared sanctions on Sudan by some Arab and Asian banks. The implica-tions of these restrictions are clear. In addition to driving up the cost of banking services in Sudan and shrinking the banking network, there is likely to be an indirect impact on the economy, particularly on employment levels, exchange rates and inflation. The indicators are likely to show a worsening scenario. As more and more international and regional banks avoid transactions with Sudanese entities, the cost of doing business in areas of export and import trade financing has become exceptionally high in Sudan. This has made it difficult and in some cases impossible for private sector entities (especially SMEs) and Sudanese nationals to conduct simple banking transactions. The Sudanese diaspora is resorting to informal, high cost, time consuming and risky ways to make transfers to their families in Sudan. Informal reports within Embassies, multilateral/bilateral institutions and other entities in Sudan who are exempt from sanctions are also affected by the refusal of for-eign correspondent banks to process foreign exchange transactions.

7 The Economist reported that on June 30th 2014, prosecutors and regulators an-nounced a US$8.9 billion fine they planned to impose on BNP Paribas, France’s largest bank, for evading American sanctions on doing business with Cuba, Iran and Sudan.

Table 1.3: Growth in Sudan Labor Force

Indicator 1990 2000 2005 2010 2011 2012 2013 2014

Population 15-64 years (‘000) 10,324 14,777 16,980 19,539 20,068 20,592 21,124 21,678

Labor force 5,750 6,766 7,728 10,479 10,790 11,110 11,443 11,782

Unemployed labor force 817 968 1,175 1,551 1,597 1,644 1,694 1,744

Employed labor force 4,934 5,798 6,554 8,928 9,193 9,466 9,749 10,038

Memo items:

Labor force growth (% p.a.) 3.0 3.0 3.0 3.0 3.0

Participtation rate (%) 55.7 52.3 53.0 53.6 53.8 54.0 54.2 54.4

Unemployment rate (%) 14.2 14.3 15.2 14.8 14.8 14.8 15.2 15.2

Source: Annex Table 1.4.



1.3 Demographic Change and Labour Force Growth

1.3.1 As Table 1.1 indicates, the population of Su-dan is currently growing at about 2.1 percent a year, having declined from much higher growth rates in the 1980s and 1990s. In the early 1990s, for example, the population growth rate was about 4.2 percent a year, due to a rapid decline in death rates and a large inflow of people from other countries. Since the mid-1990s, there has been an appreciable slowdown in the pop-ulation growth rate as a result of a steady decline in the natural rate of population increase in Sudan and substantial outmigration. The population is relatively young, with about 40 percent below 15 years present-ly, down from a peak of about 47 percent in the 1980s. Life expectancy has increased from 49 years in 1960 to about 62 presently. The very high child and maternal mortality rates have also declined, although Sudan still has one of the highest maternal mortality rates in the world.

1.3.2 The urban population of Sudan grew rapidly during the 1960-2000 period, with the average growth of about 6.3 percent a year. As a result, the urbanisa-tion rate increased from about 11 percent in 1960 to 33 percent in 2000. In the past decade, the growth in urban population has slowed to about three percent a year. The total urban population is currently about 13 million. It is projected to continue increasing by about three percent a year to a total of about 21 million by 2030, at which time almost 40 percent of the popula-tion would be in urban areas.

1.3.3 As Table 1.3 indicates, the labour force of Sudan currently consists of about 12 million people. The overall labour force participation rate is about 54 percent, with female and male participation rates of 31 percent and 76 percent respectively. The market is du-alistic, with the co-existence of both rural and urban markets that correspond broadly to modern and tradi-tional production systems. The urban sector employs 34 percent, with the other 66 percent employed in rural areas and mainly in agriculture. A significant share of the rural labour force is self-employed as smallholder farmers, along with a portion of the rural workforce that is employed on mechanised farms, on farms with ir-rigation and on larger commercial farms. The work is seasonal because of the nature of the inter-year varia-

tion in rainfall. There are also intra-year variations due to weather and production and prices. There are thus considerable risks, and some use crop sharing. The public sector is a big employer and there is a large in-formal economy. 8

1.3.4 Population movement and labour migra-tion have historically been very high in Sudan. In the pre-modern economy, nomads in most of the coun-try had seasonal movements in search of pastures. These were spread all over the country, particularly in Kordofan, Darfur, the Blue Nile and Eastern Sudan. The establishment of irrigation schemes in central Sudan and the need for seasonal agricultural labour resulted in large migration from the less fortunate areas. During the 1980s, population movements were also reinforced by droughts, conflicts and the regional disparities in ac-cess to economic opportunities and basic health and education services. As a result, there was significant migration from rural to urban areas. According to the United Nations Population Fund (UNFPA), in 2007, about 3.7 million people reported they were new mi-grants to where they were staying at that time.

1.3.5 In the past decade, new entrants into the Su-dan labour market averaged about 280,000 a year. However, with a labour force growth rate of about 3 percent a year since the early 1980s, and a combination of moderate economic growth and limited skills devel-opment in the labour force, the unemployment rate has remained at 14-15 percent for more than two decades, with unemployment among the youth at 25 percent. The country has not been able to generate enough jobs for young, new entrants into the labour force. A large number of college graduates have been unemployed, suggesting either a low level of job creation for these entrants into the labour force or a mismatch between skills and labour market demands. Consequently, the returns to education have not been high. As the discus-sion in Chapter 9 indicates, the number of universities and graduates increased considerably in 2000. How-ever, the quality of education has declined.

1.3.6 Following the secession of South Sudan in 2011, the majority of Southern Sudanese in (north) Su-

8 According to the 2011 Labour Survey, 8.9 million people aged 15 years and above participated in the labour market in 2010, with paid employment accounting for 42 percent, own-account work, 39 percent, and unemployed, 19 percent. Despite the relatively high share of the wage economy, the rate of unemployment among the young aged between 15 and 24 was reported to be 33 percent. The growing level of unemployment among young adults is a matter of concern, in view of the lack of unemployment insurance schemes and the weak formal social protection institutions.


Table 1.4: Growth Performance and Structural Change Since 1960

Sector Pre-Oil Export Period Oil Export Period

1960-69 1970-79 1980-89 1990-99 2000-10 2011 2012-13

Average annual growth of GDP at 2012 constant prices (% p.a.)

Agriculture 3.8 3.0 7.1 5.4 -14.7 4.9

Industry

Petroleum - - - - 35.5 -16.3 -17.0

Manufacturing 3.1 4.2 6.3 9.8 8.6 9.8

Other industry 3.6 0.3 8.7 9.0 -14.7 4.9

Sub-total 2.9 2.5 6.6 12.0 -3.0 -3.5

Services

Commerce, hotels, restaurants

6.3 2.9 4.7 0.8 2.4

Transport & communications

2.1 4.9 8.7 -2.3 4.3

Government services

2.6 10.4 10.5 -15.1 -2.1

Other services 8.2 3.9 5.3 -5.9 2.3

Sub-total 6.1 4.5 4.0 7.0 -6.6 1.6

GDP 1.4 4.3 4.1 5.1 7.5 -8.1 2.0

Non-oil GDP 1.4 4.3 4.1 4.9 6.9 -7.5 4.2

Composition of GDP (at current market prices)

Agriculture 41.9 36.8 34.3 40.3 34.1 34.1 33.5

Industry

Petroleum - - - 0.6 8.3 5.0 3.3

Manufacturing 5.7 6.0 7.2 6.1 8.4 8.7 8.9

Other industry 7.5 6.4 6.8 6.0 5.6 6.7 7.5

Sub-total 13.2 12.4 14.0 12.7 22.3 20.4 19.7

Services

Commerce, hotels, restaurants

19.0 20.6 15.5 16.4 16.6

Transport & communications

9.7 9.4 11.5 13.1 13.4

Government services

6.8 3.5 5.2 5.4 5.5

Other services 11.7 11.2 9.5 8.7 9.4

Sub-total 35.5 39.9 47.2 44.7 41.7 43.6 44.9

Indirect taxes & subsidies

9.4 10.9 4.5 2.3 1.9 1.9 1.9

GDP 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Annex Tables 2.1 and 2.4.

dan migrated to their new country. Also, highly skilled labour left Sudan seeking jobs abroad. About 1.3 mil-lion relocated to Arab countries and elsewhere. The outmigration has resulted in substantial brain drain in the country, although this group now constitutes an important source of remittances to Sudan. Skills shortages in the domestic labour force resulted in a large inflow of skilled labour from abroad during the oil boom. The UNFPA estimated the presence of 750,000 foreign workers in Sudan in the 2000s. Informal esti-mates suggest that the share of the oil industry in total employment was only 0.01 percent. This is very small compared to the contribution of the subsector to GDP

value added. The three establishments from the oil sec-tor included in the Comprehensive Industry Survey of 2005 show a total employment of 845. Yet wages in the oil sector were 18 times the average national wage.

1.3.7 According to the labour force projections set out in Annex Table 1.4, the number of new entrants into the labour force will rise sharply in the decade ahead. A total of 6.5 million people are projected to enter the la-bour force during the 2015-25 period, equivalent to an average of 650,000 a year. The new entrants are pro-jected to increase to an average of 700,000 a year in the period 2025-30. Absorbing the substantially larger



number of new entrants into productive employment in the labour market over the next 10-15 years represents a major challenge. The challenge can only be met if there is sustained strong growth in the non-oil econo-my of Sudan, along with a range of policies that ensure the growth is broad-based and inclusive.

1.4 Patterns of Development Since Independence

Overview

1.4.1 Notwithstanding several economic plans and many years of development experience, Sudan has not made it beyond the factor-driven stage of economic development.9 The country’s dominant source of com-petitive advantage and exports rests with natural re-sources (arable land, pasture, minerals, fossil energy and abundant water) and labour. Economic activities centre on primary commodity production, relatively simple manufactured products and a range of services. However, there have been three distinct phases in Su-dan’s development since independence: • In the first one, from 1956 to 1998, primary agricul-

tural production was the major source of economic growth.

• In the second phase, between 1999 and 2010, growth was driven by a significant increase in oil production.

• In the third phase, which is ongoing, the role of oil in the Sudan economy has been reduced substan-tially by the secession of South Sudan in 2011.

1.4.2 The dynamics of the first two phases differ from each other,10 while the salient features of the post-oil era are still unfolding. With the sudden drop in oil revenue in the past year, the country has to turn back to its pre-oil sources of growth and tap into its previously accumu-lated assets while venturing into new frontiers. Sudan also needs to look back on its development experience and reflect on the challenges dealt with and constraints encountered in order to draw lessons needed to design a strategy for revitalising the economy and overcoming the current development bottlenecks.9 A factor-driven economy, by definition, competes primarily with its natural resources

and low prices. Businesses invest in primary production that occupies an initial phase in the value chain. The economy is vulnerable to fluctuations due to various external shocks. Subsequent stages are the efficiency-driven stage and the innovation-driven stage. See World Economic Forum (2008), The Global Competitiveness Report, 2008-2009. Global Economic Forum, Geneva, Switzerland, 2008.

10 For a more detailed discussion of the analytical framework that underpins the analysis of this period in this Chapter, see Robert E. Lucas (1988). “On the Mechanics of Eco-nomic Development.” Journal of Monetary Economics 22 (1988) 3-42.

Sluggish Growth in the Pre-Oil Period

1.4.3 On the eve of its independence, Sudan had a predominantly agricultural economy that provided live-lihoods for the majority of the population. Agricultural activities accounted for 61 percent of GDP and gener-ated over 95 percent of the country’s foreign exchange earnings. Industry contributed a little over one percent of GDP founded on vegetable oil extraction, laundry soap plants, ginning factories, spinning and weaving mills, sugar processing and few other consumer goods industries. Agriculture was based on traditional rain-fed subsistence farming, a nomadic pastoral system of production and a small but important modern sys-tem of irrigated land driven by the public sector mainly to produce cotton. The latter consisted of 210,000ha (500,000 feddans) of land put under gravity irrigation, including a little more than 100,000ha in the Gezira scheme that was established by the British colonial administration after building the Sinnar Dam on the Blue Nile River in 1925. Another 41,200ha in Gash and Baraka river deltas in Eastern Sudan was farmed us-ing flush irrigation. Some 71,000ha in the Blue Nile and White Nile basin in central Sudan was also cultivated and put under pump irrigation.

1.4.4 Pressed to meet the high expectations of the people after independence, the government started a process of physical capital accumulation and spend-ing on social and economic infrastructure. However, the accumulation and public spending processes soon came to a halt. Low levels of domestic savings resulted in constrained investment levels in the economy, and with limited foreign exchange earnings, the acquisi-tion of capital goods required for increased production capacities was also constrained.11 These constraints played an important role in limiting the growth of the pre-oil economy of Sudan. However, as the analysis in Chapter 3 indicates, the deeper reasons have to do with poor public spending choices, inefficient project implementation, flawed macroeconomic and develop-ment management, and failures to enhance efficien-cy, productivity, entrepreneurship, innovations, export earnings, savings and investment.

1.4.5 During this post-colonial pre-oil era, growth

11 This so-called two-gap economic model was first developed by Chenery et al (1962) and was later extended to include a fiscal constraint that limited public investment needed to support growth (Taylor, 1990). For the case of Sudan, see World Bank (El-Shibly M. and Anthony Philip Thirlwall, “Dual-Gap Analysis for the Sudan”. World Development. 1981, vol. 9. Issue 2, pages 193-200.


was volatile and was shaped by the following policies and programmes:• Expansion of large public sector irrigated schemes

in central Sudan, producing cotton, sugar, oil seeds and cereals.

• Expansion by smallholders in traditional rain-fed farms producing food for subsistence, cash crops and animals products for local and foreign markets.

• Investment by the private sector in pump irrigated schemes producing cotton, food and export crops.

• Expansion by the private sector in rain-fed mech-anised farms producing cereals and oil seeds.

• Import substitution in industry led by the private sector, with a focus on basic consumer goods and agro-processing.

• Increase in non-tradable services, such as con-struction, finance, real estate and government ser-vices.

1.4.6 In 1960, the government adopted the 10-Year Plan for Economic and Social Development (1961-71). On the basis of this, the public sector invested in ir-rigated agriculture (the Managil Extension of the Ge-zira Scheme, Khasm al Girba, Junaid Sugar Irrigation scheme, and the Roseires Dam). The private sector, on the other hand, invested in pump schemes and rain-fed mechanised farming. Additionally, in an attempt to diversify the economy, the government made direct in-vestments in manufacturing and tried to simulate private investment in the sector by adopting “The Enterprise Concession Act” in 1956. The Act offered protection from foreign competition through tax exemptions and subsidies. It also set up the Industrial Bank of Sudan to help finance industry. These measures encouraged several manufacturing investments. The government also established the Ministry of Industry and Mining in 1966 and enacted the Organisation of Industrial Invest-ment Act 1967, which offered favourable terms for the local and foreign investors in resource based activities, agro-based industry. The main characteristics of these industries were that they required simple skills and were labour intensive, but with little value added. The plants were largely of small or medium size. However, with limited domestic resource mobilisation and capacity for exports, international reserves were soon depleted and a fiscal deficit arose.

1.4.7 A series of development plans, including a “Five-year Plan”, an “Interim Action Programme” and

“Sixth-year Plan”, reflected unsettled policy direction. Just before the end of the 1970s and despite various problems, there was optimism about the future of man-ufacturing and private sector diversification.12 However, in 1970, the government nationalised and confiscated tens of enterprises in banking, commerce and industry, only to reverse its policies and undo its nationalisation measures in 1972. A period of peace and access to foreign finance helped the government to invest in in-frastructure projects (Khartoum-Port Sudan highway), agriculture (Rahad, Stait, Es Suki and Kenana projects) and industry (textiles). However, the imports of capital and intermediate goods were not matched by a cor-responding rise in export capacity. The development projects were not export-oriented and the existing ir-rigated schemes witnessed decline in the exportable surpluses (both of cotton and groundnuts). As the 1970s advanced, the trade gap and current account deficit both increased. Concessional borrowing dimin-ished and the government was forced to shelve its in-vestment projects and borrow on a commercial basis. Subsequently, the government had difficulties in meet-ing its debt obligations. Officials met with the Paris Club creditors and then adopted a stabilisation and adjust-ment programme.

1.4.8 However, the economic performance contin-ued to deteriorate during the 1980s, largely because of the collapse of the peace agreement in 1983, the resumption of the civil conflict in the South, a severe drought in 1983/84 and influx of refugees from neigh-bouring countries. Economic conditions deteriorated and the government incurred large budget deficits averaging 11.3 percent of GDP. Inflation accelerated, averaging 37 percent a year. Investment, exports and savings collapsed and GDP growth slowed down. The government decided in 1987 to restrict its debt repay-ments to 25 percent of the budget, but that led to an accumulation of arrears in external debt service pay-ments that has persisted to the present day.

1.4.9 In the beginning of the 1990s, the new gov-ernment gave contradictory signals about its policy orientation. Self-sufficiency was a major objective in its development policy, even if it was to come at the

12 One expert wrote “there is every reason to believe that within the coming decade or two the Sudan will be self-sufficient in the production of a wide range of consumer goods with even a surplus to export. Already, the country is either self-sufficient or produces the bulk of such goods as confectioneries, edible oil, biscuits, beer, spirits, soap, matches, footwear, low grade cotton goods, paints, batteries, and refrigerators (Bushra, 1972, p. 28).



expense of allocative efficiency. The government also resorted to price and import controls and introduced export retention control. However, faced with a failure of its administrative price regime, the government soon switched to a more liberal policy. In 1992, it adopted “the Comprehensive National Strategy for Economic Development” that included a harsh stabilisation pro-gramme and control of public expenditures through a cash budget system. It also lifted subsidies, privatised some of the public-owned enterprises and floated the exchange rate. With no external support to ease the adjustment, the value of the local currency fell and do-mestic prices and wages rose significantly. Fortunately, favourable weather conditions and an increase in ag-ricultural production due to price incentives led to im-proved growth performance. In the latter part of the de-cade, investment in oil and oil related industries helped the economy to pick up.

Onset of the Oil Boom in 1999

1.4.10 The first oil discovery in the Sudan was made by the Chevron Corporation following exploration at the border between Kordofan region in North Sudan and the Upper Nile region in South Sudan. However, Chevron pulled out due to lack of security in the area. The areas with known oil reserves and potential were in a war zone that involved conflict between the gov-ernment and the Sudan People’s Liberation Movement (SPLM). To its credit, the government of Sudan worked against all odds to stimulate the interest of foreign com-panies to invest in oil. After the withdrawal of Chevron, the Chinese National Petroleum Corporation (CNPC), which was later joined by the Malaysian PETRONAS and the Indian Oil and Natural Gas Company, devel-oped the oil fields. It constructed 10,506 kilometres of oil pipelines to a terminal in Port Sudan in 1999, and established a refinery north of Khartoum. A series of other discoveries resulted in increased oil production that peaked at about 580,000 barrels/day.

1.4.11 The oil produced is shared in accordance with an arrangement that divides it into a cost portion and a profit portion. The investment cost incurred by the oil companies is recouped from the portion allocated for cost. The profit portion is shared between the gov-ernment (70 percent) and the companies (30 percent). The arrangement is intended to allow oil companies to recover the investment cost in five years, though the

actual period taken for cost recovery depends on the volume produced and the international prices of oil. Af-ter the companies recover their investment cost, the government’s return increases.

1.4.12 The government revenue generated from oil consists of its share of the income from export earn-ings and domestic sales less the cost of transporta-tion through the pipeline and refining, in addition to the share of its company, Sudapet. The payments to CNPC for the construction of the refinery were made out of the government’s share of the oil revenues.

1.4.13 In 2005, the Comprehensive Peace Agree-ment (CPA) between the Government of the Sudan and the SPLM included provisions for sharing electricity and oil revenues between the two parties. The successful conclusion of the peace agreement resulted in a rise in oil production that reached 550,000 b/d by 2010. Government’s revenue increased sharply. But the fact that the CPA included the secession option meant that there was a risk the oil revenue during the six years prior to the referendum would be a short-lived windfall.

1.4.14 Economic Impact of the Oil Industry. The immediate impact of the oil boom was an accelerated GDP growth. In each of the first two years (1999 and 2000), GDP grew by more than 20 percent. As Table 1.4 indicates, during 2000-2010, GDP grew by an av-erage of 7.5 percent a year in real terms. Total GDP increased from US$33 billion in 1998 to US$74 billion in 2010 when measured in 2012 constant prices and exchange rate. As a result, there was a significant in-crease in national income per capita in this period (from US$330 in 1998 to US$1,210 in 2010). The accrual of oil revenue to the government also increased substan-tially with the share of total government revenue to GDP increasing from 7 percent in 1998 to a peak of 22 per-cent of GDP in 2008. The expenditures by the national government increased from about 8 percent of GDP in 1998 to a peak of almost 23 percent by 2007 (Annex Table 2.5). National savings increased, investment rose and the trade and external sector balances improved. Oil revenue also created some space for increased ex-penditures on infrastructure. The availability of fuel for local consumption, including electricity generation, re-duced the energy shortages and disruptions. However, as discussed elsewhere in this Report, the sale of fuel oil was heavily subsidised by the government for much


of the oil boom period.

1.4.15 During the oil boom era, significant progress was made in developing roads transport, electric-ity generation and communications. More roads and bridges were constructed and electricity was generat-ed. The Khartoum-Dongola road in Northern Sudan, Khartoum El Obied to Western Sudan, Khartoum-Ko-sti road along the White Nile and the link from Gedarif to the Ethiopian border in Eastern Sudan, were con-structed. The completion of Merowi dam in 2009 and the Roseires dam in 2013 brought the total installed electricity generation capacity to about 5,443 MW by end of 2013. These dams resulted in a significant shift to the cheaper and more environmentally friendly hy-dro-power. There was also a noticeable improvement in the telecommunication system with substantial addi-tional private investment in the mobile network. Mobile penetration soared from less than one percent in 2000 to 33 percent by 2009. As Chapter 8 indicates, the penetration has continued to increase rapidly.

1.4.16 The Sudanese experience is a typical case of an economy that tumbled into low-cost oil production with large inflows of foreign exchange into the country. The oil revenue had far reaching impact on the coun-try, generating many advantages; but there were losses and, at the same time, missed opportunities. Whether the discovery and exploitation of oil during the 1999-2011 period brought with it a “curse” to Sudan or not remains a matter of some controversy.13 The rapid GDP growth in the 2000s was due to expansion in oil pro-duction rather than agriculture, which had been the predominant source of growth in the economy prior to the oil boom. The oil sector remained somewhat of an enclave with limited spill-over effects, mainly in the transport services sector and construction activi-ties. However, as Chapter 7 indicates, much of these services were provided by foreign firms with only lim-ited subcontracting to domestic companies. Sudan’s growth in this period was mainly a reflection of the ex-pansion in oil production, and not growth in produc-tivity or the deployment of oil revenue to build non-oil sectors. The impact of the oil revenue during the 1999-2011 period can be summarised as follows:

13 There is an extensive literature on the so-called “Dutch Disease” effect that stems from large inflows of foreign exchange from export of natural resources such as oil and other minerals. For a further discussion on the impact of the oil boom in Sudan, see, for example, Samia Satti Osman Mohamed Nour (2011), “Assessment of the Impact of Oil: Opportunities and Challenges for Economic Development in Sudan.” African Review of Economics and Finance, Vol. 2, No. 2, June 2011.

• Positive impact on growth, macroeconomic indica-tors and investment.

• Some investment in social and economic infra-structure.

• Adverse relative price allocative effect on the trade and non-oil sector.

• Weakening of governance and deterioration in the social capital.

• Widening regional and income inequalities.

1.4.17 In contrast to the pre-oil period, the savings and foreign exchange gaps became less binding. However, the oil sector was a small, capital-intensive enclave that did not have direct linkages with the rest of the economy. Neither did it generate large amounts of employment. Its economic impact was felt in three ways: first, through its effect on relative prices (the for-eign exchange rate, wages and price of goods), result-ing in a bias against the domestic trade sector; second, through the volume, composition, quality and efficiency of public spending; and third, through weakened in-stitutions. The oil windfall did not have any significant positive effect on economic diversification.

1.4.18 The impact of the oil flows was transmitted throughout the economy largely by increased govern-ment spending and larger inflows of foreign direct in-vestment. However, the direct linkages of the oil sector with the non-oil economy remained weak. In a typical case of the “Dutch disease” phenomenon, the increase in oil exports led to appreciation in the value of the lo-cal currency. Wages also rose and the prices of such non-traded goods as housing, restaurants and hotels soared. This gave rise to a bias against the domestic traded goods and left an adverse impact on the non-oil

Table 1.5: Population and GDP After Secession

Indicator 2010 2011

Population ('000)

Sudan 35,652 36,431

South Sudan 9,941 10,381

Total 45,593 46,812

GDP (US$ mill at current prices)

Sudan¹ 70,340 70,131

South Sudan² 16,339 20,782

Total 86,678 90,914

Memo item

Sudan GDP² (US$ mill) 65,632 67,321

Source: Population data from Annex Table 1.2. Note: 1. GDP in SDG mill from Annex Table 2.1; 2. GDP from World Bank development indicators database.



sector.14 A study by Maxwell Stamp Plc (2009) noted that “notwithstanding the performance of some partic-ular sectors, livestock in particular, by the 1980s and 1990s, Sudan turned from a dynamic and diversified exporter to a stagnant exporter with a very narrow ex-port portfolio in terms of markets and commodities”. 1.4.19 Impact on the institutional environment. Another serious impact was the loosening of guards against the misuse of public funds and corruption, de-scribed as government lapses during the oil boom. The high cost of civil construction, the surge in non-per-

14 A World Bank Report issued in 2003 about Sudan specifically alluded to the downside risks of oil production, arising from oil price fluctuations (which could complicate fiscal management), a harmful appreciation of the value of the local currency (as a result of large foreign receipts), rising wages, increase in the prices of non-traded goods, and diminished traditional exports. An IMF Article IV report (2000, p 21) also warned that “the overall challenge to the authorities will be to design a medium term policy which best harnesses the oil revenue inflows in the most productive manner while avoiding the dangers in mishandling oil revenue experienced by many other countries”.

forming loans (NPLs) in the banking system, the con-struction of large infrastructure projects in far flung areas, excessive cost and time overruns in public in-frastructure projects and a large amount of contractu-al obligations by the government have been cited as signs of weakened governance. The worst impact was not the loss of the money appropriated, but the dam-age to institutions and social capital. The loose pres-sure on scrutinising public expenditure led to invest-ment in projects with poor returns, either as a result of political pressure or mismanagement. It also created an environment for corruption and patronisation. Addition-ally, it led to the weakening of government institutions. The polarisation in the society and the ensuing military conflicts stemmed, in part, from increasing income in-equality in the country.15

Impact of South Sudan’s Independence

1.4.20 The secession of South Sudan in July 2011 had substantial economic consequences for (North) Sudan. As Table 1.5 indicates, about 10 million people were resident in South Sudan at the time of separation. The Sudan Government reports that the GDP of (North) Sudan was about US$70 billion in 2011, while the World Bank reports that the GDP of South Sudan was about US$20.8 billion in the same year – or about 23 percent of the combined total prior to the secession.16

15 Income inequality increased as a result of the oil boom. According to the CIA (2013), the lowest 10 percent of the households accounted for only 2.7 percent of the national income, while the top 10 percent of households accounted for 26.7 percent of income in 2009 (CIA Country Facts Book, 2013).

16 There is a range of estimates for the GDP of Sudan as reported by the UN, IMF and World Bank. As Table 4.1 indicates, the estimates of the World Bank for this period are somewhat lower than that of the Government. See Annex 2 for a further discussion of these differences.

Table 1.6: Key Economic Indicators for Sudan and Comparator Countries, 2012

Indicator Sudan Sth Sudan Chad Ethiopia Egypt Kenya Uganda Tanzania

Population (million) 37 8 12 85 83 42 35 46

Land area ('000 km²) 1,886 644 1,284 1,120 1,001 583 236 945

Population per sq. km 20 13 9 76 82 71 146 49

Urban population (% of total) 33 17 22 17 44 24 16 27

GDP at PPP (US$ billion) 134 21 25 114 878 95 49 78

GDP per person at PPP (US$) 3,607 2,523 2,206 1,343 10,638 2,272 1,430 1,692

Gross national income per capita (US$)

1,460 840 970 410 2,980 870 480 570

Poverty level (% of population) 47 51 n.a. 30 25 46 25 33

Life expectancy at birth (years) 61 53 50 59 73 57 54 58

Human development index (HDI) 0.414 n.a. 0.340 0.398 0.662 0.519 0.456 0.476

Country rank for HDI (186 countries) 172 n.a. 184 173 112 145 161 152

Source: World Bank Development Indicators and UNDP (2012), Human Development Report. Note: GDP at PPP refers to GDP at purchasing power parity.

Table 1.7: Poverty Profile of Sudan, 2009

Category Population Poverty measure (%)

(million) Incidence Gap Severity

National incidence of poverty

National 34.9 46.5 16.2 7.8

Rural 23.3 57.6 21.3 10.6

Urban 11.6 26.5 7.1 2.7

Regional incidence of poverty

Darfur 8.4 62.7 24.6 12.6

Kordofan 5.0 58.7 23.1 11.7

Eastern 5.0 46.3 17.7 9.0

Central 8.4 45.4 13.8 6.1

Northern 2.1 33.7 9.4 3.8

Khartoum 6.0 26.0 6.4 2.4

Source: CBS (2009), Sudan National Baseline HouseholdSurvey, 2009).


Table 2.5). This dramatic change in the financial posi-tion led to a rapid deterioration in the country’s macro-economic stability as the discussion below indicates.

1.4.21 However, the post-secession Sudan is still richly endowed with agricultural land, abundant water from the Nile and its tributaries, unexploited non-oil minerals, and some oil production. The various gov-

The most immediate impact of the secession was the loss of substantial oil export revenues, declining from US$10,991 million in 2010 to US$2,158 million in 2012 (Annex Table 2.6). As a result, oil revenues in the na-tional government budget dropped from 10.8 percent of GDP in 2010 to 1.4 percent of GDP in 2012. The overall budget balance went from a surplus equivalent to 0.3 percent of GDP to a deficit of 3.5 percent (Annex

Table 1.8: Progress Towards MDGs for Selected Indicators

Goal Indicator Baseline Current level

2015

Indicator Year Indicator Year target

Eradicate extreme poverty and hunger

Population living below US$1 per day (%) 64 2004 25 2009 32

Population below national poverty line (%) 90 1992 46.5 2009 23

Poverty gap (%) 16.2 2009

Poverty severity (%) 7.8 2009

Employment rate (%) 89 1993 85 2013

Underweight children under 5 years (% of total) 32 1995 27 2006 16

Population below minimum dietry energy intake (%)

28 2009 14

Achieve universal primary education

Gross enrolment in primary school (%) 48 1990 70 2012 100

Literacy rate of 15-24 year olds (%) 27 1990 80 2012 100

Promote gender equality and empower women

Primary school 48 1991 89 2012 100

Secondary 21 1991 91 2012 100

Tertiary 67 1990 113 2012 100

Share of women in employment in non-agriculture (%)

20 1992 59 2008

Seats held by women in national parliament (%)

24 2014

Reduce child mortality Under five years mortality rate 128 1990 77 2013 41

Infant mortality rate 80 1990 51 2013 53

One year old children immunized against measles (%)

57 1990 85 2013

Improve maternal health Maternal mortality ratio (per 100,000 live births) 537 1990 360 2013 134

Births attended by skilled health personnel (%) 69 1990 23 2010

Combat HIV/AID, malaria and other diseases

HIV prevalence among population aged 15-24 years (%)

Females 0.2 2013

Males 0.1 2013

Incidence & dealth associated with malaria

Incidence (millions of reported cases) 7.5 1990 3.1 2009

Deaths ('000) 35 2001 8.8 2009

Ensure environmental sustainability

Population using improved drinking water (%) 67 1990 56 2012 82

Population using improved sanitation (%) 27 1990 24 2012 67

Develop global partnership for development

Cellular subscribers per 100 population 9 2005 73 2013

Internet users per 100 population 8 2005 23 2013

Source: UNDP (2012), Sudan National Human Development Report 2012 and World Bank Development Indicators database.



ernments of the pre-secession Sudan were not able to develop these resources, partly due to policy oversight and partly because of the distraction of the prolonged civil war from 1955-1973 and again from 1983-2005. As noted elsewhere in this Chapter, the past experi-ence of Sudan reflects the fact that underdevelopment and regional inequalities handicapped the process of nation building. Internal conflicts have also been very costly.

1.4.22 Sudan has a strategic geographical location bordering seven countries (Egypt, Eritrea, Ethiopia, Libya, Chad, Central Africa and South Sudan). It also enjoys close proximity to the rich markets of the Gulf countries that host over half a million Sudanese work-ers who regularly remit foreign currency back home. Table 1.6 provides a comparison with some neighbour-ing countries. Measured in PPP terms, the GDP of Su-dan was estimated to be about US$134 billion in 2012, after Egypt, the largest among these seven comparator countries. GDP per capita (also in PPP terms) stood at about US$3,600 in 2012, again the second highest in the group after Egypt. At 47 percent, Sudan’s poverty level is one of the highest in the group. And for 2012, it was ranked 172 out of 186 countries in the Human Development Index (HDI) of the UNDP.

1.5 Implications for Incomes and Poverty

Income Distribution and Poverty

1.5.1 The 2009 National Baseline Households Sur-vey estimated that 46.5 percent of the population lived below the poverty line (Table 1.7).17 The Survey also estimated a poverty gap of 16 percent, defined as the shortfall of the income of those below the poverty line relative to the poverty line. The incidence of severe poverty stood at 7 percent. The relatively high pover-ty indicators in Sudan is a result of its weak growth throughout much of the period since independence in 1956, and the prolonged internal conflict. The survey results indicate that poverty is positively correlated with education. The higher the education, the higher the in-come. It is also gender sensitive, being higher among female-headed than in male-headed households.

1.5.2 These national averages in the incidence of 17 The poverty line is not estimated in accordance with the global definition of one dollar

per day. It was based on estimates by the National Survey.

poverty mask significant disparities between the ru-ral and urban areas and between the various regions. Rural poverty has a higher incidence, has much more depth and is more severe than urban poverty. In Sudan, rural poverty is closely associated with the livelihood systems of rain-fed agriculture. Traditional crop farm-ers and pastoralists have a higher incidence of pov-erty due to their limited use of agricultural inputs and modern farming techniques. Smallholder farmers are hindered by the limited size of their landholdings, low levels of farm productivity, and an inability to improve their incomes. The latter stems from a range of fac-tors, including: inadequate access to credit, marketing and distribution channels; inadequate technical knowl-edge and support; and poor skills in production and marketing. Many of the heads of families seek off-farm employment. Many rural people who do not have land to farm must depend on casual labour opportunities, such as collecting firewood and making charcoal, to generate income. In times of drought, an entire family may move to urban centres. Isolation is one of the key factors affecting poverty. Settlements that have little or no access to road networks have very limited access to social services and markets.

1.5.3 The depth and severity of poverty is higher in western Sudan (both Darfur and Kordofan) and in East-ern Sudan than in the rest of the country. In some of the poorest rural communities, there are significant popula-tion pressures on fragile ecosystems. As the discussion in Chapter 5 indicates, erosion, loss of soil fertility and damage to watersheds are affecting resources. Agri-cultural productivity is low and farmers face problems associated with water scarcity. Volatile domestic prices for food have also affected household security through-out the country.

1.5.4 The 2009 Household Survey also revealed that in the rural areas, 62 percent of consumption goes to food items, whereas in the urban centre, food con-sumption is 52 percent. About 31 percent of the total population consumes less than the minimum dietary consumption requirements. There are sharp differenc-es among regions. In the Red Sea, 44 percent of the population do not consume the minimum dietary re-quirements, while only 15 percent of those in the Gezira and the River Nile do not meet the minimum. Another category of people experiencing high levels of poverty and poor social indicators are the displaced popula-


tions who have been affected by the armed conflict in Darfur, Nuba Mountains and Kordofan. Despite efforts to provide assistance to those in the refugee camps, these camps do not provide adequate social services and food assistance. The camps are also more vulner-able to the outbreak of disease.

1.5.5 The country has widespread malnutrition and a high proportion of underweight children. The maternal mortality rate is 360 per 100,000 live births. About 92 percent of children aged 12 to 23 months are fully im-munized. There are also significant regional differences in terms of access to education, sanitation and clean water. Access to safe water is available to about 56 percent of the total population. This proportion is higher in urban areas (66 percent) than in the rural areas (50 percent). Only 30 percent of the population has access to improved sanitation at the national level, while the percent for the urban and rural populations was 44 and 23 percent respectively.

1.5.6 In the case of education, the literacy rate is es-timated at 73 percent of the population, but it is lower among females than males. The gross enrolment ratio rose in primary education from 65 percent in 2004 to 70 percent in 2012 – still well below the average for Sub-Saharan Africa. Though the Government is com-mitted to providing free and compulsory basic edu-cation, it continues to grapple with the challenges of making adequate resources and facilities available to schools throughout the country. Teacher training has been limited and there is a high turnover of teachers leaving for higher paying jobs in the Arab countries.

There are also gender inequality and geographical dis-parities in education. In primary education, girls make up 42 percent of the students, while in secondary schools, their proportion is only 27 percent. However, in 2009, girls constituted 42 percent of tertiary schools.

1.5.7 The poor health and education indicators are partly the result of low public spending on health and education services. During the 1980s and the 1990s, the country experienced a significant decline in the pro-vision of public services. This was attributed to cuts in public expenditure on these services as the govern-ment was forced to adjust its expenditure to achieve the stabilisation objectives and to meet the cost of mil-itary activities within the country.

Progress Towards the Millennium Development Goals

1.5.8 The fight against poverty and improving the social conditions has been pursued within the frame-work of the government’s sector policies and budget programmes. Additionally, efforts were undertaken within the framework of the Millennium Development Goals (MDGs) and the recently formulated Interim Pov-erty Reduction Strategy. According to the UNDP (2012) Human Development Report for Sudan, the country has made some progress. As Table 1.8 indicates, there has been improvements in a number of fronts, includ-ing primary school enrolments, literacy among 15-24 year-olds, the number of girls in school relative to boys, and the infant mortality rate. However, much remains to be done to reduce poverty, maternal mortality rates,

Table 1.9: Trends in Investment and Savings in Sudan(Expressed as annual average % of GDP)

Indicator 1980-89 1990-99 2000-09 2010 2011 2012 2013

Gross investment 12.5 16.3 26.5 23.0 21.6 21.2 19.7

Change in inventories 0.1 5.6 5.1 2.9 2.5 2.2 1.9

Fixed capital formation

Private 8.5 9.8 16.8 16.2 16.2 16.7 15.9

Public 3.9 0.9 4.6 3.9 2.9 2.3 1.9

Sub-total 12.4 10.7 21.4 20.1 19.1 19.0 17.8

Gross national savings 3.7 4.0 20.3 21.0 21.2 17.1 17.6

Foreign savings 8.8 12.3 6.2 2.0 0.4 4.1 2.1

Memo items:

FDI as % of fixed capital formation

6.8 10.3 22.0 20.5 19.9 19.1 21.1

FDI as % GDP 0.8 1.1 4.7 4.1 3.8 3.6 3.7

Source: World Bank Development Indicators database and estimates by authors for 2013.



and increase access to improved water and sanitation services. 1.5.9 In the health sector, the Government has in-creased the focus on primary health care and rural health. To complement resources, it introduced cost recovery measures by instituting a National Health In-surance Programme and encouraged private invest-ment in the sector. In the education sector, the gov-ernment adopted the strategy of “education for all” and aimed at universal and compulsory basic education. The responsibility of spending on the social sectors has been entrusted to the states, which are short of funds and dependent on Federal transfers. The government’s pro-poor spending as a percent of GDP was 6.2 per-cent in 2004, but it rose to 10.3 percent in 2009. How-ever, it is expected to have fallen after the secession of South Sudan. Expenditure on security also diverts re-sources away from pro-poverty activities, humanitarian assistance and development projects.

1.5.10 In 2011, an Interim Poverty Reduction Strat-egy was prepared. Though with no assured funding, the Interim Strategy was based on five pillars, namely: To strengthen governance and institutional capacity; reintegrate the internally displaced persons and the ref-ugees; develop human resources; and promote eco-nomic growth and employment creation. The latter pil-lar focuses on the creation of an enabling environment for private sector led growth, promoting the growth of the agricultural sector, developing infrastructure and protecting natural resources and the environment. While many more resettled elsewhere in the country, huge humanitarian assistance is needed to meet the basic needs of the displaced population living in the ref-ugees camps. Donors provide most of the assistance.

1.5.11 The Ministry of Social Welfare is in charge of assisting the vulnerable groups, the homeless, the or-phans and the old. However, the challenges are much greater than its resources. Together with donors, the Ministry oversees a Community Development Fund, which provides support for community initiatives and capacity building programmes. Additionally, some money is collected as Zakat, which is an Islamic tax on wealth. The main purpose of Zakat is to assist the poor.

1.5.12 Sudan has a limited pension system, covering government employees. The largest proportion of the population is unprotected in old age. However, even the pensioners from the government sector have suffered from the high rate of inflation. They have seen the pur-chasing power of their pensions eroded far from meet-ing their basic needs. The pension fund itself is failing to meet its obligations as its revenue is only about one quarter of its liabilities. Thus, the government is forced to supplement the pension payments to partly cover the funding deficit.

1.5.13 In 1994, a health insurance programme was introduced to subsidise the health services extended to the poor, children and those who need intense medical care. The coverage of the insurance is at 35 percent, but it is expected to rise.

1.6 Challenges for Development and Diversification

Key Challenges

1.6.1 The poor economic performance of the pre-oil era and associated structural and capacity weak-

Table 1.10: Growth Accounting Estimates for 1960-1997(In % per annum)

Indicator 1960-64 1965-69 1970-74 1975-79 1980-84 1985-89 1990-97 Total

Growth in real GDP per worker

-0.96 -1.18 -0.37 3.44 -0.38 -2.42 1.03 -0.12

Contribution per worker

Physical capital

4.16 1.88 1.01 1.93 1.22 -1.19 -0.42 1.37

Labor 0.04 0.08 0.16 0.22 0.33 0.35 -0.21 0.20

Residual -5.16 -3.14 -1.54 1.29 -1.93 -1.58 1.66 -1.69

Source: Quoted from O'Connell and Ndule (2000) by Ali and Badawi (2004).


nesses stemmed from a number of policy and capacity shortcomings, and from the effects of internal conflict. Key challenges for the decade ahead include the fol-lowing:• Macroeconomic instability • Low levels of domestic savings and investment af-

ter the loss of oil income• Lack of productivity growth and inability to develop

competitiveness and efficiency• Price disincentives• Limited entrepreneurship and executive capacities• Weak governance• Inadequate physical infrastructure• Internal conflict that stemmed, in part, from region-

al inequalities.

Macroeconomic Instability

1.6.2 As the earlier discussion indicates, the mac-roeconomic environment deteriorated sharply in the pre-oil era, especially during the 1980s and the 1990s. The civil conflict in South Sudan, changing weather conditions and drought (in 1983/84 and 1990/91), ris-ing public expenditures to expand social services, bur-geoning public services, and the monetisation of the deficit led to high rates of inflation, external imbalances and increased dependence on external borrowing. The country accumulated arrears, and was as a result de-nied access to new concessional financing.

1.6.3 Macroeconomic instability affected the econ-omy through the adverse effect of inflation on invest-ment and on foreign exchange availability. The latter created difficulties in the purchase of fuel, inputs and capital goods. The decline in the availability of external resources (from investors and creditors) contributed to the worsening of the macroeconomic environment. While the external imbalances resulting from macroeco-nomic instability weakened the supplies of imported in-puts, the mismatch between the increase in imports of machinery and intermediate goods and the stagnation in the export capacity resulted in a binding constraint on production. The resulting debt overhang that arose stemmed from the failure to promote exports, select viable projects and avoid implementation delays. The lesson from this experience was that building export capacity to generate foreign exchange earnings would have helped to sustain economic growth.

Current Low Levels of National Savings and Investment

1.6.4 As Table 1.9 indicates, fixed capital formation in Sudan was only 12.5 percent of GDP in the 1980s – a very low level of investment compared with many other Sub-Saharan countries. Furthermore, with very low national savings in the 1980s and 1990s, most of the fixed investments in Sudan were financed from in-flows of offshore funds. Inflows of FDI were small and the bulk of the inflow was debt financing from official and private sources. It was these funding activities in the 1980s that laid the foundations for the subsequent difficulties that Sudan had in meeting its debt service obligations. However, the subsequent oil boom re-sulted in a significant increase in investment in Sudan during the 2000s. Fixed investment increased sharply and averaged 21 percent of GDP for the decade as a whole. The large increase in fixed investment in this period was accompanied by an impressive increase in national savings from an average of about 4 percent of GDP in the 1980s and 1990s to 20 percent during the 2000s. The latter reflects the fact that a substantial part of the oil revenue was saved.

1.6.5 However, the pattern of saving and investment went through substantial change after the loss of oil revenues in 2011. Gross investment declined from about 23 percent of GDP in 2010 to about 20 percent in 2013. With the loss of oil income, the savings per-formance of the country deteriorated. National savings stood at 21 percent of GDP in 2010 and 2011, but declined to an average of a little more than 17 percent during 2012-13. This decline was accompanied by a modest increase in foreign savings. Net inflows of FDI declined from an average of 4.7 percent of GDP in the 2000-09 period to an average of 3.6 percent in the 2012-2013 period.

Lack of Productivity Growth

1.6.6 During the pre-oil era, agricultural productivi-ty was low and industry suffered from underutilisation of capacity and inefficiencies in various supply chains. Poor management, the fall in the international prices of cotton and rising costs of production hit the cot-ton industry hard. Both public and private schemes could neither bring down the cost of production nor develop high yielding seed. The private sector, lacking



government support and facing an unfavourable mac-roeconomic environment, lost interest in cotton pump schemes. Though rain-fed mechanised farming was an important avenue for medium-scale commercial private sector investment, it exhibited fluctuations and decline in output. Traditional rain-fed crop and animal production systems provided the bulk of the population with food supplies and helped in diversifying agricul-tural crops and exports, but only through area expan-sion rather than increases in yields. The manufacturing sector was also plagued with many bottlenecks and constraints, including inadequate infrastructure, power shortages, union disputes and the unfavourable mac-roeconomic environment.

1.6.7 A macroeconomic growth accounting decom-position analysis for Sudan covering the 1960-97 pe-riod was undertaken by O’Connell and Ndule (2000) as part of a research project on African countries. The results of the analysis that are reported in Table 1.10 show that in five sub-periods out of seven, the growth of the residual was negative. It was also negative for the period in totality. The interpretation of these results is that growth was largely a result of factor accumulation rather than productivity growth.

1.6.8 Other studies also confirmed the lack of prog-ress in productivity growth in agriculture beyond ex-pansion of cultivated areas (World Bank, 2009). Growth in per capita agricultural output and staple food pro-duction declined. Average agricultural productivity levels in Sudan are as a result lower than in countries with similar conditions. It has also been lower than the levels recorded in farm research trials. Yields in mech-anised farms suffered from poor management, inade-quate provision for fallows within planned crop rotation and failure to use fertilizers. Such poor attention led to degradation and mismanagement of natural resources. Traditional rain-fed agriculture, on its part, lagged be-hind in production technologies, finance, management, research, extension services, market structure, access to inputs, such as seeds and fertilizers.

Price Disincentives

1.6.9 Price disincentives held down investment and production through three channels. First, overvalued currency had been disadvantageous to exports and traded goods, and had reduced the competitiveness of

good from Sudan. Second, by fixing the prices of com-modities, the marketing boards denied the producers an incentive to expand production and discouraged the investors. Third, taxes on agriculture were high.

1.6.10 Strong evidence exist that price incentives are critical for sustaining growth. The increase in agricul-tural production during the 1990s (by 10.8 percent per annum) as compared with the 1980s (mere 0.6 per-cent) was attributed in no small way to the improve-ment in the price incentives. According to World Bank (1993), though the improvement in agricultural pro-duction in the 1990s was partly a result of favourable weather conditions, a more important explanation for the difference in the growth performance between the two periods was government’s success in reducing the macroeconomic instability and prices disincentives.18 Adjusting and floating the exchange rate lessened the degree of the local currency overvaluation. The bias against exports was reduced after the government cancelled the export tax on agricultural products and dismantled the monopolistic position of the marketing boards.

1.6.11 The adverse impact of imposing crops on un-willing producers was demonstrated by the significant variations in performance between the four systems of production during the 1990s. Production in both the rain-fed agricultural farms and livestock were stimu-lated by the improved price system alluded to earlier. The growth in output rose sharply from nine and two percent to 25 and 16 percent respectively. Production in irrigated agriculture also rose from an annual average of 1.5 percent to 6.6 percent between the two peri-ods. The growth in the production in the mechanised farms remained negative during the two periods. The World Bank (1993) suggests that the general thrust of incentives introduced through government policies was favourable; but policies to impose price ceilings for sorghum and to induce wheat production in the irrigat-ed agriculture had a negative impact. Farmers experi-enced low returns from wheat production.

18 Elamin, Dirdiri H M and Nasser A El Naam (2000), “Pricing Policies and Agricultural exports in Sudan, lessons from the 1980s through the 1990s.” El Obied Research Station (2000). Also see World Bank (1995), “Supply Prospects for the Agricultural Sector”. October 1995.


Trade Policy and Lack of Diversity in Exports

1.6.12 For a long time, Sudan’s exports were dom-inated by cotton, but from the mid-1980s, this com-modity lost its dominance.19 Other agricultural crops started to gain ground. In the 2000s, oil’s contribution bypassed all other exports. It accounted for 85 percent of total merchandise export earnings before the seces-sion in 2011.

There have been substantial changes in the amount and composition of agricultural and agro-industrial ex-ports in the past decade. Exports of cotton have de-clined, whereas exports of sesame, gum arabic and live animals (to Middle East countries) have grown ap-preciably. In 2000, for example, agriculture and agro-in-dustrial exports accounted for about 80 percent of the non-oil exports of the country. By 2005, their share had increased to 86 percent. However, with the subsequent rapid rise in exports of gold, the agriculture and agro-in-dustrial exports accounted for only 26 percent of total non-oil exports by 2010. The diversity of exports is less than that of the economy as a whole. Petroleum prod-ucts continue to dominate exports, accounting for 57 percent of total export earnings in 2013, followed by gold, which accounted for 15 percent last year. Agri-culture-related products account for 23 percent. Live-stock, sesame and gum arabic continue to account for the bulk of these exports. The relatively poor per-formance of agriculture-related exports stems from a range of policy and programme issues that are taken up in more detail in Chapters 3 and 5.

1.6.13 The other significant change in Sudan’s external trade account occurred in 2014. In that year, payments for imports of oil products exceeded earnings from the export of crude and oil products. The trade balance for petroleum products moved from a surplus of US$2.55 billion in 2013 to a deficit of US$270 million in 2014. As Chapter 7 indicates, there is a very real prospect that imports of oil products will exceed oil export earning throughout the 2014-2030 period. This possibility re-inforces the case for a concerted effort to accelerate development of the export market for agricultural and agro-industrial products.

19 For a more detailed analysis of trends in the composition of exports see Nasredin A. Hag Elamin (1997). “Export Performance in Sudan: Recent: Trends and Policy Im-pact”. Journal of Economic Cooperation Among Islamic Countries, 18, 4, pp.57-76.

Infrastructure Constraints

1.6.14 The responsiveness of farmers and investors is often dampened by the lack of adequate infrastructure. The poor infrastructure, especially in transport and en-ergy (with frequent power interruptions) resulted in high cost of production, which drove business out of some activities. By contrast, the construction of Khartoum and Port Sudan stimulated large increase in agricul-tural exports, although the deterioration of the railways system had a very adverse effect on the cost of trans-porting goods. Chapter 8 discusses in some detail the problems associated with inadequate infrastructure in Sudan.

Internal Conflict and Regional Inequalities

1.6.15 As noted earlier, the country suffers from so-cio-economic inequalities that have their origin in a range of factors, including lack of support for rain-fed agriculture, problems with land reform, and the distri-bution of development resources between urban and rural areas. These inequalities led to prolonged inter-nal conflict and resulted in large internal migration. The current spread of the country’s capital formation was caused by geography, the colonial history and the post-independence pattern of investment. British inter-est in cotton led to the development of the irrigated schemes in central Sudan. According to Ali et al (2004), at independence, the regions now comprising the Blue Nile, Sennar, Gezira and White Nile states enjoyed the highest per capita (US$118), followed by the East (US$92) and the West (US$76). The Gini coefficient was 0.2635 “reflecting a fairly even distribution of GDP consistent with the level of development”. However, as most of the post-colonial developments were made in central Sudan, economic gaps with the rest of the country widened. Together with droughts and conflict, this inequality led to high population movements and concentration in metropolitan Khartoum.

1.6.16 As a result, most of the country’s industry is centred around Khartoum because of the large mar-ket, high purchasing power and better infrastructure. Ironically, Bushra (1972) warned that “if the existing economic imbalance is to continue, it will lead to the depopulation of large areas in the countryside. In fact, economically backward areas such as Darfur and



Southern Sudan are already experiencing a population exodus”.

1.6.17 The failure to realise a spatially broad-based and inclusive pattern of growth resulted in regional and other inequalities, and gave rise to prolonged conflict. These had a high human cost and resulted in produc-tion losses. The rise in military expenditure competed with economic and social spending, led to macroeco-nomic imbalances and diverted government’s attention from the pressing development challenges of the coun-try.20

1.6.18 Spatial diversification will certainly lead to the exploitation of growth potentials in many other parts of Sudan. The decentralisation system adopted can facili-tate such regional development. However, issues of in-tergovernmental fiscal relations have to be addressed. The major problem with decentralisation is that states

20 Ali A. Ali and Ibrahim A. El Badawi, (2004), Explaining Sudan’s Economic Growth. The African Economic Research Consortium, Working Paper #9, January 2004.

do not have their own budgetary resources and de-pend on transfers from the National Government.

1.6.19 The 2010 MDG report of the United Nations maintained that “limited diversification was reflected in the expansion of the oil sector, while the nominal sec-tor has been declining. The oil sector, being capital intensive, its employment intensity and hence pover-ty reduction has been limited”. 21 Through contributing to sustained growth and jobs creation, diversification can assist in ameliorating the unfavourable social con-ditions described above. Diversification is expected to result in increased job creation. At the same time, the push for diversification itself will either be facilitated or constrained by the characteristics of the labour force and labour markets conditions. With the existing high mobility of labour in Sudan, the response of the labour force is likely to be supportive of the proposed diversi-fication drive.

21 United Nations (2010), The Millennium Development Goals Report, 2010. New York, 2010 (see p.22). See also Republic of Sudan (2010), Sudan Millennium Goals Prog-ress Report, 2010. Ministry of Welfare and Social Security and National Population Council General Secretariat, Khartoum, Sudan, 2010.





2.1 Private Sector-led Growth and Diversification

2.1.1 The need for economic diversification in Sudan has been recognised for some years now, but with the oil boom during the 2000s, progress on this front was very limited. Following the secession of South Sudan and the decline in the importance of oil in the econo-my, Sudan has had to confront a wide ranging set of policy issues as has been outlined in Chapter 1. These include the large dependence on oil as a key source of growth for the economy, a heavy external debt burden, international sanctions, and in more recent years, a highly volatile macroeconomic environment character-ised by major economic imbalances, and continued in-ternal conflict. Moreover, the ongoing conflict in South Sudan poses a threat to continued oil flows. This chain of events has served to underscore the importance of restoring macroeconomic stability and adoption of programmes that will ensure that the non-oil economy becomes the major source of growth in employment, incomes and exports in the decade ahead.

2.1.2 Sudan has a substantial natural resource base that can provide the foundation for successful eco-nomic diversification. A multi-pronged strategy is now required for a successful transition to a well-diversified economy with growth that is broad-based and inclu-sive. The key elements of such a strategy are as fol-lows:• Early progress on establishing macroeconomic

stability that is an essential foundation for substan-tial increases in private sector-led economic activ-ity. With assistance from the IMF, the government has embarked on a macroeconomic stabilisation

programme that has already begun to show re-sults. Chapter 3 addresses the various concerns associated with establishing a stable macroeco-nomic framework for the medium and longer-term.

• The proposed programme for economic diversifi-cation calls for a substantial increase in the level of public and private investment in the economy. Close attention has to be given to development of an environment that is conducive for such invest-ment by the private sector, including for example, timely and cost-effective business processes, ap-propriate regulatory oversight of business activi-ty, and improved arrangements for private sector access to land for agricultural and industrial use. Chapter 4 discusses the requirements for a sub-stantially larger role for the private sector in the pro-posed diversification programme.

• The launch of a range of programmes that will pro-mote domestic and offshore private investment in increased production of food, raw materials and a growing range on manufactures for the domestic and international markets that can underpin an ac-celerated programme of agricultural and industrial development throughout the country. In setting out a strategy for the medium and longer-term, the po-sition taken in this Report is that the greatest po-tential for new sources of growth in the near-term are with further investment by individual farmers and medium and large-scale commercial entities in agricultural production and in the processing of food and non-food agricultural materials for the do-mestic and export markets. This will require explicit efforts to improve farm access to basic inputs such as improved seeds and fertilizer, increased access to credit from the financial sector, and improved

2. STRATEGY FOR BROAD-BASED AND INCLUSIVE GROWTH



access to domestic and international markets that have substantial potential for sale of agricultural products. Chapters 5 and 6 outline the strategy for diversification in agriculture and industry in the de-cade ahead.

• The programme will also require a major step-up in public and private investment in the physical infra-structure of the country that, at the present time, is seriously deficient. The investment in infrastructure facilities would need to be accompanied by pro-grammes that accelerate the development of ba-sic infrastructure services, including, for example, transport and communications services and an im-proved supply of electric power. Chapter 8 sets out the requirements for expansion of the infrastructure network and related services.

• Introduction of policies and programmes that will support the further development of the domestic financial sector and related capital markets. A large part of the investment required for the diversification programme will have to be financed with resourc-es from the domestic financial market. Substantial

improvements will be required for the mobilisation of domestic savings, including a much larger share of domestic savings in the form of financial assets that are held by banks and other entities that have responsibilities for financial intermediation in the domestic market. Chapter 9 discusses the range of actions that will be needed to expand substan-tially the role of financial services in Sudan.

• Sudan will also have to expand its access to off-shore financial resources, including the multilateral financial institutions, bilateral aid programmes that can provide ODA, and private capital markets. An important first step in this regard will be to ad-dress the problems associated with the current heavy debt burden of the country. Sudan will need to enter into dialogue with its creditors and come to agreement on the terms and conditions for re-payment of existing debt obligations. Moreover, continued application of economic sanctions by the US and European countries will limit the extent to which Sudan will be able to mobilise resources in international capital markets, a reality that un-

Table 2.1: Land Resources of Sudan

Indicator 1961 1970 1980 1990 2000 2010 2011 2012

Surface area (sq. km.) 2,505,810 2,505,810 2,505,810 2,505,810 2,505,810 2,505,810 1,879,358 1,879,358

Total land area (sq.km.)

Agricultural land 1,088,400 1,097,450 1,104,500 1,229,100 1,313,520 1,362,450 1,086,788 1,127,020

Forest area 763,814 704,910 699,490 550,752 550,752

Other 383,086 357,570 314,060 166,640 126,408

Total 2,376,000 2,376,000 2,376,000 2,376,000 2,376,000 2,376,000 1,804,180 1,804,180

Share of total land area (%)

Agricultural land 45.8 46.2 46.5 51.7 55.3 57.3 60.2 62.5

Forest area 32.1 29.7 29.4 30.5 30.5

Other 16.1 15.0 13.2 9.2 7.0

Total 100.0 100.0 100.0 100.0 100.0

Agricultural land (sq. km.)

Arable land 107,750 116,650 123,600 128,000 162,330 188,580 170,560 210,450

Land under cereal production 29,638 42,905 37,346 64,513 78,864 99,292 100,884

Irrigated land 14,493 14,810 14,810

Other 1,080,512 802,126 800,876

Total 1,088,400 1,097,450 1,104,500 1,229,100 1,313,520 1,362,450 1,086,788 1,127,020

Share of agricultural land (%)

Arable land 9.9 10.6 11.2 10.4 12.4 13.8 15.7 18.7

Land under cereal producton - 2.7 3.9 3.0 4.9 5.8 9.1 9.0

Irrigated - - - - - 1.1 1.4 1.3

Other 79.3 73.8 71.1

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: World Bank World Development Indicators database.


derscores the importance of further development of the domestic capital market and export perfor-mance that can generate foreign exchange earn-ings. Chapter 3 addresses these issues.

• A series of programmes will be required in the near-term to build capacities in the public sector at the national and state levels for provision of basic services that support the proposed expan-sion in private business activities, including, for example, skills development programmes for the labour force, improved government capacities to implement programmes for development of infra-structure and other key services such as agricul-tural research and extension services. Capacity building requirements and skills development are addressed in each of the chapters that follow.

2.1.3 The priority for the near and medium-term is to accelerate the development of Sudan’s rural and agricultural potential that, as the discussion below in-dicates, is substantial. But it will also be important to develop a range of other economic activities in the me-dium and longer-term that diversify the economy fur-ther and generate higher wage employment opportu-nities. These include further development of a range of industrial activities, including the non-oil mineral wealth of the country, to expand the capacity of Sudan to gen-erate foreign exchange earnings. As the subsequent discussion indicates, successful implementation of the diversification programme set out in this Report would very likely raise the non-oil GDP per capita to about US$2,850 by 2030 – compared with the 2012 level of US$1,735 (both at 2012 constant prices and exchange rate).

2.2 Resource Base of the Country

Land Resource Base

2.2.1 The Republic of the Sudan has a surface area of about 1.9 million square km after the secession of South Sudan in 2011, of which the total land area is es-timated to be about 1.8 million square km (Table 2.1).22 About 63 percent of the land area (1.1 million square km.) is classified as agricultural land. The implication is that Sudan has the largest area of agricultural land in Africa. The next is Angola with about 590,000sq.

22 B World Bank terminology, the surface area of a country refers to the land area and water bodies within the country, whereas the land area refers to the total area exclud-ing land under inland water bodies, and national claims to the continental shelf.

km. According to World Bank data, the size of arable land stands at 210,450sq.km – equivalent to 21 mil-lion hectares – or about 19 percent of the total land area. About 10 million hectares are currently used for cultivation of cereals under rain-fed conditions. Close to 1.5 million hectares are under irrigation. This huge arable land resource offers opportunities for substantial diversification of the economy in the decade ahead, led by increased investment in agriculture and agro-indus-tries. Such a programme can also make a substantial contribution to ensuring that the development is broad-based and inclusive. As noted in Chapter 1, about two-thirds of the current population of 38.8 million (as of mid-2014) live in rural areas, and most depend on agri-culture for livelihood.

2.2.2 The ecological and climatological character-istics of Sudan suit a wide variety of crop cultivation and animal husbandry. Very large natural pastures and forests support substantial herds of livestock, includ-ing cattle, sheep and goats. The Generalised Land Use Inventory Area of (north) Sudan made by the National Forest Inventory in 1998 showed that 33 percent of ar-able area was under crop cultivation. Some 20 percent was used for grazing, while 33 percent was under for-ests. Only three percent was occupied land, while the use of the remaining 11 percent was unknown (World Bank, 2011, Annex 1.1).

2.2.3 There is a wide variation in the climatic con-ditions within Sudan, ranging from desert in the north

Table 2.2: Water Resources of Sudan, 2012(Billion cubic meters per year)

Indicator Natural Actual

Total surface water

Produced internally 2.0 2.0

Water entering Sudan 99.3 99.3

Total renewable surface water 101.3 101.3

Water leaving country 84.0 84.0

Water secured by treaty 65.5

Total renewable surface water 35.8

Total ground water

Produced internally 3.0 3.0

Groundwater leaving country (1.0) (1.0)

Total renewable ground water 2.0 2.0

Total renewable water resources 103.3 37.8

Per capita renewable resources ( m³/year)

1,016

Source: FAO AQUASTAT database.






to a belt of summer rain climate in the southern part of the country near the border with South Sudan. Annual rainfall varies from 25mm in the north to about 700mm in the southern part of the country. There can be con-siderable variation in rainfall from one year to the next and in the location of the rain. The dry season typically extends for about eight months each year. Rain-fed ag-riculture is mainly practiced in this part of the country. About 85 to 90 percent of the agriculture area in the Sudan is rain-fed, depending on the season. The major limiting factor is not the agricultural potential, but rather the short duration of the rainy season and the erratic distribution of rainfall during the growing period.

2.2.4 One important matter of concern about the land resource base of Sudan is the long history of con-flict over land (and water resources). As a result, many parts of the country suffer from severe land problems. According to the 1972 Land Act, all land in Sudan, ex-cept for a small area of freehold land in the Nile River valley, is public land, owned by the government. Users of the land, including farmers and cattle herders, have usufruct rights to this land through traditional communal land policy. Land use policy has, in effect, been dele-gated to community leaders, who are then responsible for the allocation of land use rights. These land use and ownership rights are a major obstacle for successful implementation of the proposed programme of agricul-ture-led diversification of the economy. The reason is that because all land is deemed to be owned by the govern-ment, it cannot be used as collateral by those that farm the land. The fact that land has no value as security for additional investment is a fundamental obstacle to sus-tained strong investment in agricultural production activ-ities. Chapters 4 and 5 address these ongoing concerns about land policy.

Water Resource of Sudan and Use

2.2.5 Water Resources of Sudan. Water resourc-es in Sudan comprise three main categories: (i) surface water, which contains water from rainfall and Wadis (seasonal streams); (ii) the Nile system; and (iii) ground-water and unconventional water. Sudan shares the Nile with nine other countries, the waters of the Wadis with three countries and groundwater with three coun-tries. Table 2.2 provides a summary of Sudan’s water resources. Internally produced water is quite limited and is estimated by the Food and Agriculture Organ-

isation (FAO) to be about five billion cubic metres per year (two billion of which is surface water and three billion is ground water). The bulk of the water that is available is surface water associated with the Nile riv-er system and other rivers and streams. Sudan’s total renewable water resources are estimated to be 103.3 billion cubic metres per year, but as a result of the Nile Waters Agreement with Egypt, the total available wa-ter resources of the country are estimated to be 37.8 billion cubic metres. Non-conventional water sources are very limited in Sudan. However, the desalination of seawater was introduced recently in the town of Port Sudan.

2.2.6 The high variability of river flows necessitates water storage facilities. The main dams in Sudan are as follows: (i) Sennar Dam on the Blue Nile with a design capacity of 0.93km3 and provides flood control and irri-gation for the Gezira Scheme; (ii) Roseires Dam on the Blue Nile with a design capacity of 3km3 and provides flood control and irrigation; (iii) the Jebel Aulia Dam on the White Nile with a design capacity of 3.5km3; and (iv) the El Girba Dam on the Atbara River with a de-sign capacity of 1.3km3 and provides flood control, ir-rigation water and hydropower. Because of increased sedimentation in the Blue Nile and Atbara River, FAO estimates that the total storage capacity of these four dams has been reduced from 8.73km3 to 6.9km3.

2.2.7 Water Use. According to FAO, the annual withdrawal of water in 2011 was 26.9 billion m3 (Table 2.3), with use of water for farming and livestock ac-counting for 96 percent of the total withdrawal. The use of water for irrigation accounted for about 84 per-cent of total water use in 2011. Only 3.5 percent of the water use was accounted for by households and

Table 2.3: Annual Water Withdrawal, 2011(Billion cubic meters per year)

Water Use Amount Share (%)

Agriculture

Irrigation 22.63 84.0

Livestock and other 3.28 12.2

Sub-total 25.91 96.2

Industry 0.08 0.3

Households and other 0.95 3.5

Total 26.94 100.0

Per capita withdrawal ( m³/person) 739

Source: FAO AQUASTAT database and authors estimate for irrigation use.


other non-business users. The per capita withdrawal of water was 739 m3 in 2011. If the annual withdrawal of water remained at this level for the decade ahead, the total annual withdrawal would exceed the available renewable water resources of 37.8 billion m3 by 2027. Sudan is therefore in the middle of the ongoing inter-national dialogue among the Nile river riparian states about the future use of these water resources.

International Water Issues that Confront Sudan

2.2.8 As noted above, the surface and groundwa-ter resources of Sudan are shared with neighbouring countries. The River Nile, which is shared among 10 countries, is the primary source of water in Sudan. And the largest groundwater aquifer, the Nubian Sandstone system, is shared with Chad, Libya and Egypt.

2.2.9 Over the years, states within the Nile Basin have put agreements and treaties in place to avoid con-flict over access to these water resources. The 1929 Agreement between Egypt and Anglo-Egyptian Sudan gave Egypt complete control over the Nile during the dry season when water was most needed for agricul-tural production, put substantial limits on the amount of water allocated to Sudan, and provided no water rights to any of the other riparian states.23 The subsequent 1959 Nile Agreement gave Sudan and Egypt full con-trol and utilisation of the Nile waters. This agreement allowed the entire average annual flow of the Nile (es-timated to be about 84 billion cubic metres measured at the Aswan High Dam) to be shared between Egypt and Sudan at 55.5 and 18.5 billion m3 respectively. In-cluded in the agreement was an assumption that the remaining 10 billion m3 was accounted for by losses due to evaporation and related factors. The Agreement granted Egypt the right to construct the Aswan High Dam (which can store the entire annual Nile River flow of a year) and granted Sudan the right to construct the Rosaries Dam on the Blue Nile and to develop irrigation and hydroelectric power generation until it fully utilises its Nile share.

2.2.10 Based on the 1959 Agreement, Egypt and

23 See, for example, Waterbury, John (1979), Hydropolitics of the Nile Valley. University of Syracuse Press, 1979; Tvedt, Terje (2004), The Nile: An Annotated Bibliography. I.B. Taurus, 2nd edition, January 17, 2004; Chatteri et al. (2002), Conflict Management of Water Resources. Hampshire, Ashgate Publishing Ltd. 2002; and McKenzie, Scott O. (2012), “Egypt’s Choice: From the Nile Basin Treaty to the Cooperative Framework Agreement, an International Legal Analysis,” Transnational Law and Contemporary Problems. University of Iowa College of Law, Vol. 21: 571, 2012.

Sudan claim primary control over the Nile waters. The contemporary challenge facing the Nile Basin countries is how to establish a legal framework for the utilisation of the basin’s waters that is acceptable to all the ripari-an states. The basic issue has been that seven of these countries (Burundi, DRC, Ethiopia, Kenya, Rwanda, Tanzania and Uganda) contribute to the waters of the Nile, but have no formal rights to the use of these wa-ters. Several studies have shown that the tributaries of Ethiopia supply an estimated 86 percent of the waters of the Nile.24 In the case of Egypt, FAO data indicates about 97 percent of the actual renewable water avail-able to Egypt comes from the Nile River.

2.2.11 There have been efforts by some of the ripar-ian countries to bring about cooperation over the Nile waters. Negotiations for the creation of a Cooperative Framework Agreement (CFA) started in 1997, but are yet to be concluded by all riparian countries. The CFA seeks to establish a permanent Nile River Basin Com-mission through which member countries would act together to manage and develop the resources of the river.

2.2.12 In February 1999, the Nile Basin Initiative (NBI), which is a partnership among the Nile Riparian states, was formally launched by the then nine countries that shared the resources of the River.25 The NBI is led by a Council of Ministers in charge of Water Affairs in the member states (Nile-COM) with the support of a Tech-nical Advisory Committee (Nile-TAC). The NBI “seeks to develop the river in a cooperative manner, share sub-stantial socio-economic benefits, and promote regional peace and security,” and in so-doing promote sustain-able economic development and stability across the basin.

2.2.13 With support from the African Development Bank, World Bank and other donors, the NBI has launched a substantial programme aimed at building capacities among member states and making invest-ments in water resource development and manage-ment. The NBI provides a historic opportunity to man-age the Nile for the good of the peoples of the basin and

24 See International Peace Institute (2010), Issue Brief: A Political Storm Over the Nile. New York, December 2010.

25 At the time the NBI was launched, there were nine member countries: Burundi, DRC, Egypt, Ethiopia, Kenya, Rwanda, Sudan Tanzania, and Uganda. Eritrea, which also lies within the river basin, is not an official member of the NBI, but it does hold observer status. Prior to independence in July 2011, Southern Sudan had observer status in the NBI. Shortly after independence, the Republic of South Sudan applied for full membership of the NBI.



to use it as a vehicle for change for the better. Within the framework of the NBI, the Nile states are exploring major cooperative investments in power generation, transmission and interconnection, irrigated agriculture, navigation, fisheries, and related investments in land management, watershed protection and environmental conservation. These projects are a first phase of a long-term investment programme that will support econom-ic development and integration in the sub-region.

2.2.14 Notwithstanding these developments, there has been continuing tension among NBI countries over what constitutes an equitable utilisation of water. These tensions stem from an increased need of water for ir-rigation and other multi-purpose uses. The NBI, which is a transitional arrangement, has succeeded in bring-ing the riparian states together for a common purpose. The programme has engaged in capacity building and has led the implementation of some investment initia-tives. However, the establishment of a permanent insti-tutional arrangement is still work-in-progress.

2.2.15 The lack of agreement among all the riparian states indicates that the utilisation of Nile waters will continue to pose a challenge, at least in the foresee-able future. In 2009-10, seven upper riparian states launched the Nile Basin Cooperative Framework Agreement (CFA) in a bid to establish a permanent or-ganisational structure and ensure an equitable utilisa-tion among all the riparian states of the Nile. The CFA was opened for signature on 14 May 2010 for a period of one year until 13 May 2011. Article 42 of the draft Cooperative Framework Agreement provides for its coming into force upon ratification by at least six mem-bers. So far six riparian states have signed the Agree-ment. DRC, Sudan and Egypt have not yet signed the agreement.

2.2.16 Ethiopia is currently building the Renaissance Dam on the Blue Nile River to generate 6,000 MW of electric power. Egypt and Sudan, the lower riparian countries, have objected to the construction of the dam by referring to the above-mentioned agreements of 1929 and 1959 that allow them the full utilisation of the Nile water. Ethiopia has rejected the claims on the ground that it was not a signatory of the agree-ments and has reaffirmed its right to benefit from the water. It appears that Egypt has lately narrowed its concerns to the safety of the dam and its implication

for the level of water flow to downstream countries. A tripartite committee consisting of Ethiopian, Sudanese and Egyptian officials was formed to assess the impact of the dam on downstream countries. The discussions, involving international experts, have continued with the objective of reaching consensus on the way forward. It is expected that the continued dialogue will address the concerns of the downstream countries and avert any negative impact on the realisation of the dam and planned regional power systems integration.

Petroleum Resources

2.2.17 Over the past 30 years, there has been con-siderable exploration for oil in Sudan, with important discoveries made in the 1970s and 1980s. Most of the proven reserves of crude oil and natural gas of Sudan and South Sudan are located in the Muglad and Melut basins, which extend into both countries. According to the BP (2013) Statistical Review of World Energy, South Sudan has approximately 3.5 billion barrels of proven reserves, while those of Sudan are at 1.5 billion barrels. The proven reserves of natural gas are esti-mated at about 3 trillion cubic feet. Chapter 7 provides more details about the petroleum resources of Sudan.

2.2.18 There is considerable uncertainty about the prospect for new oil discoveries around the existing producing areas and in new areas in Sudan. There is a clear case for expansion of exploration efforts for oil and gas in Sudan. The power sector is an important con-sumer of energy, mainly in the form of diesel and fuel oil. In the absence of substantial increases in genera-tion capacities that make use of hydropower and other renewable energy sources (see discussion in Chapter 8 about these options), thermal power generation based on natural gas would be a preferable lower cost op-tion for Sudan. However, at this stage, the natural gas deposits of the country are not being harnessed. The gas is either flared or re-injected. And domestic capac-

Table 2.4: Alternative Scenarios for the Decade Ahead

Scenarios Scenario characteristics

Status of HIPC

Status of sanctions

Private investment response

International donor response

Low Case Not in place In place Weak Weak

Moderate Case

In place In place Moderate Moderate

High Case In place In place High High

Source: Estimates by authors.


ities for production of fuel oil are quite limited. If the gas reserves of the country could be developed, it would provide a low cost and relatively low-carbon fuel for power generation, industry and households. To facili-tate these exploration activities, the Government may need to review existing contract arrangements related to the discovery and development of the gas resources and related marketing arrangements.

2.2.19 However, the recent large decline in internation-al oil prices has increased uncertainty about the extent to which existing operators will undertake new explora-tion. Informal judgments suggest that the average cost of production in existing fields in Sudan may be in the range of US$45 per barrel. In these circumstances, it is unclear whether existing operators will be inclined to undertake new exploration, especially if, as assumed in Chapter 7, the recovery in oil prices will be a protract-ed process in the decade ahead. If there are no new discoveries of crude oil in the near future, there may be a rapid decline in oil production in the decade ahead. In a number of mature fields, production is already on the decline. Areas adjacent to existing fields need to be explored more intensely, along with increased attention to exploration in new areas. According to the Energy Information Agency (EIA) of the United States, Sudan recently launched bidding for blocks that were clearly

located in Sudan, along with some offshore acreage. 2.2.20 Another uncertainty related to the future sup-ply of oil in Sudan concerns the recovery factor for oil from existing and new fields.26 The World Bank (2009) reported that the government expected that the re-covery factor for existing fields would be 26 percent. It went on to note that the global average is around 35 percent and based on government data, an increase of 5 percent in recovery factors would increase Sudan’s remaining proven reserves by 30 percent. There is a compelling case for maintaining production in existing fields and increasing the recovery factor. The EIA has reported that Sudan signed an agreement with Norway in 2012 to increase oil recovery rates in existing fields from 23 percent to 47 percent. This programme will take time to produce results, but it may have significant implications for oil and gas production in the decade ahead.

Other Mineral Resources

2.2.21 Sudan possesses significant non-oil mineral wealth that includes uranium, tin, silver, manganese, zinc, lead, copper, iron, asbestos, gypsum, mica, co-balt, chrome, nickel and gold, as well as agricultural minerals (urea and phosphate). The Blue Nile State is 26 A recovery factor is the proportion of the total oil contained in a reservoir (field) that is

expected to be produced commercially using current technology.

Table 2.5: Investment and Financing for Moderate Growth Scenario(In US$ at 2012 constant prices and exchange rate)

Indicator Actual/estimate Projection Total (US$ mill)

2012 2013 2014 2015 2020 2025 2030 2014-30

Investment as % GDP

Inventories 2.2 1.9 1.9 1.8 1.7 1.6 1.5 42,814

Fixed investment

Private 16.7 15.9 15.3 15.5 15.9 19.3 19.9 340,553

Public 2.3 1.9 2.2 2.3 3.4 3.6 3.6 50,968

Sub-total 19.0 17.8 17.5 17.8 19.3 22.9 23.5 391,521

Gross investment 21.2 19.7 19.4 19.6 21.0 24.5 25.0 434,335

Financing as % GDP

National savings 17.1 17.6 16.9 16.6 17.0 20.5 21.0 361,125

Foreign savings

FDI 3.6 3.7 3.9 3.7 3.5 3.5 3.5 66,481

Other net inflows 0.5 (1.6) (1.4) (0.7) 0.5 0.5 0.5 6,729

Sub-total 4.1 2.1 2.5 3.0 4.0 4.0 4.0 73,210

Total 21.2 19.7 19.4 19.6 21.0 24.5 25.0 434,335

Memo items:

Fixed investment (US$ mill) 12,913 14,202 12,827 13,572 18,061 27,494 37,219

ICOR 5.7 4.8 4.6 4.0 4.1 4.0




the host of the major chromite resources and mining started in the mid-1920s. A recent survey estimated three million tons of chromite reserves in that area. In addition, the Red Sea (Atlantis area) is said to con-tain the equivalent of US$20 billion dollars of mineral resources, including substantial reserves of gold and zinc. Substantial additional investigation of the extent of these resources is required for a comprehensive pro-gramme for private investment in sustainable resource extraction and recovery.

2.3 Proposed Programme for Economic Diversification

Alternative Scenarios for the Decade Ahead

2.3.1 This Report calls for a major programme of di-versification that is built on the sustainable development of Sudan’s land, water and mineral resources, and led by increased domestic and international private sector activity in Sudan. However, the reality is that Sudan is a somewhat fragile state. As a result, there are many pos-sible outcomes for growth and economic development in Sudan in the decade ahead. The risks and uncertain-ties include deterioration in internal security in the coun-try and prolonged conflict in South Sudan that has an adverse effect on the economic climate in Sudan itself, including large numbers of refugees.

2.3.2 Prior to the Presidential elections that were held in the first half of 2015, the government embarked on a dialogue with the political opposition and some armed groups in the Blue Nile and South Kordofan regions. In the event that this dialogue makes tangible progress in addressing the cycle of internal instability that has pre-vailed in Sudan, the prospects for creating the condi-tions for economic recovery in the near term, and the policy framework required for a successful programme of broad-based and inclusive economic diversification in the medium and longer-term, will be greatly enhanced.

2.3.3 There are also risks associated with the re-gional and international environment, including diffi-culties in reaching agreement with creditors about the management of Sudan’s debt burden, and continued imposition of economic sanctions that adversely affect the scope for offshore financing of development pro-grammes in the country. There may also be difficulties associated with the equitable use of the waters of the Nile Basin that, in turn, have an impact on the scope for expanding the irrigation capacity of the country.

2.3.4 For the purposes of this Report, the risks and uncertainties of greatest interest are those that are as-sociated with the design, implementation and financ-ing of the proposed programme for diversification. It is therefore assumed that internal security in Sudan continues to improve and that there will be social and political stability through the 2020s. Moreover, it is as-sumed that the government will be successful in re-es-tablishing a sound macroeconomic environment for the decade ahead.

2.3.5 Table 2.4 provides a summary of the alternate scenarios considered in this Report. The primary focus of the Report is on the Moderate Case that includes a steady economic recovery from the problems of recent years and private sector-led economic diversification in the 2015-2030 period. Most of the risks and uncer-tainties that confront Sudan in its efforts to diversify the economy are on the downside. Possible volatility in the domestic oil market linked to continuing conflict in South Sudan, and the fragile internal security envi-ronment within Sudan may slow the pace of econom-ic reform. The Low Case provides an overview of the implications associated with limited progress on eco-nomic diversification in the decade ahead as a result of much lower levels of domestic savings and private investment. The High Case assumes higher domestic savings rates and larger capital inflows from abroad that finance much larger investment programmes, and that this then translates into stronger economic growth.

Table 2.6: Net Inflows of Official Development Assistance to Sudan(In US$)

Indicator Annual average Annual

2000-04 2005-09 2010 2011 2012 2013

Net inflow of ODA (US$ mill) 467 2,182 2,059 1,099 975 1,163

Net ODA per capita (US$) 13 52 58 30 26 31

Source: World Bank Development Indicators database.


Table 2.7: Selected Macroeconomic Indicators for Moderate, Low and High Growth Scenarios (In US$ at 2012 constant prices and exchange rate)

Indicator Actual/estimate Projection

2012 2013 2014 2015 2020 2021 2025 2030

Moderate growth scenario

Production

GDP at market prices growth rate (% p.a.) 0.3 3.7 3.8 4.0 5.0 5.2 5.6 5.9

Non-oil GDP at factor cost growth rate (% p.a.) 0.3 3.7 3.9 4.1 5.0 5.2 5.7 6.0

Non-oil GDP as % GDP at factor cost 96.6 95.8 95.9 95.9 95.9 95.9 95.9 96.0

Income

GDP per capita (US$) 1,796 1,825 1,856 1,890 2,374 2,476 2,970

Non-oil GDP per capita (US$) 1,735 1,749 1,780 1,813 2,027 2,375 2,850

Fixed investment (as % of GDP)

Private 16.7 15.9 15.3 15.5 15.9 16.8 19.3 19.9

Public 2.3 1.9 2.2 2.3 3.4 3.5 3.6 3.6

Total 19.0 17.8 17.5 17.8 19.3 20.3 22.9 23.5

Memo items:

Petroleum value added (US$ mill) 2,266 2,884 2,948 3,044 3,851 4,063 5,033 6,578

Non-oil GDP (US$ mill) 64,538 66,403 68,993 71,822 90,189 94,879 117,984 156,998

Gross domestic product (US$ mill) 66,804 69,288 71,941 74,866 94,040 98,942 123,017 163,576

Low growth scenario

Production



Income

GDP per capita (US$) 1,796 1,825 1,850 1,877 2,027 2,210 2,425



Private 16.7 15.9 15.3 15.5 15.0 16.0 17.0

Public 2.3 1.9 2.2 2.3 3.0 3.0 3.0

Total 19.0 17.8 17.5 17.8 18.0 19.0 20.0

Memo items:




High growth scenario

Production



Income

GDP per capita (US$) 1,796 1,825 1,869 1,912 2,242 2,788 3,564



Private 16.7 15.9 15.3 16.2 19.4 22.2 23.2

Public 2.3 1.9 2.2 1.8 3.7 4.7 6.0

Total 19.0 17.8 17.5 18.0 23.1 26.9 29.2

Memo items:




Memo items:

Exchange rate 3.573 3.573 3.573 3.573 3.573 3.573 3.573 3.573

Population ('000) 37,195 37,964 38,764 39,613 44,499 49,676 55,078

Labor force ('000) 11,110 11,443 11,782 12,133 14,051 16,274 18,847

Source: Annex 3.



Macroeconomic Stability and Fiscal Policy

2.3.6 In response to the secession of South Sudan, the Government of Sudan adopted a three-year emer-gency plan (2012-14). The plan centred on the follow-ing actions: (i) consolidating public finances to address the loss of fiscal revenue, including enhancement of tax revenue, streamlining transfers to states, and phasing out fuel subsidies by end of 2017, while strengthening the existing social protection schemes; (ii) reforming the exchange rate regime; and (iii) laying the groundwork for sustained and inclusive economic growth and diver-sification. As part of this programme, the government adopted a first package of corrective measures in June 2012, the results of which were mixed. In September 2013, the government adopted a second package of corrective measures. The further actions required to develop a stable macroeconomic framework are dis-cussed in greater detail in Chapter 3.

Investment, Domestic Savings and Financial Intermediation

2.3.7 The loss of oil revenues following the secession of South Sudan and the resulting decline in domestic savings performance poses a major challenge for the design and implementation of the proposed private sector-led diversification programme. Given that eco-nomic sanctions may remain in place for an unspecified period, action has to be taken on four related fronts to mobilise the financing needed to meet the require-ments of the proposed diversification programme:• There is a need to increase substantially the level

of domestic savings to the point where it is the pri-mary source of financing for the proposed diversi-fication programme.

• Additional initiatives will be required to improve the financial intermediation capacities of the domestic financial market so that an increasingly large share of these savings is available to finance investments in agricultural production as well as industry and services.

• A well designed promotional programme aimed at mobilising FDI from various regions of the world will be needed, followed by a marketing programme that includes visits to various international capital market centres.

• External payment arrears are continuing to accu-

mulate. Early action is required to address the se-vere debt arrears problems that have resulted in Sudan being cut off from most external financing from both official and private creditors.

2.4 Growth Prospects for the Decade Ahead

Moderate Growth and Diversification Scenario

2.4.1 Investment Requirements for the Pro-gramme. The proposed programme for the Moder-ate Scenario for growth and diversification is led by a sustained build-up in private investment in agricultural and industrial production, and in increased provision of related services. This build-up in investment is a key driver for the proposed diversification of the economy away from the past excessive dependence on the oil sector.

2.4.2 Table 2.5 provides a summary of the invest-ment requirements for this scenario. Fixed investment is projected to increase from an average of about 18 percent of GDP in 2012-13 to 19 percent by 2020 and 23.5 percent by 2030. Annual fixed investment increas-es from about US$13 billion in 2012 to about US$37 billion by 2030 (at 2012 constant prices). Investment by the private sector would account for about 87 percent of the total fixed investment during 2014-30. It increas-es from about 16 percent of GDP in 2012-13 to about 20 percent by 2030. Public investment, however, in-creases only slowly from the recent very low levels of about 2 percent of GDP to about 3.6 percent by the mid-2020s, and then remains at that level during the 2020s. The concern with this level of public investment is that there may be persistent shortfalls in meeting the infrastructure requirements of the country, depending on the government’s ability to mobilise an increasing amount of private investment for PPP-type projects, especially for infrastructure. Experience elsewhere in Africa suggests that combined public and private in-vestment levels of 6-8 percent of GDP for an extended period are typically required to overcome the infrastruc-ture gaps that are common throughout Sub-Saharan Africa. Chapter 8 provides a more detailed discussion of these concerns.

2.4.3 The main constraint on investment levels in


this scenario is the mobilisation of funding for the pro-gramme. The proposed level of investment will require an increase in the national savings rate from 17 percent of GDP in 2013 to about 21 percent of GDP by the mid-2020s. Sudan would then have a savings perfor-mance that is roughly in line with the current savings levels of Tunisia, Egypt and Mauritius. The shortfall in domestic savings is currently being made up with in-creased inflows of capital from abroad. Inflows of FDI have been in the range of 4 percent of GDP in recent years, but net inflows of other capital for investment purposes have been quite limited, in part because of outflows of capital for debt service and other claims. However, the continuing effects of Sudan’s problems with debt arrears and the sanctions imposed by the US and European countries have limited the inflow of capital from official sources and from many creditors.

2.4.4 One of the potentially important sources of off-shore financing is inflows of Official Development Assis-tance (ODA). Sudan’s access to ODA has contracted sharply in the past few decades, largely because of increasingly large arrears with multilateral and bilateral creditors. As Table 2.6 indicates, in the early part of the 2000s, the average net inflow of ODA was about US$470 million a year, equivalent to about US$13 per person per year. With the successful negotiations that

led to the signing of the CPA in 2005, net inflows of ODA increased significantly during 2005-2010, averag-ing about US$2.2 billion a year – equivalent to more than US$50 per person. In more recent years, however, following continued problems with debt payments to official creditors, net inflows of ODA declined to only US$26 per person per year in 2012, but then recov-ered to US$31 per person in 2013. The position taken in this Report is that a high priority must be attached to an agreement with creditors related to Sudan’s debt servicing obligations and to establishing the conditions necessary for debt relief under an HIPC initiative.

2.4.5 Economic Growth under the Moderate Scenario. The proposed transformation under the Moderate Growth Scenario results in a broader pattern of development that provides large numbers of peo-ple with opportunities for productive employment and improved livelihoods. Table 2.7 provides a summary of the projected increase in GDP, non-oil GDP, and oil sector value added. Key features of the programme are as follows:• The growth rate for non-oil GDP rises steadily

from recent levels of about 3 percent a year in real terms to about 5 percent a year by 2020, and then to about 6 percent a year in the latter part of the 2020s.

Table 2.8: Projected Change in Selected Economic Indicators

Indicator Actual/estimate Projected

2010 2012 2020 2030

Population ('000)

Female 17,764 18,534 22,186 27,491

Male 17,888 18,661 27,587 27,587

Total 35,652 37,195 49,773 55,078

Population growth rate (% p.a.) 2.3 2.1 2.2 2.1

Urbanization (%) 33.1 33.4 35.0 38.8

Population less than 15 years (%) 42.1 41.4 38.7 35.6

No. permanent households ('000) 4,744 5,127 7,146 9,308

Average persons per household 6.2 6.0 5.2 5.0

Life expectancy at birth (years) 61 62 63 65

Labor force ('000) 10,479 11,110 14,051 18,847

Growth in labor force (% p.a.) 3.0 3.0 3.0 3.0

Unemployment rate (%) 14.8 14.8 14.0 10.0

GDP per capita (US$ at 2012 constant prices)

1,973 1,796 2,374 2,970

Increase in consumer price index (% p.a.) 15.4 44.4 5.0 5.0

Source: Table 2.7 and Annex Table 1.1.



• The non-oil economy accounts for more than 90 percent of Sudan’s GDP throughout 2014-30.

• GDP per capita increases from about US$1,800 in 2012 to about US$3,000 by 2030 (at 2012 con-stant prices and exchange rate).

2.4.6 An important point about the projections set out in Table 2.7 and Annex Table 3.1 is that it will take some time for the full economic impact of diversification to be felt. As the earlier discussion indicates, it will take sev-eral more years of prudent management of fiscal, mon-etary and foreign exchange policies to restore a stable macroeconomic environment that in turn, improves the operating environment for private investment. Moreover, building the policy framework and institutional capaci-ties for the proposed transformation of the economy will also take some time. It is for these reasons that the GDP growth rate is projected to increase only gradually to the range of 5 percent a year by 2020.

Alternative Scenarios for the Pace of Diversification

2.4.7 The Low Growth Scenario with Limited Progress on Diversification. Under the Low Growth

Scenario, it is assumed that economic sanctions would continue to be imposed on Sudan and that there would be extensive delays in reaching agreements with official and private creditors on the debt arrears problems of the country. It is also assumed that revenues from oil exports would be somewhat lower than in the Moderate Growth Scenario and that there would be slow prog-ress in improving the domestic savings performance and the operating environment for private investors. Potential offshore investors would be cautious about in-vesting in Sudan under these circumstances. With low levels of savings, limited access to external capital, the gross investment levels would be low and as a result, GDP growth would be about 4 percent a year in the lon-ger-term. In this Scenario, GDP per capita increases to about US$2,430 by 2030 (at 2012 constant prices).

2.4.8 The High Growth Scenario with Rapid Di-versification. In the High Growth Scenario, the perfor-mance of the oil sector is assumed to be the same as in the Moderate Growth Case. However, it is assumed that the operating environment is more conducive for private investment and that the pace of diversification is more rapid in this Scenario. As a result, the level of fixed in-vestment during the 2015-2030 period is substantially higher than in the Moderate Growth Case. As Table 2.6 indicates, fixed investment increases to 27 percent of GDP by 2025 and 29 percent by 2030. GDP growth increases to about 7 percent a year by the mid-2020s, compared with 5.6 percent in the Moderate Growth Case. By 2030, GDP per capita is about US$3,590 (at 2012 constant prices), compared with about US$3,000 in the Moderate Case.

2.4.9 It is assumed that economic sanctions continue to apply in the High Growth Case, thereby constraining Sudan’s access to debt financing in international capital markets. As a result, the bulk of the additional financing for the programme has to come from the domestic mar-ket. The main issue with the High Growth Scenario cen-tres on whether Sudan can raise national savings rates from the current level of 17 percent of GDP to at least 26-27 percent by 2030. In the event that Sudan was able to achieve an impressive increase in domestic savings, the financing constraint would be much less stringent and the prospects for sustained economic growth in the range of 7-7.5 percent year during the 2020s would be more plausible.

Table 2.9: Indicative Composition of Investment Expendituresfor 2014-2030 (In US$ mill at 2012 constant prices & exchange rate)

Type of investment expenditure

Amount Share

(US$ mill) (%)

Capacity building and technical services

Technical services 5,856 1.5

Goods and materials 1,952 0.5

Sub-total 7,808 2.0

Capital expenditures

Materials 125,304 40.0

Services 156,614 32.0

Equipment 101,795 26.0

Sub-total 383,713 98.0

Total

Labor services 131,159 33.5

Materials 158,566 40.5

Capital equipment 101,795 26.0

Total 391,521 100.0


2.5 Economic Impact of the Programme and the Benefits

Economic and Social Benefits of the Proposed Programme

2.5.1 Table 2.8 provides a summary of possible out-comes for key economic indicators for the period 2012-2030. Four broad sets of benefits would flow from suc-cessful implementation of the proposed moderate pro-gramme for diversification. First, with sustained broad-based growth in the range of 5-6 percent a year from 2018 onwards, the non-oil economy is able to create substantial employment opportunities for new entrants into the labour force, while also contributing to a steady reduction in the current high levels of unemployment (in the range of 15 percent of the labour force) that have pre-vailed for more than a decade.

2.5.2 Second, there is a steady increase in real income per capita within the country that will translate into im-proved livelihoods for many people. In real terms, GDP per capita increases by 3-4 percent a year during 2014-30. The proposed broad-based and inclusive programme of economic growth provides employment and income opportunities for both rural and urban populations.

2.5.3 Third, the programme will also contribute to poverty reduction. International experience suggests that sustained economic growth of 5-6 percent a year from 2018, together with improvements in a range of social services, including health and education pro-grammes, could bring the incidence of poverty down from 47 percent of the population in 2012, to about 30 percent by 2030. The implication is that there would be a decline in the number of people below the poverty line by 2030. Even with the projected overall increase in population from 37.2 million in 2012 to 55.1 million by 2030, the total number of people below the poverty line would decline from about 17.5 million in 2012 to about 15 million by 2030.

2.5.4 Fourth, the proposed programme would cre-ate a substantial range of new business opportunities within Sudan. Under the Moderate Growth Scenario, to-tal investment expenditures in the economy during the 2014-2030 period are projected to be about US$390 billion (at 2012 constant prices and exchange rate). The key issue here is the extent to which a range of actions can be taken by the government to ensure that the do-mestic business community and labour market benefit from these opportunities rather than accrue primarily to offshore suppliers of these goods and services.

Table 2.10: Projected Growth in Merchandise Exports and Imports(In US$ million at 2012 constant prices)


2012 2013 2014 2015 2020 2025 2030

Exports

Crude oil 1,755 1,617 1,091 553 893 1,410 1,719

Petroleum products 257 102 163 48 - - -

Gold 2,158 1,048 1,271 1,108 1,235 1,870 2,500

Other 989 2,032 1,825 2,160 4,960 7,500 10,900

Total exports 5,159 4,800 4,350 3,870 7,088 10,780 15,119

Imports

Foodstuff & beverages 2,109 2,448 2,344 2,297 2,251 2,206 2,162

Petroleum products 1,052 1,460 1,524 957 2,074 4,284 6,995

Manufactures 3,018 3,055 2,844 2,729 2,976 2,950 3,140

Capital goods 2,763 2,649 2,250 2,443 3,070 4,399 5,583

Other 533 305 250 500 800 1,100 1,400

Total imports 9,475 9,918 9,211 8,927 11,172 14,939 19,279

Merchandise trade balance (4,316) (5,118) (4,861) (5,057) (4,084) (4,159) (4,160)

Memo items:

Non-oil exports as % of non-oil GDP 4.9 4.6 4.5 4.6 6.9 7.9 8.5

Non-oil imports as % of non-oil GDP 13.1 12.7 11.1 11.1 10.1 9.0 7.8

Source: Central Bank of Sudan, Table 7.5, Table 7.6 and estimates by authors.



commercial buildings, and provision of various profes-sional services (legal, accounting, investment adviso-ry services, training and others). Some US$159 billion would be spent on goods and materials, including, for example, construction items such as cement, gravel, asphalt, ironworks, lumber, and supplies for plumbing and electrical connections. Further, about US$102 billion would be spent on capital equipment, including trans-port equipment of various kinds, pumping equipment for water supply and irrigation, and equipment for power generation and transmission, and for ICT services.

2.5.6 The position taken in this Report is that the government, with the support of international donors, will need to take early action on the design and imple-mentation of complementary programmes of support for the local business community. Chapter 5 and Chap-ter 6 outline the types of support that will be required. Chapter 9 then addresses the issues associated with the further development of the financial services industry and programmes for skills development for the Sudan labour force to ensure that the increased demand for semi-skilled and highly skilled workers can be met from within the country, rather than from a large influx of for-eign workers.

Expanding the Role of the Private Sector

2.5.7 Active participation of the private sector is central to the success of the proposed diversification programme. As noted in the foregoing discussion, the private sector would account for more than 80 percent of fixed investment in the Sudan economy during the 2014-2030 period. In addition, individual farmers and medium and large-scale commercial businesses would account for the bulk of production activities and service provision in the country.

2.5.8 To take advantage of the opportunities that will be created by a successful programme of economic di-versification, action by the government, in collaboration with the business and farming communities (including smallholder farmers that generate marketable surplus-es of produce), will be needed to support the further development of domestic capacities for the supply of goods and services. These actions include: (i) improve-ments in the business environment, including, for exam-ple, the adequacy of the legal framework for investment and the extent to which there is clarity in the regulato-

Table 2.11: Imports of Sudan for 2013

Imported product Quantity Value

('000 mt) (US$ mill)

Foodstuff

Wheat 2,314 1,027

Wheat flour 27 15

Sugar 1,118 646

Dairy products 31 82

Vegetables & products 82 63

Fruits & products 90 44

Animal & vegetable oils 155 149

Other 346

Sub-total 2,372

Beverages & tobacco

Soft drinks 9 27

Other 49

Sub-total 76

Petroleum products 1,294 1,460

Raw materials 241

Chemicals

Fertilizer 254 136

Other 776

Sub-total 912

Manufactures

Plastics 95 226

Iron and steel 727 711

Metal products 54 129

Paper products 126 141

Other 636

Sub-total 1,843

Capital goods

Machinery and equipment 1,713

Transport equipment 936

Sub-total 2,649

Textiles

Finished clothing 173

Synthetic fabrics 85

Other 44

Sub-total 301

Other 65

Total imports 9,918

Source: Central Bank of Sudan.

2.5.5 Table 2.9 provides a very rough estimate of the composition of the proposed investment expenditures for the economy during the 2014-2030 period. An in-creasingly wide range of skills will be required in the la-bour force. About US$131 billion would be spent on labour services related to the investment programme, including, for example, construction of infrastructure and


ry framework; (ii) programmes to ensure that small and medium-business entities in Sudan benefit from the programme; (iii) measures needed to promote the de-velopment of technical skills in the labour market; and (iv) in the case of the public sector, development of con-tracting arrangements for domestic supply of goods and services for the programme.

2.5.9 The government will also need to develop effec-tive capacities to address the concerns of international investors in a timely manner. Inability to address such concerns may result in potential investors shifting their attention to other countries where the risk-reward rela-tionship is more attractive. A country such as Sudan, having been entangled in decades of conflict, will typ-ically attract a wide of concerns by potential investors in assessing the risk-reward framework.27 These range from concerns about force majeure to political risks (such as changes in the regulatory environment), envi-ronmental risks and the current status of environmental laws and regulations in Sudan, currency exchange risks, especially in cases where substantial amounts of debt financing are used and are denominated in a currency other than that of the bulk of the revenues generated under the project, and social risks where a project may have an important impact on local communities. Unsat-isfactory arrangements regarding land tenure or use of local water resources, for example, can lead to signifi-cant local opposition to a project. This may in turn result in delays in project completion and increased comple-tion costs, and could even undermine project viability.

2.5.10 Improving the business environment: As discussed elsewhere in this Report, Sudan has limited capacity for providing institutional support to the farm and non-farm business communities. Chapter 4 pro-vides a detailed analysis of the challenges associated with doing business in Sudan. Investors will be con-cerned about the adequacy of the legal framework for investment and about the extent to which there is clar-ity in the regulatory framework. The National Govern-ment, state governments and counties need to identify key areas for improvement and take specific action to address these bottlenecks. The Government of Sudan can follow a path that is similar to that of other suc-

27 There is an extensive literature on these types of issues. See, for example, Woodside, Arch G. and Robert E. Pitts (1996), Creating and Managing International Joint Ven-tures. Quorum Books, Westport, Connecticut, 1996; Delmon, Jeffrey (2009), Private Sector Investment in Infrastructure: Project Finance, PPP Projects and Risk. Kluwer Law International, The Netherlands, 2009; and Bygrave, William D., Michael Hay, and Jos B. Peeters (1999), The Venture Capital Handbook. Pearson Education Ltd., Lon-don, 1999.

cessful reformers in Sub-Saharan Africa (e.g., Ghana, Mali, and Rwanda), which are noted for their long-term agenda for reform of the business environment and push forward continuously. Their programmes typi-cally include all relevant stakeholders in the process, set specific goals, institutionalise the reform effort and regularly monitor progress.28 The benefits can be sub-stantial. Business reforms expand the reach of regu-lation by bringing firms and employees into the formal sector. Businesses pay taxes. Products are subject to quality standards. In addition, formal firms gain greater access to bank credit to fund expansions and to courts to resolve disputes.

2.5.11 Support for smallholder farmers and small and medium business: A range of initiatives can be taken to promote the development of small and medium business activities in both rural and urban ar-eas of Sudan. Chapter 5 outlines in some detail the ap-proach that is proposed for acceleration of agricultural development throughout the country, with particular emphasis on the on-farm and off-farm needs of small-holder farmers. To promote on and off-farm smallhold-er business activities, a widely used approach in other developing countries relies on the use of a network of business development centres (BDCs) throughout the country. These centres are typically involved in training and provide support to small and medium entities to bid for and implement various types of contracts for the supply of goods and services. Such training pro-grammes include preparation of bid documents, sup-port for preparing applications to the banking sector for working capital and investment loans, arrangements for lease of equipment, and bookkeeping and record keeping.

2.5.12 Improving the supply of technical skills for the labour market: The proposed diversification programme will generate a large demand for a wide range of skilled and semi-skilled workers. It will also create job opportunities for large numbers of unskilled workers. As the discussion in Chapter 9 indicates, the key policy issues here will be the manner in which peo-ple are trained, by whom and at what cost. In the case of equipment operators, for example, it is not unusual

28 According to the IFC, 27 of 46 Sub-Saharan economies have implemented reforms aimed at improving their business environments. Rwanda was identified as one of the top improvers globally. Since 2005, Rwanda has implemented 22 business regulation reforms in areas measured by the Doing Business surveys of the IFC. Other countries, such as Ghana and Mali, have initiated similar programmes. See IFC (2013), Doing Business, 2014: Understanding Regulations for Small and Medium-Size Enterprises. International Finance Corporation, Washington DC, October 29, 2013.



for the successful contractor to assume responsibility for hiring and training the personnel required. To meet the demand for skilled tradespeople, such as electri-cians, surveyors, welders, among others, the issue is the extent to which Sudan can build accredited training institutions whose programmes meet standards that are consistent with international practice.

2.5.13 Closely related to these concerns is the actual accreditation of those training institutions whose pro-grammes conform to agreed standards for the industry. In the absence of agreed standards and an accredita-tion process, donor support for such capacity building may be considered. In the event that the development of these domestic capacities is slow, consideration might be given to support by donors for skills train-ing of Sudanese at appropriate qualified institutions in neighbouring countries. The Government may want to approach the International Organisation for Standard-isation (ISO) for assistance and training in these mat-ters.

2.5.14 Procurement policies and programmes for the domestic market: Increased attention needs to be given to the provision of public information about procurement opportunities generated by government expenditures. As Table 2.5 indicates, public investment expenditures are projected to amount to about US$50 billion during the 2014-2030 period (at 2012 constant prices and exchange rate). Some of these activities will be carried out by government agencies themselves, but in this period, a substantial part of the government’s capital works programme will have to be contracted out to private suppliers of goods and services.

2.5.15 Procurement of this amount of goods and ser-vices provides an important opportunity for the govern-ment to help promote domestic business activity. More work may be needed to ensure that the procurement policies of the national and state governments are in line with accepted international standards and that these procurement processes are open and transparent. That said, a range of initiatives can be taken to ensure that a substantial share of the procurement is awarded to qualified domestic suppliers of goods and services. Procurement policies will need to address the following types of issues: (i) the choice of technical standards for civil works and goods and materials to be supplied un-der contracts; (ii) to what extent local materials can be

used, and if their technical specifications comply with contract requirements: (iii) the number, size and type of contracts to be tendered and the extent to which local contracts will be geared to contractor capacities within the domestic market.

2.5.16 A key issue going forward is the extent to which domestic suppliers of materials will be able to meet specific product standards required for these pro-grammes. If it doesn’t already exist, Sudan will, for ex-ample, need to develop a uniform set of internationally accepted standards for domestic production of con-struction materials. Without these types of standards, there is a strong prospect for the award of contracts to external contractors for supply of materials that can comply with specifications in procurement notices. Again, the ISO could be approached for assistance in these matters.

2.5.17 Further work is needed to develop a clear set of policies for procurement that can help to develop domestic business activities. Early consideration could, for example, be given to awarding maintenance con-tracts to qualified local firms in various infrastructure sectors, initially for a year or less. As capacities of these firms increase, consideration could be given to the competitive award of multi-year or so-called “pe-riod” contracts for routine maintenance. Such con-tracts might start at, say, US$100,000 a year. The size of such contracts could be increased, consistent with the further growth of local capacities. Longer-term con-tracts that are implemented according to standards re-quired can help reduce the cost of asset maintenance, and will also permit contractors to purchase necessary equipment and meet the costs of staff training. These types of techniques were used with great success in a number of countries in East Asia several decades ago to build small domestic firms into major construction companies that were able to compete effectively with international suppliers of such services.

Import Substitution and Export Promotion

2.5.18 Opportunities for Export Promotion: The agricultural and mineral resource base of Sudan give it the prospect of becoming a major exporter of food products, agro-industrial products and non-oil miner-


al products, such as gold and cement. These are dis-cussed in chapters 5 and 6. The first exports of cement began in 2014. The main challenges limiting optimal exploitation of these export capacities are discussed at some length in later chapters, but the key issues centre on meeting international quality standards required for export markets, and improving the international com-petitiveness of potential export products.

2.5.19 Table 2.10 includes a provisional projection for merchandise export earnings in the 2014-2030 period. It is assumed that the volume of crude oil exports will increase from 11 million barrels in 2014 to about 17 mil-lion barrels by 2030, but that with growth in domestic demand for petroleum products, exports of these items will cease by about 2017. This is detailed in Chapter 7. Most of the growth in export earnings comes from ex-port of food products, livestock, agro-industrial prod-ucts and non-oil minerals. The value of gold exports is assumed to increase steadily to about US$2.5 billion a year by 2030. Earnings from other non-oil exports are assumed to grow at an average of about 10 per-cent a year in real terms during the 2014-2030 period, increasing from about US$2 billion in 2013 to about US$11 billion by 2030.

2.5.20 Prospects for Import Substitution: As Ta-ble 2.10 indicates, merchandise imports were about US$9.9 billion in 2013, and are reported by CBoS to have declined to about US$9.2 billion in 2014. The most important categories were capital goods that accounted for 27 percent of the total, foodstuffs that accounted for 24 percent, various manufactures that accounted for 19 percent and petroleum products that accounted for 15 percent.

2.5.21 There appears to be scope for development of a significant import replacement programme for Su-dan in the decade ahead. Sudan imports a substan-tial amount of foodstuffs, including products such as wheat, wheat flour, sugar, fruits and vegetables and related products, and animal and vegetable oils, all of which can be produced in the country. The total val-ue of these imports was US$2.4 billion in 2013 (Table 2.11). Successful implementation of the proposed di-versification programme would include close attention to expanding domestic production of agricultural prod-

ucts, such as wheat, sugar, dairy products and fruits and vegetables for import replacement. This will require close attention to measures that promote competi-tiveness of domestic producers and compliance with generally accepted product standards. Another area of potential interest concerns textiles. There may be op-portunities for expansion of cotton production in ag-riculture to supply domestic textile industry. Chapters 5 and 6 discuss in some detail the requirements for successful expansion in the production of these agri-culture-related products.

2.5.22 With imports of petroleum products now at US$1.5 billion a year, there may also be scope for ad-ditional investment in oil refining to meet the growing need for a range of petroleum products that are cur-rently imported. (See Chapter 7 for a further discussion of these possibilities.) The country imports substantial volumes of fertilizer. The demand for such products present opportunities for private sector investment in import replacement activities. Moreover, there may also be opportunities to promote a selective development of capital goods manufactured in Sudan, perhaps with joint venture arrangements that begin by undertaking local assembly of appliances and road transport equip-ment and so on.

2.5.23 It is assumed that a successful programme of import replacement for various foodstuffs emerges in the medium-term, and as a result, there is a modest decline in the import of these products in the decade ahead. More detailed analysis of these various options will need to be undertaken, including the prospec-tive competitiveness of domestically produced goods with comparable imports, the adequacy and reliability of raw materials supplies, and existence of technical standards for domestically produced goods that are comparable with imported products. Assuming some progress on import replacement in the decade ahead, merchandise imports are projected to increase to about US$19 billion by 2030 (at 2012 constant prices). In this case, Sudan’s merchandise trade deficit would decline from US$4.9 billion at present to about US$4.2 billion by 2030 (at 2012 constant prices). The implication is that the trade deficit declines from the current level of 7 percent of GDP to 2.5 percent by 2030.




3.1 Key Challenges for Macroeconomic Management

The Setting

3.1.1 Since the secession of South Sudan in July 2011, Sudan has grappled with a challenging macro-economic environment, although the situation shows signs of improvement. The secession led to an imme-diate significant deterioration in the economic circum-stances of Sudan. The loss of oil revenues resulted in large budget deficit in 2012. The overall balance on the budget went from a surplus equivalent to 0.2 percent of GDP in 2011 to a deficit of 3.7 percent of GDP in 2012 and 2.3 percent in 2013. Heavy reliance on Central Bank of Sudan financing for this budget deficit, along with a large devaluation of the currency, then translated into a sharp increase in domestic infla-tion. On an end-year basis, the consumer price index increased by 44 percent in 2012 and 42 percent in 2013.

3.1.2 As Chapter 1 indicates, the surge in oil revenue that began in 1999 brought great advantages to the economy. But it also came with risks. Though the oil money was more of a windfall gain than an assured flow, it encouraged expenditure levels that lacked the backing of non-oil revenues and that became unsus-tainable with the secession of South Sudan and de-cline in oil revenues. Furthermore, it led to appreciation of the real exchange rate and increased the circulation of high powered money, along with sharp increases in domestic inflation. It also concealed the poor perfor-mance of the non-oil sector and may have contributed to laxity in economic governance and management.

3.1.3 As noted in Chapter 1, the recent intensi-fication of economic sanctions against Sudan may complicate efforts to improve the domestic macro-economic environment. A continuation of the 2014 breakdown in relations with correspondent banks will very likely have a considerable negative impact on the Sudan economy. The impact may include a decline in exports and imports that, in turn, may affect domes-tic consumption and production. Reduced supplies of goods may increase in inflation and foreign exchange shortages may contribute to depreciation of the cur-rency on the parallel market, fuelling inflation and un-dermining macroeconomic stability.

The Need for Macroeconomic Stability

3.1.4 A stable macroeconomic environment con-tributes to growth and diversification. Restoring macroeconomic stability is a critical condition for in-vestment, which is the main vehicle for the proposed programme of private sector-led diversification. In a stable macroeconomic environment, investors can feel more confident about the environment for medi-um-term to long-term investment. Investors expect these policies to affect the real rate of return on their efforts; the expected real value of their investments in the system over time; and the ability to transfer their assets and earnings from the domestic economy to another country. Low inflation, capital mobility, a sta-ble (but legally flexible) exchange rate, and convertibil-ity of the domestic currency or at least an absence of exchange controls, all attract investors (both local and foreign) to the local economy, benefitting economic diversification and growth.

3. TRANSITION TO A STABLE MACROECONOMIC ENVIRONMENT



3.1.5 The immediate post-secession policy agen-da is to restore the internal and external balances, re-duce inflation and stabilise the foreign exchange rate. The medium-term agenda is to broaden the base of production. In principle, short-term stabilisation poli-cies can influence the diversification objective through their impact on the price structure and the incentive system. As the discussion below indicates, a range of important macroeconomic variables (inflation, current account balance in relation to GDP, and the fiscal deficit in relation to GDP) require further adjustment. Appropri-ate monetary and fiscal policies, adopted together with banking and finance sector policy measures, would in-fluence resource mobilisation and financial intermedia-tion.

3.1.6 Good fiscal management, while helping to contain inflationary pressures, will also contribute to an improved economic performance in a number of ways: (i) Fiscal sustainability will create a space for govern-ment investment in the physical and social infrastruc-ture; (ii) on the revenue side, reform of the tax structure will help in achieving allocative efficiency as well as im-proving the incentive system (for example by rational-ising taxes on the agriculture sector); and (iii) on the expenditure side, clear prioritisation of expenditures will ensure efficient allocation of public expenditure.

3.1.7 Trade policy influences the growth of exports and imports and partly determines the degree of open-ness of the economy. In that connection, a stable and appropriate foreign exchange rate is critical for export competitiveness since overvalued rates inflate the price of exports and deflate the price of imports, thus giving advantages to foreign producers over local producers, both in the domestic market and in offshore markets where they are competing. It affects the whole spec-trum of traded goods in a number of ways: (i) Appropri-ate exchange rate policies will boost competitiveness and help remove price distortions and disincentives, especially to exports; and (ii) building adequate re-serves will help stabilise the exchange rate.

3.1.8 Given the sharp decline in domestic savings, as discussed in Chapter 1, the choice of appropriate monetary and financial policies will facilitate domes-tic resource mobilisation (savings and intermediation). Sound monetary policy has an impact on the availability and the cost of credit to the private sector. Financial

policies that encourage financial deepening and the efficient intermediation between savings and investors can make an important contribution to the further de-velopment of the domestic capital market that is central to successful implementation of the Moderate Growth Scenario discussed in Chapter 2. Closely related to the need for improved domestic resource mobilisation is the need to resolve the ongoing problems of debt ar-rears. An early resolution will create opportunity for in-creased flow of concessionary financing resources and will also have a positive impact on investor perceptions about the merits of substantial additional investment in key components of the proposed diversification pro-gramme.

3.1.9 As indicated in Chapter 2, the Government of Sudan adopted a three-year emergency plan (2012-2014) to address the macroeconomic impact of the secession of South Sudan. The key features of the plan were as follows: (i) To address the loss of fiscal revenue, consolidate public finances (including the enhancement of tax revenue), streamline transfers to states, and phase out fuel subsidies by the end of 2017, while strengthening the existing social protection schemes; (ii) reform the exchange rate regime; and (iii) lay the groundwork for sustained and inclusive eco-nomic growth and diversification. As part of this pro-gramme, the government adopted a first package of corrective measures in June 2012, the results of which were mixed.

3.1.10 In September 2013, the government adopted a second package of corrective measures. In early 2014, it sought the assistance of the IMF to put in place a Staff Monitored Programme (SMP) for the January-De-cember 2014 period. The objective of the SMP is to re-store macroeconomic stability, strengthen social safety nets, and develop the required reforms to refocus the economy on its non-resource sector, thereby laying the groundwork for sustainable economic growth over the medium and longer-term. The discussion below out-lines the key macroeconomic challenges that continue to confront the government, along with a summary of the actions being taken.29

29 For a more detailed discussion on the emergence of macroeconomic instability in Su-dan and the measures being taken under the SMP to restore stability, see the recent country economic reports of the IMF, including: IMF Country Report No. 14/249 of August 2014; No. 14/203 of July 2014; No. 13/320 of October 2013; No. 12/298 of November 2012; and No. 11/86/of April 2011.


Table 3.1: Inflation Rates in Sudan During 1961-2014

(Average annual percentage increase)

Indicator 1961-69 1970-79 1980-89 1990-99 2000-09 2010 2011 2012 2013 2014

Consumer price index

End year 9.3 15.4 18.9 44.4 41.9 25.7

Period average 3.4 15.3 36.2 80.4 8.7 13.1 18.3 35.1 37.1 37.5

GDP deflator¹ 39.3 53.6 9.4 13.7 25.3 30.0 16.7

Memo item:

World Bank GDP deflator 4.0 16.7 42.0 73.9 9.1 19.6 21.0 27.6 36.7 29.9

Source: Central Bank of Sudan, World Bank Development Indicators and IMF country reports. Note 1. See

Annex 2.3 for GDP deflator from government's national income accounts.

Table 3.2: Fiscal Operations of Central Government of Sudan

(Receipts and expenditures as % GDP at current prices)

Indicator 1995 2000 2005 2010 2011 2012 2013 2014

estimate

Revenue and grants

Oil revenue - 4.2 10.8 10.7 10.0 1.7 2.2 1.0

Non-oil revenue

4.6 5.5 6.9 6.7 7.0 7.0 8.8 9.8

Grants - - - 0.6 0.3 0.4 0.7 0.5

Total 4.6 9.7 17.7 18.0 17.3 9.1 11.6 11.4

Expenditures

Recurrent 5.4 8.2 16.4 14.2 14.5 10.2 11.6 10.1

Capital 0.8 2.2 2.7 3.6 2.6 2.1 2.2 2.2

Total 6.2 10.4 19.1 17.8 17.1 12.3 13.8 12.4

Overall balance

(1.7) (0.7) (1.5) 0.3 0.2 (3.1) (2.2) (1.0)

Financing sources

Foreign funding

0.5 0.3 0.1 0.4 0.6 0.1 0.4 0.1

Domestic funding

Bank financing

1.1 0.2 0.9 2.2 2.2 0.8 - -

Other funding

- 0.0 0.4 (2.8) (2.9) 2.2 1.8 0.9

Sub-total 1.6 0.6 1.5 (0.3) (0.2) 3.0 1.8 0.9

Discrepancy 0.0 0.1 - - - - 0.0 -

Total 1.7 0.7 1.5 (0.3) (0.2) 3.1 2.2 1.0

Memo items:

Oil revenue (US$ million)

- 548 3,699 7,518 7,020 1,187 1,352 716

Oil as % of total revenue

- 43.2 61.2 59.3 57.7 19.1 18.6 9.0

GDP at market prices (SDG mill)

8,034 33,663 83,298 162,204 186,690 243,413 294,631 435,140




3.2 Re-emergence of High Domestic Inflation

Inflation in Sudan

3.2.1 Sudan has a long history of high domestic in-flation.30 As Table 3.1 indicates, average annual infla-tion rates per decade was less than 10 percent only in the 1960s and again in 2000-2009. In the 1980s and 1990s inflation rates were very high. They were brought down with more stringent monetary policy and exchange rate management. The high inflation rates of the past have been not conducive to macroeconomic stability in general and financial sector stability in par-ticular. The adverse impact of high inflation on the ex-pectations and investment decisions of private inves-tors has led to lower levels of private investment and reduced economic growth in the non-oil economy.

3.2.2 The current challenge is to contain the very high rates of inflation that emerged after the secession of South Sudan in 2011. The end-year inflation rate for the consumer price index rose from 19 percent in 2011 to 44 percent in 2012 and 42 percent in 2013. Under the SMP agreed upon with the IMF, the target rate of increase in consumer prices for 2014 (on an end year basis) was 18.1 percent. Measures taken under the SMP programme reduced the inflation to 26 percent for 2014. The objective of the SMP that was agreed upon with the IMF in 2014 was to bring down the rate of inflation to 12 percent in 2015 and about 6 percent by 2018.

30 See, for example, IMF (2012.a), “Sudan’s Inflation Problem: Some Lessons from the Past Thirty Years.” IMF Country Report No. 12/299, September 10, 2012. See also IMF (2013.d), “Monetary Transmission Mechanism in Sudan.” IMF Country Report No. 13/320 Sudan: Selected Issues. October 2013.

3.3 The Need for Fiscal Consolidation

The Oil Boom and Secession of South Sudan

3.3.1 As the IMF (2014a) has pointed out, the fis-cal performance of Sudan over the past three decades has been heavily influenced by two major concerns: an unsustainable level of external debt and since 1999, substantial dependence of oil as the primary source of public revenues. Since the oil boom began in 1999, fis-cal and exchange rate policies have been influenced by the heavy dependence on oil revenues. These revenues accounted for about 60 percent of total government revenues during the 2000-2010 period, a dependence that then resulted in a very low tax burden on the non-oil economy (Table 3.2). The substantial oil revenues also allowed the government to maintain an overvalued exchange rate.

3.3.2 These longer-term problems were exacer-bated by the secession of South Sudan in 2011. The Government responded to the shock by adopting an emergency budget in 2012, reiterating its objectives to control prices, restore the external balance, sus-tain economic growth and support the poor and the vulnerable. The brunt of its short-term “emergency” response was to be undertaken through a combina-tion of fiscal adjustment and appropriate monetary and fiscal policies. Due to its arrears problem with external debt payments, the country had limited access to ex-ternal financing that could have eased the burden of adjustment. Thus, the challenge for fiscal adjustment was to restore fiscal sustainability, realise an efficient al-location of expenditure and high quality of government expenditure. In addition, the government also faced the challenge of improving public financial management. The agenda in public financial management included adopting a multi-year medium-term budget, introduc-ing transparency in budgeting, achieving a higher lev-el of fiduciary standards, consolidating fiscal reporting and eliminating the extra-budget units by adopting a Treasury Single Account and sub-national government accounting.31

31 Heeding the advice of the IMF, in 2001, the Government established an oil savings account that aimed at channelling some of the oil revenues to a protected fund that could be used to hedge against revenue declines. By 2004, the Government had put a considerable amount of money in the account, equivalent to 25 percent of GDP.

Table 3.3: Revenues as% GDP for Comparators

Country 2012

Cape Verde 20.8

Cote d'Ivoire 17.8

Ghana 19.4

Nigeria 5.0

Senegal 20.2

Uganda 13.2

Zambia 21.4

Source: World Bank

Development Indicators


Revenue Performance

3.3.3 For much of the pre-oil boom period, public revenues of Sudan were low – equivalent to less than 10 percent of GDP. With the start of the oil boom in 1999, oil revenues grew rapidly and by 2005, were equivalent to 11 percent of GDP (Table 3.2). Prior to the secession of South Sudan in 2011, oil revenues remained in the range of 10-11 percent of GDP, while non-oil revenues were about 7 percent of GDP. Following the secession, oil revenues declined to less than 2 percent of GDP in 2013 and 2014, while non-oil revenues increased from about 7 percent of GDP in 2011-12 to almost 10 per-cent in 2014. Total public revenues therefore dropped precipitously from an average of 17 percent of GDP during 2005-10 to 11 percent in 2012-14.

3.3.4 Beginning in 2013, Sudan began to receive additional revenue under the agreements signed with South Sudan in 2012.32 In 2013, Sudan received a total of US$123 million in oil transit fees charged to South Sudan, and US$248 million under the Transitional Fi-nancial Agreement (TFA). In 2014, the TFA payments by South Sudan were expected to amount to about US$460 million.

3.3.5 However, tax revenue in Sudan as a percent-age of GDP is relatively small, with low levels of taxation on the non-oil economy. In 2012, the non-oil tax reve-nue of 7 percent of GDP was lower than that of Egypt, Ethiopia, Kenya, Malawi, Rwanda, Tanzania, Uganda and Zambia. There was modest improvement in 2013 and 2014, with these taxes rising to an estimated 10 percent of GDP in 2014. The low tax rate stems from a narrow tax base, low tax rates, weak administration and high levels of exemptions. Currently, the tax struc-ture is dominated by indirect taxes. A value added tax was introduced in 1998 and set at a rate of 15 percent, but it was recently raised to 20 percent. Other taxes include personal income tax (on wages and salaries), business profits tax (on individuals) and corporate in-come tax.

3.3.6 Reforming the tax structure is important not only because it will help alleviate the fiscal deficit, but also in view of its impact on resource mobilisation and allocations and economic incentives. Additionally, it will help in creating a space for government to invest in 32 Sudan and South Sudan signed a total of nine agreements in October 2012 covering

a range of issues that had been under negotiation since 2010.

infrastructure, which is critical for attracting investment. There is room to raise tax revenues by taxing gold pro-duction, broadening the tax base, improving tax ad-ministration and removing unjustified tax exemptions (see IMF, 2013.b). In 2012, gold mining accounted for 40 percent of the export earnings, but generated less than 0.1 percent of the total tax revenue.

3.3.7 Another key objective of the SMP is to realise improved mobilisation of non-oil tax revenues, a reduc-tion in tax exemptions, reform of tax arrangements for gold-related activities, and improvements in the effi-ciency of tax collection. In the event that the ongoing SMP is implemented successfully, the IMF projects that revenues would then grow in line with GDP to reach 11 percent of GDP by 2019. Oil revenues are expected to be about 1 percent of GDP throughout this period. The position taken in this Report is that in the longer-term, Sudan would need to continue to raise the share of Na-tional Government revenues relative to GDP. Table 3.3 reports on the revenue performance of SSA countries that are currently classified by the World Bank as lower middle income countries, as is Sudan, and for which revenues are reported by the World Bank for 2012. On the basis of these comparator countries, a reasonable objective for Sudan would be to raise government rev-enues to about 18 percent of GDP by 2030 – a revenue performance that would be roughly comparable to that of these comparator countries in 2012. Based on the projections for GDP growth in the Moderate Growth Scenario, this would put government revenues (exclud-ing grants) at about US$30.0 billion in 2030, compared with US$6.9 billion in 2013.

Public Expenditure and Deficit Financing

3.3.8 The total public expenditure of the National Government declined from 18 percent of GDP in 2010 to about 14 percent in 2013 (Table 3.2). For 2013, re-current expenditure was 12 percent of GDP and capital expenditure was 2 percent. At 40 percent of recurrent expenditures, wages constituted the largest share of these outlays. In 2012, the overall fiscal deficit of the national government was 3.1 percent of GDP. In the absence of access to external financing, the govern-ment financed the deficit, mainly by borrowing heavily from the Bank of Sudan. It also raised additional fund-ing by issuing various government securities, such as its Investment Certificates (Shahama) and Investment



Sukuk (Sarha).33 This mode of financing proved to be expansionary and contributed significantly to the surge in inflation experienced in 2012 and 2013. In 2013, the government discontinued its use of Central Bank of Sudan (CBoS) financing.

3.3.9 Under the SMP, the government is taking a range of actions to cut and rationalise spending. Re-ductions in the wage bill of the government and in the large fuel subsidies are key elements of the pro-gramme. One of the largest adjustments at the national level has been the substantial cut in transfers to the state governments. Though the Fiscal Decentralisation Act resolved a number of tax jurisdiction issues with the regional governments, they have continued to de-pend on the Federal Government for substantial finan-cial transfers. They have been running deficits through accumulating arrears or defaulting. Occasionally, and on ad-hoc basis, they impose fees and taxes while elic-iting the support of the Federal government. A major responsibility of the states is to spend on social infra-structure. Further streamlining of intergovernmental fis-cal relations, which is currently monitored by the Fiscal and Financial Allocation and Monitoring Commission (FFAMC), is important. The states are also expected to play an important role in attracting investment nec-essary for diversification, in addition to expanding on basic social services.

33 See Chapter 9 and Annex 9 for a detailed outline of the Islamic financial instruments in use in Sudan.

3.3.10 Under the SMP, subsidies for petroleum prod-ucts, wheat and sugar were identified as targets for ex-penditure cuts. Action was taken in September 2013 to reduce the subsidies on fuel, but this action triggered riots and turmoil. The Government has reiterated its intention to phase out fuel subsidies by 2017. How-ever, with the phase out of fuel subsidies, and with 47 percent of the population below the poverty line, the government intends to increase spending on the social safety net of the country in order to protect the welfare of lower income people and preserve social stability. These programmes include increased budget alloca-tions for health and education, increased support for micro-finance programmes for the working poor in the informal sector, and improvements in health insurance and pension programmes.34

3.3.11 According to the IMF (2014.c), successful im-plementation of the programme was expected to bring the budget deficit down to 1 percent in 2014. The re-duced deficit would be financed mainly from domestic resources, including commercial bank and non-bank financing. Financing by the CBoS was capped at 0.6 percent of GDP – a substantial reduction from the high levels of 2012. According to the IMF, successful im-plementation of the National Government’s programme for the medium-term would bring revenues and expen-

34 According to the IMF (2014.b), about 11.8 million people are enrolled in the health insurance scheme, 32 percent of whom are civil servants, 44 percent are low income people, and the remaining 24 percent operate in the informal sector. Under the pro-gramme, all medical services for those enrolled are covered at 100 percent and med-icines are covered at 75 percent.

Table 3.4: Trends in Management of Broad Money (M2) for Sudan and

Comparator Countries

Country 2000-04 2005-09 2010 2011 2012 2013 2014

Growth in Broad Money (M2) % p.a.

Egypt 15.0 13.1 12.4 6.7 12.3 18.9 15.8

Kenya 9.1 15.9 22.4 19.2 14.4 12.8 17.0

South Africa 14.9 16.7 6.9 8.3 5.2 5.9 7.3

Sudan 30.0 25.3 26.3 17.7 39.1 13.1

Tunisia 9.4 11.1 11.3 9.3 7.7 6.9 7.9

Uganda 15.8 20.9 38.1 12.4 14.9 9.5 15.2

Ratio of Broad Money (M2) to Total Reserves (%)

Egypt 5.5 4.1 4.8 9.6 12.4 13.0 15.4

Kenya 4.4 3.8 3.7 4.0 3.6 3.5 3.3

South Africa 9.9 7.2 6.5 6.4 5.7 5.2 5.1

Sudan 11.8 6.8 15.0 82.2 85.4 72.4 74.7

Tunisia 5.0 2.9 2.9 4.0 3.5 4.1 4.3

Uganda 1.1 1.2 1.6 1.6 1.5 1.5 1.8


ditures into balance by 2018. For the longer term, it is assumed that prudent management of the fiscal ac-counts of government would result in continued bal-ance of revenues and expenditures.

3.4 Monetary Policy and Exchange Rate Management

Liquidity Control and Macroeconomic Stability

3.4.1 Macroeconomic stability, and in particular low and stable rates of inflation, is essential for private sec-tor development and growth. Monetary policy has a role to play in this regard. An effective monetary policy is reflected in successful control of reserve money as well as broad liquidity that, in turn, has an impact on domestic inflation. As Table 3.4 indicates, the growth in broad money (M2) was higher in Sudan than Ken-ya, Egypt, Uganda, Tunisia and South Africa in the 2000-2009 period. Following the secession of South Sudan in 2011, the growth in broad money surged in Sudan, and increased by about 39 percent in 2012. Subsequently, the government was able to bring about a substantial reduction in the growth of broad mon-ey in 2013, although the IMF (2014.c) reports that the growth rate increased to 19.1 percent in 2014. Reserve money growth was also higher in Sudan than Kenya, Egypt, Uganda, Tunisia and South Africa for much of the past decade. The IMF (2014.c) reports that reserve money growth increased by about 17 percent in 2010, after which growth accelerated to 47 percent by 2012. Under the subsequent stabilisation programme, the growth of reserve money was cut back to about 15 percent in 2013.

3.4.2 Table 3.4 also shows the ratio of broad mon-ey to total reserves for Sudan and the comparator countries. Following the secession of South Sudan in mid-2011, the ratio of broad money to total reserves in-creased dramatically to 85 percent in 2012. It declined marginally in 2013 and 2014. These levels are substan-tially higher than those of the comparator countries.

3.4.3 These trends suggest the existence of high ex-cess liquidity in the banking system of Sudan com-pared to Kenya, Egypt, Uganda, Tunisia and South Africa. Such liquidity is inimical to the effectiveness of

monetary policy. The existence of high excess reserves in Sudan is characteristic of a financial sector with lim-ited money market instruments and a weak interbank market. It poses a challenge to the success of mon-etary policy. The absence of active interbank money markets has led to large excess in Sudan and a loss of monetary control when CBoS continues to provide credit to individual banks, while lacking flexible means to mop up excess liquidity. High excess liquidity in the banking system thwarts the growth of credit to the pri-vate sector. This shrinks private sector investment, with negative consequences for economic diversification and growth.35

Monetary Policy and the Fiscal Deficit

3.4.4 By lending to the government to finance the deficit in 2012, thereby allowing monetisation of the deficit, the CBoS was highly accommodative. The increase in the broad money supply by 39 percent in 2012 far exceeded the Central Bank’s target of 15 per-cent for the year. Concomitantly, there was an increase in net claims on public assets and expansion in do-mestic credit. Public sector borrowing from the bank-ing system crowded out private borrowing. 3.4.5 The objective of the CBoS is to contain infla-tionary pressures and restore price stability. It has tight-ened its control of credit to the government to reduce inflation and avoid crowding out private investment. It has also increased reserve requirements for the bank-ing sector. In 2012, CBoS raised the required reserve ratio three times from 11 percent to 18 percent. How-ever, this has not proven to be an effective way of con-trolling money supply, nor is it conducive for economic development. The CBoS operates under the Shariat law and cannot use interest bearing debt instruments. The Bank is thus left with three alternative instruments: The use of equity-based instruments, quantitative ceil-ings on credit and reserve ratios. Each of these has shortcomings.

3.4.6 The process of mopping up excess liquid-ity in Sudan through open market operations (OMO) is based on the use of instruments that have Islam-

35 This effect is stronger when the excess reserve is more for precautionary purpose than when it is involuntary. When it is involuntary, it is driven by weak prospects for the economy, thereby weakening aggregate demand and demand for credit. As a result of asymmetric information, increased borrower risk of default and volatility of demand deposit, banks often find it necessary to have more liquidity in excess of statutory requirement, which is precautionary excess liquidity.



ic banking characteristics and the legal reserve ratio. The equity-based instrument has the drawback in that it cannot be priced efficiently.36 The other instruments – quantitative ceilings and reserve ratios – cannot guar-antee full control of the supply of money. As a result, the monetary policy framework of Sudan has to rely on the conventional instruments for regulating money supply using quantitative control by fixing ad hoc credit ceilings and imposing high unremunerated reserve re-quirements. As in other Islamic banking systems, the lack of adequate monetary instruments has led to high intermediation cost and persistent inflationary pres-sures.

3.4.7 As the IMF (2013.a) has indicated, with a full-fledged Islamic banking system, the monetary policy framework lacks adequate instruments for monetary operations, liquidity management, and non-inflationary financing of government deficits.37 Under an effective monetary policy framework, the central bank would use debt-based instruments in the interbank money market and government security market to inject or mop up the flow of liquidities from the banks and transmit its policy intentions. Under the Islamic mode of finance, debt-based instruments cannot earn a positive rate of return through interest and cannot be discounted in a secondary market. However, equity-based secu-rities can be traded in the open market, with trading values reflecting market expectations of economic per-formance and rates of return. Designing equity-based instruments linked to government or central banking operations can pose significant difficulties because of complexities in computing appropriate profits and rates of returns.38 These constraints have limited the devel-opment of efficient instruments for interbank market and central bank credit facilities. Another issue is the cost of the Shariat-based instruments in comparison with alternative instruments or non-Shariat traditional instruments.

3.4.8 The implication is that the instruments of mon-

36 Equity based securities can be priced on the basis of expectations of economic per-formance or rates of return. However, as noted in IMF (2013.a) it is difficult to com-pute the expected returns and rates of profits. This characteristic has complicated the manner in which such securities can operate and it made difficult to develop efficient instruments for interbank market and central bank credit facilities.

37 IMF (2013.a), Sudan: Selected Issues. IMF Country Report No. 13/320, October 2013. See also, Sundararajan, V., Marston, D., and Shabsigh, G. (1998), “Monetary Operations and Government Debt Management under Islamic Banking,” IMF Working Paper, WP/98/144.

38 In Sudan, the process of calculating return on most government securities depends on the audited accounts certified by the authorized bodies. The securities issued by the Central Bank of Sudan are based on ljara mode, where its return is determined in advance.

ey control available to the CBoS are less effective com-pared to those in countries operating under the tradi-tional non-Shariat system. In Sudan, the tendency is to put more weight on direct methods of mopping up excess liquidity or injecting liquidity into the system. This has adverse effects on the growth of the private sector, as it is through the injection of liquidity that the private sector benefits from bank lending to support in-vestment. In addition, it has adverse implications on the control of inflation. This is bad for macroeconomic sta-bility as well as the growth of the private sector. In ad-dition, the shallow nature of the stock exchange does not allow the other asset price channel to be strong. Hence, the exchange rate channel and the bank lend-ing (credit) channel of monetary policy transmission to the real sector are expected to be the relevant mech-anisms for transmission of monetary policy impulse to the real sector. This suggests the importance of strong regulations and supervision of banks and the need for channelling credit to the private sector by way of boost-ing economic activities.

3.4.9 The manner in which the CBoS uses its in-struments to achieve its objectives of low inflation and financial system stability can have an impact on the Sudan economy via the effects on competitiveness of different activities in the system, as well as on the ef-ficiency with which the economy as a whole operates vis-à-vis that of other countries. The key instruments of monetary policy – reserve and liquidity requirements – should not be used in ways that tax banks or reduce flexibility in using their free reserves.

Management of the Foreign Exchange Regime

3.4.10 During the five years prior to secession of South Sudan, the CBoS had large reserves and a sub-stantial capacity for current account payments that relieved the foreign exchange rate from pressures as-sociated with excess domestic liquidity. The rate was determined by direct transactions between banks, with the CBoS intervening only when the fluctuations exceeded plus or minus 3 percent of the rate in the previous day. The foreign exchange rate system was classified by the IMF as a floating exchange rate. With the subsequent shortages of foreign exchange in 2011 and the fall in the reserves to the equivalent of only 1.5 months of imports, the Sudanese Pound was exposed


Table 3.5 Balance of Payments

(In US$ million at current prices)

Item 1995 2000 2005 2010 2011 2012 2013 2014

Merchandise trade

Merchandise exports 556 1,864 4,878 12,700 11,063 5,122 4,793 5,156

Oil and products - 1,408 4,240 10,991 8,679 2,012 1,719 2,085

Gold - 47 63 1,018 1,442 2,158 1,048 1,172

Other products 556 409 575 691 942 952 2,025 1,899

Merchandise imports 1,219 1,553 5,946 8,989 8,312 8,528 8,925 8,556

Oil and products 194 137 283 385 662 947 1,313 1,612

Other products 1,025 1,416 5,663 8,604 7,650 7,581 7,612 6,943

Trade balance (663) 311 (1,068) 3,711 2,751 (3,406) (4,132) (3,400)

Services (5) (341) (1,641) (2,062) (1,389) (874) (227) 131

Exports 132 28 114 259 764 1,159 1,578 1,861

Imports 137 368 1,755 2,321 2,153 2,033 1,805 1,730

Income (914) (1,887) (1,989) (5,127) (2,763) (2,422) (2,773) (2,685)

Receipts 2 5 44 138 108 14 9 -

Non-oil payments 916 1,269 762 1,932 1,886 2,220 2,533 2,352

Oil-related expenses - 623 1,271 3,333 985 216 249 333

Transfers 104 344 1,721 2,131 1,112 863 1,381 1,437

Private 60 315 1,487 940 439 445 945 992

Official 44 29 234 1,191 673 418 436 445

Current account balance (1,479) (1,573) (2,977) (1,347) (289) (5,839) (5,751) (4,517)

Capital and financial account 206 24 2,836 (1,451) (998) 4,060 3,522 2,829

Capital account 11 21 - 174 162 320 309 232

Financial account 195 3 2,836 (1,625) (1,160) 3,740 3,213 2,597

Disbursements 86 41 309 569 606 376 344 261

Amortization (288) (265) (290) (485) (445) (402) (381) (405)

Net foreign assets of banks 54 (18) (204) (429) 313 (61) 227 234

Other short-term capital flows 331 117 666 (1,641) (1,362) (731) (515) (765)

Foreign direct investment 12 128 2,355 2,900 2,666 2,466 3,091 2,322

Other capital flows

Public - - - (1,289) (1,388) 556 580 624

Private - - - (1,250) (1,550) 1,536 (133) 326

Errors and omissions 178 436 221 (1,720) (710) 550 67 -

Overall balance (1,096) (1,113) 80 (4,518) (1,997) (1,229) (2,162) (1,688)

Financing 1,096 1,113 (80) 4,518 1,997 1,229 2,162 1,688

Change in international reserves (20) (108) (745) (195) 249 (376) 75 (98)

Short-term foreign liabilities 17 (82) (23) (83) (51) (164) 230 -

IMF (3) (28) (31) (11) (5) (7) (6) (10)

Change in arrears 1,101 1,331 719 4,807 1,804 1,776 1,863 1,796

Financing gap - - - - - - - -

Memo items:

Trade deficit as % of GDP (4.8) (0.2) (7.9) 2.3 1.9 (6.3) (7.0) (5.0)

Gross international reserves 163 138 1,869 1,566 1,317 1,693 1,619 1,716

Reserves as months of imports 1.4 0.9 2.9 1.7 1.5 1.9 1.8 2.0

Source: Annex Table 2.2 and Annex Table 2.8.

GDP (US$ mill) 13,830 13,093 34,195 70,340 70,131 68,126 62,554 64,960



to heavy pressure, affecting the price level and creating disincentives for investors. In response, the CBoS took a more interventionist role in the foreign exchange mar-ket.

3.4.11 Following this, the IMF reclassified the market as a managed exchange rate system. In addition, the CBoS imposed restrictions on foreign exchange trans-actions. Consequently, the gap widened between the non-formal market rate and the official rate. The CBoS started using multiple foreign exchange rates. In addi-tion to the central rate of SDG 4.42 per US$, it adopted different rates for wheat, gold and other transactions.39 In September 2013, the CBoS devalued the curren-cy by 29 percent to align it with the commercial bank exchange rate of SDG 5.70 per US dollar. It is evident that the exchange rate was not allowed to bear the full burden of adjustment, perhaps because the govern-ment was concerned about the inflationary impact of devaluation, especially on food prices. As the CBoS re-stricted access to foreign exchange and tried to defend the currency, the gap between the official and parallel rates widened.

3.4.12 Shortages in foreign exchange had resulted in adverse effects on inflows of foreign direct investment and domestic capital formation. They also diverted pri-vate transactions, including remittances, to the curb market.40 The IMF (2014.b) has estimated that in 2013, transactions diverted to the curb market accounted for 10 to 30 percent of total imports. This diversion of for-eign exchange, in turn, put pressure on the capacity of the Bank of Sudan to build international reserves. According to IMF (2014.b) estimates, the gap between the official and curb market rates stood at about 35 percent at the end of 2013. This gap had increased to about 50 percent by mid-2014. The gap is the result of a range of factors, including: (i) uncertainty about the revenues from oil transit as the conflict in South Sudan remains unsettled; (ii) domestic political uncertainty in the run-up to presidential elections; and (iii) imbalances in the foreign exchange market through pervasive for-eign exchange rationing.

39 At that point the respective exchange rates for imported wheat and commercial banks were SDG 2.90 and SDG 5.55 per US dollar. There was also a gold exchange rate used by the central bank in its gold transactions. The central rate is used for fuel importation, payment of government obligations, and valuation at customs. The commercial banks rate applies to all other transactions. See IMF (2012.b) and IMF (2013.d).

40 Sudan has large inflows of remittances from the diaspora. These have been employing various means of transferring their money. However, gauging the size of these flows is not easy.

3.4.13 The continuing gap between the official and curb market exchange rates will hinder reserve accu-mulation and compromise the central bank’s credibility in protecting the value of the local currency. Greater flexibility in the foreign exchange market, together with the elimination of the remaining restrictions, is needed to reduce the persistent gap between the exchange rates.

3.4.14 After the devaluation in September 2013, the official exchange rate between the US dollar and the local currency remained constant. According to the IMF (2014.a), with inflation higher in Sudan than in its trading partners, the real exchange rate appreciated by about 24 percent through to end of March the follow-ing year. To avoid the loss of international reserves and provide a shock absorber to the economy, increased exchange rate flexibility was central to the new opera-tional monetary framework anchored on reserve mon-ey. Under the SMP programme, the IMF proposed a policy mix that was built around the following features: (i) Greater exchange rate flexibility; (ii) a continuation of the tight fiscal and monetary policy stance; (iii) strength-ening prudential regulations on exchange rate risks; (iv) the removal of the remaining restrictions on foreign ex-change transactions to improve the functioning of the market; and (v) a steady communication strategy with market participants regarding the government’s policy intentions to head off some of the speculation.

3.4.15 Addressing foreign exchange imbalances is crucial to restoring competitiveness. The dilemma is that the process of exchange rate adjustment will take time, but it is an issue that requires urgent attention. The authorities have introduced new measures to ad-dress the imbalances in the foreign exchange market. Nonetheless, further exchange rate flexibility will be needed to reduce the gap between the official and non-formal market rates. These measures will enhance the functioning of the foreign exchange market by shift-ing a significant portion of the dollar transactions to the official market.41 The measures will also help to rebuild Sudan’s international reserves. Sudan’s support for the exchange rate in past years has kept its international reserves at low levels – typically less than two months of imports for more than a decade now (see Table 3.5) and well below the generally accepted international standard of at least three months of imports of goods 41 The CBoS recently issued a set of circulars allowing: (i) Foreign exchange bureaus to

transact at any rate they choose; and (ii) exporters to sell their proceeds to importers.


and services. Continued low international reserves, in combination with vulnerability to external shocks be-cause of heavy dependence on export earnings of oil and gold, can undermine confidence in the currency and expose the domestic economy to exchange rate shocks.

3.5 Trade Policy External Imbalances and Debt

External Trade and Imbalances

3.5.1 As noted earlier, oil export earnings led to a significant improvement in the country’s external po-sition in the last decade. Even so, the trade account was in deficit for much of the decade (Table 3.5). For-tunately, there was an increased inflow of FDI, primarily related to the oil industry. This helped to enhance the overall balance of payments.

3.5.2 In the aftermath of the secession in 2011, mer-chandise export earnings fell dramatically from a peak of US$12.7 billion in 2010 to US$4.8 billion in 2013. The balance on the goods and services trade account went from a surplus of a US$1.6 billion in 2010 to a deficit of US$4.4 billion in both 2012 and 2013, equiv-alent to about 6.2 percent of GDP. A recovery in oil export earnings and increased income from export services, together with a decline in non-oil imports of goods and services, resulted in a decline in the trade deficit to about US$3.3 billion in 2014.

3.5.3 This progress notwithstanding, the fact re-mains that Sudan’s foreign exchange earnings from

merchandise exports continues to be dominated by oil and gold. These two export products accounted for 91 percent of export earnings in 2011 (down from 95 per-cent in 2010). This dependency dropped to 58 percent in 2013 as a result of the decline in recorded exports of gold. It rose again in 2014 to about 63 percent. This continued heavy concentration of earnings on these two products exacerbates the vulnerability of the Su-dan economy to external shocks – especially terms of trade shocks. The dependency reinforces the urgency and importance of moving quickly to develop a much more diversified export base for the country, in the first instance built around increased exports of agricultur-al products, including raw materials and processed foods, and other harvests.

3.5.4 The sharp deterioration in the trade account since the secession of South Sudan in 2011 has translated into a large increase in the current account deficit in Sudan’s balance of payments. As Table 3.5 indicates, the current account went from a very small deficit in 2011 to US$5.8 billion in 2012 and again in 2013 – equivalent to about 8 percent of GDP. About half of the current account deficit in 2012 and 2013 was financed by the net inflows of foreign direct invest-ment (FDI), with most of the remainder met by a further increase in arrears in payments on the medium and long-term debt of the country. International reserves re-mained fairly stable at a little more than US$1.6 billion in 2012 and 2013 – equivalent to about 1.9 months of imports of goods and services. 3.5.5 With successful implementation of the SMP, the expectation is that the balance of payments deficit will gradually decline over the next five years to about

Table 3.6: External Debt Burden Indicators for Sudan (In US$ billions at current prices)

Indicator 1980 1990 1995 2000 2005 2010 2011 2012 2013 2014

Total external debt 4.7 14.0 19.8 20.4 26.7 39.5 41.4 42.0 44.4 46.4

Total arrears in service payments

Principal arrears 0.6 5.7 7.6 7.3 7.8 8.6 9.7 10.7 11.4 -

Interest arrears 0.1 3.7 5.7 4.5 5.4 6.8 4.9 5.1 5.1 -

Sub-total 0.6 9.4 13.4 11.8 13.1 15.4 14.6 15.8 16.6

Memo items:

Total debt as % GDP 62.3 112.8 143.2 155.8 78.1 56.2 59.0 61.7 71.0 71.4

Principal arrears as % total debt 12.9 67.2 67.5 57.7 49.2 39.0 35.4 37.5 37.3 -

Source: Annex Table 2.13; IMF & CBoS for total external debt for 1990-2014; & World Bank development indicator database for total debt outstanding in 1980, & long- & short-term debt in arrears for 1980-2013.



5 percent of GDP. The bulk of the deficit would be fi-nanced by inflows of FDI and other short and medi-um-term capital, along with further increases in arrears on debt outstanding. At the same time, a small increase in international reserves relative to the level of imports is expected. There are, of course, many uncertainties associated with these projections. These include future revenues from oil exports and from transit fees paid by South Sudan for the export of its oil. In addition, it re-mains to be seen if the Government’s current efforts to attract more remittances from Sudanese working abroad by introducing incentives and improving ad-ministrative procedures will be successful, especially in view of the possible continued impact of the economic sanctions imposed by the U.S. and European coun-tries.

External Debt and the Problem of Arrears

3.5.6 As Table 3.6 indicates, the total outstanding public debt of Sudan increased dramatically in the 1980s and 1990s. By 2000, total external debt stood at US$20.4 billion – equivalent to about 156 percent of GDP. However, the debt burden relative to GDP de-clined substantially during the oil boom of the 2000s. It rose slightly after South Sudan seceded in 2011, and stabilised at about 71 percent of GDP from end of 2013 through to end of 2014. The government’s provisional estimate for debt outstanding at end of 2014 stood at US$46.4 billion – equivalent to about 53 percent of the provisional estimate for GDP in 2014. By the end of 2014, total outstanding public and publicly guaranteed external debt was estimated at about US$46.4 billion,

Table 3.7: IMF Projections of the Economic Outlook for 2014-2019

Indicator IMF estimates Projected

2011 2012 2013 2014 2015 2016 2017 2018 2019

GDP at current prices (SDG billions) 179.5 225.7 317.5 435.1 547.8 631.6 711.6 792.8 884.1

GDP at 2012 constant prices (SDG billions) 230.8 225.7 233.1 240.4 248.5 258.2 269.1 281.4 294.7

GDP growth (% p.a. at constant prices)

Oil value added (36.0) (59.0) 15.6 6.3 3.2 3.8 4.4 5.0 5.5

Non-oil GDP 6.8 4.7 2.7 2.9 3.4 3.9 4.2 4.6 4.7

GDP (0.3) (2.2) 3.3 3.1 3.4 3.9 4.2 4.6 4.7

Inflation (% p.a.)

Consumer prices (end period) 18.9 44.4 41.9 28.7 12.4 8.6 6.5 5.7 5.3

Non-oil GDP deflator 15.2 32.6 36.3 32.8 20.8 10.5 7.3 5.9 5.9

National government budget (% of GDP)

Revenues and grants 18.0 9.8 9.9 11.4 12.0 12.4 12.5 12.7 12.8

Current expenditure & transfers 16.1 12.0 11.1 11.0 11.6 11.1 10.4 9.9 9.3

Capital expenditure 1.7 1.5 1.0 1.3 1.7 2.0 2.4 2.9 3.3

Overall balance 0.2 (3.7) (2.3) (1.0) (1.2) (0.7) (0.3) (0.1) 0.3

External sector (US$ billion)

Exports of oil 8.7 2.0 1.7 2.1 2.4 2.4 2.4 2.5 2.6

Merchandise exports 2.4 3.1 3.1 3.1 3.3 3.8 4.4 4.7 5.1

Merchandise imports (8.3) (8.5) (8.9) (8.6) (8.9) (9.4) (10.0) (10.5) (11.0)

Net services (1.5) (1.3) (1.4) (1.3) (1.3) (1.3) (1.3) (1.4) (1.4)

Current account balance (0.3) (5.8) (5.8) (4.5) (4.1) (3.9) (3.8) (3.8) (3.9)

Current account deficit (% of GDP) -0.4 -9.2 -8.6 -6.5 -6.3 -6.0 -5.5 -5.1 -4.9

External debt (US$ billion) 41.4 43.2 45.0 46.4 48.0 49.5 51.1 52.7 54.4

International reserves

Gross reserves (US$ billion) 1.3 1.7 1.6 1.7 2.1 2.4 2.8 3.1 3.3

Reserves as months of imports 1.5 1.9 1.9 1.9 2.2 2.4 2.6 2.8 2.9

Source: IMF (2014.c), Sudan: 2014 Article IV Consultation and Second Review Under Staff-Monitored Program.Country Report No. 14/364. December 2014.


much of it owed to multilateral institutions, bilateral (Paris Club and non-Paris Club creditors) and commer-cial banks. 3.5.7 According to World Bank data, arrears in debt service payments accounted for about 40 percent of the total increase in short and long-term debt of the country during the 1980-2013 period. Sudan began to accumulate arrears on debt to external multilateral and bilateral creditors and private creditors in the mid-1980s. The country was not able to honour its repay-ment obligations. As a result, Sudan has a large volume of accumulated arrears. Except for non-concessionary loans from India and China and some bilateral and multilateral Arab creditors, the government was unable to access concessionary financing. Continuing prob-lems with unresolved arrears hinders Sudan’s access to global capital markets and to concessional funding from the international donor community. In 2013, for example, several private debt holders brought lawsuits against Sudan. Court orders that were executed in Bahrain and Dubai resulted in the freezing of foreign assets.

3.5.8 As noted in Chapter 2 (see Table 2.6), the in-flow of official development assistance (ODA) declined sharply in the 1990s after Sudan failed to meet debt obligations to the international donor community. From the early 1990s until about 2003, inflows of ODA were sharply reduced. However, the relationship with some members of the donor community has improved in more recent years. As a result, inflows of ODA per capita recovered to about US$52 per person during 2005-09. There was nonetheless a sharp decline in the net inflow of ODA during 2011-13. As this pattern of ODA inflows suggests, Sudan has lost access to sub-stantial amounts of concessional ODA in the past two decades. The continuing lack of access to concession-ary financing has an adverse impact on the prospects for accelerating development of health and education programmes as well as other priority areas that nor-mally attract substantial donor support. These include, for example, access to improved water and sanitation, support for rural development and for accelerating the development of small-scale farming activities that are central to the success of the proposed strategy for di-versifying the country’s economy and accelerating eco-nomic growth.

3.5.9 A major concern for the immediate future re-lates to the prospects for significant debt relief. Tan-gible evidence of agreement with creditors and con-crete action on the pursuit of a Heavily Indebted Poor Country (HIPC) plan for Sudan would improve investor perceptions about the risk-reward trade-off associated with investment in the country. The Government has made it clear that it attaches a high priority to obtaining debt relief under an HIPC initiative.

3.5.10 The IMF and World Bank jointly undertook a debt sustainability analysis in 2013, the conclusion of which was to classify Sudan as being in debt distress. To expand access to concessionary financing, Sudan will need to normalise relations with its creditors, agree to an approach for arrears clearance and set a road map that would lead to HIPC relief. At the present time, the prospects for such an action are unclear. However, the IMF (2014.a) Country Report for Sudan has reaf-firmed that the country is eligible for debt relief under the HIPC initiative. At the time the report was released, Sudan met the following conditions for the HIPC ini-tiative: (i) It faced an unsustainable debt situation that could not be addressed through traditional debt relief mechanisms; and (ii) it has developed an Interim Pov-erty Reduction Strategy (I-PRSP) document that has been reviewed by the Boards of the IMF and the World Bank.42

3.5.11 The Tripartite Committee (Sudan, South Su-dan, and the African Union High Implementation Panel) met in May 2014 to agree on an outreach programme to major multilateral and bilateral creditors of Sudan. Sudan will need to move forward in the near-term to reach an agreement with existing creditors. These ar-rangements need to be in place prior to the launch of the above-mentioned programme for marketing po-tential investment opportunities with offshore inves-tors. Tangible evidence of agreement with creditors and tangible action on creation of a Heavily Indebted Poor Country (HIPC) initiative would improve investor perceptions about the risk-reward trade-off associated with investment in Sudan. To reach the Decision Point, Sudan would need to undertake the following:• Obtain assurances that the bilateral official and

commercial creditors are willing to consider pro-viding debt relief;

• Obtain assurances of support for HIPC debt relief 42 IMF (2013.c), Sudan: Interim Poverty Reduction Strategy Paper. IMF Country Report

No. 13/318, October 2013.



from a large majority of creditors representing at least 70 percent of HIPC-eligible debt;

• Establish with the IMF an adequate track record of strong policy performance in the period leading up to the Decision Point, under an IMF Staff Monitored Programme (SMP) judged by the Executive Board to meet the policy standards associated with up-per-credit tranche arrangements; and

• Clear its arrears with the IMF, and have a fully fi-nanced plan and a timetable to clear arrears with the World Bank and the African Development Bank in order to restore its eligibility to borrow from these sources.43

3.5.10 These arrangements need to be in place prior to the launch of the above-mentioned programme for marketing potential investment opportunities with off-shore investors.

3.6 Macroeconomic Outlook for the Medium and Longer Term

3.6.1 The macroeconomic framework used in this Report is modelled on the projections for 2014-2019, which were prepared recently by the IMF in conjunc-tion with its second review of the SMP adopted by the Government of Sudan for 2014. As noted in Chapter 2, in early 2014, the government sought the assistance of the IMF by putting in place a Staff Monitored Pro-gramme (SMP) for the January-December 2014 peri-od. The objective of the SMP is to restore macroeco-nomic stability, strengthen social safety nets, and de-velop the required reforms to refocus the economy to its non-resource sector, thereby laying the groundwork for sustainable economic growth over the medium and longer-term. The key elements of the programme pro-posed by the IMF include the following actions:• Fiscal adjustment in the context of the 2014

budget framed in a medium-term strategy: Im-provement of fiscal sustainability is a core compo-nent of the proposed programme, with increased revenue mobilisation in the non-oil economy. On the expenditure side, measures would be adopted to reduce some components of public spending (including a phase-out of fuel subsidies by 2017), but increase allocation for social safety nets and

43 The costs to the IMF and other international agencies for providing debt relief to Sudan were not included in the original costing estimates for the HIPC initiative. Additional financing will therefore need to be secured when Sudan is ready to clear its arrears and embark on the HIPC initiative.

capital works in the public sector.• A tighter monetary stance to contain inflation

and lessen exchange rate pressures: Sharply reduced budget deficits are expected to contain inflationary pressures. As noted earlier, because of Sudan’s limited capacities to borrow on favourable terms from offshore sources of funding, the large deficits of recent years were, in effect, monetised because they were largely financed by borrowing from the Central Bank. The proposed programme puts clear limits on the government’s access to Central Bank financing. As a result, inflation is ex-pected to decline steadily to single digit levels by 2016.

• Further exchange rate flexibility to improve external competitiveness: Measures will be ad-opted to ensure greater exchange rate flexibility and eliminate the current large gap between the official exchange rate and that of the curb market.

• Actions would be taken to restructure and modernise the banking industry in Sudan: These measures include the following: Support for improvements in bank supervision, inspection and enforcement; termination of direct ownership of banks by the Central Bank; and upgrade of the legal, regulatory and institutional framework of the sector to enhance financial deepening.

• Improvement of the business environment to boost private sector-led growth: Details of the proposed programme are set out in Chapter 4 be-low.

• The government should reach out to creditors and normalise relations with international financial insti-tutions.

3.6.2 According to the IMF (2014b), the main mac-roeconomic objectives for the near-term were fourfold: (i) Reach a non-oil real GDP growth rate of 2.5 percent in 2014 as a result of a rebound in agriculture, con-tinued improvement in export performance, and pro-ductivity gains that stem from the policy reforms being undertaken by the government; (ii) reduce inflation to about 18 percent for the year through fiscal consolida-tion, monetary tightening, and stabilisation of the ex-change rate; (iii) reduce the overall fiscal deficit to about 1.2 percent of GDP through improvements in revenue collection and reduced spending; and (iv) reduce the current account deficit of the balance of payments to about 7 percent of GDP and finance the deficit from


non-debt-related financial flows.44

3.6.3 In the latter part of 2014, the IMF (2014c) undertook a review of progress under the SMP. The review indicated that the programme was broadly on track, with GDP growth estimated at 3.1 percent for 2014, reduction in the budget deficit to about 1 percent of GDP, and a current account deficit in the balance of payments of about 6.5 percent. The main concern was the continued high domestic inflation that was project-ed by the IMF to be about 29 percent in 2014, com-pared with the SMP target of 18 percent.

3.6.4 As part of the review, the IMF (2014) revised its macroeconomic projections for 2015-2019.45 The pro-jections were based on the assumption that the gov-ernment would continue with its efforts to establish a stable macroeconomic environment that would support an economic rebound and the proposed programme of economic diversification for the longer-term. Table 3.7 provides a summary of the macroeconomic indicators that are projected to 2019 by the IMF. The key features of these projections are as follows:• Gradual increase in GDP growth to about 4.7 per-

cent a year by 2018. • Continued reduction in the rate of inflation, with the

increase in consumer prices declining to an annual rate of about 5 percent by 2019.

• With continued adherence to a sound macroeco-

44 IMF (2014.b), Sudan: First Review Under Staff-Monitored Programme. Washington DC. IMF Country Report No. 14/249, August 2014.

45 IMF (2014.c), Sudan: 2014 Article IV Consultation and Second Review Under Staff-Monitored Programme. Washington DC. IMF Country Report No. 14/364, De-cember 2014.

nomic framework, the fiscal deficit is expected to remain at sustainable levels during the 2015-2018 period, and then be in surplus by 2019. However, the IMF projects very little improvement in the reve-nue performance of the national government in the 2015-2019 period, with total receipts remaining at about 12-13 percent of GDP. As a result, much of the fiscal adjustment stems from reductions in cur-rent spending, and only a very limited increase in capital expenditures from 1.3 percent of GDP in 2014 to 3.3 percent by 2019.

• After allowing for grants, the implication is that total annual spending by the National Government (in-cluding transfers to state governments) would be about 20 percent of GDP by 2030.

• The current account deficit in Sudan’s balance of payments is projected to decline from about 9 per-cent in 2013 to 5 percent in 2018-2019, along with a steady improvement in the level of international reserves to about US$3.3 billion by 2019 – equiv-alent to about 2.9 months of imports of goods and services.

• The external debt of the country is projected to in-crease by about US$9 billion during the 2014-19 period to about US$54.4 billion by the end of 2019.

3.6.5 For the purposes of this Report, the macro-economic framework set out by the IMF for 2019 is assumed to prevail during the 2020s.




4.1 The Setting

4.1.1 Sudan has emerged from a deep historical legacy of state participation in many forms. At inde-pendence, British colonial administrators turned over control of the economic apparatus supporting pro-duction and supply of cotton and other commodities for the government to manage. Since independence, the government’s attitude towards the private sector has shifted significantly. Large parastatals dominated the economy for decades following Independence. The government first invested directly in large irrigation schemes, in mechanized farming and in manufactur-ing. It also owned railways, hotels and airlines compa-nies. Most of these state interventions were justified on the ground that the local private sector was not able to carry on such activities. Occasionally, either for con-crete interests or ideological leanings, the government crowded out and displaced the private sector in eco-nomic activities that the latter could undertake efficient-ly. The government also set up public marketing boards out of monopolistic motive. Along with Egypt, Sudan reverted to an “Infitah” policy in the 1970s, that wel-comed foreign investment but maintained a large state role in enterprise ownership as well as industrial policy with features of import-substituting industrialization. In the early 1970s, it confiscated trading firms, banks and manufacturing enterprises, though it quickly reversed these actions. In the 1980s, the Sudan’s financial cri-sis precipitated a policy of privatisation, particularly fo-cused on enterprises that created substantial losses or had contingent liabilities. This was carried out with min-imal international financial support. Only 17 enterprises were initially privatised.

4.1.2 Despite the changes in government’s policies vis-a-vis the private sector since independence, and in spite of the various constraints on its development that are outlined later in this Chapter, the private sector has managed to expand and venture into areas wherever opportunities emerged. It has proved to be capable of responding to opportunities, generating growth and creating wealth.

4.1.3 For many years, the private sector in Sudan operated mainly in trading activities, helping to channel the country’s produce to the market centres and dis-tributing imported goods throughout the country. By so doing, it contributed to the transition of the economy from its subsistence phase to a monetised commercial production phase integrated locally and into the global economy. Subsequently, wholesale traders managed to diversify from the trade business to agro-business in the cotton pump schemes in the Blue Nile and White Nile areas, and in rain-fed mechanised farming in the Gedarif region and elsewhere in the country.

4.1.4 As opportunities for import substitution arose, the private ventured into manufacturing during the 1960s, taking advantage of the incentives provided by the government. After the 1980s, the government promoted private sector development and entered into joint-ownership of commercial banks with private en-tities. Banks were allowed to operate in accordance with the Islamic laws. In 1990, the government adopt-ed market-friendly policies. It passed The Public Sector Enterprises Disposition Bill46 and privatised many state-owned enterprises, as much as it at the same time set

46 The Public Sector Enterprises Disposition Bill (1990) and State Corporation Act (1992) codified the privatisation programme, and the High Council for the Disposition of Pub-lic Enterprises was established to carry out the policy.

4. PROMOTING PRIVATE SECTOR-LED GROWTH



up a large industrial complex and participated in tele-communications. More recently though, the govern-ment has sought to revive the privatisation programme for remaining firms. The UNIDO (2003) industrial survey found that private ownership accounted for 96 percent of business firms in Sudan in 2002. The Sudan Pro-ductivity and Investment Climate Survey (PICS) of 2008 found that only two percent of the surveyed firms were government owned.

4.2 Current Profile of the Private Sector

Overview

4.2.1 The private sector is diverse, including a tra-ditional base of sectors linked to agricultural activities in the economy, and an increasing number of firms that supply the growing domestic demand for a wide range of goods and services. At the same time, infor-mal business activities have expanded in the various urban centres of the country and now constitute a large segment of private sector activities. At the beginning of the 2000s, the largest industrial sectors were food processing, followed by metalworking and wood pro-cessing.47 More traditional subsectors have been the sugar industry, leather, textiles, pharmaceuticals, oil-seed processing, soap, and cement. More recently, in addition to oil refining, automotive assembly, plastics, cable, and pipe manufacturing have been developed primarily for domestic consumption.

4.2.2 The formal private sector consists largely of small firms, structured as private limited companies (60 percent) and sole proprietorships (37 percent) spread over a wide range of sectors. Many of these business-es are family owned. Of the sample of formal manu-facturing firms in the PICS of 2008, only eight percent were partnerships and two percent were state-owned. Three percent were listed on the Khartoum Stock Ex-change.

4.2.3 In Sudan, small and medium enterprises ac-count for the majority of business activities in agricul-ture, manufacturing, trade and finance, in addition to business companies in the construction industry, trans-port and professional services. A small number of big conglomerates operate in trade, industrial processing 47 See United Nations Industrial Development Organisation (2003), Sudan: Comprehen-

sive Industrial Survey of 2001. UNIDO, Vienna, Austria, 2003.

and agriculture.

4.2.4 Though export activities have been a major area for the private sector, public marketing boards still compete or receive concessional advantages from the government. In the particular case of oil and oil related sectors, foreign firms, especially Chinese, Malaysian, Indian and others, have invested heavily in these activi-ties. Services for the oil production industry have largely been supplied by foreign companies, along with some government-initiated partnerships. The oil boom of the past decade also stimulated interest in real estate, ho-tels and restaurants, creating a class of investors in this area.

4.2.5 Another important characteristic of the busi-ness sector is its uneven distribution throughout the country. Few parts of Sudan offer infrastructure and factor markets necessary to support large-scale, for-malised manufacturing and other business activities. Khartoum and Port Sudan lead in commercial activ-ities. Khartoum has the biggest share of industries. Mechanised farming is spread in the East, Central and Western Sudan, though traders and ex-officials are the main participants in the sub-sector. Small firms and in-formal enterprises are spread throughout the country, but larger companies are located primarily in Khartoum, and to a lesser extent, El Gezira, Nyala, Port Sudan and North Kordofan.

Impact of Conflict on Private Business

4.2.6 Internal conflict has adversely affected large areas of Sudan, impeding business activities and trade. The most affected areas are Darfur, Kordofan and the Blue Nile state. All these regions are rich in natural resources and minerals, and have great potential for crop and animal production. However, internal conflicts have cut off the trade links, weakened the private sec-tor, impeded investment, destroyed the livelihood of the small farmers and interrupted nomadic movements.48 A large proportion of the population either migrated to big cities (El Fashir, Nyala and Al Gunina, Ed Damazin, El Obied) ) or found shelter in refugee camps. Others migrated to Khartoum and outside Sudan. According to one estimate, the conflict resulted in about 25-30 percent of the urban traders going out of business. In

48 Buchanan-Smith, M. and A. Fadul (2008), Adaptation and Devastation: The Impact of the Conflicts on Trade and Markets in Darfur. The Findings of a Scope Study. Tuft University, May 2008.


South Darfur, more than 80 percent of the manufactur-ing firms are reportedly not operating.

4.2.7 Buchanan-Smith, M. and A. Fadul (2008) sum-marised the situation as follows: “Darfur’s traders have been put to the ultimate test by the conflict. Supplies have been disrupted and market structure damaged, especially the primary market network. Many rural mar-kets have been abandoned and movements restricted due to the risk of banditry. Transaction and transport cost have rocketed, sometimes four-fold. As the econ-omy contracted, the response by the governments of the three states of Darfur has been to impose ever higher taxes on a smaller number of traders in order to shore up revenue. Taxes on Darfur’s main commodi-ties have more than doubled compared with pre-con-flict levels, creating a strong incentive to trade illegal-ly. In addition, there are numerous “informal taxes” in the form of protection payments to militias and check points fees. The conflict is in effect crippling the envi-ronment in which to do business.”

4.2.8 In the regions experiencing conflict, the Diag-nostic Trade and Integration Study (DTIS) noted that the public sector was crowding out the private sector: The report indicated that “the expansion in public expendi-tures has crowded private sector credit and stressed the financial sector”. With the oil revenue shortfalls in 2006 and 2007, the Ministry of Finance and National Economy sought high levels of financing and absorbed the majority of available domestic credit. Subsequent-ly, the increase in private credit slowed considerably, growing by only 16 percent in 2007 compared to 62 percent and 45 percent in 2005 and 2006 respectively (DTIS).

Trends in Private Investment

4.2.9 For the past three decades, the private sec-tor has accounted for most of total fixed investment that has taken place in Sudan. As Table 1.8 indicates, investment by the private sector has increased from an average of about 8.5 percent of GDP in the 1980s to about 16.8 percent of GDP in the 2000s – equiva-lent to about 80 percent of the fixed investment in the country. After the secession of South Sudan in 2011, the level of private investment remained stable at about 16 percent of GDP, and then increased to 18 percent in 2013, largely because of a substantial increase in FDI inflows. Within these totals for private investment, the importance of offshore private investment in Sudan increased appreciably in the past decade, due in part to substantial offshore investment in the oil sector. By 2013, net inflows of FDI accounted for about 25 per-cent of total fixed investment.

4.2.10 Implementation of the proposed strategy for private sector-led diversification of the Sudan economy will require continued high levels of private investment by the domestic business community, along with con-tinued large inflows of FDI. It will also require improved access to debt financing in the domestic capital mar-ket for short-term working capital as well as long-term lending for investment. As mentioned elsewhere in this Report, on a number of occasions – most recently during the crisis that followed the secession of South Sudan – the government demands on the domestic credit market have crowded out private sector access to commercial bank financing for working capital and investment. Chapter 9 sets out the strategies required for further development of the domestic capital mar-ket to meet these needs. These may include a range of measures aimed at increasing the liquidity of finan-cial institutions and their capacity to increase resource flows to SMEs.

4.3 Private Sector Productivity and Competitiveness

Labour Productivity in Sudan

4.3.1 Within Sudan, productivity varies significantly by region and by size of firm. Labour productivity mea-sured as value added per worker is one of the basic

Table 4.1: Productivity Measures for Manufacturing in

Sudan and Comparator Countries (In US$ at 2006 prices)

Country Value added Capital Labor cost Unit labor

per worker per worker per worker cost

Kenya 8,707 11,558 2,149 0.13

Morocco 7,947 5,438 3,809 0.19

Sudan 6,682 16,118 6,280 0.19

Tanzania 3,268 1,680 899 0.15

Uganda 1,975 1,863 880 0.22

Egypt 1,657 5,447 797 0.16

Ethiopia 1,509 2,588 493 0.14

Source: World Bank (2009), Sudan: The Road Toward

Sustained and Broad Based Growth, p.43.



measures of enterprise productiveness. Differences in labour productivity so measured, however, can be the result of differences in technology used, skills of work-ers, including managerial quality, as well as differences in the intensity of capital used. Gezira and Khartoum re-gions appear to have relatively high labour productivity. This is due primarily to a higher concentration of large firms, which are typically more productive. The PICS (2008) data indicate that enterprises in Khartoum, Red Sea and Gezira are, in terms of employment, bigger on average compared to those in other states. They are also more capital intensive and have better educated managers and work force. West and South regions, as well as the North, other than Khartoum and Gezi-ra (e.g., Red Sea and River Nile states), have very low productivity levels, including in large firms. Interestingly, microenterprises in the West outperform firms in Khar-toum and score higher than the national average.

4.3.2 The analysis of the competitiveness of Sudan in manufacturing was summarised in a 2009 World Bank study. The indicator considered was the labour cost as related to value added; that is, total value add-ed divided by the number of workers for the various firms. Sudan was found to have the highest labour cost in the following comparator group of countries: Kenya, Morocco, Tanzania, Uganda, Egypt and Ethiopia (Table 4.1).

4.3.3 Additional evidence used is total factor produc-tivity (TFP), which captures the total and synergy con-tribution of all factors of production. The World Bank study found that with the exception of food manufac-turing firms, the other companies did not come close to

their international competitors. Firms producing food, garments, wood product, furniture and chemicals in Sudan were found to enjoy better TFP efficiency than those in Ethiopia and Egypt, but not so when compared with counterparts Uganda, Tanzania and Kenya. The conclusion reached was that Sudan’s private sector was “isolated from international markets, with only 10 percent of manufacturing firms in the PICS survey able to export their products.” To address these concerns, the government could consider establishing an export promotion agency to help organise the implementation of agreed policies to promote exports. Such an agency could focus on ways to enhance the expertise of ex-porters in such basics as quality management, export packaging and export marketing skills.

Competitiveness at the National and Sector Levels

4.3.4 For the purposes of this Report, two measures of competitiveness are considered. One is an assess-ment of competitiveness at the national level. The other is at the sector and industry level. At the national level, competitiveness is ranked in the Global Competitive-ness Report.49 Sudan was not ranked in the 2013 Afri-ca Competitiveness Report. However, it was ranked in the Global Sustainable Competitiveness Report (2013). Given its substantial natural resource base, much of

49 The Global Competitiveness Report (1996) defines competitiveness as the “ability of a country to create added value and increase national wealth by managing assets and processes, attractiveness and aggressiveness, globality and proximity and by in-tegrating these relations into an economic and social model”. This definition is further clarified by Michael Porter (1990, p.73), who wrote that “the only meaningful concept of competitiveness at the national level is productivity, with which a nation’s labour and capital are employed”. Porter added: “As the basis of competition has shifted more and more to the creation and assimilation of knowledge, the role of the nation has grown. … Ultimately, nations succeed in particular industries because their home environment is the most forward-looking, dynamic and challenging.”

Table 4.2: Global Sustainable Competitiveness Index, 2013

(Country rankings out of 176 countries)

Indicator Sudan Egypt Kenya South Africa Tunisia Uganda

Sustainable competitiveness

82 97 150 159 81 108

Natural capital 41 55 156 72 140 76

Resource intensity 7 130 58 163 95 54

Sustainable innovation & economy

133 153 111 107 63 99

Social cohesion 158 43 147 149 72 141

Memo item:

WEF Global Competitive Index

- 107 106 52 - 123

Source: SolAbility (2013). WEF refers to World Economic Forum.


which remains to be developed in the coming decades, Sudan scored well on its natural capital ranking and resource intensity among the 176 countries included in the survey.50 It scored much less on innovation, eco-nomic competitiveness and social cohesion.

4.3.5 Diversification can be achieved in an open economy if the capacity to compete is developed and additional markets are penetrated or the productivity of existing ones is raised. Achieving growth in compet-itiveness and productivity require an enabling policy, regulatory and administrative framework, efficient insti-tutions at the national level, and efficiency and innova-tions at the industry and firm levels.

50 For more information about this index, see SolAbility (2013), The Global Sustainable Competitiveness Index, 2013. Ilsan, South Korea, April 2013. Sustainable competi-tiveness means the ability of a country to meet the needs and basic requirements of current generations, while sustaining or growing the national and individual wealth into the future without depleting natural and social capital. Sustainable competitiveness re-quires a number of elements: the basic structures (infrastructure, and the maintenance of infrastructure), business environment, quality education and R&D capabilities. The “Natural Capital” of a country refers to its land and the geography, climate, biodiver-sity, fertility, water availability, and the availability of mineral and fossil resources. One element of sustainability is having resources at one’s disposal. Another element is how efficiently the available resources are used. Whether a country does or does not possess natural resources within its boundaries, efficiency in using resources – be they domestic or imported - is a cost factor, affecting the competitiveness and thus the wealth of nations. In addition, non-renewable resources that are used today will not be available tomorrow. This affects competitiveness, wealth and quality of life in the future. The absence or deterioration of social cohesion in turn leads to lower pro-ductivity (health), rising crime rates, and potential social unrest. These cause adverse consequences on economic development and growth.

4.3.6 In recent years, Sudan’s international com-petiveness has been adversely affected by exchange rate policy as indicated in Chapter 3. The IMF (2013.a) country report that includes an assessment of Sudan’s external competitiveness argued that the currency was overvalued despite the 29 percent devaluation of Sep-tember 2013.51 The gap between the parallel market rate and the official rate has persisted. By mid-2014, the parallel market rate differed substantially from the official rate. However, the parallel market exchange rate premium declined considerably in the second half of 2014. Nonetheless, the appreciation of the Sudanese currency in recent years has undermined the compet-itiveness of agricultural exports and that of domestic products that compete with comparable imports.

4.3.7 The conclusion of the IMF study is that with-out more investment in agriculture to address the per-sistent low productivity and high costs of production, the poor quality of packaging, the high internal taxes and fees and the high transport costs, the competi-tiveness of Sudan’s agricultural exports will continue to be undermined.52 As Chapter 3 indicates, such policies

51 IMF (2013.a), Sudan: Selected Issues. IMF Country Report No. 13/320, October 2013.

52 The relationship between the exchange rate and the competitiveness of the agricultur-

Table 4.3: Ranking of Sudan in Doing Business Survey of World Bank, 2014

(Ranking among 189 countries surveyed)

Indicator Sudan Egypt Eritrea Ethiopia Kenya Rwanda South Sudan

2014 2013

Starting a business

131 122 50 188 166 134 9 140

Dealing with construction permits

167 166 149 189 55 47 85 171

Getting electricity

113 106 105 95 91 166 53 184

Registering a property

41 37 105 184 113 163 8 183

Getting Credit 170 167 86 186 109 13 13 180

Protecting investors

157 156 147 115 157 98 22 182

Paying taxes 108 105 148 150 109 166 22 92

Trading across borders

155 155 83 170 166 156 162 187

Enforcing contracts

154 154 156 67 44 151 40 87

Resolving insolvency

89 87 146 189 75 123 137 189

Overall ranking

149 143 128 184 125 129 32 186

Source: World Bank (2013), Doing Business 2014. Economy Profile: Sudan, 2013.



have to be complemented with a more flexible man-agement of the exchange rate. The analysis undertak-en for this Report suggests that both the exchange rate effect and the structural and institutional factors affect the competitiveness of domestic products and exports, including those from the agricultural sector. It is therefore essential that legal, institutional, financial and infrastructure-related constraints are addressed in order to enhance the responsiveness of producers to price changes.

4.3.8 There also appear to be marked regional dif-ferences in productivity and competitiveness in Sudan. According to a World Bank (2009) survey of the invest-ment climate in Sudan, firms operating in Khartoum have a higher propensity to assimilate technology and gain market competitiveness compared to those in other areas.53 The TFP growth among manufacturing firms in food, textile, wood and wood products, chem-ical and non-metallic products located in Khartoum is higher compared to that of those operating in other areas. Only firms outside Khartoum engaged in metal and metal products have higher TFP growth than those in the main city. This suggests that there is a big dis-parity in the productivity and competitiveness of firms operating in and outside the city centre of Khartoum.

4.4 Investment Climate and Government Policies

4.4.1 The ability of Sudan’s private sector to drive growth and diversify the economy depends on the re-moval of the constraints holding it back and undermin-ing its international competitiveness. All the major inter-national surveys that have a bearing on the investment climate and competitiveness suggest that Sudan’s performance is low relative to most of its peers.54 The DTIS that held interviews with the business communi-ty reported that the top three constraints identified by the private sector firms in Sudan are political instability, corruption, and economic uncertainty.55 The Study at-tributed the prevailing inefficiency in the manufacturing sector to the following issues: (i) Taxes that were bur-densome and not transparent; (ii) the scarcity of skilled

al exports has been a controversial issue in Sudan for a long time. 53 World Bank (2009.a), Sudan: Private Investment Survey Climate. Washington DC, De-

cember, 2009.54 These surveys include the World Bank’s Doing Business Indicators (DBIs), the World

Bank, Country Policy and Institutional Assessment Ratings (CPIA), Transparency Inter-national’s Corruption Perception Index, and the World Bank’s Worldwide Governance Indicators (WGIs).

55 World Bank (2008), Revitalising Sudan’s Non-Oil Exports: A Diagnostic Trade Study (DTIS).

labour; (iii) the inadequacy of infrastructure; and (iv) the lack of access to term loans that are needed for plant modernisation.

4.4.2 Subsequently, a comprehensive assessment of the business environment was reported by the World Bank in “Doing Business Report, 2014”. The report was based on tracking 10 different sets of busi-ness-related activities. It ranked Sudan at 149 out of 189 countries – a decline in ranking from the 2013 level (Table 4.3). In comparing the business climate in Sudan with six comparator countries, the report found it worse than those of Egypt, which was ranked at 128, Ethiopia (at 125), Kenya (at 129), and Rwanda (at 32). In five of the 10 categories, Sudan ranked in the bottom 20 per-cent of the countries surveyed. There were no rankings in the top 20 percent of these countries, but Sudan continued to show some strength in activities related to property registration and resolving insolvencies. The worst rankings were for getting credit and dealing with construction permits. The low ranking for access to credit reflects the scarcity of information obtained on business and the strength of legal rights index.

4.4.3 In comparison, best practices show “strong legal rights for lenders and borrowers under collateral and bankruptcy laws, and an increase in the scope, coverage and accessibility of credit information”. In the case of construction permits, the low ranking reflected the long period (270 days), the cost (249 percent of per capita income) and the degree of complexity (16 proce-dures) associated with obtaining all the necessary ap-provals to build a warehouse in Khartoum, connecting with basic utilities and registering the property so that it could be used as collateral or transferred to another business.

4.4.4 Other areas of considerable concern to in-vestors that did not show any improvement over the 2013 rankings were enforcement of contracts, trading across borders and protection of investors. Regard-ing the ease of getting taxes paid, Sudan stood was ranked at 108. On average, firms in Sudan make 42 tax payments a year, spend 180 hours a year filing, pre-paring and paying taxes amounting to 36 percent of profit. Sudan should consider establishing a one-stop shop for registering a business. Rwanda established such procedures and significantly reduced the amount of time/bureaucracy/cost in establishing a business.


4.4.5 Among the six comparator countries included in the Sudan Report for 2014, only Ethiopia and South Sudan had lower rankings than Sudan. The better per-forming countries are reported to have taken action to implement more reforms. Some adopted a one-stop-shop system and simplified procedures. Others reduced the minimum capital requirements. In trading across borders, Sudan is ranked 155 compared to 83 for Egypt, 156 for Kenya, and 162 for Rwanda. Ex-porting a standard container of goods requires 7 doc-uments, takes 32 days and costs US$2,050. Importing the same container of goods requires 7 documents, takes 46 days and costs US$2,900. In enforcing a con-tract, Sudan was ranked 154 out of 189, compared with 40 for Rwanda, 44 for Ethiopia, 152 for Kenya and 156 for Egypt. Data shows that enforcing the contract takes, 810 days, costs 20 percent of the value of the claim and requires 53 procedures. In resolving insolven-cy, Sudan was ranked 89 compared to 146 for Egypt, 123 for Kenya, 137 for Rwanda and 75 for Ethiopia. It is estimated that it takes two years on average and costs 20 percent of the debtor’s estate to be liquidated.

4.5 Impediments to Private Sector Growth

The Setting

4.5.1 Economic diversification needs a strong pri-vate sector. This requires the government to support the private sector by creating the relevant environment for its growth. A concerted programme of action over the next 3-5 years that addresses these concerns can lay the foundations for sustained strong growth in pri-vate sector activities in Sudan. Within the private sector itself, the small and medium enterprises (SME) are im-portant channels for boosting growth. This action plan must therefore address the concerns of both large and small enterprises, including the large number of fami-ly-owned businesses that operate in Sudan.

4.5.2 The results of the above-mentioned interna-tional surveys all point to the importance of early action to improve the business climate in Sudan. The Sudan authorities will need to make concerted efforts to re-duce administrative costs and barriers in establishing and operating a business, especially in relation to the regulatory regime and trade environment, including access to credit, investor protection, construction per-

mit procedures, trading across borders and contract enforcement. In addition to legal and organisational improvements to simplify and speed-up processes, the authorities should also monitor closely the imple-mentation of the rules and laws on doing business in Sudan. These surveys also highlight the importance of action on the political and security environment, includ-ing transparency, accountability and corruption. Infor-mal reports suggest that taking bribes to implement existing rules is often rife in the business environment. As experience in other countries has shown, action on these fronts can generate productivity gains and bol-ster private sector investment and expansion, and im-prove efficiency in the public sector.

4.5.3 A basic reorientation of the State’s role in the productive sector is also needed. In addition to direct ownership of enterprises at national and state levels of government, the state indirectly owns enterprises through government officials and political parties. The broad range of activities in which the state participates as direct or indirect owners of enterprises distorts com-petition in those markets, as the presence of state firms provides a strong disincentive to private entry. This un-dermines policies to allow greater entry of the private sector. On the other hand, there is a need for a more effective and stronger state role in the provision of pub-lic goods, such as infrastructure, and in establishing institutions that support fair competition.

4.5.4 Strategies for private sector development in countries with limited industrial development, such as Sudan, often emphasise light manufacturing as the major area for policy focus. The lessons of international experience with manufacturing take-offs highlight the importance of such industries as good areas to start from. These light industries typically include textiles and clothing, agricultural processing, meat and fish preservation and packaging, leather goods, and wood-working (see Dinh et al., 2013).56 In that connection, cross-country studies of experience with programmes to promote private sector development that are com-parable to that proposed for Sudan have highlighted the following seven key constraints that are typically encountered in these types of undertakings, as report-ed by Dinh, et al (2013).

56 The following factors seem to be critical in explaining this tendency: (1) Ready avail-ability of raw materials and labour; (2) universal demand for food and clothing; (3) simplicity and widespread diffusion of the relevant technologies; (4) limited capital and skill requirements; (5) absence of scale economies (Dinh, et al 2013).



4.5.5 The earlier mentioned findings of the World Bank Doing Business survey for 2014 are consistent with the findings of these cross-country studies: 1. The availability, cost and quality of inputs; 2. Inadequate physical infrastructure, especially elec-

tricity, water, telecommunications, and land trans-portation;

3. Access to land, especially for industry; 4. Access to finance; 5. Trade costs and logistics, due especially to invisible

infrastructure and limited knowledge, experience and network in commerce;

6. Limited entrepreneurial capabilities, at both techni-cal and managerial levels; and

7. Inadequate worker skills.

4.5.6 This Report also finds that export promotion and its implications for successful economic diversifi-cation programme is an additional important concern for the proposed programme.

The Availability, Costs and Quality of Inputs

4.5.7 As the discussions in Chapters 5 and 6 indi-cate, Sudan currently faces significant issues related to the regular availability of inputs (such as agricultural supplies for food processing), their cost and quality. In-put sourcing can be a problem because of import costs and local production and supply constraints, including quality shortcomings. Input costs and availability for domestic manufacturing firms can be adversely affect-ed by import tariffs and bans, regulations and licensing requirements, or poor local supply chains. As recent

experience has shown, substantial overvaluation of the currency in the official foreign exchange market has not helped. 4.5.8 To address these costs and availability issues, trade reforms are useful as are improvements in do-mestic market facilities and in government administra-tive costs of doing business. Most of the solutions are within Sudan’s government control. An obvious exam-ple is to grant low tariffs (if any) on essential imported inputs along with ensuring a more stable macroeco-nomic environment as discussed in Chapter 3. In the case of domestically produced inputs for the man-ufacturing firms, the government can assist as well. For instance, government regulations can be stream-lined and administered more efficiently, and infrastruc-ture facilities (especially land transportation, electricity and water) enhanced and supplied more efficiently to enable improvements in the delivery performance of domestic suppliers of inputs. In addition, private businesses that specialise in providing services in the supply chain, such as storage and trucking firms, can also face finance and infrastructure constraints. Here too, the government can help in various ways. The government could, for example, work with banks by underwriting loans to certain businesses to allow the banks to reduce the risk assessment associated with the loans. The government can also help by building cluster facilities (such as storage facilities) for rent by the business community or by purchase over a period of time. Other types of support include hosting foreign entrepreneurs who may be interested in joint venture arrangements with the local business community.

Table 4.4: Direction of Merchandise Trade, 2013(In US$ million)

Trade category Exports Imports Trade balance

Oil Gold Non-oil Total Oil Gold Non-oil Total Oil Gold Non-oil Total

Industrial countries

- 123 169 291 81 1,987 2,068 (81) 123 (1,818) (1,777)

Other europe - - 32 32 15 427 442 (15) - (395) (410)

COMESA 49 - 169 218 241 705 946 (192) - (536) (729)

Other Africa - - 191 191 5 40 45 (5) - 151 146

Asia 3,911 - 185 4,096 229 3,565 3,794 3,682 - (3,380) 302

Arab countries 54 926 669 1,648 810 1,067 1,877 (756) 926 (399) (229)

Latin America - 11 11 0 143 144 (0) - (132) (132)

Other - 599 599 79 524 603 (79) - 75 (4)

Total 4,013 1,048 2,025 7,086 1,460 - 8,458 9,918 2,553 1,048 (6,433) (2,832)

Source: Central Bank of Sudan, Foreign Trade Statistical Digests, various issues.


4.5.9 As regards domestically produced inputs that are often important in the case of light industries, the issue of quality needs to be addressed. Improved co-operation and communication between suppliers of the inputs and the manufacturing users can go a long way to resolving these problems. However, the government may also be able to help by strengthening the enabling environment for the needed cooperation.

4.5.10 Compliance with Appropriate Internation-al Standards and Codes. As noted in Chapter 2, a key issue for Sudan is the further development of ap-propriate technical standards for both the domestic and export markets. The Sudanese Standards and Metrol-ogy Organisation (SSMO) has the overall responsibility for setting and enforcing product standards in Sudan.57 Increased attention to the current status of standards in Sudan and arrangements for ensuring compliance with these standards is of considerable importance at his stage. Sudan must ensure that its governance structure is up-to-date in knowledge about the rele-vant international standards and codes, and develop expertise to design and implement the full compliance processes, starting with self-assessments of the initial state of compliance.

4.5.11 The standards and codes relevant to private sector development in areas as diverse as trade, fi-nancial services supervision, property rights, natural resource management and freedom of expression are broad norms that have been legitimised by the interna-tional community. They have evolved from experience; arrived at by agreement (via open discussion); and are expected to be implemented by national authorities, without a central world authority, because such im-

57 The Sudanese Standards and Metrology Organisation (SSMO) is a Governmental organisation set up under the private law of SSMO, issued in 1993. The Standards Act (2008), Metrology Act (2008) and Precious Stones Act (2008), all allocate more au-thority to SSMO, which has its headquarters in Khartoum and separate offices in each state. It has 15 laboratories in addition to those established at the SSMO Branch-es. The most important and well equipped are those at the Port Sudan Branch. The SSMO also has an Information Centre. It is a member of ISO, the African Regional Or-ganisation for Standardization (ARSO), the Arab Standards and Metrology Organisa-tion (ASMO), and Codex Alimentarius Commission, the Arab Industrial and Mining Or-ganisation (AIDMO), the Islamic Institute for Standardisation, the International Institute for Cereal Science and Technology (ICC), African Electro-technical Standardisation Commission (AFSEC), International Organisation for legal metrology (OIML), an affiliate member of IEC. Besides being the focal point for SPS and TBT WTO Agreements. SSMO has also signed several; bilateral agreements with the following: The Kenyan Bureau of Standards (KEBS), the Korean Agency for Standardisation (KATS), the Jor-dan Institution for Standards and Metrology (JISM), the Syrian Arab Organisation for Standardisation and Metrology (SASMO), the Egyptian Organisation for Standardisa-tion and Quality (EOS), the Saudi Arabia Standards Organisation, the Syrian Standards Organisation (SASO), Emirates Authority for Standardisation (ESMA), Turkish National Centre for Standardisation (TSE), Libyan National Centre for Standardisation (LNCSM), General Administration for Chinese Standards (SAC),Uganda National Centre for Standardisation (UNBS), Tunis National Institute for Standardisation (INORPI) and the in the process of signing with the Ethiopian Standards Authority (QSAE).

plementation is in the self-interest of the countries.58 Sudan needs to demonstrate that it is committed to implementation of these standards and codes. This typically means prompt legal ratification; organisation-al set-up to implement the standards and codes; and demonstration, through steadfast and fair enforce-ment, as well as transparent reporting to that effect that it supports both the spirit and the letter of each of these standards and codes. Peer reviews by other countries and international organisations will also greatly help in the validation process. In the absence of such actions, Sudan will suffer in any assessment as a place to do business, especially by investors, rating organisations and official regulators around the world. It will then be at a disadvantage in attracting capital, talent and offers to participate in global value chains.

Access to Land and Services

4.5.12 As the discussion in Chapter 2 indicates, ac-cess to land is a major issue within Sudan, especially for agricultural activities as discussed in Chapter 5. How-ever, manufacturing firms also require access to land for their processing and storage facilities, even more so when they plan to form a cluster of industrial plants. The typical land requirements include the following: (i) Enough space to set up facilities and expand (adding to factories and warehouses) and sometimes even pre-built structures immediately usable for manufacturing, storage, and housing; (ii) access to reliable supplies of electricity, water and other utilities; (iii) clear rights to the land they occupy that would, among other things, al-low them to use the land as collateral for loans; and (iv) proximity to attractive neighbourhoods – that is, places with adequate skilled labour and affordable housing, recreational facilities, a clean and crime-free environ-ment, and efficient services. For some enterprises (in-cluding producers of certain export products), proximity to an airport with numerous connections is necessary to allow for easy shipment of products quickly and, as needed, import of key inputs, spare parts, and skilled labour.59 4.5.13 The Sudan authorities at the local, state and/or national level may need to review existing policies related to the development and servicing of special economic zones, with a view toward trying to develop

58 See Johnson (2002), who makes these points in the case of the compliance with the Core Principles for Systemically Important Payment Systems.

59 See Dinh, et al (2013) and Yusuf (2008).



some for selected industrial activities with satisfactory supplies of serviced land adequate for their uses. In mobilising the support and cooperation of state gov-ernments and local authorities for these types of initia-tives, the national government could consider guaran-teeing the states and the local authorities a share of the resulting taxes paid by the firms in zones in their states/local areas, with this tax share not being counted as part of the normal budget transfer from the central gov-ernment to the states. This plan could constitute an important component of efforts to galvanize self-inter-est in favour of promoting private sector development. If a group of firms in the same sector are encouraged to move into the same economic zone/industrial park/cluster, the firms would gain from agglomeration effect (external economies), which adds to the developmental impact.

Access to Infrastructure Services

4.5.14 The infrastructure services that are of greatest interest at this stage are access to reliable and rea-sonably priced electricity services, land transportation (road and rail, especially for bulk freight services), water for agricultural use in small and large-scale irrigation developments by the private sector, and for industrial use. Slow and inefficient transport and poor commu-nications can increase trade cost, reduce sales, and, moreover, cause serious loss of market share over time. For exports, port facilities and controls can cause serious delays, thereby adding to trade costs.

4.5.15 The various infrastructure issues that confront national efforts to accelerate development of the pri-vate sector are discussed in some detail in Chapter 8. To underpin these initiatives, the Sudanese authori-ties could supplement the findings of the recent World Bank report on Doing Business in Sudan with addition-al surveys of the business community to obtain more information on the nature and effect of infrastructure as a constraint on manufacturing/industrial firms, and the extent to which the constraint differs by location, size, and sector of business.

Export Promotion and Diversification

4.5.16 The proposed diversification programme puts emphasis on the importance of expanding a wide range of exports within the region and to the broader

international markets. It stresses the need to expand beyond the present dependence on two products – oil and gold – as the primary source of foreign exchange earnings. The related problem is that Sudan is heavily dependent on a relatively small number of markets for its exports. As Table 4.4 indicates, about 97 percent of oil exports in 2013 went to China, and 88 percent of gold exports went to Arab Peninsula countries. Exports of products other than petroleum and gold amount-ed to about US$2.0 billion in 2013, a large share of which was accounted for by exports of agricultural products to countries in the Arab peninsula. Exports to other members of COMESA, to the advanced in-dustrial countries, and to Asian states – a number of which are active in Sudan – are negligible. Further work is required to create more export markets. While poten-tial private investors would be expected to do much of the required work, the government can support market expansion initiatives by addressing the various domes-tic constraints, including, for example, putting in place and enforcing the production of the necessary inputs to the technical standards that are required for successful development of these markets.

4.5.17 For producers who want to operate in export markets, the standards in international markets are higher than in many of the domestic product markets of Sudan. Additionally, the competition is more intense. Partly for these reasons, but also because of limitations of domestic producers, due to size of firm and of in-dustry, as well as limited degree of exposure to world markets, the binding constraints on success in export markets are also far more arduous than those dis-cussed earlier, for many domestic firms to overcome. (See Chapters 5 and 6 for further discussion of these issues.) However, given the considerable natural re-source base of the country, the proposed programme for diversification attaches importance to the further development of these export markets. There is need for increased attention of current practices and policies related to the establishment and enforcement of these standards, especially for domestically supplied inputs required for export products. Current tools for interven-tion in support of compliance with standards may need to be expanded or modified.

Trade Costs and Logistics

4.5.18 Trade costs include all costs incurred in getting


a product to a final user, other than the cost of produc-ing the good itself. These include transportation costs (both freight costs and time costs), policy barriers (tariffs and nontariff barriers), information costs, contract en-forcement costs, costs associated with the use of dif-ferent currencies, legal and regulatory costs, and local distribution costs (wholesale and retail).60 An important component of trade costs is sometimes termed ‘trade facilitation’ costs. These are costs related to activities that affect the movement of goods, persons and ser-vices in international trade and payments. The activities include dealing with customs, certain infrastructure fa-cilities (such as border posts), international shipments, and various tracking and tracing procedures. In gener-al, low trade facilitation costs (relative to the import and export prices of goods) contribute greatly to low trade costs and hence to export promotion.

4.5.19 In 2012, the World Bank’s Logistics Perfor-mance Index (LPI), an assessment of certain qualities of trade facilitation, rated Sudan at 2.10 on a scale of 1 to 5. 61 The average score for Sub-Saharan African countries was 2.46. Among the LPI categories, Su-dan’s strongest performance was in ensuring the time-liness of shipments in reaching their destination and the

60 For further discussion of these issues, see, Anderson and van Wincoop (2004), pp. 691-2.

61 The categories used are: customs (2.14), infrastructure (2.01), international shipments (1.93), logistics competence (2.33), tracking and tracing (1.89), and timeliness (2.31). The figures in parentheses represent Sudan’s scores.

quality of transport and IT infrastructure for logistics, the latter having improved slightly in recent years.

4.5.20 To promote trade, countries are typically urged to improve trade facilitation. International experience suggests that in many elements of trade facilitation, rapid progress is possible. This is especially true for the sub-category of infrastructure termed “invisible”. These are infrastructures that essentially comprises automated procedures, software and systems – infor-mation and communication technologies – that simplify and speed up data management and processing and communications in economic transactions (Staples, 2002). The government and the relevant state bodies can quickly put in place legislation, rules and the vari-ous technologically related systems, and have in place capable and trustworthy personnel to apply and use them appropriately.

4.5.21 The absence of quantitative restrictions on ex-ports of goods and on imports of essential inputs for production helps to reduce trade costs and promote exports. So do low nominal tariff rates on imports of inputs and tax rates on exports. At an even more basic level, the absence of delays, bribery and harassment in official trade due to behaviour of customs, border and tax officials, also facilitates a reduction in trade costs and increases in exports.

Table 4.5: Projected Levels of Fixed Investment and FDI (As % of GDP)

Indicator Actual Projection

2012 2013 2014 2015 2020 2025 2030

Fixed investment by source

Private 16.7 15.9 15.3 15.5 15.9 19.3 19.9

Public 2.3 1.9 2.2 2.3 3.4 3.6 3.6

Total 19.0 17.8 17.5 17.8 19.3 22.9 23.5

Fixed investment by sector

Oil sector 1.2 1.0 1.0 0.9 0.8 0.8 0.8

Non-oil sector 17.8 16.8 16.5 16.9 18.5 22.1 22.7

Total 19.0 17.8 17.5 17.8 19.3 22.9 23.5

Memo items:

Gross investment (US$ mill) 12,913 14,202 12,827 13,572 18,061 27,494 37,219

Private investment (US$ mill) 11,377 12,860 11,215 11,819 15,194 24,065 32,918

of which: FDI 2,466 2,648 2,859 2,821 3,345 4,364 5,790

Other sources 8,911 10,211 8,356 8,997 11,850 19,701 27,128

FDI as % GDP 3.6 3.8 3.9 3.7 3.5 3.5 3.5

Source: Annex Tables 3.1 and 3.2, and estimates by authors. Note: US$ values for investment and FDI are at 2012 constant prices.

GDP market prices (US$ mill) 68,126 70,620 73,299 76,250 95,562 124,692 165,417



4.5.22 Success in promoting export of goods in world markets can also be constrained by limited under-standing of the market conditions and requirements, such as what is demanded and by whom, as well as the packaging needs. It is further limited by inadequate information on how to sell in a particular market (for example, knowledge of shippers, storage options, wholesalers, middlemen and retailers, etc.), and how to obtain optimal arrangements for facilities like insurance or handling errors and returns. Effective communica-tions with buyers and various service providers can be a problem at times, particularly with changing technol-ogies around the world.

4.5.23 In marketing, domestic producers new to par-ticular areas of export and domestic market activity of-ten need to obtain assistance via specialists, such as trading companies (service providers that, inter alia, link producers with potential buyers), and/or by joining ap-propriate networks of producers and market experts of the types of goods involved. Here, the government can help in the search process and with resolute reforms that reduce trade costs over which the authorities have control.

Technical and Managerial Capabilities of Entrepreneurs

4.5.24 Successful entrepreneurs possess certain managerial, technical, and commercial skills. These typically include capacities to spot business opportu-nities; organise and run a firm; deal efficiently with cus-tomers, workers, suppliers, business competitors, and government officials; and an ability to assess and man-age microeconomic and macroeconomic risks that will threaten the profitability and even the survival of their businesses.

4.5.25 The entrepreneurship skill gap in Sudan var-

ies from one region (state) to another as indicated, for example, by the share of business managers with uni-versity degree. The authorities may be able to support programmes that help to expand the size and quali-ty of the stock of entrepreneurial talent in the country. One way would be to help organise and finance formal entrepreneurial training in classes. Much of the man-agement practices of entrepreneurs can be directly taught in management courses. Hence, subjects such as quality control procedures, inventory management, marketing, human resource management, and finan-cial management can be taught in workshops and also benefit from in-house management consultancies.62 The second way would be to seek and enable expe-rienced entrepreneurs from abroad to cooperate with the local entrepreneurs via joint actions, foreign direct investment and consultancies. A third way is for the government to create an environment that attracts able entrepreneurs to operate in the country, including a re-turn of Sudanese entrepreneurs who are currently out-side. Both Korea and the Philippines undertook such programmes with their Diasporas in the 1970s and 1980s.

4.5.26 The case for active government assistance is founded on two grounds. First, the government is likely to have a comparative advantage in leading the cooperation that is required for accelerated increase in entrepreneurship in Sudan. Second, the first major en-trepreneurs to achieve substantial success in important manufacturing enterprises are likely to generate knowl-edge in the Sudan environment, for which they may not reap “fair” compensation before being copied by others. Hence, government assistance would enable a socially adequate supply of such entrepreneurship to emerge quickly.63

62 See Bloom et al (2010), for example.63 See Parker (2009) for a good introduction to the economics of entrepreneurship.

Table 4.6: Projected Levels of Bank Lending to the Private Sector

Indicator At current prices At 2012 constant prices

2010 2012 2020 2025 2030

Bank credit as % GDP 11.9 12.0 19.5 23.5 27.0

Bank credit (US$ mill) 8,218 8,016 18,338 28,909 44,165

Memo item (in US$ million):

GDP at factor cost 69,058 66,804 94,040 123,017 163,576

Source: Table 9.3, Annex Tables 3.1 and 3.2, and estimates by authors.


Skills in the Workforce and Labour Policies

4.5.27 Lack of skilled manpower was cited as a se-rious business obstacle by close to 40 percent of re-spondents to the PICS 2008 manufacturing survey for the whole of Sudan. However, there was some variation around the country. The majority of Sudan’s educated labour force is concentrated in the capital and other large cities, whereas in Nyala, for example, 56 percent of the respondents cited lack of skills as a major to severe business constraint.

4.5.28 As Table 2.8 indicates, the labour force in Sudan is projected to increase by about 3 percent a year during the 2012-2030 period, with the absolute number increasing from about 11 million in 2012 to approximately 19 million by 2030. Absorbing an aver-age of about 427,000 new entrants into labour each year in this period is a major challenge for the coun-try, especially in view of the fact that unemployment rate has been about 15 percent for more than a de-cade. Addressing the human capital constraint, typi-cally identified as “shortage of worker skills”, in trying to boost manufacturing activity, involves policies in the following three areas: Basic general education (having an overwhelming proportion of the population complet-ing formal schooling at the secondary level); improved literacy; and putting in place a sound, modern, and for-mal technical and vocational educational system that is accessible (both physically and financially) to all of those who want to participate in it. The literacy of the adult population of Sudan was only about 71 percent in 2010, but this will change rapidly in the decade ahead as the literacy rate of 15-24 year olds was 87 percent in 2010, and is projected to increase to 100 percent within the next few years. Chapter 9 provides a detailed assessment of the challenges associated with building the skills of the labour force.

4.5.29 Difficult issues arise in the areas labour poli-cies. The main issue is the degree of freedom and flexi-bility that the top management will have with respect to hiring and firing, overtime pay, minimum wage, leave, treatment of unions, and hiring of foreigners at all lev-els of the firm. With the help of an international agency such as the World Bank, the government could take a survey of what leading economic powers and rapidly growing developing countries are doing at the moment,

and adopt an appropriate mix of policies that are suffi-ciently flexible and would be fair to the workers in Su-dan.

4.6 Private Investment Requirements and Financing

Private Sector Investment Requirements

4.6.1 As the discussion in Chapter 2 indicates, for the purposes of this Report, the Moderate Growth Sce-nario is one in which Sudan continues to face econom-ic sanctions by the US and European countries, but it does reach an agreement regarding the arrears on its external debt and is able to benefit from a substantial increase in inflows of ODA and continued substantial inflows of FDI. In this case, successful implementation of the proposed action programme for diversification over the next five years results in a gradual increase in non-oil GDP growth to about 5.7 percent a year by 2020, with growth during the 2020-2030 period con-tinuing at close to 6 percent a year. As Table 4.5 indi-cates, increased private investment drives this transi-tion to sustained strong growth by the 2020s, together with an operating environment that is supportive of pri-vate sector-led diversification. Private fixed investment remains at its current level of about 16 percent of GDP until 2020, and then rises steadily to about 20 percent of GDP by 2030.

4.6.2 In this scenario, private fixed investment has to increase from about US$13 billion in 2012 to about US$15 billion by 2020 and US$33 billion by 2030 (all at 2012 constant prices). Total private fixed investment during the 2014-2030 period is projected to be about US$340 billion, including US$66 billion from FDI. This leaves a balance of some US$274 billion to be financed from other sources of equity and debt. The key chal-lenge for this scenario is putting in place the policies and programmes that will be needed to mobilise the funding required for these levels of private investment. There are four potential sources of funding: investment in kind by business entities and individual farmers and business people, the domestic financial market, foreign direct investment and offshore sources of debt financ-ing, and to a much lesser extent, retained earnings:• Foreign direct investment is assumed to grow

steadily from its current level of about US$2.7 bil-lion a year to about US$3.3 billion by 2020, and to



about US$6 billion by 2030 (all at 2012 constant prices), at which time FDI would be about 3.5 percent of GDP, compared with about 4 percent in 2012-13. As noted above, total FDI during the 2014-2030 period is projected to be about US$66 billion.

• Given the assumed successful agreement on the issue of arrears payments, Sudan’s access to off-shore debt financing is assumed to improve by 2020. However, with continued sanctions, access to the offshore commercial debt markets, including export credits, would be somewhat constrained.

• The implication is that the domestic capital market of Sudan will have to play an increasingly important role in mobilising domestic savings, and through effective intermediation, make these savings avail-able for private sector investment.

4.6.3 Given that some of the above-mentioned US$275 billion of private fixed investment (net of FDI inflows) will be funded by equity contributions rather than debt financing, a not unreasonable estimate of the amount of debt financing that may be required may be in the range of US$20 billion a year by 2030 (equivalent to a debt:equity ratio of about 75:25).

Outlook for Foreign Direct Investment

4.6.4 FDI is expected to play an important role in the private sector-led diversification programme proposed in this Report. This inflow of investment and related technical and managerial skills can also play an import-ant role in addressing some of the above-mentioned major constraints that confront private investment in Sudan at this time.

4.6.5 Trade logistics – particularly for exports – and entrepreneurial skills, would likely be the most import-ant areas where FDI could make an important contri-bution. The federal and state governments in Sudan can no doubt assist – via both policy interventions and finance – with the availability, cost and quality of input, infrastructure and worker skills. In other words, Sudan’s need for FDI is mainly about knowledge (espe-cially technical and managerial), finance, and marketing (especially information and logistics). In that context, the strategy to attract FDI could be built around the following three initiatives:• First would be to pursue business friendly reforms

in the economic governance and policy environ-ment. To attract FDI, the government should ex-plicitly promote the openness of Sudan to foreign capital and highly skilled labour. Key elements of this initiative may need to be reflected in the laws and regulations of the country. Such openness would attract foreign investment to Sudan, as well as the opening of the Sudan market to skilled for-eign labour.64

• Second, enterprises that are partly or wholly for-eign-owned should also be given equal access to benefits from selective intervention policies, when explicit government subsidies are not at issue. If the intervention involves rental of government facil-ities or government loans to be repaid with appro-priate interest, for example, then enterprises that are wholly or partly foreign-owned could also be allowed to compete for the benefit.

• Third, the authorities should try to create an envi-ronment that makes Sudan attractive for foreigners to take up residence in the country. Having a phys-ical environment that is attractive as a place where people want to live and work in typically means that services such as transport, housing, hotels, physical security, medical services, facilities for leisurely activities and educational establishments include components that operate at appropriate international standards.

4.6.6 Foreign investors need not necessarily help to manage a local firm. There could be cases in which FDI can simply invest in a local enterprise without any attempt to get involved in its management. Listing of a Sudanese enterprise in the Khartoum Stock Exchange or direct approach to venture capitalists may lead to this kind of outcome.

4.6.7 In implementing the promotional strategy for attracting FDI to Sudan, the national and state govern-ments may want to make greater use of industrial parks and duty-free zones that are well serviced with infra-structure and other services. Such facilities would help to assure potential investors that government policy is well thought out and that the government is serious about industrial development and export promotion. In-vestors, entrepreneurs, and skilled workers associated

64 Skilled labour from abroad would still need to obtain appropriate work permits. But the policy of openness would be tailored to enable the firms in Sudan, irrespective of their ownership, to be able to get the worker skills they want, including from abroad, while ensuring fair (non-discriminatory) treatment of workers of Sudanese origin.


with the FDI would appreciate the likely gains from the agglomeration and would be more willing to come for-ward with ideas to help facilitate such services.65 Such action would also help to overcome problems associat-ed with setting aside land in urban and other areas for sale or long-term lease for industrial activities.

Improving Access to Financing in the Domestic Market

4.6.8 The proposed programme of private sector-led diversification will require funding from the domestic fi-nancial markets for new investments and for working capital. For investment, the main sources of finance would be own savings, friends and relatives in the case of family-owned business, micro-finance programmes, curb market loans, and the formal financial markets, including banks, private equity and debt markets. For working capital, the main sources would be internal cash and working capital loans from banks. An import-ant aspect of these financing arrangements would be the existence of facilities that can meet the working capital and investment financing needs of SMEs.

4.6.9 As the discussion in Chapter 9 indicates, the total amount of bank loans to the private sector stands at about 12 percent of GDP, a very low level relative to the experience of four of the five comparator countries (that is, Egypt, Kenya, South Africa, Tunisia and Ugan-da) used for the analysis of financial development in Sudan (Table 9.3). A review of the experiences of these countries indicates that over the past three decades (from 1980 to 2010) bank loans to the private sector increased by a total of about 25 percentage points of GDP. If bank lending to the private sector in the de-cades ahead were to increase at a rate comparable to that of these comparators, private sector lending by the domestic banking network would be about 27 per-cent of GDP by 2030. As Table 4.6 indicates, this indic-ative benchmark suggests that total loans outstanding to the private sector for investment and working capi-tal purposes could be in the range of US$44 billion by 2030, compared with $8 billion in 2012 (both at 2012 constant prices) – an average growth of 9.3 percent a year.

4.6.10 The implication of this scenario for lending by

65 See, for example, Table 5.2 in Basant (2008), which summarizes the responses from cluster and non-cluster firms about their perceived advantages of locating in a city cluster.

the domestic banking network is that the net increase in bank lending for investment and working capital re-quirements would be in the range of US$4 billion a year by 2030 (at 2012 constant prices). In this scenario, the domestic banking system would therefore finance per-haps about US$3 billion a year of the above-mentioned US$19 billion a year required by the private sector, leav-ing a balance of US$16 billion to be mobilised from oth-er domestic and international sources. If the domestic financial market is to finance a substantially larger share of the private sector investment, there must be a major effort on two fronts: (i) accelerate the capacity of the domestic capital market to mobilise domestic savings and to provide investment loans to the private sector through increased lending by the banking network; and (ii) early attention to development of other forms of do-mestic debt financing, such as a corporate bond mar-ket.

Access to Offshore Debt Financing

4.6.11 One of the most important offshore sources of debt financing will be the export credit agencies of countries that export capital equipment to Sudan for private sector use. As Table 2.9 indicates, a substan-tial portion of the proposed capital expenditures for the programme will be for transport and other capital equipment. Given the very limited domestic capacities for production of capital goods in Sudan, much of the required equipment will have to be imported. The ob-vious source of financing for much of this equipment would be the export credit agencies of the countries that supply the capital equipment. Possibly, as much as 25-30 percent of the proposed private sector in-vestment will be in the form of imported capital equip-ment that could be financed by accessing export credit from the countries of origin of the capital equipment. This suggests that by 2030, about US$7 billion a year could be mobilised from these sources of financing of imported capital goods. In this connection, the govern-ment could also consider introducing programmes that would facilitate private sector access to these offshore sources of official financing. With the assumed contin-uation of economic sanctions by the US and European countries, it is unlikely that the capital goods would be imported from these countries and financed by them. Alternative sources of supply would be required, includ-ing countries like China that have established capaci-ties for the manufacture of capital goods and export



financing facilities.

4.6.12 Concessional loans from bilateral and multilat-eral donor agencies can be another important source of debt financing for the proposed programme. While a substantial part of these donor programmes may be used to finance both national and state government in-vestment programmes, a portion of the aid may also be used to support private sector investment through direct on-lending to local entrepreneurs and farmers, especially small and medium-scale agricultural and in-dustrial activities. In the course of developing a detailed financing plan for the proposed private sector-led di-versification programme, donor agency funds can pro-vide enhancements to domestic sources of funding. A range of techniques drawn from international experi-ences can be considered. One example would be to

use donor funding to extend the maturities of domestic loans, thereby improving cash flow in the early years of an investment by the borrower. Given the substantial amount of trade with Arab Peninsula countries, Sudan may be able to mobilise substantial amounts of aid from the relevant donor agencies in these countries. In that connection, an ongoing dialogue with the Arab authority for Agricultural Investment and Development, and the Arab Organisation for Agricultural Develop-ment, may be productive.

4.6.13 The prospects for private sector mobilisation of debt financing in international financial centres, such as London and New York, are unclear at this stage, given the continuing application of sanctions against Sudan.





5.1 Current Status of the Agricultural Sector

The Setting

5.1.1 Sudan has long been regarded as having the potential to become one of the major surplus food pro-ducers in the world. 66 As the discussion in Chapter 2 indicates, with the secession of South Sudan in 2011, and the end of the oil boom, Sudan must now move to a broad-based programme of development that puts substantial emphasis on using the vast agricultural po-tential of the country to underpin an extended period of sustained strong economic growth and development.

5.1.2 About 63 percent of the land area of the coun-try is classified as agricultural land – that is to say, the land is arable, under permanent crops or under pas-tures (Table 2.1). The country has ecological and cli-matological characteristics that suit a wide variety of crop cultivation and animal husbandry. About 85 to 90 percent of the agricultural area in Sudan is rain-fed, depending on the season. Because of the unreliable

66 During the 1970s, Sudan, Canada and Australia were viewed as the three countries that could be the main contributors to the world food basket. More recently, Sudan has been classified as a country in which agriculture can be used as the basis for sustained strong economic growth if a productivity revolution in smallholder farming is realised (World Bank, 2008.a).

nature of the rains, farming in much of the rain-fed area is based on a low-input-low-output technology. It is fur-ther characterised by cheap access to land, allowing unlimited horizontal expansion for farmers that are able to invest, and fuel and readily available labour at com-paratively low daily rates (WFP-FAO 2011).

5.1.3 The vast potential notwithstanding, since the 1960s there has been a decline in the contribution of agriculture, livestock, forestry and fisheries to the GDP of the country.67 Value added by the sector declined from an average of 46 percent of non-oil GDP in the 1960s to about 36 percent of non-oil GDP in the 2010-2013 period. In the same period, the rural population increased from about 7 million to 25 million. The agri-culture sector thus provided employment and incomes for about two-thirds of the population. In the 1970s, the agriculture sector grew at an average of almost 4 per-cent a year, and then in the 1980s and 1990s, growth averaged about 5 percent a year. In the decade after the oil boom began, the growth performance of the ag-riculture sector was maintained at an average of 5.3 percent a year. If the large contraction in agriculture that reportedly occurred in the secession year of 2011 is excluded, the growth in value added during the 2010-

67 This Report uses the term ‘agriculture’ as a shorthand reference to crops, livestock, forestry, aquaculture and commercial fisheries.

5. PROMOTING AGRICULTURE AND RURAL DEVELOPMENT

Table 5.1: Growth of Value Added by Agriculture, Forestry and Fisheries Sector, 1960-2013

Indicator 1960-69 1970-79 1980-89 1990-99 2000-09 2010-13

Average growth rate per decade (% p.a.) n.a. 3.8 3.0 7.1 5.3 5.5¹

Agriculture share of GDP (%)

Total GDP at factor cost 46.2 41.4 34.3 40.3 34.2 33.4

Non-oil GDP at factor cost 46.2 41.4 35.8 41.3 38.0 36.2

Source: Annex Tables 2.1 and 2.2. Note 1. The average growth rate excludes 2011 when anunusually large contraction in value added occurred.



2013 period has been maintained at about 5.5 percent a year. However, as a result of poor policy choices, rural incomes decreased in this period, thereby contributing to an increase in poverty. By 2009, the incidence of poverty in rural areas stood at 58 percent. This meant that about 13.4 million rural residents were below the poverty line at that time. During the 2000s, the total value of agricultural exports, including manufactures, declined to 0.5 percent of non-oil GDP. As a result of the effects of the oil boom, the agricultural sector was essentially catering only for the domestic market in the 2000s. The problems in the agricultural sector reduced incentives for farmers and discouraged the increasingly large number of young adults entering the labour force from taking up farming.

5.1.4 Structurally, most of the productive capaci-ty of other sectors depends heavily on agriculture as a source of raw materials,68 wage goods, foreign ex-change earnings and a market for goods and services produced by other sectors (JAM 2007, CBoS 2010 and IMF 2012). In the pre-oil boom period, the agriculture sector provided the bulk of the export products of the country and accounted for the bulk of the foreign ex-change earnings. Sudan produced a diversified range of exports of food and non-food products, such as cot-ton, gum Arabic and sesame, along with substantial exports of sheep and other animals. The sector also provided key inputs (edibles oils, leather, and sugar, for example) to manufacturing industries. 68 Agriculture provides raw material for almost 70 percent of the manufacturing indus-

tries.

Key Features of the Agricultural Sector

5.1.5 The agriculture, livestock, forestry and fisher-ies sector includes the following three farming systems: traditional rain-fed farming, semi-mechanised rain-fed farming, and irrigated agriculture. These farming systems are used for both crop and livestock production. The key activities of the sector can therefore be characterised as follows: • Irrigated agriculture (with approximately 1.7-1.9 mil-

lion ha);• Semi-mechanised rain-fed farming (with approxi-

mately 5-6 million ha);• Traditional rain-fed farming (with approximately 4.2-

5.0 million ha);• Livestock activities (with 105 million head as of

2014); • Forests, woodlands and rangelands with 67 million

ha (669,471 sq. km.); and • Fisheries sub-sector (with a production in the range

of 55,000 tons in 2014).

5.1.6 Historically, the main cash crops in the Su-dan have been cotton, oil seeds, hibiscus (kerkeday), watermelon seeds, gum Arabic and sugar, whereas sorghum, millet and wheat were the main staple ce-real foods. In the post-colonial pre-oil era, agricultural growth was largely driven by the following activities: (i) expansion of large public sector irrigated schemes in central Sudan producing cotton, sugar, oil seeds and cereals; (ii) expansion by smallholders in traditional rain-

Table 5.2: Agriculture Sub-Sector Growth Rates and Share of Contribution to GDP bythe Agriculture Sector for 1991/92-1999 and 2000-08

Agriculture sub-sector 1991/92-1999 2000-08

Growth rate Share of sector Growth rate Share of sector

(% p.a.) value added (%) (% p.a.) value added (%)

Crops

Irrigated cropping 6.6 21.1 4.4 28.2

Rain-fed semi-mechanized

-6.7 6.3 5.2 3.1

Rain-fed traditional 24.6 12.5 2.4 14.9

Minor crops -1.4 1.2 n.a.¹ n.a.¹

Other products 2.4 5.9 n.a.¹ n.a.¹

Sub-total 8.5 47.0 3.6 46.3

Livestock 15.9 46.9 3.6 47.2

Forestry -21.5 4.8 2.5 6.5

Fisheries 9.0 1.3 n.a.¹ n.a.¹

Total agriculture 10.8 100.0 3.6 100.0

Source: World Bank (2009), Table 4.1. Note 1: data included in the forestry sector.


fed farms producing food for subsistence, cash crops and animals products for local and foreign markets; (iii) investment by the private sector in pump irrigated schemes producing cotton and other food and export crops; and (iv) expansion by the private sector in rain-fed mechanised farms producing cereals and oil seeds.

5.1.7 There has been a substantial increase in the importance of the livestock industry over the years. According to the Ministry of Livestock, fisheries and Rangelands (MoLFR), by 2013 there were about 105 million head of livestock throughout the country, includ-ing various breeds of cattle, sheep, goats, and camels (MoLFR 2012). Whereas livestock accounted for 3 to 6 percent of all agricultural exports between the late 1950s and early 1970s, these percentages increased substantially in more recent years. By 2012, livestock activities accounted for more than 60 percent of agri-culture’s total contribution to GDP.69

5.1.8 Table 5.2 gives an overview of the contribution of these various sub-sectors to the overall performance of the agriculture sector from 1991 to 2008. The crop and livestock sub-sectors grew rapidly in the 1990s, but slowed appreciably during the 2000-2008 period. They have each accounted for about 47 percent of the

69 Based on unpublished data from CBS, cited by Behnke (2012) and UNEP (2012).

value added of the agriculture sector. The share of the forestry sector increased to about 6.5 percent during the 2000-2008 period, but the contribution of the fish-eries sub-sector has been negligible throughout the en-tire period under review (FAO-SIFSIA N 2012).70 During the 1990’s, the traditional rain-fed sector boomed (with a growth rate of 25 percent per annum), whereas mech-anised farming contracted by an average of 6.7 percent a year. The expansion in small-scale rain-fed farming at that time was attributable to government support for small farmers to promote growth and maintain food security. In the 2000-2008 period, however, the perfor-mance of these sub-sectors was reversed, with tradi-tional rain-fed agriculture increasing by only 2.4 percent a year, whereas mechanised farming grew at about 5.2 percent a year. Despite the low growth of the irrigated sector in the 1990s and 2000’s, the contribution of the sub-sector to total value added by agriculture increased from 21 percent to 28 percent. More recently, substan-tial increases in production costs, labour shortages that stemmed from domestic conflict and immigration, and the lack of macroeconomic stability as outlined in Chap-ter 3, has had an impact on the performance of the agri-culture sector.

5.1.9 With the secession of South Sudan in 2011,

70 The fisheries figure is an estimate by authors, as it is not separately available.

Table 5.3: Crop Production During 2005/06-2014/15(In '000 metric tons)

Crop 2005/06to 2012/13

2012/13 2013/14 2014/15

(annual average)

Cereals

Sorghum 3,154 4,524 2,249 6,169

Millet 677 1,090 359 1,245

Wheat 470 250 194 473

Maize 0 50 20 48

Sub-total 4,301 5,914 2,822 7,935

Oilseeds

Sesame 306 563 205 721

Groundnuts 873 1,766 963 1,871

Sunflower 98 86 56 51

Sub-total 1,277 2,415 1,224 2,643

Cotton 288 131 162 176

Memo item 2005/06 2012/13 2013/14 2014/15

Wheat imports 1,411 2,314 2,178 n.a.

Source: Department of Statistics, Directorate of Agricultural Economics and Planning , 2012/13., and Annex Table 2.12 for wheat imports.



and the associated loss of government revenues from oil, the emergency programme that was launched by the government with the support of the IMF calls for the re-moval of fuel subsidies and increases in the VAT that will have an impact on costs for some agricultural products. There is some concern that these macroeconomic ad-justments may have an adverse impact in the agriculture sector (AfDB, 2012).

5.2 Performance of Individual Sub-Sectors

Performance by Crop Type 5.2.1 Cereals constitute the main staple food in Sudan. Sorghum has been the most important staple food crop in Sudan, comprising about 78 percent of to-tal cereal production during 2012/13 through 2014/15,

followed by millet (16 percent) and wheat (6 percent) respectively. Their production was reported to average 4.3 million mt a year during 2005/06-2012/13, com-pared to 5.4 million mt during 2013/14 and 2014/15 (Table 5.3) – an increase of 25 percent between these two periods.

5.2.2 The domestic supply deficit in cereals that cur-rently amounts to more than two million mt a year is covered by imports of wheat and wheat flour through three well-known private sector wheat and wheat flour companies. As Table 5.3 indicates, imports of wheat increased from 1.41 million mt in 2005/06 to an average of 2.25 million mt in the past two years. In 2013/14, imports accounted for more than 90 percent of total supply of wheat and about 44 percent of the total sup-ply of cereals.

Table 5.4: Average Area Cultivated and Harvested for Main Crops During 2005/06-2014/15. (In hectares '000)

Crop Area cultivated Area harvested Harvested area as % of cultivated

Average yearly Average yearly Average yearly Average yearly

2005/06-2012/13 2013/14-2014/15 2005/06-2012/13 2013/14-2014/15 2005/06-12/13 2013/14-14/15

Cereals

Sorghum 8,016 9,391 5,452 6,544 68.0 69.7

Millet 3,447 3,449 2,199 2,405 63.8 69.7

Wheat 252 181 241 171 95.6 94.5

Maize 32 30 29 26 90.6 86.7

Sub-total 11,747 13,051 7,921 9,146 67.4 70.1

Oil seeds

Sesame 1,808 2,229 1,361 1,731 75.3 77.7

Groundnuts 1,489 2,359 920 1,718 61.8 72.8

Sunflower 131 91 114 64 87.0 70.3

Sub-total 3,428 4,679 2,395 3,513 69.9 75.1

Cotton 133 77 122 70 91.7 90.9

Total 15,308 17,807 10,438 12,729 68.2 71.5

Source: Department of Statistics, Directorate of Agricultural Economics and Planning.

Table 5.5: Average Area Cultivated and Harvested, Production and Yieldfor Selected Export Crops, 2012/13-2014/15

Crop Area ('000 ha) Production Yield

Cultivated Harvested ('000 mt) (kg/ha)

Lubia pulses 258 193 66 255

Watermelon seeds & fruit 811 579 57 70

Roselle 313 227 37 118

Guar 7 6 3 423

Source: Department of Statistics, Directorate of Agricultural Economicsand Planning.


5.2.3 The performance of most crop farming in Su-dan is characterised by low yields. These poor yields stem from many factors, including unfavourable climat-ic conditions (highly variable rainfall, for example), poor soils, low-input use and low levels of technology adop-tion. Recent yield data is available for sorghum, millet, wheat and maize and for various oil seeds, including cotton, sesame, sunflowers and groundnuts. For the purposes of this Report, average crop yields have been calculated for the period 2005/06 through 2012/13.

5.2.4 The average area of cereals, oil seeds and cot-ton that was cropped annually from 2013/14 to 2014/15 was 17.8 million ha compared with an annual average of 15.3 million ha during the 2005/06-2012/13 period. This represented an increase of about 16 percent. About 10 million ha of this area was rain-fed. Food crops and oil seeds were cultivated annually from an estimated to-tal arable area of 19 million ha (53 percent). The area of cereals harvested in 2012/13 accounted for 9.1 million ha compared to an average of 7.9 million ha during the 2005/06-2012/13 period. Almost one-third of the area planted by sorghum and millet is usually not harvested (Table 5.4). The latter is typically limited by rainfall varia-tion, inadequate supply of inputs and price competition among crops. In irrigated areas, about 90 percent of the cropped area was harvested in the years 2013/14 to 2014/15. Production and management are usually more satisfactory under irrigated farming compared to that for rain-fed growing of cereals.

5.2.5 Cotton was once the king of the crops, almost all produced under irrigation.71 Cotton is produced mainly for fibre and not for cottonseeds, which are considered a by-product. Cottonseeds are processed domestical-ly to produce cooking oil. Cottonseed oil is used as a substitute of imported fats for domestic production of soap in Sudan. Cotton-cake, the by-product of cotton-seed oil production is an important feed, especially for fattening animals for export.

5.2.6 About 85 percent of the cotton lint that is pro-duced is exported. However, there has been a substan-tial decline in the production of cotton in Sudan over the past few decades, hence a large decline in exports. Cot-ton production dropped from 400,000 tons in 1989/90

71 Whilst long staple cotton prevails in irrigated agriculture, American short staple cotton is reported in rain-fed areas and accounted for almost 5 percent of total cotton pro-duction in the country. More precisely, irrigated cotton shared (95 percent) with acala replacing long staple varieties of Shambat and extra staple long varieties of Barakat in the Gezira scheme.

to 144,000 tons in 1993/94, then picked up to 300,000 tons by 1995/96, only to drop again to an average of 153 thousand tons a year in the 2013/14-2014/15 seasons. According to Sudan trade data, some 234,000 bales of cotton were exported in 2001, but by 2014, exports had declined to 99,000 bales. There has been a ma-jor shift away from cotton production with an average of only 77,000 hectares cultivated in the years 2013/14-2014/15. This decline stems, in part at least, from the decline in farm-gate competitiveness of cotton, relative to other crops.72 In addition to the reduced area under cultivation, several external factors have contributed to the decline in Sudan’s cotton exports, including the decrease in the demand of extra-long and long staple cotton in world markets.

5.2.7 However, production of oil seeds increased to an annual average of 1.93 million tons during the 2013/14-2014/15 years, about 50 percent higher than average annual production in the 2005/06-2012/13 pe-riod (Table 5.3). The large variability in agricultural pro-duction creates a frequent threat for the agro-industrial sector, which requires a stable supply of product and reliable prices. In the case of oil seeds, as much as one-third of the area planted is not harvested. As the subse-quent discussion indicates, yields are much lower than international outputs and those in similar countries.

5.2.8 Other important export cash crops in Sudan include Lubia pulses, water melons (seed and fruit), Roselle (hibiscus Karkadey) and Guar. Table 5.5 shows average area and production for the period 2012/13-2014/15. For most of these crops, there has been con-siderable variability in terms of areas grown and harvest-ed, along with low yields. At about 800,000 ha, water melons for both seeds and fruits account for the largest area cultivated, compared to lubia pulses and Roselle with cultivated areas of about 260,000 and 310,000 ha respectively. However, total production of guar, which is a promising gummy product, was only 3,000 mt in 2012/13-2014/15, compared to an average of 9,000 mt in the recent past. Vegetables and fruits are import-ant in domestic trade, but there are acute information gaps for these cropping activities.

72 For a somewhat dated assessment of the factors that contributed to the decline of the cotton industry, see Babiker, Elfadil Abdelrahman (undated), Sudan Cotton Research and Production Scenarios: Challenges, Achievements and Prospects. Office of Na-tional Coordinator for Cotton Research Programme, Khartoum, Sudan.



Performance of the Irrigation Sub-Sector

5.2.9 Irrigated farming is the most well established type of farming in Sudan. The FAO-SIFSIA N Crop and Food Assessment Report of 2012 outlines the key fea-tures of the two types of irrigated farming in Sudan:• Small to medium-scale mechanised, commercial

farms on gravity-fed schemes previously owned and managed by the State, which are now mostly released from tenancy restrictions and obligations to grow cotton, but are increasingly involved in growing cotton and other crops under contract for emerging agricultural companies.

• Privately-owned pump-schemes growing mixtures of cereals, vegetables, legumes, fruits and oilseeds at variable production capacities.

5.2.10 In addition, there are small irrigated holdings that practice old irrigation methods of farming known as Shadoof and flood irrigation, along the Nile Rivers and its tributaries. However, these types of irrigation are minor and information about them is limited.

5.2.11 Farming practices in the irrigated sub-sector have always been more intensive than in the rain-fed sector. In spite of this, the sub-sector has invariably failed to meet targets for irrigated areas, a result of problems with water supply and delivery, and mana-gerial shortcomings (FAO SIFSIA N 2012). During the 1990s, irrigated agriculture accounted for almost all of the cotton produced in Sudan, 25 percent of the sor-ghum, almost 100 percent of the wheat, all of the sugar cane, and 53 percent the groundnuts. At that time, cot-ton was the most important crop in irrigated farming, but this is no longer the case.

5.2.12 During the years 2013/14-2014/15, the irrigat-ed sector produced an annual average of 1.18 million mt of cereals, equivalent to about 22 percent of total annual production (Table 5.6). The contribution of the irrigated sector to other food crops such as groundnuts and sesame were quite different. Groundnuts produced under irrigation accounted for 280,000 tons, equal to 20 percent of total country production. However, sesame is produced entirely by the mechanised and traditional rain-fed agriculture. Sunflower, a promising new enterprise, produced an annual average of 23,000 mt during the 2013/14-2014-15 period. Informal esti-mates suggest that almost 80 percent of fruit and veg-etable production is produced under irrigation. Various vegetables and fruits are also produced by small farm holdings along the Nile Rivers and its tributaries, but reliable data is scarce. The ARP reported production of an average of 5.9 mt of vegetables and 7.3 mt of fruits (Annex 5). Sudan also has five sugar refining factories with a total area of about 87.6 thousand hectares. The total sugar produced in 2009-10 averaged to 690,000 mt of refined sugar compared to 730 thousand in the year before. 73

5.2.13 In summary, food production by the irrigated sub-sector accounts for some 830,000 ha of cultivated areas and 20-25 percent of domestic cereal production

73 The factories are: (i) the Guneid (7.9 thousand ha); (ii) New Halfa (15.1 thousand ha); (iii) Sennar (13 thousand ha); (iv) Assalaya (15.5 thousand ha); and (iv) Kenana (36 thousand ha). The area of White Nile Sugar Company which is a private company approaches 42 thousand ha.

Table 5.6: Area Irrigated, Production and Yields for Selected Crops During 2013/14-2014/15


Planted Harvested ('000 mt) (kg/ha

Cereals

Sorghum 423 376 810 2,157

Millet 7 5 5 900

Wheat 175 166 328 1,969

Maize 17 15 20 1,333

Total 623 561 1,162

Oil seeds

Ground nuts 122 118 280 2,381

Sunflower 17 16 23 1,389

Total 139 134 303

Cotton 64 59 153 2,602

Source: Ministry of Agriculture and Irrigation.

Table 5.7: Area, Production and Yields for Main Crops UnderMechanized Farming During 2013/14-2014/15



Cereals

Sorghum 5,711 4,017 2,258 562

Millet 258 181 75 415

Total 5,968 4,197 2,333

Oil seeds

Sesame 1,032 835 237 283

Other crops¹

Source: Ministry of Agriculture and Irrigation. Note 1: Other crops include sunflowers and guar are produced in small amounts


depending on the season. As the discussion below in-dicates, rain-fed agriculture accounts for the remaining 75-80 percent of cereals grown in Sudan. The irrigated sector produces about 20 percent of sorghum, where-as mechanised and traditional sub-sectors account for 54 percent and 26 percent of sorghum respectively.

Performance of Rain-fed Farming

5.2.14 Rain-fed farming has accounted for about 95 percent of the total areas cultivated in the 2013/14-2014/15 period, of which about 38 percent is classified as mechanised farming. The area farmed under rain-fed conditions averaged 18.3 million ha during these past two years. About 13.1 million ha was harvested.

5.2.15 Mechanised farming in these rain-fed areas accounted for about 30 percent of the areas cultivat-ed and harvested, and about 34 percent of produc-tion during 2013/14-2014/15. This form of farming ac-counted for about 54 percent of sorghum production, 9 percent of millet, and 51 percent of the sesame, but no wheat and groundnuts. As Tables 5.7 and 5.8 indi-cate, the average yields for mechanised farming were essentially the same as those in traditional rain-fed farming.

5.2.16 Large-scale semi-mechanised farming has been the main factor contributing to deforestation in Sudan, and related land degradation and soil erosion. Modern zero tillage cultivation with chemical weed con-trol has been only previously adopted in the Blue Nile State’s Agedi Scheme of the Arab Authority for Agricul-tural Investment and Development.

5.2.17 Traditional rain-fed farming. Most small-scale farming in Sudan depends on traditional rain-fed agriculture and accounted for 89 percent of mil-let production and 30 percent of sorghum during the 2005/06-2012/13 period (Table 5.8). The sub-sector accounted for about 37 percent of maize production and a negligible portion of wheat production. A slight shift from millet to sorghum has been reported by the smaller farms prior to this period, where they regularly produce about 95 percent of the pearl millet, 38 per-cent of the sorghum, 67 percent of the groundnut and 38 percent of the sesame grown. Additionally, tradition-al farming accounts for 67 percent of groundnut pro-duction, 38 percent of sesame, and 100 percent gum

Arabic (FAO-SIFSIA 2012). In contrast to the SIFSIA assessment, Table 5.8 shows that the sub-sector pro-duced almost 55 percent of sesame, and 89 percent of millet over the 2005/06-2012/13 period.

5.2.18 Crop yields in traditional agriculture are low compared to other countries that farm these crops. As shown in previous tables, most of cash crops like karkadey, water melon seeds and lubia pulses are en-tirely produced through the traditional rain-fed farming, either in clay or sandy soils.

Livestock and Fisheries Sub-sectors

5.2.19 The livestock sub-sector plays a key role in

Table 5.8: Area, Production and Yields for Main Crops UnderTraditional Rain-fed Farming During 2013/14-2014/15



Cereals

Sorghum 3,257 2,153 1,142 530

Millet 3,184 2,219 723 326

Wheat 6 5 6 1,304

Maize 12 12 14 1,165

Total 6,458 4,388 1,884

Oil seeds

Sesame 1,196 895 227 253

Ground nuts 2,237 1,600 1,137 711

Sunflower 74 48 31 653

Total

Cotton 13 12 16 1,379

Other

Lubia pulses 290 256 83 322

Water melon 694 586 60 102

Karkadey 344 241 41 168

Guar 9 7 4 522

Total 1,337 1,090 187

Total 11,314 8,032 3,481

Source: Ministry of Agriculture and Irrigation.

Table 5.9: Livestock Population(Number '000 head)

Livestock 2010 2012 2013

Cows 41,761 29,840 30,010

Sheep 52,079 39,483 39,868

Goats 43,441 30,837 30,984

Camels 4,623 4,751 4,773

Total 141,904 104,911 105,335

Source: MoLFR (2014).




the Sudan economy and in food security for the coun-try. In terms of value added, the livestock industry is now the largest component of the agriculture, forest-ry and fisheries sector, accounting for about 60 per-cent of total value added by the sector. Its impressive growth in the past decade has been closely linked to the development of a large export industry, primarily in the form of live animals (mainly sheep and lambs) along with some exports of meat products. In 2001, for example, total exports of livestock products stood at about US$20 million. By 2013, they had increased to about US$680 million, with exports of sheep account-ing for about US$480 million. There are no records for unofficial trade in livestock across Sudan’s borders, so the total value of exports is larger than reported, but by how much is not known.

5.2.20 Various livestock farming systems exist, the most common of which is the traditional rangeland based system in western parts of the country. Livestock are reared by nomads who follow traditional breeding systems, and in other areas by pastoralists, who also engage in crop production. Intensive production sys-tems are found in the vicinity of urban centres, such as crop-livestock integration by settled cultivators and organic livestock production through grazing of range-lands. (See Map 5.1 for patterns of livestock migration in Sudan and South Sudan)

5.2.21 As Table 5.9 indicates, the Ministry of Live-stock, Fisheries and Rangelands (MoLFR) estimated the livestock population of Sudan to be about 142 mil-lion in 2010, of which sheep accounted for 37 percent, goats 31 percent, cattle 29 percent and camels about 3 percent.74 About 26 percent of the animal population

74 This estimate includes the livestock herds of South Sudan. Moreover, the data are not based on an actual census of the livestock population of the country. When actual censuses of livestock herds in these two countries were carried out, it was found that

in 2010 was estimated to be in South Sudan. After the secession in 2011, the Sudan animal population has been estimated to be about 105,000. The great bulk of livestock production – possibly as much as 90 percent – comes from smallholders and migratory producers. Because of uncertainties about the size of the livestock herd, there are no reliable estimates for the annual off take of animals for the domestic and export markets. Estimates for the off take of sheep range from 15 per-cent to 50 percent (World Bank, 2009). However, it is generally believed that off take rates in Sudan are low by African standards, in part because pastoralists at-tach importance to the size of their livestock herds. The major concern here is that excessive stocking rates in Sudan, destruction of tree cover, expansion of crop-ping areas and soil erosion are all contributing to a seri-ous deterioration in the carrying capacity of rangelands in Sudan.

5.2.22 The livestock population and supply of livestock products (including meat, eggs, poultry, and milk) have increased over the past decades (Annex 5). Milk pro-duction increased from 1.885 million tons to about 4.160 million tons between 1985/86 and 1994/95. Pri-or to the secession of South Sudan, milk production for greater Sudan was 7.5 million metric tons in 2010 (Table 5.10). Recent estimates by the MoLFR indicate that about 78 percent of the meat production and 58 percent of the milk production came from Sudan. Much of the milk production comes from the traditional sec-tor.75 Modern dairy farming exists around urban centres, and new investments made it competitive with traditional milk producers and distributors. These urban-oriented processing industries face challenges in the area of feed supply, milk collection, preservation, transport and distri-bution. Production of milk from range cattle averages about 15lbs/cow/day, which is low compared to inter-national standards. FAO (2005) estimated that cattle milk yield in Sudan averaged about 480 litres/year/cow (about 3lbs/cow/day). Goats, on the other hand, are im-portant for the poor families as they are a source of milk as well as an important source of regular cash income for pastoral households. They are also a source of meat for home-consumption.

the prior official estimates of herd size were underestimated by about 50 percent. See Intergovernmental Authority on Development (2013), The Contribution of Livestock to the Sudan Economy. IGAD Centre for Pastoral Areas and Livestock Development, Policy Brief No. 6/CLE/8/2013.

75 The Kenana and Butana cattle breeds rank as best milk producers under tropical conditions with under-tapped potential.

Table 5.10: Main Livestock and Fisheries Products ('000 tons)

Product 2010 2012 2013

Meat 1,860 1,456 1,466

Milk 7,471 4,318 4,359

Fish n.a. n.a. 55

Poultry meat 30 45 55

Eggs 35 40 45

Hides and skins 78 n.a. n.a.

Source: MoLFR (2014).



5.2.23 Poultry farming in Sudan relies mainly on tra-ditional methods of production, though modern poultry farms are also common in densely populated areas. Poultry meat production increased from 20,000 tons to 29,000 tons in 1985/86-1994/95, and reached 30,000 tons by 2010 (Table 5.10). Production of eggs increased from 23,000 to 35,000 in the 1985/86-1994/95 period, but it remained at same rate in 2010.

5.2.24 Status of the Fisheries Industry. Sudan is also endowed with inland and marine fisheries resourc-es, including fin-fish, oysters, mussels, and clams, crus-taceans (shrimps, prawns, lobster) corals and other an-imal and plant organisms (FAO-ERCU 2013). In recent years, fish production has become increasingly mar-ket-driven, with the demand for freshwater fish going up in the domestic and export markets. However, Sudan lags behind other African countries in terms of the quan-tities produced and utilisation. 76

5.2.25 The Ministry of Livestock, Fisheries and Range-lands has estimated the total potentially harvestable in-land fish catch at about 110 thousand tons, including the Red Sea fish that account for only 10 thousand tons per annum. Current statistics report fin-fish production to be about 55 thousand tons/year (Table 5.10), with per capita consumption approaching 1.6 kilograms/year. This catch is about 65 percent of the estimated po-tential. Lake Rosaries ranks fourth as a source of inland fish production, after the Gabal Awlia, Marew Dams and Lake Nasir. Fresh water pond-based fish production has recently been introduced by the private sector, but it is on a limited scale at this stage. Sudan has no exports of fisheries products; but by way of contrast, export earn-ings of Nile perch by Uganda account for 90 percent of the total formal fish exports. The Nile perch has been a close substitute for traditional white fillet fish like cod, but the recent emergence of farm cod and Pangasius from Vietnam and other Asian countries has threatened these natural African catches (ACP-EU 2010).

76 For instance, FAO reports the estimated global inland waters fishing at about 10 million tons annually, which comprise 10 percent of total global fishing (FAO 2008). Regionally, Kenya, Uganda and Tanzania are main competitors for fresh water Nile Perch in Lake Victoria. The maximum sustainable yield for Lake Victoria is approximately 300,000 tonnes. The lake is a shared resource between Kenya, Uganda and Tanzania. How-ever, Uganda now lies second in aquaculture production in sub-Saharan Africa, next to Nigeria. Its global contribution is less than 0.5 percent. Despite the lack of data for Africa, Uganda’s trade in fisheries and aquaculture (90 percent Nile perch) contributed about 2.8 percent of the national GDP, which is significantly important for poverty reduction for about four percent of the population (Ssebisubi 2011, MTTI 2006.a; Ful-gencio 2009).

Forestry and Woodlands

5.2.26 Prior to the secession of South Sudan in 2011, forests and woodlands of Sudan covered about 64 mil-lion ha (World Bank, 2011).77 Thirty-five percent of the land in former Sudan was classified as forest, of which one-quarter represented timber resources and 3 percent were forest reserves. There was also some plantation forests and community woodlots. The most recent sta-tistics put the forest area at 20.6 million ha, the same as cultivable agricultural land (World Bank, 2011). However, potential forests and woodlands (which are typically tall shrubs) remain in areas of low rainfall in the north.

5.2.27 No up-to-date statistics are currently available for timber and forest products of Sudan. Informal esti-mates suggest that these areas have now been reduced to about 30 million ha for forests and woodlands (An-nex 5). The current status of forest resources in Sudan needs to be assessed in order to quantify and qualify these areas and location sites. The Forest Law of 2002 requires that trees should be left standing on 5 percent of lands that are farmed mechanically and on 10 percent of rain-fed lands. The objective of these tree belts is to reduce evaporation losses and decrease water and wind erosion. According to the World Bank (2009), there has been extensive mismanagement of these resources with destruction of watersheds and desertification, especially in central and northern Sudan. The contributing factors include the expansion of mechanised agriculture on for-estlands, uncontrolled tree felling, overgrazing, erratic rainfall and droughts.

77 Forests are defined as an ecosystem with a minimum of 10 percent crown cover of trees and/or bamboos, generally associated with wild flora, fauna and natural soil conditions, and not subject to agricultural practices (Elamin and Ce’sar 1994).

Table 5.11: Available Animal Feed in Sudan, 2014

Type of feed Dry matter Energy Digestible protein

(mill tons) (mill megajoule ('000 tons)

Herbaceous plants

48.2 432,720 1,900.0

Browsing (fodder, schrubs, tress)

5.2 39,150 30.0

Irrigated forages 3.4 44,386 680.0

Crop residues 8.3 53,086 0.3

Agro-industrial by-products

1.4 14,485 314.0

Cereals 0.1 1,823 7.0

Total 66.6 585,650 2,913.3

Source: Range and Pasture General Directorate (2015)


5.2.28 The contribution of the forestry sub-sector to the overall growth performance of the agriculture sector has been erratic. The poor performance is not unrelated to the above-mentioned unsatisfactory management of the forest resources of the country. Value added from for-estry activities showed a negligible growth of 0.7 percent during the 1981/82-1990/91 period, followed by a neg-ative growth rate of 21.5 percent in the years 1991/92-1999 (FAO 2004). However, the forestry sub-sector be-gan to recover during 2000-08 with average growth in value added estimated at 2.5 percent a year.

5.2.29 The most important product from forested ar-eas is gum arabic, which is produced for export.78 Gum arabic constitutes an essential forestry product. Gum ha-shab in Sudan is derived from both natural stands and plantations and collected by tapping of the trees. Gum talha, on the other hand, comes mostly from natural stands and through natural exudation. Management of the resources for gum production falls into one of two systems: hashab owner or hashab renter. Artificial regeneration of hashab is carried out by direct sowing of seeds and transplanting of seedlings. More than 50 percent of gum Arabic produced in Sudan is obtained from plantations or naturally regenerated stands. Plan-tations and naturally regenerated stands are owned by individuals, government or cooperative bodies.

5.2.30 Many thousands of Sudanese are dependent on gum Arabic for their livelihoods, but production levels have varied. From the 1950s to the early 1990s, Sudan accounted for roughly 80 percent of gum arabic pro-duction in the world, but according to the World Bank (2007), by the mid-2000s, production had declined to about 50,000 metric tons a year.79 However, it is still the world’s largest single producer. In 2013/14, the produc-tion of gum Arabic is estimated at 70-80 thousand tons compared to 30,000 tons in the previous year. Increased domestic processing of gum Arabic has stimulated pro-duction and a higher volume of and value for exports.

Rangelands

5.2.31 The rangelands of importance to the traditional livestock industry are confined to the Semi–Desert, Low

78 The secretary general (SG) of the Gum Arabic Council in Sudan announced in Decem-ber 2013 that France imports more than half of total production of 50 thousand tons in 2012. The current production is estimated as 70-80 thousand tons. The value of French purchases was about US$70-80 million (El Youm Et Tali newspaper, No. 291, dated 11 December 2013).

79 World Bank (2007), Policy Note, Export Marketing of Acacia Gum from Sudan. World Bank, Washington DC, March, 2007.

Rainfall Woodland Savannah, and the northern fringes of the High Rainfall Woodland Savannah areas. In the Semi-Desert, the plant cover is a mixture of grasses and herbaceous plants intermingled with Acacia spp, and shrubs representing the main grazing areas for camels and sheep. Two particular grassland areas form a distinct feature of this rangeland type, namely the Bu-tana plains (grassland on clay) and Baja area (grassland on sand). The Rainfall Woodland Savannah on clay and sand have a plant cover of a mixture of Acacia spp, and other trees, such as Balanites aegyptiaca and Ziziphus spina-christi in addition to shrubs and a number of her-baceous plants.

5.2.32 Grasslands (grazing) are most important feed source in term of area and production. They provide feed during wet season (August to December). In the short wet season, grasses grow and mature rapid-ly, and produce abundant biomass. Rangelands are affected by the amount of rainfall and its distribution. The nutritional inadequacy of dry season grazing im-poses a major constraint on sustainable livestock production under traditional systems, where grazing constitutes the only source of feed for livestock (Idris, 2013).80 Browse species (fodder trees and shrubs) are important components of the natural rangelands as herds at different ecological zones under traditional pastoral production system depend mainly on grazing and browsing. In the drier areas where Acacias are pre-dominant, fruits (seedpods), twigs, flowers and leaves are the main browse materials. In the wetter areas to the south where broad-leafed plants are dominant, live-stock depend heavily on tree foliage. The most import-ant feature of the browse species is availability during the dry season when all types of grasses are already exhausted, or are of low nutritive value. They are par-ticularly valuable in the Semi-Desert and Low Rainfall Woodland Savannah Zones. Utilisation of forage de-pends on a range of factors, including availability, se-curity of countryside, access to water sources, among others.

5.2.33 As Table 5.11 indicates, rangelands accounted for about 53.4 million tons of the 66.6 million tons of dry matter content of available animal feed balance in 2014 – equivalent to about 80 percent of the available

80 Idris, M.F (2013). Working Paper: on Role of Natural Forage Plants Diversity in Pastoral and Agro-pastoral Communities Livelihood - Prepared for Development of Strategy for Building the Resilience of Pastoral Communities to Climate Change in Two Ecosys-tems of Sudan Project (PSAP) – RPGD, Khartoum.



supply in 2014. Most of the remainder was accounted for by crop residues.

5.3 Policy and Institutional Arrangements for the Sector

The Policy Framework

5.3.1 Agricultural policy is currently aligned with vari-ous plans and development objectives, including those set out in the MDGs, ARP II, 25-Year Plans (TYP), and the MTPF. The policy framework is also aligned with the FAO and IFAD strategic frameworks for Sudan (cur-rent FAO-SPFS) and proposed National Food Securi-ty Action Plan (NFSAP).81 As discussed in Chapter 3, following the secession of South Sudan in 2011, the government launched the three-year economic stabil-ity programme (2011-14) that was part of a five-year (2011-16) plan designed to smoothen the transition from oil-led growth to agriculture and manufactur-ing-led growth. However, to date, it appears that less attention and resources have been directed to agricul-ture, agribusiness and agro-industry (AfDB 2012.b).

5.3.2 Since independence, policy makers have em-phasised the importance of agriculture as a corner-stone of development and means of growth. However, little has been put in place to make this a reality. Sup-port for the agricultural sector has been limited, and as a result, it has not performed to its full potential. The reasons are many and varied, but progress was mainly hindered by political instability and domestic conflicts. As a result, most agricultural plans were not execut-ed, or were discontinued midway, or extended at the end of the planning period, or simply neglected and replaced by rolling investment programmes in the con-text of economic reform policies (AfDB, 2013). Lack of a systematic private sector development studies and analysis linked to the implementation programmes also contributed to the poor performance.82

5.3.3 Sudan has not made full use of the African

81 The overall average rating of Sudan for the Country Policy and Institutional Assess-ment (CPIA) stood at 2.7 in 2011, which is below the cut-off score of 3.2 for fragile states. This rating reflects the high degree of fragility of Sudan (AfDB 2012.a).

82 Sudan has made notable efforts to diversify its economy and support private sector growth. The first systematic attempt was made in the context of the two Ten-Year Plans (TYP) of the early 1960s and early 1970s. The TYP was in response to the realisation that the development programmes for the 1946 – 1961 period, though they greatly stimulated Sudan’s economy, did not enhance private sector growth. The case then for economic diversification and private sector growth was based on the country’s crucial dependence on one crop (cotton), which had fluctuating international prices, in addition to facing stiff competition from synthetic fibres (AfDB assignment document 2013).

Agribusiness and Agro-Industries Development Initia-tive objective (3ADI), whose major goal is to increase private sector investment flows into the agriculture sec-tor in Africa by mobilising resources for agribusiness and agro-industrial development from domestic and international financial systems (FAO-UNIDO, 2010).83 Through the 3ADI, Sudan was assumed to have an ag-riculture sector that by the year 2020, would be built around highly productive and profitable agriculture val-ue chains. These chains were expected to link small and medium size agricultural producers to markets, supply higher-valued food, fibre, feed and fuel prod-ucts, contribute to increasing farmers’ incomes, utilise natural resources in a sustainable manner and gener-ate increased and high quality employment. The 3ADI is linked with the ARP that is the government’s main ongoing programme for agricultural development.

5.3.4 The National Medium-Term Priority Framework (NMTPF) for 2008-12 (FAO-NMTPF, 2007) showed that the policy for the various agricultural sub-sectors might vary, but generally, the focus was on the optimal util-isation of resources and more sustainability, solving production gaps resulting in sub-optimal utilisation of resources and exploration of better investment oppor-tunities. The means to realise these policy objectives included: • Mobilisation of domestic and foreign resources to

increase agricultural production; • Removal of economic, administrative and legal re-

strictions through policy and investment reform; • Abolishing state monopolies in agriculture, industry

and transport through privatisation; • Allowing market prices to dominate; and • Alleviation of restrictions on exports and imports.

Institutional Arrangements for the Sector

5.3.5 Various ministries and institutions are respon-sible for agricultural policy in Sudan. The main federal

83 The 3ADI was launched with a vision to spur the development of competitive, sus-tainable and inclusive agro-industries and agribusinesses in Africa as a pathway to in-creased economic growth and food security in the continent. The African Union Com-mission (AUC) and its New Partnership for Africa’s Development (NEPAD), through the Comprehensive Africa Agriculture Development Programme (CAADP), partnered with the African Development Bank (AfDB), the Food and Agriculture Organisation of the United Nations (FAO), the International Fund for Agricultural Development (IFAD), the United Nations Economic Commission for Africa (UNECA) and the United Nations Industrial Development Organisation (UNIDO), to launch the African Agribusiness and Agro-industries Development Initiative (3ADI) during the High-Level Conference on the Development of Agribusiness and Agro-Industries in Africa (HLCD-3A), hosted by the Government of the Federal Republic of Nigeria in Abuja, Nigeria, in March 2010 (FAO-UNIDO 2010).


ministries with responsibilities for aspects of agricultur-al policy and development are as follows: the Ministry of Agriculture and Irrigation; the Ministry of Livestock, Fisheries and Rangelands; the Ministry of Environment, Forestry and Tourism and its affiliated Higher Council for Environment and Natural Resources (HCEANR); and the Ministry of Industry. These ministries are responsi-ble for the policy formulation, planning and monitor-ing of developments, research and extension services, pest control activities in agriculture, livestock, forestry, fisheries, pastures and irrigation, natural resources pro-tection, conservation, development, management of environmental concerns and manufacturing of agricul-tural commodities (FAO-CPF, 2011). 5.3.6 The Ministry of Agriculture and Irrigation has prime responsibility for the sector, together with the Ministry of Livestock, Fisheries and Rangelands.84 While reliable statistics is considered a major facet for measuring progress and appropriate policy analy-sis, Sudan’s agricultural statistics are wanting and the quality of the data for policy design is questionable. For instance, data for studies that provide alternative pol-icy options in agriculture (World Food Programme, for example) are deficient and decisions may be made on an ad hoc basis.

Role of the Private Sector in Agriculture

5.3.7 Private sector involvement in agriculture and agribusiness in Sudan dates back to the colonial period of the British and Turkish regimes in the 18th and 19th centuries (Ismail 2010). Since independence in 1956, the government has played a critical role in establish-ing new systems of laws, regulation and governance, set rules for fair and competitive markets and trade, and ensured that the rules are followed. As the discus-sion in Chapter 4 indicates, however, there have been abrupt changes in policy towards the private sector at various times since independence.

5.3.8 There have been various initiatives to promote private sector investment in agriculture in Sudan, but the sector has not been particularly attractive to pri-vate investors (or for local financial institutions), in part because of the substantial risks and uncertainties as-sociated with such investment compared to other sec-

84 In spite of this responsibility and accountability, there is no annual or periodic bulletin or document that embodies these federal agricultural policies, and interested readers often collect such information from different departments.

tors (such as trade and services) in the economy. The last amendments of the 1980 Investment Promotion Act were in 2003. The Act encourages investment in backward economic areas, but conflict and instability discouraged potential investors. The rate of implemen-tation of approved investment projects was about 28 percent in the case of national investment applications, 17 percent in foreign investor applications, about 10 percent in joint venture company applications, and one percent in the case of bilateral investment agreement in single or joint projects (NEPAD CAADP: Vol. V, 2005). The implementation of approved/licensed agricultural investments was also low. For instance, only 16 per-cent of agriculture-related investments approved with-in the Investment Act programme were implemented prior to 2005. Anecdotal evidence suggests that the situation has not changed much in more recent years.

5.3.9 The objective of the Multi-Donor Trust Fund (MDTF) private sector development programme for Sudan that was launched in 2007 was to enable the private sector to maximise its contribution to sustained peace and poverty reduction in the country (UNIDO 2010). But as the discussion below indicates, progress towards these goals has been disappointing.

5.3.10 With the adoption of the Sudan National Agri-cultural Investment Plan (NAIP) in 2013 (see discussion below), the government has put increased emphasis on creating an investment climate for the private sec-tor to be actively involved in agriculture and agribusi-ness. The objective of such an enabling environment is to pave the way, not only for private business owners, small farmers, and agro-industry owners, but also to expand their business enterprises.

5.3.11 Key components of a successful programme for promoting private sector investment in agriculture include the following:• Improving access to finance through extending

lines of credit and providing technical assistance to banks and microfinance institutions active in ag-riculture as well as supporting small and medium enterprises linkages;

• Investment in private equity funds focused on ag-riculture and in periods of liquidity crisis, and sup-porting trade finance to facilitate trade in agricultur-al commodities;

• Encouraging public private partnerships in agricul-



ture by leveraging public resources to entice pri-vate sector operators to invest in agriculture; and

• Encouraging new investors to venture into the ag-ricultural sector and develop partnerships with key international agribusiness groups.85 Where gov-ernment needs to strengthen its outreach for con-structive partnerships with the private sector, inter-national partnerships could be through facilitation of market access, joint business ventures, invest-ment and trade agreements, technology transfers, leadership enhancement and capacity building for an improved business climate (OECD-UN 2011).

5.3.12 The government will, in all likelihood, require support in articulating its role in the agriculture sector based on the new strategy that is emerging from the NAIP. The key objective is to ensure there is a level play-ing field for private investment. To ensure this outcome,

85 According to FAO estimates (FAO/UNIDO 2010), over the 44-year period from 2006 to 2050, the cumulative global investments required in Sub-Saharan Africa in agriculture and downstream support services amount to US$940 billion [in 2009 US$]. Of this amount, about 66 percent will be required for agribusiness and agro-industries capital outlays, covering items such as cold and dry storage (US$78 billion), rural and whole-sale market facilities (US$159 billion), first stage processing (US$207 billion), mechani-sation (US$59 billion) and other power sources and equipment (US$115 billion). These investments will have to be made primarily by the private sector. The public sector will thus be confronted with the need to create and maintain conditions that favour invest-ment in agribusiness and agro-industries by the private sector [including farmers]. It is to the end of assisting African countries to meet this challenge that this programme framework and its financial facility that together shape the 3ADI were designed.

a range of actions will be needed to enforce impartial rules and regulations, protect public goods such as re-search and extension services, and market information. The government strategy may need to provide initial support for farmer investment in a range of agricultur-al products that include the seed industry, provision of input supplies, and post-harvest technologies that add value to production and expand market chains. How-ever, an essential component of the public sector sup-port strategy must include clear arrangements for the government to exit from activities that can be undertak-en by the private sector.

5.4 Lessons from the Agricultural Revival Programme (ARP)

Insights from Experience with ARP Implementation

5.4.1 The disappointing performance of the agricul-ture sector from the early stages of the oil boom, along with the lack of progress in improving living standards for the majority of the population that depended on agricul-ture for their livelihood, led to action by the government in the latter part of the 2000’s to reverse this decline

Table 5.12: Average Yields for Major Crops in Sudan and those for Comparator Countries(Yields expressed as kg per hectare)

Crop Reported by Sudan Average for 2013/14-2014/15

Reported by FAOSTAT (average for 2009-2013)

Argentina China India Nigeria Sudan USA

Irrigated Rainfed

Mechanised Traditional

Cereals

Sorghum 2,157 562 530 4,370 3,776 916 1,287 565 3,831

Millet 900 415 326 1,676 2,028 1,096 1,112 288 1,528

Wheat 1,969 - 1,304 2,964 4,872 3,013 1,422 1,743 3,067

Maize 1,333 - 1,165

Oil seeds

Sesame - 283 253 1,323 375 458

Groundnuts

2,381 - 711

Sunflower 1,389 - 653

Cotton 2,602 1,379

Other

Lubia pulses

600 - 322

Water melon

- - 102

Karkadey - - 168

Guar - - 522

Source: For yields reported by Sudan, Tables 5.6, 5.7 and 5.8. For comparator countries and Sudan, FAOSTAT.


and promote a broad-based programme for agricultur-al recovery. The revival of agriculture was expected to increase overall economic growth and expand exports, reduce poverty and sustain food security, particularly in rural areas. In addition, increased agricultural production was also seen as the key foundation for expansion of the agro-industrial sector.

5.4.2 Annex 5 includes a detailed evaluation of the experience with the ARP I programme. This experience suggests there was a wide gap between stated objec-tives and those achieved. In the absence of detailed sta-tistics on the performance of the ARP I during 2008-11 and information on actual disbursements under the programme, informal analysis and consultations with concerned stakeholders revealed lack of progress in achieving the stated objectives of the programme.

5.4.3 A recent review of the performance and achievements of the ARP showed weak implementa-tion of the programme, with limited tangible progress in the stated objectives, including programme expendi-tures. Even before the secession of South Sudan in July 2011, the programme appears to have encountered a number of difficulties during implementation. It appears that a low priority had been assigned to agriculture in the allocation of government financial and human resources.

5.4.4 The less than satisfactory implementation stemmed from the following factors:• There was a substantial shortfall in the funding of

the programme, due in part to financial imbalances at the macroeconomic level as outlined in Chapter 3, and limited support for the programme by the domestic financial sector, and difficulties with the large budget allocations to sub-national levels of government for the ARP.

• The national government role was highly cen-tralised. The ARP structure was found to lack ef-fective delegation of powers to states and to have an unclear distribution of responsibilities between the national and state governments to ensure fair and equitable share in budgets.

• The states were found to have weak administrative and implementation capacities for achieving the ARP goals.

• There was a lack of up-to-date information about programme implementation.

5.4.5 Despite the fact that the ARP is comprehensive in terms of projects to be undertaken, it did not show clear links with respect to complementarities among the various economic regions, comparative advantage of crops and specialisation in production in areas such as agro-industry through in-depth studies that could then be translated into private sector investments. Although the ARP has provided a comprehensive and seemingly consistent set of policies and strategies for the entire agricultural sector, the institutional capacity to im-plement these policies was found to be technically and financially limited. The ARP fell short in addressing the relevance and the interdependence of governance sys-tems and processes in agriculture, both vertically and horizontally. In other words, the ARP was unable to link local and national issues effectively.

5.5 Key Challenges for the Sector 5.5.1 For an improved performance by the agricul-tural sector, a high priority must be attached to im-provement of on-farm productivity, including, in partic-ular, substantially better crop yields. Closely related to concerns about on-farm productivity is the need for a wide range of off-farm actions, including more bridg-es and roads, swifter trade procedures, higher levels of cross-border trade and investment, as well as bet-ter institutions and bureaucrats skilled in public policy co-ordination to compete successfully in the global economy (AfDB 2013).

Low Crop Yields and Productivity

5.5.2 One of the biggest challenges for a successful programme of agricultural development in Sudan is that the yields of all major crops in the country are very low in comparison with many comparator countries. For the past two decades, increases in production have come from an expansion of traditional rain-fed farming areas,

Table 5.13: Comparison of Agricultural R&D Spending in Sudanand Brazil

Expenditure on research

Sudan Brazil Sudan as %

of Brazil

As percent of GDP

0.17 1.73 9.8

Per scientist (in 2000 US$)

10 110 9.1

Source: World Bank (2009), Table 4.6.



rather than from increases in yields. Table 5.12 provides a summary of recent experience with yields in Sudan and the following five comparator countries: Argentina, Chi-na, India, Nigeria and the United States of America.

5.5.3 In the case of cereals, yields under rain-fed farming are lower than the averages for all the com-parator countries. Only under irrigated farming are the yields for sorghum higher than the averages for India and Nigeria. And in the case of wheat, yields under irri-gation exceed the average yields for Nigeria. Reasons for the persistent low yields are many. They include un-reliable rainfall, poor quality of seeds, low use of other production inputs such as fertilizer, lack of finance for purchase of inputs and equipment, poor farm manage-ment and lack of knowhow about recent developments in production technologies.

5.5.4 Research findings show the low level of agri-cultural productivity as the key problem for the agri-culture sector. The weak yield performance stems from the poor adoption of available technologies (seeds, good agricultural practices, fertilizers, and pest control technologies).86 The solution is to find ways and means to increase productivity, which in itself is a technical/technological problem. Since the technologies and international knowhow required for enhancing pro-ductivity are available, the main challenge is to put in place mechanisms for diffusion of these technologies and knowledge. This requires provision of improved seeds and farm access to other inputs such as fertiliz-er, expanded access to credit programmes that include working capital to facilitate crop production each year, as well as term loans for purchase or lease of equip-ment and effective agricultural extension services that provide farmers with access to good agricultural prac-tices. These programmes for on-farm support need to be supplemented with improved off-farm services, in-cluding transport, storage and processing services and facilities, as well as a substantially larger programme of agricultural research.

5.5.5 The lack of improved and or certified seeds is one of the major causes of low yields. Private sector par-ticipation in seed propagation and certification within Sudan is negligible, and is mainly limited to importation of hybrid varieties. There has been little attempt to de-velop all stages of the seed supply chain from breeder 86 Fertilizer use in Sudan is very low. The CBoS (2010) reported total use of fertilizers at

only 153 thousand tons in 2006, increasing to 302 thousands in 2010.

seed to production of commercial certified seed within Sudan. Financial constraints mean that public/private sector seed production can only meet a small fraction of demand, but private suppliers seem unable or un-willing to fill the gap. There is also a need to harmo-nise seed policy and certification systems to facilitate intra-regional seed trade.

5.5.6 Until recently, domestic production of seeds had been monopolised by the Seed Multiplication Cor-poration, a state-owned entity. Private companies have only recently entered the seed market (FAO 2012.a). However, the seed industry lacks an enabling environ-ment and supporting infrastructure that can improve the profitability of marketing these seed inputs by the private sector. In addition, private companies in Sudan have faced competition from foreign suppliers selling seeds in the local market, and have also had to con-tend with the lack of organised agro-dealer networks for the sale of improved seeds in the local market (FAO 2012.a). There have also been problems with some of the imported material.87 The volume of improved seed being sold through private companies, compared to the vast areas annually cultivated, is relatively modest. The very limited supply of improved seeds impedes large-scale adoption of improved varieties.

Limited Institutional Capacities

5.5.7 Improvement of crop yields is also limited by a number of institutional factors, including: (i) Limited government budget allocations that led to poor agricul-tural services, including irrigation, research, extension and crop protection; (ii) inadequate supply of foreign exchange led to reduced supply of imported farm in-puts and maintenance; and (iii) inefficient linkages among research, extension and the farmers, especially with almost complete absence of farming systems re-search, leading to a large yield gap between research and the farm level (MoAF, 1997).

5.5.8 State ministries have limited technical and or-ganisational capacity as reflected in inadequate or poor skills for planning, policy formulation and analysis. In addition, budgets for agriculture are sufficient only for salaries and operational expenses, but not for expan-sion of key services, such as research and extension,

87 In recent years, farmers’ complaints from poor quality assurance and inspection of im-ported varieties, including sunflower and genetically modified cotton, has been loudly voiced.


or infrastructure. Anecdotal evidence suggests that no quick strides are being taken at the state level in train-ing and capacity building. Institutional and technical ca-pacities of relevant line ministries and local NGOs are lagging behind, particularly capacity for integrated food security, nutrition and livelihoods programming.

5.5.9 As the foregoing review of the experience with the ARP I indicates, limited institutional capacities at the national and state level, and lack of coordination at each level and among national agencies and individual states, contributed to the weak implementation of ARP I. The ARP Council needs to introduce new modalities and mechanisms for effective implementation of pro-grammes and projects. It appears that the current or-ganisational structure and institutional setup of the ARP and also the related institutions (vertical and horizontal links) will have difficulty in achieving the declared ob-jectives of ARP II. A structural change in the organisa-tional and institutional set-up of the agriculture-related line ministries may be necessary. There may be need for a support agency to bridge an obvious disconnect among stakeholders (government institutions, financial institutions, private investors and farmers/producers). Such an agency would need to ensure appropriate coordination between the ARP supervisory body and national government line ministries on the one hand, and between these national bodies and entities at the state level with responsibilities for the ARP programme on the other hand. Such assistance would include translation of the ARP policy documents into action programmes and generation of more awareness about the programme, among private sector entrepreneurs, investors, and trade unions.

Limited Capacities for Research and Extension Services

5.5.10 Agricultural research and mechanisms for sup-porting the adoption of positive results at the farm level are essential components of the mechanisms required for improvement in productivity at the farm level. Sudan has had a good tradition in both applied and adaptive agricultural and water management research focused on food and cash crops (AfDB 2010, Ismail 2010, and MoAF 1997 and 2010). However, in recent decades, these capacities have eroded. Under existing condi-tions in Sudan, farmers face considerable difficulties with technological options, given the weak agricultural

and livestock extension services, insufficient research and limited access to financing that can facilitate the uptake of new technologies.

5.5.11 For several decades now, the capacity for sustained research in Sudan has been eroded by sub-stantial reductions in funding. Agriculture and livestock research institutions are weak and under-funded. The have weak capacities to address the wide range of is-sues that currently face the sector (DJAM 2012). As the World Bank (2009) has reported, expenditures on agricultural research in Sudan are very low, compared to similar spending in Brazil, which is now a world lead-er in a number of agricultural products. Research ex-penditures as a percent of GDP and per scientist sug-gest that Sudan’s R&D expenditures on agriculture are a fraction of those undertaken by Brazil (Table 5.13). Capacities in Sudan have been eroded by lack of well-trained research scientists and resources to carry out the research protocols in animal and crop husbandry, varietal trials and seed selection, soil improvement, live-stock breeding, rangeland and pasture.

5.5.12 Moreover, as international experience demon-strates, making good progress on productivity im-provements as shown by research trials requires a large expansion in agricultural extension services and access to relevant inputs, not the least of which is improved seeds. Formation of effective research-extension-farm-er linkages is one of the established systems to bring all those actors to work together. Unfortunately, there is no such mechanism of linkage with the stakeholders in Sudan (DJAM 2012). Agricultural extension services in Sudan have been weakened by a lack of well-trained technicians and resources to carry out the task prop-erly. Experts at the Ministry of Agriculture and Irrigation have little to offer farmers about improved agricultur-al practices, and do not have adequate skills to cope with today’s farmers seeking a livelihood from a range of natural resources since they have multiple-range of skills and knowledge gaps. Similarly, farmers and live-stock keepers have scarce participation in farm plan-ning and in decision-making processes with the stake-holders (Ismail 2010, DJAM 2012).

5.5.13 Private sector entrepreneurs may be interest-ed in partnerships with the government for investment in research and extension services that enable produc-ers and agribusinesses to access new productive tech-



nologies, and expand research and extension services. Such investment by the private sector in education and training for those engaged in agriculture may well result in increasing agricultural professionals capable of providing needed services, knowhow to increase yields, and entrepreneurial leadership to the community (DJAM 2012). These possibilities need to be explored in a systematic fashion by national and state govern-ments.

Uncertain Operating Environment for Investment in Agriculture

5.5.14 To attract the substantial additional financial investment by the domestic and international business community, and a combination of additional in-kind in-vestment of labour by small-scale farmers together with financing for equipment and other improvements, there is need for a sustained improvement in the operating en-vironment for such private investment. As the discussion in Chapters 2 and 4 indicates, the current operating en-vironment for private investment suffers from inadequate investment procedures and land acquisition rights, and in recent years, an unstable macroeconomic environ-ment. In addition, there are a number of concerns that are specific to the agricultural sector. They include:• The burden associated with taxes imposed by

sub-national administrative units and local authori-ties (IFAD 2009), including agricultural export taxes and Zakat on primary agricultural commodity ex-ports;

• Poorly linked agricultural markets along the com-modity value chains;

• Inadequate physical infrastructure; and• Limited access to debt financing to meet annual

working capital and investment requirements for im-proved on-farm capacities and productivity.

5.5.15 Taxes on Agriculture and Livestock. His-torically, agriculture was burdened by a wide variety of taxes imposed by local, state and federal authorities. This was until late 1999. In early 2000, agriculture and its inputs were exempted from taxes (except for few fees based on service provision). In reality, however, taxes are still being collected by local authorities since it is the only real source of revenue for local and state au-thorities, and because federal transfers have been quite limited. Except for wheat flour, which has been partly subsidised, the pricing of most agricultural products is

liberalised, particularly sugar, cotton, gum Arabic, and cereals. Currently, states and local authorities impose taxes on economic activities within their jurisdictions. The full range of taxes is cumbersome to assess, as it varies by product and location, and includes both offi-cial and unofficial taxes. The private sector faces tax-es for using land as collateral, building tax, business registration and establishment fees to start a business, license fees, and various taxes on imports, value added and profits. In the case of livestock taxes, at least five types are imposed in western Sudan (livestock, sale, Zakat, stamp, and slaughter tax). These taxes appear to have a number of unintended consequences, in-cluding avoidance to pay (DJAM 2012). Anecdotal ev-idence also suggests that some of the taxes at state and local levels are not consistent with those specified at the national level, but are collected by local officials.

5.5.16 The recent rapid expansion of the ICT network of the country, and a substantial push by the nation-al government to introduce various e-applications as Chapter 8 indicates, suggests that filing and collection of these taxes on private activity can be built into mod-ern electronic systems. Such an initiative may improve compliance with existing tax codes and improve trans-parency in the processes. For similar reasons, support and reform of customs and trade procedures is also needed. International experience suggests that the in-cidence of corruption in tax collection can be reduced through the use of digital systems that can be upgrad-ed to the high standards with minimal investments in databases and infrastructure.88

5.5.17 Market and Physical Infrastructure Con-straints. A concerted effort is also required to address the inadequate market and physical infrastructure of the country. Lack of feeder roads, transport services, cold and dry storage facilities, slaughterhouses and tanner-ies and so on, are a serious impediment to expansion of marketable farm surpluses. The limited availability of transport and storage facilities is aggravated by weak technical, managerial and financial capacities of the producers and weak linkages between stakeholders. Lack of marketing awareness about packaging, pack-ing and promotion is also prevalent and is coupled with inefficient management of whole value chains. As the discussion in Chapter 6 shows, problems in the food

88 Another option for reducing the burden of taxes on private activity may be to harmo-nise the tax policy and modality of tax payment at few collection points (either federal or state) so as to reduce costs and barriers to crop and animal production.


and agro-industrial sectors (such as very limited pro-cessing capacities) also impose constraints on the ability of the agricultural sector to expand marketable surpluses in a sustained manner over extended periods of time.

5.5.18 Chapter 8 provides a detailed account of the existing shortcomings in the infrastructure network of the country and related services. The current situation shows slow progress in construction and or recon-struction and expansion of physical infrastructure such as feeder roads, dams and irrigation catchments/res-

ervoirs, water points ‘hafirs’, agricultural resource cen-tres, and facilities for quarantine, rural markets, grain storage and higher agricultural vocational training. Ex-pansion of water access through construction of small-scale water storage, shallow tube wells and repair of water management infrastructure, are also lacking (DJAM-FAO 2012). Many of these shortcomings have direct consequences on the agriculture sector. For ex-ample, the poor road infrastructure harms the profit-ability of agricultural surpluses.

5.5.19 The key physical infrastructure priorities for the agriculture sector include improved access to transport services at reasonable cost, water catchment facilities and irrigation systems; establishment of vocational and training centres, locality-based extension resources centres, research laboratories, cold storage facilities, food grain warehouses, agricultural research sub-sta-tions, standard food and processing markets, and seed germ plasm banks. In the livestock sector, prior-ities include slaughterhouses, tanneries, and standard markets that create forward and backward linkages to agriculture and livelihoods (DJAM-FAO 2012).

Issues Related to Land Tenure

5.5.20 As the discussion in Chapter 2 indicates, there is a long history of conflict over land (and wa-ter resources) in Sudan, and as a result, many parts of the country suffer from severe land problems. Ac-cording to the 1972 Land Act, all land in Sudan, except for a small area of freehold land in the Nile River valley, is public land that is owned by the government. Farm-ers and cattle herders have usufruct rights to this land through traditional communal land policy. Land use pol-icy has, in effect, been delegated to community leaders, who are then responsible for the allocation of land use rights. These land ownership and use rights are a major obstacle for successful implementation of the proposed programme of agriculture-led diversification of the econ-omy. The reason is that because all land is deemed to be owned by the government, it cannot be used as collat-eral by those that farm the land. The fact that land has no value as security for additional investment is a funda-mental obstacle to sustained strong investment in ag-ricultural production activities. Customary law provides farmers with long-term user rights if they continue to cul-tivate the land, but this arrangement has led to situations where land is cultivated continuously to justify these user

Table 5.14: Domestic Resource Costs of Selected Crops and Commodities

Product description Average

1990-00 2001-03 2004-06

Crops

Lac, gums, resins, vegetable saps and extracts

34.6 46.1

Oil seed, oleagic fruits, grain, fruit, etc

16.6 12.2

Sesame 135.5

Sesame seed cake 61.6

Groundnuts 1.6

Cotton seed cake 2.9

Cotton 5.7 4.2

Cotton lint 10.4

Sugar and sugar confectionary

3.2 1.9

Sugar 4.6

Vegetable plaiting materials, vegetable products nes

0.4 0.3

Cereals 0.2 0.1

Sorghum 13.7

Edible fruit, nuts, peel of citrus fruit, melons

0.2 0.1

Livestock

Live animals 24.7 21.2

Raw hides & skins (other than furskins) and leather

3.6 2.1

Hides and skins 0.7

Meat and edible meat offal 1.4 0.6

Chilled meat 4.6

Products of animal origin nes

0.3 0.1

Other

Commodities not elsewhere specified

2.5 0.0

Animals, vegetable oilfats & oils, cleavage products

0.7 0.0

Residues, wastes of food industry, animal fodder

0.4 0.3

Source: Annex 5.



rights. As a result, there has been serious degradation of the land. Farmers and herders have no vested interest in sustaining the value of the land they use. The resulting low level of investment in arable land and rangelands has contributed substantially to the low levels of agricultural productivity evident in Sudan today.

5.5.21 According to the FAO (2004), the absence of appropriate land tenure policies and environmental con-siderations are among the main constrains facing this sub-sector. The DJAM emphasised that inadequate land use and tenure policies have created insecurity and disputes between agro-pastoralists and nomads (DJAM-FAO 2012). These conflicts will continue if core issues are not resolved. Institutional and legislative sys-tems are weak. Following the Comprehensive Peace Agreement (CPA) of 2005, land commissions were established at the national and state level to address the long-standing range of issues associated with land tenure, but it appears that little has been accomplished subsequent to the 2005 CPA.

5.5.22 With the aim of encouraging investment in ag-riculture and maintaining sustainable land use, the ARP of 2008 proposed that land issues be addressed in the following ways:• Registering agricultural land, and as part of the

process, defining the rights of citizens, villages and groups;

• Registering the rest of the land under government ownership and making parcels available to inves-tors; and

• Setting equitable rules for land lease and rent, and reviewing existing relevant laws.

5.5.23 As indicated in Chapter 2, the position tak-en in this report is that reform of land policy and im-provement of regulatory legislation are needed if there is to be a successful programme of private sector led diversification that is built on development of the vast agricultural potential of the country. That said, it is also clear that comprehensive land reform and develop-ment of related institutional capacities will necessarily take considerable time. In the absence of a sustained

Table 5.15: Projected Supply and Consumption of Cereals


2014 2015 2020 2025 2030

Area ('000 ha)

Cultivated 13,051 13,289 13,462 13,750 14,375

Harvested 9,146 10,100 10,500 11,000 11,500

Supply ('000 mt)

Production 5,379 5,959 7,350 9,900 12,650

Imports 2,180¹ 900 280 45 77

Total 7,559 6,859 7,630 9,945 12,727

Post harvest losses 1,882 2,086 1,470 990 1,265

Consumption ('000 mt)

Domestic consumption

5,658 4,754 5,785 6,955 8,262

Exports 19 20 375 2,000 3,200

Total 5,677 4,774 6,160 8,955 11,462

Memo items:

Area harvested as % cultivated

70 76 78 80 80

Yield (kg per ha) 588 590 700 900 1,100

Post harvest losses (% of production)

35 35 20 10 10

Per capita domestic use (kg)

149 120 130 140 150

Population ('000) 37,964 39,613 44,499 49,676 55,078

Source: Tables 5.3 and 5.4, Annex Table 1.2 and estimates by authors.Note 1: see Table 2.11 for details about imports.


and transparent programme of reform, lack of access to land with clear arrangements for ownership and or leasing will continue to be a major constraint for large-scale private investment in the sector, including crop and livestock development, as well as substantial in-vestment in forestry and fisheries activities. It will also continue to limit access to bank financing by a majority of the smallholder farmers in Sudan that account for the bulk of agricultural activities in the country.

Agriculture Has Limited Access to Public and Private Funding

5.5.24 For some years now, the agriculture sector has had only very limited access to funding by the govern-ment and the domestic banking system. Poor manage-ment of ARP budgets and limited participation in the ARP by domestic banks left many farmers and agro-industry entrepreneurs without access to adequate funding. In the case of public finance, the Maputo Declaration of 2003 had committed African countries to a minimum of 10 percent of their national budget expenditures to ag-riculture (AfDB, 2010). In the case of Sudan, only four percent of national budget expenditures were allocated to agriculture in 2012.89 This allocation was equivalent

89 El Youm Et Tali newspaper, No. 291, dated 11 December 2013.

to 0.6 percent of non-oil GDP – half the level of public spending that had been proposed under ARP I.

5.5.25 As the discussion in Chapter 9 about the domestic financial system indicates, one of the ma-jor obstacles confronting the proposed diversification programme is the availability of debt financing in the domestic market. In the case of domestic commercial bank lending, the outstanding agriculture sector share of total bank loans declined from about 18 percent in 2001 to about 9 percent by 2005. It then increased to about 17 percent by 2014 (see Table 9.4). This recent level of lending for agriculture was equivalent to about 1.4 percent of non-oil GDP. The Central Bank of Sudan reports the loan balance of domestic commercial bank lending to agriculture to have been SDG 5.2 billion in 2013 – equivalent to US$1.10 billion at the 2013 av-erage exchange rate. It is not clear how much of the lending is in the form of short-term loans for working capital to purchase inputs for annual production, and how much may be medium- and longer-term loans for the purchase of equipment and other improvements. But, given the above-mentioned constraint that exist-ing land laws place on access to bank loans, it is very likely that the bulk of these outstanding loans are used to meet short-term working capital requirements relat-

Table 5.16: Projected Supply and Consumption of Oil Seeds


2014 2015 2020 2025 2030

Area ('000 ha)

Cultivated 4,718 5,614 6,471 7,412 8,588

Harvested 3,513 4,660 5,500 6,300 7,300

Supply ('000 mt)

Production 1,934 2,586 3,163 3,780 4,745

Imports - 0 0 (0) (0)

Total 1,934 2,587 3,163 3,780 4,745

Consumption ('000 mt)

Domestic disappearance

1,628 2,187 2,670 3,080 3,525

Exports 306 400 493 700 1,220

Total 1,934 2,587 3,163 3,780 4,745

Memo items:

Area harvested as % cultivated

74 83 85 85 85

Yield (kg per ha) 550 555 575 600 650

Per capita domestic use (kg)

43 55 60 62 64

Population ('000) 37,964 39,613 44,499 49,676 55,078

Source: Tables 5.3 and 5.4, Annex Table 1.2 and estimates by authors.



ed to production activities rather than new investment.

5.5.26 Access to agricultural credit is further compli-cated by the use of the Islamic mode of financing in Su-dan. The discussion in Chapter 9 outlines the current status of this lending by Islamic mode. These instru-ments are equity-based in the sense that the borrowers hold part of the investment they finance. Because land cannot be used as equity for these borrowings, small-holder farmers face considerable difficulty in meeting these equity requirements. It is not surprising that the Salam mode of financing in Sudan, which is the typical mode for agriculture, accounted for less than one per-cent of total commercial bank financial flows to private sector activities in 2010, although there was a modest recovery to almost 4 percent of total flows in 2014 (see Table 9.5). Because of a significant shortage of term financing, many farmers/agro-industry entrepreneurs do not have appropriate equipment and implements for cultivation and/or processing. These gaps need to be addressed with access to credit for purchase or lease/rental of the necessary equipment.

5.5.27 As the analysis in Chapter 9 indicates, much effort will be required in the decade ahead to substan-tially improve the mobilisation of domestic savings by the financial system, as well as to significantly raise the ca-pacity of the financial system to channel these savings into productive uses throughout the economy, including, in particular, the agriculture sector. Moreover, funding modalities and mechanisms need to be improved. The conditions attached to the financial products of com-mercial banks are not favourable for small-scale farm-ing.

5.6 Action Programme for Agriculture

Overview of the Action Plan

5.6.1 As the discussion above indicates, Sudan is endowed with range farming systems, including large irrigated schemes, large-scale commercial rain-fed semi-mechanised schemes, agro-industries, small-scale rain-fed traditional and rural farming system as well as tremendous livestock production systems, mostly in western Sudan. There is broad agreement that the available potential resources of Sudan, togeth-er with the adoption of appropriate economic reform

policies (as in the ARP strategy), would enable the country to produce substantial surpluses of food and cash crops for domestic consumption and export. A much stronger growth performance by the agriculture sector would have a significant impact on the overall economic performance of the Sudan, including im-proved livelihoods for large numbers of people. Ac-cording to the OECD-UN (2011), the main determinants of successful agricultural diversification include good governance, abundant natural resources to increase the range of exports, active participation and private sector role in agriculture and agribusiness, regional integration for facilitating trade and commerce, and broader inter-national context that offers the prospect of an operative environment that can spur national economic diversifica-tion.

5.6.2 A successful strategy for sustained strong growth in production in the agriculture, forestry and fish-eries sector requires a combination of interventions that result in increased uptake of technologies, an expansion and improvement in support services for the sector, im-proved access to credit to meet seasonal working cap-ital requirements as well as investment requirements for new technologies and equipment, and improved infra-structure and related services (especially transport and storage services) that support agricultural activities and reduce the cost of accessing domestic and international markets. Moreover, the strategy must address the need for better markets for land and for sale of products in domestic and export markets. In reviewing the status of agriculture in Sudan, the FAO-UNIDO (2010) indicated that there was an urgent need to go beyond the tradi-tional agricultural growth promotion efforts. The report highlighted the need to prioritise not only agribusiness and agro-industrial development strategies, but also adopt more innovative and selective approaches that consider the modernisation of agribusiness, strengthen competitiveness, enhance sustainability and inclusive-ness of the country’s food and agricultural systems. The proposed strategy for further development of food and non-food agro-business activities is taken up in Chapter 6. 90

5.6.3 In response to the decline in importance of the oil industry and the need for economic diversification,

90 Best and Placide (2006) showed that the food industry played a vital role in transform-ing agricultural raw material to usable industrial products over longer periods, reduced loss, fetched for new markets for manufactured agricultural products by value addition and quality improvement, sought for new investment opportunities to make use of secondary industrial products, and created new jobs.


the government has recently taken a number of import-ant initiatives related to the agriculture sector. In 2013, Sudan became the 12th member state in the Common Market for Eastern and Southern Africa (COMESA) to sign the Comprehensive Africa Agriculture Develop-ment Programme (CAADP) Compact. In doing so, the government signalled that it had adopted agriculture as the key driver for economic growth within the frame-work of the CAADP. The Compact compliments the Agricultural Revival Programme (ARP) and the enact-ment of the Investment Encouragement Act of 2012-14, which aims to promote public-private partnerships. Subsequent to signing the Compact in July 2013, a series of actions were taken to formulate the Sudanese Agricultural Investment Plan (NAIP). Various commit-tees, including a National Steering Committee (NSC), were set up to govern the NAIP process. A roadmap for the NAIP process was endorsed by the MoAI in December 2014. The FAO has committed to provide technical support for the NAIP process. By January 2015, the following seven Investment Programme Ar-eas had been identified by the NSC. • Creation of an enabling environment for agricultur-

al production and development. One of the objec-tives of an improved policy framework would be to improve the climate for private investment in agriculture. Follow-up work will need to focus on improvements in the rules and regulations related to land policies, land leasing arrangements, tax treatment of investments and export facilities. The government has already announced policies and legislation for abolition of fees on agricultural inputs and means of production. Follow-up action will be required to ensure that local governments do not impose local taxes or fees on agricultural inputs and outputs.

• Institutional reform that enhances farm manage-ment and capacity building for producers and workers in the agricultural sector. The government will need to strengthen the role of farmer and pro-ducer associations in the sector. Increased empha-sis on the role of the private sector in spearheading further development of agricultural commodities suitable for the domestic and export markets are also seen as key elements of the new strategy for agriculture. The experience of Brazil and India with commodity exchanges is also seen as relevant for further development of agriculture in Sudan.

• Actions required that address agricultural land,

natural resources and wildlife issues. The pro-posed strategy recognises that the main constraint for traditional farming is the current land policy. A high priority is therefore attached to improving the incentives for traditional farmers to invest in im-proved technology and increase production. The land rental and tenancy system should be carefully reviewed to allow for the issue of long-term leases for smallholder farming. Such leases would also help promote long-term investment in soil fertility and management.

• Provision of better support services, informa-tion and knowledge management systems. The emerging strategy for the sector calls for increased attention to improved management and marketing of livestock and gum Arabic, for improved crop varieties, sustainable soil and water management, water harvesting and other low risk technologies. Improved infrastructure is seen as an essential part of efforts to open up access to markets in tradition-al rain-fed farming areas.

• Enhanced production and productivity and mod-ernisation of the agricultural systems of Sudan. The strategy for the agriculture sector emphasises the role of small farmers in cultivation under both irriga-tion and rain-fed farming.

• Industrialisation, value chain development and ex-ploitation of agricultural capacities.

• Enhancing food security and nutrition, quality and safety measures.

5.6.4 In elaborating on the proposed strategy for ag-ricultural diversification, this Report has drawn on the findings of a study by Maxwell Stamp Plc (2009) that made an assessment of the competitiveness of a range of agricultural crops and products based on estimates of the Revealed Comparative Advantage (RCA) and the Domestic Resource Cost (DRC) of these products. These assessments were also supported by value chain analysis from the farm gate to final market for a num-ber of products.91 Table 5.14 gives a summary of some of the estimates of RCA values for particular products and product groups. It indicates that Sudan has a com-parative advantage (an RCA greater than unity) in all the commodities that it exports in large amounts. This is es-pecially the case for gum Arabic, live animals (and espe-

91 See Annex 5 for a more detailed description of these measures of competitiveness and the results of the study. Maxwell Stamp Plc. (2009), “Assessing Sudan’s Diversifi-cation Potential in Agricultural Production.” Unpublished Report prepared by Dr Panos Konandreas on behalf of Maxwell Stamp Plc., for the Ministry of Foreign Trade, Gov-ernment of Sudan and the European Union.



cially sheep), oil seeds and especially sesame, cotton, hides and skins, sugar and perhaps meat. The analysis also found that there has been a substantial decline in the international competitiveness of groundnuts over the past two decades.

Strategy for Cereal Production

5.6.5 The findings of these prior assessments of the potential for further development of the cereals sub-sec-tor, and additional value chain analysis undertaken for this Report, suggest that there is considerable scope for private investments in a range of activities that will increase production and reduce post-harvest losses for the four main cereals in Sudan for the domestic market: sorghum, millet, wheat and maize. Given its international competitiveness, there also appears to be good pros-pects for export of sorghum to various international mar-kets. As noted earlier, the key challenge is to improve the yields for these crops. A range of interventions are required to realise this objective, including increased em-

phasis on the production and distribution of improved seeds for use by large scale commercial farming and smallholders. The analysis suggests that increased pri-vate investment in processing and packaging of sor-ghum and millet grain in key production regions (Ge-daref, Damazin, Sinnar and Kosti) would also be attrac-tive.

5.6.6 The proposed strategy for cereal production is to promote private investments that expand the area under cultivation and contribute to improved yields in all the four cereals produced in Sudan. Table 5.15 provides an indicative scenario for the expansion of domestic production of these cereals. It is based on a 15 percent increase in the harvested area during 2014-30, an al-most doubling of the current average yield for cereals, and substantial reduction in post-harvest losses as a result of improved transport services and storage facil-ities. Successful implementation of a strategy for cereals production would achieve several objectives: (i) It would gradually expand wheat production to the point where

Table 5.17: Projected Growth in Agriculture Value Added by Sub-Sector(In SDG million at 2012 constant prices)

Sub-sector indicators Actual/estimate Projection

2012 2013 2014 2015 2020 2030

Value added (SDG million)

Crops 38,885 40,052 41,454 42,905 53,924 92,111

Livestock 39,773 41,799 43,875 45,957 54,856 73,251

Forestry 807 819 837 857 988 1,328

Fisheries 1,210 1,232 1,260 1,292 1,493 2,007

Total 80,675 83,902 87,426 91,010 111,261 168,696

Share of total sector value added (%)

Crops 48.2 47.7 47.4 47.1 48.5 54.6

Livestock 49.3 49.8 50.2 50.5 49.3 43.4

Forestry 1.0 1.0 1.0 0.9 0.9 0.8

Fisheries 1.5 1.5 1.4 1.4 1.3 1.2

Total 100.0 100.0 100.0 100.0 100.0 100.0

Growth in value added (% p.a.)

Crops - 3.0 3.5 3.5 5.5 5.5

Livestock - 5.1 5.0 4.7 2.8 2.9

Forestry - 1.5 2.2 2.4 3.0 3.0

Fisheries - 1.8 2.3 2.5 3.0 3.0

Total 5.7 4.0 4.2 4.1 4.1 4.3

Memo items:

Agriculture value added as % non-oil GDP

33.8 33.9 34.0 34.0 33.1 28.9

Rural population ('000) 24,779 25,238 25,716 26,220 28,924 33,685

Value added per person (US$) 911 930 951 971 1,077 1,402

Source : Annex Table 3.3.


the current large volume of imports is eliminated; (ii) it would also establish the basis for substantial exports of sorghum by the latter part of the 2020s.

Programme for Oil seeds and Other Crops

5.6.7 Oil Seeds. Oils seeds are potential crops for domestic and export markets if crop yields are in-creased, along with a range of other actions that can improve international competitiveness. The earlier mentioned analyses of international competitiveness suggest that with increased production of sesame and perhaps other oil seeds, Sudan can establish itself as a significant exporter of oil seed products.

5.6.8 Table 5.16 sets out a scenario for the produc-tion of sesame, groundnuts and sunflower seeds in the period 2014-2030. The indicative programme proposes a 60 percent increase in the area cultivated, and with steady progress in increasing yields, a close to doubling of production by 2030. After allowing for a small increase in domestic use per capita, exports of oil seeds – primar-ily sesame – would increase from about 306,000 mt in 2014 to 1.22 million mt by 2030.

5.6.9 For many years, Sudan has been an exporter of vegetable oils, primarily to the EU market. Given the competitiveness of these products, exporters could di-versify into new markets, but this will require close at-tention to compliance with quality standards of these markets. Major markets for sesame, such as the United States, Japan, and Malaysia, have not been penetrated. Oil seeds are the major expense item in the production of these vegetable oils. Producers have reported that a shortage of oil seeds is one of the most important con-straints for the industry. The conflict in Darfur, for ex-ample, has disrupted the supply of these seeds. At the same time, farmers using irrigation have shifted from oil seeds to wheat, encouraged by government subsidies for wheat production. Also, imports of vegetable oils have increased appreciably in the past decade. As the World Bank (2009) has observed, given the seasonality of oilseed production, it will be difficult for oil processors to compete internationally unless they import oilseeds during the off-season in order to utilise fully their process-ing plant capacity.

5.6.10 Cotton Seed and Lint. Detailed programmes for further development of the cotton industry were not available when this Report was prepared. Given the dif-

Table 5.18: Projected Growth in Agriculture Value Added and Investment(Values at 2012 constant prices and exchange rate)


2012 2013 2014 2015 2020 2030

Agriculture value added

SDG million 80,675 83,902 87,426 91,010 111,261 168,696

US$ million 22,579 23,482 24,468 25,472 31,139 47,214

Growth rate (% p.a.) 5.7 4.0 4.2 4.1 4.1 4.3

Investment in agriculture (US$ million)

Public 345 432 517 575 902 1,570

Private 1,075 1,284 1,652 1,933 3,759 5,827

Total 1,420 1,716 2,170 2,508 4,660 7,397

Agriculture value added as % GDP 33.1 33.3 33.4 33.4 32.6 28.5

Agriculture investment as % non-oil GDP

Public 0.5 0.7 0.8 0.8 1.0 1.0

Private 1.7 1.9 2.2 2.2 4.2 3.7

Total 2.3 2.6 2.9 3.0 5.2 4.7

Memo items:

ICOR 1.9 1.9 2.2 2.5 3.8 3.8

Non-oil GDP (SDG mill at 2012 prices) 230,595 237,259 246,513 256,620 322,246 560,954

Non-oil GDP (US$ mill at 2012 prices) 64,538 66,403 68,993 71,822 90,189 156,998

Non-oil GDP growth rate (% p.a.) 5.7 4.0 4.2 4.1 4.1 4.3

Exchange rate 3.573 3.573 3.573 3.573 3.573 3.573




ficulties faced by the industry in the past decade, it is assumed that the cultivated areas and cotton production will continue at recent levels, with contributions to ex-port earnings staying in the range of US$50-100 million a year. The average for 2013-2014 was about US$70 million.

5.6.11 Sugar. The analysis also suggests that sugar has the potential to be competitive in international mar-kets. The production costs of sugar in Sudan compare favourably with those of other exporting countries. Ex-ports of sugar and molasses peaked at about US$36 million in 2008, but since then, only insignificant amounts have been exported. This weak performance notwith-standing, Sudan has the potential to expand sugar pro-duction and exports substantially. The available water resources of the White Nile could allow a substantial expansion in production by bringing in additional com-mercial ventures. The industry has been regulated by controls on both imports and domestic sales. The net result has been high domestic prices for sugar. As the World Bank (2009) has observed, Sudan can establish a more export-oriented industry, given the opportuni-ties offered by EU preferences and the regional market through COMESA. Demand within the COMESA region is growing rapidly, while production of traditional suppli-ers for this market (Malawi and Zambia) has been divert-ed to the protected EU market.

5.6.12 According to the World Bank (2009), the follow-ing three-pronged programme of reform could result in increased production of sugar in Sudan: (i) Liberalilation of sugar imports subject only to the VAT, and elimina-tion of the excise duty on sugar, thereby benefiting con-sumers and industrial users; (ii) reducing government involvement in the four sugar companies owned and operated by the government by privatising them or al-lowing them greater autonomy in managing and invest-ing their resources; and (iii) encouraging the continuation of services provided to local communities by the sugar companies with introduction of a tax credit for the cost of these services.

5.6.13 Other Agricultural Crops. The main products of interest here are fruits, vegetables, herbs, spices and pulses, primarily for the domestic market. However, the analysis of competitiveness suggests that there are also prospects for export of some particular products. Un-like Kenya and some other African countries, Sudan has

not yet ventured into the business of exporting flowers.

92 Another area of potential interest is the production and processing of honey and bees-wax. In conjunction with expansion in the production of these perishables, there will be need for increased private investments in cold storage facilities for these products. There may also be opportunities for private investments in equipment and machinery for greenhouses.

Expansion of Livestock Activities

5.6.14 As noted earlier, the livestock industry in Su-dan has gone through a tremendous change in the past decade. In the face of the large increase in the country’s livestock population, there is a clear need for improvement in pastoral conditions and flock manage-ment through regulation of grazing intensity of common rangelands in regions such as North Darfur and North Kordofan. Such actions may need to be supplement-ed with changes in land policy that place increased re-sponsibility for sustainable land use with farmers and pastoralists via the use of covenants related to land and forest management (World Bank, 2009). Improved management of pastoral resources and flocks will re-quire that government agencies establish sustainable management practices and monitor and regulate natu-ral resource use. At this point in time, these capacities remain to be developed within government.

5.6.15 The value chain analysis undertaken for this Report suggests that there are a number of promising areas for joint commercial and small-scale farming op-erations. These include the following:• Investment in dairy production and processing can

be a profitable investment due to increased de-mand and purchase prices of fresh and powdered milk.

• Livestock products, including mutton, beef, poultry products, skins and hides, and leather, all appear to have promising market opportunities.

• Investment in programmes to improve livestock breeds (e.g. Kenana and Butana cattle, goats and sheep) through artificial and/or natural insemination to improve the genetic makeup of meat and dairy livestock (cattle, camel and goat) can make an im-portant contribution to improvements in livestock productivity.

• A range of supporting services also needs to be 92 Further study is required to explore and exploit niche markets for non-traditional prod-

ucts such as flowers, herbs and medicinal plants.


developed in the decade ahead, including private veterinary services (through mobile and stationary services), and processing industries for the provi-sion of animal feed.

5.6.16 In addition to these conventional livestock pro-grammes, there may also be important opportunities for private investment in wildlife production (game farm-ing of deer, crocodiles, lizards, jungle fowls, birds, etc.). Such investments can be linked to tourism, particularly agro-tourism, through private national parks (Dinder and Mardoom, for example).

Forestry, Rangelands and Fisheries Programmes

5.6.17 Analysis of value chains undertaken for this Report suggests a number of areas of potential inter-est to private investment and development in forestry, rangelands and fisheries. These include the following: (i) Development of balanced feed supplies for the dairy and livestock industries; (ii) increased production of pasture seeds; (iii) forestry nurseries and fencing; (iv) development of timber plantations for furniture making with, for example, eucalyptus microceca, azachrata in-

dica (neam), mahogeny and jogan; (v) development and processing of forest products (fruits such as aradeb, gonglius, gudaeim); and (vi) further development of the gum arabic industry.

5.6.18 Balanced Feeds for the Livestock Indus-try. In the case of balanced feed supplies for the dairy and livestock industries, there has been progress in re-cent years in developing new technologies. The man-ufacture of straw-based Densified Total Mixed Ration Blocks (DTMRBs), also called Densified Complete Feed Blocks (DCFBs), is an innovative technology to supply balanced feeds to the dairy and other livestock farmers. It involves mechanical mixing of forages with feed concentrates without densification. This technol-ogy offers a means to increase milk and meat produc-tion.

5.6.19 Apart from an optimum supply of energy and protein through complete feed block, the animals get their required amounts of minerals and vitamins that, in turn, enhance reproductive efficiency.93 A densified straw based feed pellet technology has recently been developed. Using this technology, densified total mixed ration is delivered as pellets and not as blocks. This technology is particularly useful for those materials that are hard and biomass is available in abundance. Straws that are highly lignified with hard fibre can be easily crushed and converted into Total Mixed Ration pellets. Straws of wheat, groundnut haulms, and cot-ton can be used for production of straw-based pelleted feed. The optimum supply of nutrients and micro-nutri-ents through DTMRB also has a positive impact on the maintenance of good animal health.

5.6.20 The feeding of Total Mixed Ration blocks pro-vides immuno-protection against infectious diseases and also decreases the occurrence of metabolic and reproductive disorders. Consequently, this may also reduce the farmer’s expenditure on treatments and on maintaining proper health of the animals. Other advan-tages of this technology include its sustainability. It pro-vides easy handling, transportation and storage of the straw based feed blocks. It is low cost and results in high quality milk that in turn has a positive impact on

93 The technology also allows for feed additives that control certain protozoa and bacte-ria in the rumen, and generate less waste (methane). In addition, it decreases ruminal protein breakdown that results in decreased ammonia production. The shift in ruminal bacteria population and metabolism allows beneficial bacteria to be more efficient through an increase in the amount of propionic acid and a decrease in production of acetic and lactic acid. Therefore, cattle experience an increase in the overall energy status and use feed resources more efficiently (Guan et al. 2006).

Table 5.19: Summary of Proposed Investment Programfor Agriculture (US$ mill at 2012 prices & exchange rate)

Indicator 2014-20 2021-30 Total

Total investment (US$ million)

Public investment

Government budget 3,078 7,392 10,469

ODA 2,052 4,928 6,980

Total 5,129 12,320 17,449

Private investment

Equity 4,539 12,191 16,730

Debt 13,618 36,573 50,191

Total 18,157 48,764 66,921

Total 23,287 61,083 84,370

Composition of investment (%)

Public investment

Government budget 13.2 12.1 12.4

ODA 8.8 8.1 8.3

Total 22.0 20.2 20.7

Private investment

Equity 19.5 20.0 19.8

Debt 58.5 59.9 59.5

Total 78.0 79.8 79.3

Total 100.0 100.0 100.0

Source: Annex Table 3.4 and estimates by authors.



milk prices. It can be used irrespective of seasons. Improved performance of the animals obtained from feeding the DTMRB can bring better returns to farmers.

5.6.21 Pasture Seed Production. There is increas-ing demand for herbage seed in Sudan that has not, however, been matched by increased domestic col-lection or production of herbage seed. Most of the in-creased demand for herbage seed comes from natural resources development projects. Such demands are usually met by imports and are thus not conducive to the development of a domestic herbage seed industry. In 2010, the government passed legislation designed to regulate the domestic seed industry. The challenge now is to promote private investment in the production of pasture seed.

5.6.22 Fisheries. In the case of fisheries, the analysis suggested opportunities for private investment in ma-rine fishing, development of a farm raised fish industry that includes both production and processing, devel-opment of aquaculture, including sea cucumber and shrimp production and processing, and investment in inland fisheries facilities to produce Nile tilapia. These programmes would need to be complemented with increased emphasis on fish safety, quality assurance, value addition and marketing.

Improvements in Land Tenure and Other Institutional Support

5.6.23 As the foregoing discussion indicates, success-ful implementation of the proposed programme for agri-cultural diversification that can, in turn, result in sustained strong growth in the industry and reductions in rural pov-erty will require an improved operating environment for both individual family farmers and for medium and large-scale commercial enterprises involved in the supply of inputs, production of agricultural produce and its subse-quent transport and distribution. Key issues here are im-proved policies related to land use and land tenure, the availability of agricultural credit, and adequate support for research and dissemination via extension services of research findings.

5.6.24 Policies Related to Land Tenure and Use. As noted earlier, according to the 1972 Land Act, all land in Sudan, except for a small area of freehold land in the Nile River valley, is public land that is owned by the

government. The inability of farmers to use land as col-lateral for on-farm investment has resulted in low levels of investment that has in turn contributed substantially to persistent low agricultural productivity and extensive degradation of farmland and rangeland in Sudan.

5.6.25 There is a compelling case for early action to address this problem. The position taken in this Report is that consideration should be given to the introduction of long-term tradable leasing arrangements for agricultural lands that give farmers legal security for land use. Such action would, in turn, provide a basis for substantial ad-ditional lending for investment activities in agriculture. There is some experience in Sudan with these types of arrangements. The land policy in the Gezira Irrigation Scheme under the Gezira Act of July 2005 provides for the tradability of leases. This has allowed land to be used as collateral for working capital and term loans for invest-ment.

5.6.26 Research and Extension services. As not-ed earlier, agricultural research and extension services in Sudan have deteriorated, in part, because of very low levels of budget allocation for these services by the national and state governments (see Table 5.13). An expanded programme of research, especially as relates to the problems faced by small-scale farmers operating under rain-fed conditions, will be an essential require-ment for successful implementation of the proposed programme for agricultural diversification. Larger bud-get allocations for research, and increased affiliations with major research programmes in other regions of the world, will be essential. Moreover, an expanded pro-gramme of research trials will require a large expansion in extension services (along with access to relevant in-puts, such as seeds and fertilizer)

5.6.27 Other Supporting Services. Work under-taken for this Report identified a range of services and related activities that would need to be developed in conjunction with the various production programmes outlined in the foregoing discussion. These include the following:• Development of a seed industry in conjunction with

stepped up research programmes for development of new crop varieties suited to conditions in Sudan: For many years, the Agricultural Research Corpora-tion (ARC) has been developing new higher yielding varieties of cotton, sorghum and sesame, for exam-


ple, but has not had the means by which seeds of these varieties can be produced commercially for sale to the farming community. 94

• Development of a private based seed production and supply industry: This will require a supportive regulatory environment for private seed producers, working in close coordination with ARC.

• Development of livestock breeding programmes for meat and milk production through artificial and natu-ral insemination and use of biotechnology.

• Increased private investment in bulk grain transport and storage in various key regions of the country, including Gedaref, Damazin, Sinnar and Kosti.

• Development of a range of private sector services that include product grading and inspection, and transport and storage.

5.6.28 Seed multiplication and distribution of im-proved genetics are critical for improved yields, par-ticularly sorghum grains.95 As the earlier discussion indicates, local demand for improved seed is currently not being met. Most farmers continue to plant unim-proved seed obtained from local sources, including seed saved from the farmers’ own crops, from neigh-bours or relatives, or purchased in local markets (ECA-SA 2010). Much of the seed that is in the market does not meet required standards. A high priority should be attached to addressing current shortcomings in seed production and certification, including efficient multi-plication of both breeder seed and foundation seed, i.e., the propagation of good seeds and certified seed that increase yields (crop and livestock), along with en-hanced support services, including research, extension and technology transfer.

5.6.29 Private sector suppliers must produce seeds that meet certification requirements. Distribution mech-anisms must have the capacity to make these seeds available to corporate and individual farmers through-out the country. To make the seed industry effective and efficient, the analysis suggests the creation of an independent agency to oversee improved seed pro-duction and or importation, and ensure that distribution mechanisms are able to supply high quality seed to all

94 Worldwide, the development and spread of modern plant varieties was the technolog-ical force behind the green revolutions that occurred in China, India, Southwest Asia, and many parts of Latin America (ECA-SA 2010).

95 Initiating extensive breeding and propagation programmes of high yield varieties of sorghum for food (rich in protein and other essentials), feed (high energy level cultivars) and also more suitable for other industrial uses as starch, medical alcohol, etc: In this respect, the breeding of dual-purpose sorghum varieties for food, fodder and feed grain is an important element in broadening the sorghum utilization base.

farmers. Such an agency may also be responsible for the formulation of a seed policy and appropriate laws and regulations related to the seed industry.

5.6.30 Credit Policies for Agriculture. As dis-cussed elsewhere in this Chapter and in Chapter 9, the availability of agricultural credit for farming operations and investment tends to favour large-scale farming op-erations, typically those with mechanised farming. As such, they discriminate against small farmers who are not able to use their land as collateral for loans. The discussion below provides a more detailed outline of what will be required to meet the future credit needs of the agriculture sector.

5.6.31 Monitoring and Evaluation. The quality and timeliness of Sudan’s agricultural statistics has been less than satisfactory. These shortcomings can result in the use of questionable data for policy design and pro-gramme implementation. Lack of reliable information about the ARP I programme on a state-by-state basis was found to be a major shortcoming for the ARP pro-gramme of 2008-11. In the ARP document, there were a few lines on monitoring and evaluation to ensure effi-ciency and effectiveness of the system, but there were major shortcomings in assessing the extent to which key objectives were being met at the field level and the reasons for the shortfalls in performance. In Sudan, as in most African countries, increased attention needs to be given to the development of reliable and timely information systems to enable effective strategic and development planning (AfDB 2010). A comprehensive monitoring and evaluation (M&E) programme needs to be put in place to provide information at the national and sub-national levels of government regarding prog-ress with programme implementation. This programme also needs to audit financial contributions by the vari-ous partners in the programme.

Implications for Growth of the Agricultural Sector

5.6.32 Successful implementation of the proposed programme would result in an improved growth perfor-mance for the agriculture sector in the medium-term. The growth in value added for the sector is projected to be about 4.1 percent a year during the 2013-20 pe-riod. This compares favourably with an average of 3.7 percent a year that was achieved in the 2000-13 peri-



od. In the 2020-30 period, the steady increase in pri-vate investment in agriculture would result in sustained growth of about 4.3 percent a year for the sector (Table 5.17).

5.6.33 The agriculture sector share of non-oil GDP would decline from the current level of about 34 per-cent to 29 percent by 2030. Value added per person in rural areas would increase from an average of US$911 in 2012 to about US$1,400 by 2030 (at 2012 con-stant prices). As Chapter 2 indicates, the broad-based programme of development for the rural communities throughout Sudan and sustained strong economic growth would also make an important contribution to the reduction of rural poverty in Sudan.

5.7 Programme Investment Requirements and Financing

Investment Requirements for the Programme

5.7.1 An important reference point related to esti-mates of development expenditures required for the proposed agriculture programme during the 2014-2030 period was the earlier-mentioned approximations for the ARP I programme. As noted, the programme called for development expenditures in agriculture that totalled SDG 10.1 billion during the 2008-11 period (at 2008 constant prices). On an annualised basis, this level of spending was equivalent to 2.1 percent of non-oil GDP in 2008, with the public sector component being equal to 1.0 percent of non-oil GDP and the private sector equal to 1.1 percent.

5.7.2 The proposed programme for the agriculture sector set out in this Report adopts a comparable ap-proach for the near-term regarding the pace at which both public and private development expenditures build up over time. Public and private investment expenditures in the agriculture sector are estimated at about 2.3 per-cent of non-oil GDP in 2012, increasing to 2.6 percent in 2013 (Table 5.18). For the purposes of this Report, it is assumed that implementation capacities and investment opportunities will build up steadily in the medium-term. In the indicative scenario proposed in this Report, in-vestment expenditures rise to 3 percent of non-oil GDP (the level assumed in the ARP) only by 2015. The pro-posed programme calls for a continued rise in the level

of investment expenditures to about 5 percent of non-oil GDP by 2020, and then average 4-5 percent during the 2021-2030 period. On this basis, the total investment cost of the programme for agriculture, forestry and fish-eries amounts to US$23 billion for the 2014-2020 period and US$61 billion for the years 2021-2030 (Table 5.19). Average levels of investment called for during the 2014-2020 period are therefore about US$3.3 billion a year and US$6.1 billion a year for the 2021-2030 period (at 2012 constant prices and exchange rate).

Public and Private Sources of Financing of the Programme

5.7.3 Financing the Public Investment Pro-gramme. The position taken in this Report is that the Government should consider mobilising a substantial amount of donor support for the public investment pro-gramme, with the balance of the required funding to come from the national budget and via Federal Govern-ment transfers to the state governments.

5.7.4 Potential sources of donor support include the aid agencies of the Arab Peninsula states, China and other trade partners in Asia, and the bilateral and mul-tilateral donors that are members of the Paris Club. For the purposes of this Report, it is assumed that ODA would account for 40 percent of the proposed public in-vestment plan for agriculture – equal to about 8 percent of the planned farming programme. As Table 5.19 indi-cates, this would require mobilisation of about US$7 bil-lion of ODA from these various sources during the 2014-2030 period. A programme of this magnitude translates to about US$6 of ODA per capita in 2015, rising to about US$12 per capita by 2030 (all at 2012 constant prices and exchange rate). The primary focus of the donor pro-grammes would be support for the following activities: (i) Loans for smallholder farms to finance on-farm capital improvements; (ii) development of domestic input indus-tries, including improved seeds; (iii) development of gov-ernment services, including research and extension; and (iv) a range of initiatives that support the development of domestic and international markets, including, for exam-ple, market information systems and application of tech-nical standards for agricultural products used as inputs in the domestic food and non-food agro-industries, and for those products sold in international markets.

5.7.5 The balance of the public funding in the amount


of US$10.4 billion would come from the National and state budgets. This funding by governments would ac-count for about 12 percent of the total investment pro-gramme for agriculture. These estimates of investment do not include recurrent costs of service provision by the government, including, for example, operating costs of extension, research and other public services that pro-vide direct support to the agriculture sector.

5.7.6 Sources of Funding for Private Investment. It is assumed that 25 percent of the private investment to be undertaken in the agriculture sector in the 2014-2030 period will be in the form of equity, with the bal-ance being financed by loans from various sources. As Table 5.19 indicates, the total equity contribution is put at about US$17 billion. Two types of funding would be used: (i) In-kind equity in the form of on-farm improve-ments provided by the labour of small-scale farmers; and (ii) in the case of medium and large-scale com-mercial farms, equity contributions would be in the form of activities funded with financial resources, either from the domestic market or via increased FDI invest-ment in the sector. Given the continued dominance of smallholder farms in Sudan in the decade ahead, it is likely that a significant portion of the on-farm capital improvements that are made during the 2014-2030 will be in-kind improvements, along with increased access to improved seeds and other inputs, and greater use of machinery (either farmer owned or services provided by contractors).

5.7.7 The debt financing requirements for private sector investment in agriculture are put at about US$50 billion for the 2014-2030 period at 2012 constant pric-es. The two obvious sources are the domestic com-mercial bank network and offshore sources of debt fi-nancing. There are substantive issues associated with the availability of funding from these two sources. In the case of the domestic banking system, the key issue is the capacity of commercial banks to mobilise the fund-ing required and to allocate it to the agriculture sector.

5.7.8 In 2009 and 2010, the level of the outstand-ing agricultural debt was quite stable at an average of 33 percent of value added by agriculture. If the ratio of the outstanding agriculture sector debt to value added were to increase to 40 percent in 2014-2030, the total commercial bank lending to agriculture would increase by about US$50 billion in this 17 year period – roughly

equal to the total amount of debt financing that will be required for the private sector investment programme in agriculture. However, a substantial portion of the fi-nancing by commercial banks will continue to be used to meet the working capital requirements of the farming community. The implication is that a large shortfall in domestic bank financing of private investment in ag-riculture may persist unless the government and pri-vate sector introduce innovative new programmes to address the problem. An in-depth assessment of these funding requirements for the agriculture sector is need-ed in the near-term to provide policy makers with op-tions for the diversification programme in agriculture.

5.7.9 The extent to which the agriculture sector can access commercial debt financing from offshore sourc-es also carries a number of uncertainties. Access to key parts of the international banking network will very likely continue to be severely restricted if the US and European sanctions remain in place for an extended period. The issue then is the extent to which the do-mestic agriculture sector may access loan financing from financial institutions of countries that have not im-posed sanctions on Sudan. One of the concerns here is the issue of foreign exchange risks associated with offshore borrowing to finance activities that generate income only in the local market. As the discussion in Chapter 3 indicates, exchange rate instability poses a serious risk for producers who do not export goods to overseas markets and thereby generate foreign ex-change earnings. Large commercial operations that are joint ventures with offshore investors, or are 100 percent foreign owned and are active in export mar-kets, are much less likely to face these types of financ-ing constraints.

5.7.10 Role of Foreign Direct Investment in the Agriculture Sector. Research studies have found that key objectives of international investment in Africa include food and bio-fuel production, areas in which Sudan has immense potential. A recent FAO study (2011) concluded that the nature of FDI in Sudan’s ag-riculture has been mostly resource-seeking in contrast to a more market-led focus in Egypt and Morocco.96 Resource-seeking foreign direct investments are typi-

96 Since independence in 1956, Sudan has undertaken a number of large investments in agricultural production, particularly in large plantation schemes and other related activities. Examples are the Sugar Schemes (Kenana, Assalaya, Guneid, Sinnar and New Halfa), Blue and White Nile Irrigated Schemes, and many others in Northern and River Nile states. Most of these projects were designed on a capital-intensive basis and characterised by long gestation periods. Financing these investments required access to term financing from capital markets and international donors.



cally oriented towards export of most or all of the out-put to the home country of the investor. This orientation eventually increases export volume and revenues of the host country, particularly when these products are sold in high-value markets (FAO 2010). However, it appears that in the past decade at least, the amount of FDI that has gone into the agriculture sector has been quite modest. 5.7.11 Given the current limitations on the capacity of the domestic financial market to provide substantial amounts of capital for long-term investments in agricul-tural production, there will be a need to attract larger amounts of FDI financing (both equity and related debt financing) for the proposed diversification programme. The indicative equity investment estimate in Table 5.19 suggests that about US$17 billion of private equity will be required for the proposed programme. Annex Table 3.2 submits that total FDI inflows to Sudan during the 2014-30 period will need to be in the range of US$60-70 billion (at 2012 constant prices and exchange rate). In this case, the agriculture sector requirements would be about one-quarter of the projected total FDI inflow.

5.7.12 In designing the strategy and programme for the promotion of investment opportunities in Sudan, the presentations to potential offshore investors will need to emphasise the importance of FDI investment for medium and large-scale commercial farming that also contracts small-scale farmers for the supply of ag-ricultural raw materials and products for processing. As a next step, additional work is now required to trans-late relevant components of the private investment programme for agriculture into specific investment projects and programmes that can then be put for-ward to potential offshore investors. Briefs for a series of projects for potential investment in irrigation, 97 on-farm and off-farm storage and processing of products, and other programmes need to be developed as a first step in mobilising international investment for the sec-tor. The government may need to retain a specialised international team that can assist with the preparation of these project proposals and then have the team pro-vide support in negotiations with potential international investors and associated institutions. Experience with these types of arrangements in other parts of the world suggests that the cost of these types of advisory ser-vices can typically be in the range of at least one per-cent of the capital value of the projects concerned.

97 For example, the foregoing discussion in this Chapter suggests that the area cultivated for cereals be expanded by about 1.2 million ha, a significant portion of which might be for irrigated production of cereals. Assuming an average capital cost of US$3,500 per hectare for new irrigation by, say, medium-scale commercial farming, mobilisation of US$1 billion for such activities would fund development of about 330,000 hectares of newly irrigated farm land.





6.1 Current Status of the Industrial Sector

Structure of the Industrial Sector in Sudan

6.1.1 For the purposes of this Report, the industrial sector of Sudan is defined to include petroleum and other mining activities, manufacturing, construction, and provision of electricity, water and gas services. As Table 6.1 indicates, for much of the 2000s, the oil in-dustry accounted for a substantial share of industrial value added, reaching a peak of 49 percent in 2008. The share of GDP (at factor cost) attributed to the non-oil industrial sector increased from 11.4 percent in 2000 to about 15 percent by the mid-2000s. As a result of strong growth in the non-oil mining sector and manufacturing, its share increased to about 17 percent in 2012 and 2013.

Structure of the Manufacturing Sector

6.1.2 The manufacturing sector of Sudan is among the oldest in Africa and the Middle East. As with other African countries, Sudan has had traditional handicraft industries for centuries. However, a modern industrial sector began in 1918 when a cement factory was built in Atbara. The 1940s witnessed the establishment of food processing and a few consumer industries, mainly vegetable oil extraction, matches and soaps. Also, a ginning factory started in Gezira. It experienced periods of intermittent expansion during the 1960s through the 1990s.

6.1.3 1960s, spinning and weaving mills and sugar

factories were established. The country then witnessed the establishment of a variety of industries. The sector has become diversified with agro-processing indus-tries, including textiles, sugar, oil seeds, vegetable and fruits, soft drinks, starch and glucose, leather products. Other important activities include the manufacture of cement, chemicals and pharmaceuticals. Food prod-ucts account for about 50 percent of total production, with beverages accounting for about 15 percent. Tex-tiles and clothing account for about four percent.

6.1.4 However, many industries in the sector suf-fered from deterioration in the past three decades. The discovery and export of oil in the last decade, together with federal/local taxation policies, led to investment disincentives, creating an unattractive environment for agro-based manufacturing. As a result, the sector has been described as inefficient and capital intensive, highly dependent on imported inputs and dominated by consumer goods. Capacity utilisation in a number of these industries fell from levels of 80 percent in 1970s to less than 10 percent, with much of this decline oc-curring in manufacturing units that processed primary agricultural products.

6.1.5 In the early 2000s, manufacturing activities ac-counted for more than 40 percent of industrial value added, but with the onset of the oil boom, the share declined rapidly to 26 percent by 2007. However, as a result of a strong growth performance in the past five years, the share of manufacturing in industrial value added increased to about 47 percent by 2013. By then, the share of manufacturing in GDP at factor cost had increased to almost 10 percent, compared with only 7 percent in 2000. Still, the contribution of the manu-

6. ACCELERATING INDUSTRIAL DEVELOPMENT



facturing sector to employment has been modest. In 2009, manufacturing activities employed about two percent of the labour force (with an estimated 238,400 workers) mostly in Khartoum region.98 The bulk of the industry is agro-based and involves processing of food and raw materials. The sector is dominated by small- and medium-sized firms. Recent surveys indicate that the private sector accounted for 84 percent of man-ufacturing establishments, more than 89 percent of gross output, and 50 percent of capital formation.

6.2 Status of the Food and Non-Food Agro-Industries

The Setting

6.2.1 Agro-industry is composed of both food and non-food processing enterprises.99 Agro-processing

98 These figures are estimates by authors based on information about the labour force of 11.92 million as indicated in the CIA Country Facts Book. This estimate of the labour force is larger than the estimate of 10.18 million used in this Report. UNIDO had esti-mated the workforce at 162,000 in 2001. (UNIDO, 2001).

99 The list includes enterprises in the production, processing and preservation of food

refers to the set of activities that make produce from agriculture, livestock, aquaculture and forests usable as food, feed, fibre, fuel or industrial raw materials (Kachru 2006). The industry depends mainly on raw material from food and non-food crops, vegetable and fruits, fisheries, forest trees and fodder crops. The sug-ar industry is the most well-known component in the agro-food industry in Sudan, along with the wheat flour milling, processing of bakery products, beverages, con-fectionaries, canned foods, processed seeds, fruits and vegetables, including jams, spices, and edible oils (Is-mail 2010). The industry has been operating well below its existing production capacity because of shortages of agricultural inputs, the high cost of spare parts and en-ergy, and the absence of efficient marketing chains/links between agriculture and manufacturing.

crops, fruits, vegetables, meat, and other meat products, including manufacturing of starches and starch products, and production of bakery products (Ismail 2010). Processing of dairy products and preservation of poultry, fish and fish products and animal feed are part and parcel of the list, besides beverages and cold drinks as co-coa, chocolates, and sugar confectionery.

Table 6.1: Structure of the Industrial Sector

Sector 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013

Value added (in million SDG at current prices)

Petroleum 2,303 6,461 9,478 10,122 16,655 9,621 15,654 9,248 8,095 8,962

Other mining 102 157 192 212 272 310 365 2,180 4,752 5,808

Manufacturing 2,276 7,322 8,042 8,782 9,726 11,508 13,673 16,285 21,677 26,101

Utilities 234 1,071 1,820 1,981 2,242 2,513 2,894 1,606 2,181 2,644

Construction 1,159 3,824 4,243 4,651 5,239 6,171 7,458 8,718 11,525 13,866

Total 6,073 18,835 23,774 25,748 34,135 30,123 40,044 38,037 48,230 57,381

Annual growth rate at constant prices (% p.a.)

Petroleum 264.7 11.7 9.1 50.0 (4.2) - (4.3) (16.3) (67.4) 33.3

Non-petroleum

Other mining 6.5 16.0 (33.8) (13.5) (12.1) (20.3) 95.5 58.7 215.7 36.0

Manufacturing 24.2 3.1 2.0 19.0 7.7 7.3 7.0 8.6 18.1 1.5

Utilities (17.8) 13.0 9.8 6.0 8.2 25.4 6.0 (5.4) 3.2 3.0

Construction (24.8) 19.9 5.5 8.4 16.7 4.5 13.9 (11.9) 5.8 2.0

Sub-total 7.7 7.4 3.3 14.8 9.3 9.0 8.5 2.8 15.9 2.6

Total 31.6 8.7 5.1 26.1 4.2 5.9 4.2 (3.0) (6.1) 5.4

Share of GDP at factor cost (%)

Petroleum 7.0 7.9 10.0 9.7 13.6 7.2 9.8 5.0 3.4 3.1

Non-petroleum

Other mining 0.3 0.2 0.2 0.2 0.2 0.2 0.2 1.2 2.0 2.0

Manufacturing 6.9 9.0 8.5 8.4 7.9 8.7 8.6 8.9 9.1 9.0

Utilities 0.7 1.3 1.9 1.9 1.8 1.9 1.8 0.9 0.9 0.9

Construction 3.5 4.7 4.5 4.4 4.3 4.6 4.7 4.8 4.8 4.8

Sub-total 11.4 15.1 15.1 14.9 14.3 15.4 15.3 15.7 16.8 16.8

Total 18.4 23.0 25.1 24.6 27.9 22.6 25.1 20.8 20.2 19.9



Status of the Food Sector

6.2.2 The food manufacturing sector is the largest in the country, with 70 percent of all manufacturing es-tablishments and accounts for almost 35 percent of large enterprises (Ismail 2010 and UNU-MERIT 2011: see also Annex 6). Until 2005, the sector accounted for about 72 percent of the manufacturing industry in Sudan, about 55 percent of value added by manu-facturing, and almost 57 percent of the labour force employed in manufacturing (MoI, 2005: see Annex 6). 100 The wheat flour industry is the largest in the sector. Production more than doubled from 0.62 million tons in 2000 to 1.3 million tons in 2004 (MoFNE, 2004 and CBoS 2010). It is currently about 2.1 million tons and is expected to reach 2.5 million metric tons by 2015 (Ismail 2010). There is a potentially large market for by-products of wheat, to be used as fodder by the poultry industry that is also rapidly growing. The number of enterprises

100 The food industry plays a vital role in transforming agricultural raw materials to usable industrial products. For a more detailed review of the contribution of the food industry sector, see Best and Placide (2006).

in the bakery industry is large, although they are mostly micro or small enterprises. According to the Commodity Inspection Service (CIS) company based in Khartoum, as early as 2003, there were 4,200 such establishments.

6.2.3 As the foregoing discussion indicates, the growth performance of the food industry in the past de-cade has been poor. As a result, imports of food prod-ucts and beverages have increased from about US$830 million in 2005 to a peak of US$2.4 billion in 2013, largely because of very rapid growth in imports of wheat, sugar, and animal and vegetable oils (Table 6.6). These three product groups accounted for 50 percent of food and beverage imports in 2005. By 2013, they accounted for 76 percent of these imports. At the same time, the growth in exports of processed food products and bev-erages has been very modest. As Table 6.9 indicates, exports of these products were less than US$50 million in 2013. As a result, the trade deficit in food and bever-ages increased from about US$790 million in 2005 to US$2.36 billion by 2013.

6.2.4 At the national level, the development of the food industry has been hampered by weak inter-linkag-es between agriculture and agro-industry, as well as lack of coordination in policy-making and programme imple-mentation, poor infrastructure, and inadequate supply of raw inputs due to the seasonality of supply of food raw materials. The food industry is becoming the most dy-namic and innovative sector in the global economy with the emergence of new food technology packages (Ismail 2010). The position taken in this Report is that there are substantial opportunities for expansion of domestic sup-plies that can replace imports, and in so doing lay the foundations for a subsequent large increase in exports of food products to the Gulf countries and Western Europe.

6.2.5 The output of biscuit industry increased to 52 thousand tons in 2009 and continued to expand to 69,000 metric tons by 2013. Dairy products showed an unprecedented increase over same period, from 7.5 thousand tons to almost 145 thousand tons. However, declines were experienced in the sweets and halva in-dustry from 38 thousand tons in 2009 to 26 thousand tons in 2010 (Table 6.2).

6.2.6 The edible oil milling industry has 250 process-ing plants all over the country dealing mainly with cotton seeds, sunflowers, sesame, groundnuts, and peanuts.

Table 6.2: Production of Manufactured Food

Product 2009 2010 2011 2012 2013

Production (in '000 tons)

Sugar 739 642 687 680 843

Flour 1,470 1,264 1,410 1,450 1,694

Sweets, biscuits 90 61 136 161 175

Juices 30 7 15 16 16

Jams 10 42 n.a. 55 n.a.

Tomato paste 5 5 21 12 n.a.

Dairy products 8 118 123 n.a n.a

Vegetable oils 155 163 110 159 210

Other products

Soft drinks (million cases)

73 528 698 720 882

Fresh water (million liters)

940 n.a n.a n.a n.a

Source: Central Bank of Sudan, various annual reports.

Table 6.3: Production of Cotton Industry

Activity 2000 2001 2002 2003 2004 Recent

Ginning ('000 tons)

8.0 5.5 5.5 3.3 3.8 3.0

Spinning (million yards)

35 22 15 15 20 59

Clothing (million pieces)

- 2.0 1.5 1.0 1.0 21

Source: MoFEP (2004), Economic Review, and Ministry of Industry.



It has an installed capacity for crushing 2.3 million tons of oil seed. Most of the plants have closed and even the few ones producing are operating below 15 percent of capacity due to the steep decline in oil seeds produc-tion. Sudan is now a net importer of edible oil. In 2010, mills used 1.5 million tons and operated at about 50-55 percent of design capacity. The quantity of oils produced from vegetable oils (sesame, sunflower, and groundnuts) has improved substantially from an average production of 110 thousand tons during the 2000-2004 period. By 2013, total production had increased to 210,000 metric tons. More than 90 percent of the vegetable oil plants are of micro- or small size, with medium and large enterpris-es accounting for only 1 percent of production. About 89 percent of the oil industry establishments have less than 10 workers per establishment (Ismail 2010).

6.2.7 The sugar industry is next to the oil seed in-dustry in terms of production capacity, with output of about 843,000 metric tons in 2013. Over half of this is produced by the private sector, namely Kenana Sugar Company. In the marmalades industry, production has fluctuated a lot, depending on the availability of raw ma-terials, prices and competitiveness with imports. Output almost doubled in 2002 (15 thousand tons) compared to 8 thousand tons in 2000, but it dropped back again to 5.5 thousand tons in 2004 (MoFNE, 2004), before ris-ing again to almost 10 thousand tons in 2008 (CBoS 2010). The sweeteners (Tahnia) industry has experi-enced a dramatic deterioration since 2000 because of strong competition of imports. In the case of vegetable oils, production declined from 65 thousand tons in 2000 to about 22 thousand tons, but then recovered to about 170 thousand tons in 2010. The soft drinks sub-sector is also growing very fast. Production reached 71 million cases in 2008, compared to 20 million in 2002 and then jumped to 544 million cases in 2010.

6.2.8 The meat industry is still at an infant stage. It has two frozen meat units with a capacity of 1,805 tons/year. The production of meat depends largely on meat prices, the types and quality of meat produced, together with other factors that determine consumer demand. During the 2001-2006 period, the price of red meat increased by an average of almost 10 percent a year. This was mainly for mutton and lamb meat for the export market. Despite the relative increase in demand for meat, poultry (meat and eggs) showed an annual de-cline of 2 percent and 4 percent respectively over the

same period.

6.2.9 In the case of dairy products, the estimated av-erage consumption of milk was 120 litres per year per capita in 2000, compared with 26 litres for Africa as a whole and 28 for East Africa in 1999 (FAOSTAT, 2000). Total milk production grew at 5 percent a year in 2001-2006 to meet the increasing demand (Annex 6). Recent statistics show that the total milk production in Sudan is estimated to 7.4 million tons/year (MoI, 2005: CBoS 2010) produced under both traditional and modern dairy farms. The modern dairy systems of the coun-try that use advanced preservation and pasteurisation technologies are considered to be large establishments since their labour force exceeds 100 employees per plant. However, the domestic milk industry, which has almost doubled its capacity since 2005, meets only 2 percent of potential demand for milk and milk products. Imports of dairy products increased rapidly in the past decade, rising from US$48 million in 2005 to a peak of $136 million in 2009, and then declining to about US$82 million in 2013. The high dependency of dairy products on imports reflects the lack of domestic man-ufacturing capacity. There were substantial increases in imported milk powder that resulted in negative terms of trade. This is because milk production is scattered and difficult to transport to processing plants.

Opportunities in the Non-Food Agro-Industry

6.2.10 There is a range of options for accelerating growth in the non-food agro-industry sector in Sudan. The sector includes clothing, textiles, footwear and leather, forestry products including paper, pulp and furniture. The structure and performance of non-food industry is variable, but in broad terms, its role and per-formance has been very weak. Many establishments have shut down because of high operating costs and lack of competitiveness in regional and world markets. The textile industry contributed about 2.8 percent of gross output, 2.6 percent of gross value added, and accounted for 5.3 percent of total labour in the manu-facturing sector (Ismail 2010). Table 6.3 shows perfor-mance of the sub-sector in both ginning and spinning of cotton in the 2000-2004 period. The ginning of cot-ton dropped from 8 thousand tons in 2000 to about 3.8 thousand tons in 2004 – a reduction of more than 53 percent. However, as a result of the large decline in the


area cultivated for cotton production, the prospect for replenishing the ginning clusters back to full capacity is uncertain. Farmers have abandoned production of the crop in almost every administrative block. Another consequence of the decline in this industry concerns exports. Sudan exported 1.2 million bales of cotton in 1984, but its cotton exports did not exceed 100,000 bales in 2013 or in 2014.

6.2.11 The ginning industry has had a weak perfor-mance, and is a matter of concern to the public sec-tor that almost entirely owns and operates the existing mills. The few private ginning enterprises that were in operation earlier in the 2000s are out of service. Cur-rent information at the Ministry of Industry shows a to-tal spinning capacity of 59 million yards, 300,000 tons of textile and 21 million pieces of ready-made clothes annually. As a result, imports of textiles and yarns have increased steadily in the past decade from about US$230 million in 2005 to US$300 million in 2013. The current situation calls for a move away from depen-dence on publically-owned plants that are not compet-itive in today’s market, to one in which the role of SMEs in ginning operations is promoted with cost-effective, good quality and timely operations.

6.2.12 The leather industry is composed of about 20 large, intermediate and small tanneries with a total de-sign capacity of about 15 million pieces of sheep and goat hide, and about 3 million pieces of cattle hide per year. The leather industry is also distinguished by high production of leather products, in particular leather shoes, which average 17 million pairs.

6.2.13 Production in the ethanol industry declined from 50 million litres in 2009 to 37.5 million litres in 2010. The reasons for the drop are not clear (Table 6.4). Fodder production increased by almost one-third from 2009 to 2010. Cur-

rent statistics are not available to verify these fodder trends, but the growing demand for poultry and animal feed is a potential opportunity for private investment in fodder production and baling. In contrast with many other African countries (Kenya, Uganda and Tanzania, for example), no flower export enterprises are in oper-ation. Moreover, there appear to be good opportuni-ties for production and export of aromatic and natural herbs and plants.

6.2.14 Very little attention has been given to the man-ufacture of gum arabic, a favourite commodity of the western world. Sudan used to enjoy an effective mo-nopoly in the 1970s, producing 85 percent of world production of the Hashab/Acacia variety. In 2013, an-nual production of gum arabic had increased to about 40,000 metric tons.

6.2.15 Over 95 percent of Sudan’s exports are either raw or semi-processed (pickled or mechanical pow-der). There are only two small factories producing spray-dried powder gum that enjoys a substantial price premium when compared to raw or semi-processed material. The major obstacles to the development of spray-dried powder gum include, among others, US and European economic sanctions, a monopoly by Eu-ropean manufacturers and unavailability of medium and long-term finance for the development of the industry. Local commercial short-term bank finance is available for the gum arabic trade, but very little, if any, has been made available for the development and promotion of the gum arabic production and related manufacturing. Moreover, producers are burdened by federal, state and local taxes that have encouraged smuggling and re-export through neighbouring countries. It would ap-pear that the growing international market demand for these products would justify increased efforts to devel-op this niche market.

6.2.16 With the rapid increase in export of live ani-mals to Middle East countries in recent years, the feed industry is also increasing in importance. However, available information shows poor performance in the feed industry. Of the 27 forage manufacturing plants, only 19 are currently working with annual production of 177 thousand tons, which comprises only 60 percent of the design capacity of these plants (MoAF, 2010). In addition, half of the 16 available milling plants are out of work and for various reasons. The remaining eight

Table 6.4: Production of Other Agro-Industrial Products

Product 2009 2010 2011 2012 2013

Ethanol (million liters) 50 37 39 33 67

Tobacco and cigarettes ('000 tons)

6 n.a. n.a n.a. n.a

Fodder ('000 tons) 250 340 n.a. n.a n.a.

Hides and skins (million pieces)

n.a. 10 18 n.a. n.a

Shoes (pairs) 5 n.a. n.a n.a. n.a

Source: Central Bank of Sudan, various annual reports.



milling plants produce 124 thousand tons, which is only 20 percent of their milling capacity. In 2009, the Syga, Wheata, and Seen milling plants produced 217 thousand tons, but they have had difficulty in obtaining supplies of wheat (Ibid, 2010).

6.2.17 Before the GIAD industrial complex, Sudan had no experience in manufacturing agricultural inputs, such as fertilizers, agricultural tools, machinery and equipment.101 In Sudan, the use of fertilizers is uncom-mon, except in irrigated agriculture. In rain-fed farming, chemical fertilizers are rarely used. However, imports of fertilizers have increased from a low of about US$40 million in 2006 to almost US$140 million in 2013. The discussion in Chapter 5 placed particular importance on the need to develop these agricultural input indus-tries with improvements in productivity and profitability. At this juncture, available information is not sufficient to help identify potential investment and business oppor-tunities, and related risks and challenges associated with these opportunities. However, in 2012-13, GIAD started partnerships and other initiatives to develop pri-vate business in agricultural inputs sector. These are to be promoted under Public-Private Partnership (PPP) arrangements.102

Domestic Agricultural Markets Are Not Well Developed

6.2.18 Sudan does not have well developed agricul-tural marketing systems to facilitate efficient distribution and marketing of products and related input services (in resource or factor markets). The salient features of crop and livestock marketing in Sudan are similar to those of many other African countries. These include poor infra-structure, technological, institutional, and macroeco-nomic policy impediments, along with sector-specific constraints (Ismail 2004.b). The general features of the agricultural markets in Sudan are as follows:• Wide geographical dispersion and spatially sep-

arated within areas that impede supply of inputs, product output and distribution of processed prod-ucts, i.e. market access for inputs and products is largely affected by the poor road infrastructure, leading to isolation of regions and limits on market

101 GIAD is a motor vehicle assembly group located in Sudan.102 The proposal is to develop these arrangements as joint ventures with River Nile State

in order to establish processing plants in collaboration with FRC and UNIDO. The ventures would address the factors that impede agricultural input use in that area and other similar areas and document best practices, lessons and challenges in fostering the agricultural input business development in the country.

integration, especially during the rainy season. • Seasonality of supply and market periodicity, i.e.,

markets that are held daily, weekly or seasonally after harvest. Seasonality and inter-annual varia-tions in production output, low productivity, lack of finance and other marketing bottlenecks also char-acterise the agricultural sector of the Sudan.

• Variability in quality of agricultural produce at mar-kets, together with low quality that restricts sales in domestic markets and export of produce to inter-national and regional markets.

• High level of perishability of products, since fruit and vegetable markets lack proper handling tools, grading systems and cold storage to extend the shelf life of these products.

• Most crop markets have no standardisation mea-sures (no scaling by weights and units), except for few cash crops.

6.2.19 The supply and value chains of most agricultur-al products can be judged as modest, where provision of inputs, particularly improved seeds, is lagging be-hind. The food production systems suffer from power supply problems and low quality produce due to lack of sorting, grading, packing and packaging material and equipment. Storage of perishable crops is confined to few markets, and does not cover all areas. Features of markets show spatial dispersions and transport, whether by trucking or railway, is often inefficient. Most crops are seasonal and rural markets are periodic with variable openings. These experiences suggest that Su-dan needs to have a value chain programme starting from agricultural inputs (seeds, fertilizers), crop selec-tion, production techniques to increase yield, address-ing issues related to insects, post-harvest handling, applied agricultural programmes that link farmers to government research, crop marketing, distribution, and interjection of produce into domestic and international markets.

6.2.20 There are various types of markets and mar-keting systems for different crops, including food-grains (sorghum, millet and wheat), oil seeds (sesame, ground-nuts, and sunflowers) and other cash crops (such as karkadey, watermelon seeds, guar, and gum arabic). Most crop markets adopt a direct sell system, except sesame and gum Arabic, which are sold on auction market basis (Ismail 2012.b). Livestock mar-kets, on the other hand, have their own periodicity and


selling pattern, but auction of live animals is unusual (Ismail, 2012.a). Market frequency, periodicity, market-ing costs, prices, and margins are important parame-ters that affect the improvement of market efficiency (Ismail 2004.b, 2010.b). Most fruit and vegetable mar-ket sales and purchases are by volume (heaps, sacks, dozen and tins) rather than per unit weight basis that is considered a disadvantage for information gathering and dissemination about market conditions and trends. All cereals are sold by the sack (90 kg sack), except sesame and gum arabic, which are sold on a kantar basis (one kantar=45kg=100 lb). Quality standardisa-tion measures are only used for exports, as there are neither efficient entities at locality/municipality level to plan nor financial capabilities to trace slaughter (Ismail 2004.b, 2010). 6.2.21 The main crop markets fall in the dry farming areas; Gedaref (Gedaref state), Damazin (Blue Nile state), Nyala (South Darfur) and El Obeid crop mar-kets (North Kordofan). These markets are the most re-nowned in the country, but they are characterised by

relatively poor information systems, lack of adequate records, and have poor experience in data collection and analysis (Ismail 2004.b, 2012.a, and 2012.b). The livestock, vegetables and fruits markets have similar characteristics. Despite the lack of information and oth-er drawbacks, the agricultural markets can be said to be fairly competitive. The number of buyers, sellers and traders is relatively large with an informal organisational set up (Ismail 2003). Strong market competition exists where large number of producers and limited number of buyers exist. Oligopoly, on the other hand, exists for oil seeds, gum arabic and some other cash crops (Ismail 2004.b, 2012.a, and 2012.b).

6.2.22 Domestic trade patterns vary by type of pro-duce and destination, and are largely affected by the trade services sector that is generally weak. The spa-tially differentiated regions with inadequate transport and storage facilities brought an inefficient domes-tic distribution system that is also critical for getting products to international markets and for developing backward linkages with agriculture, since improved lo-

Table 6.5: Summary of Sudan's Imports by Product Group, 2001-2014(In US$ million at current prices)

Product group 2001 2005 2010 2011 2012 2013 2014

Foodstuffs 416 811 2,366 1,888 2,049 2,372 2,248

Beverages and tobacco 14 43 77 68 60 76 96

Petroleum products 130 322 428 735 1,052 1,460 1,524

Raw materials

Agriculture - - - - - - 15

Other - 104 161 187 237 230 218

Sub-total 61 104 161 187 237 230 233

Chemicals

Agro-industrial - - - - - - 154

Other 160 494 968 1,063 797 912 769

Sub-total 160 494 968 1,063 797 912 923

Manufactures

Agro-industrial - - - - - - 507

Other 547 1,862 2,419 2,066 2,222 2,144 1,414

Sub-total 547 1,862 2,419 2,066 2,222 2,144 1,921

Capital goods

Machinery and equipment 551 1,972 2,349 2,323 1,771 1,713 1,543

Transport equipment 221 1,150 1,225 889 992 936 707

Sub-total 771 3,122 3,574 3,213 2,763 2,649 2,250

Other 202 - 52 16 37 65 17

Total 2,301 6,757 10,045 9,236 9,216 9,908 9,212

Memo items:

Non-oil imports 2,171 6,435 9,617 8,501 8,164 8,448 7,688

Agriculture products as % non-oil imports 19.8 13.3 25.4 23.0 25.8 29.0 39.3

Source: Central Bank of Sudan, Annual Reports & Foreign Trade Statistical Digests, various issues.



gistics and trade facilitation are essential to the devel-opment of backward linkages. International experience demonstrates that modern wholesale and retail sectors (restaurants, hotels, supermarkets, etc) and the tradi-tional wet markets are important channels for moving goods efficiently from the farm to the urban consumer (ADB 2008). In the case of Sudan, large supermarkets and leading hotels use imported fresh produce rath-er than depend on local markets because of concerns about product quality.

6.2.23 There are examples of well-defined quality management systems, including good manufacturing practices, that have been introduced by private sector enterprises involved in livestock, dairy and meat pro-cessing (Lolie, Gusie, Beledie, and Kaboo). While their products are processed for local consumption, they can meet regional and international market require-ments, only that price-wise, they may remain uncom-petitive in offshore markets. These examples are limited though. Most local markets are still in their infancy, and

are poorly structured and serviced. For the most part, retail markets are working at low quality standards, with poor packaging and packing.

6.2.24 A major effort is required to promote the devel-opment of domestic markets. Appropriate modalities for facilitating commercial linkages between farmers and supermarkets with products of good quality and af-fordable price will enhance local trade. A multi-pronged approach along the following lines will be required:• There is a clear need for increased emphasis on

transport and storage of agricultural crops, includ-ing perishable fruits and vegetables. Previous gov-ernment initiatives to support viable private sec-tor companies in the domain of agribusiness and agro-processing, including storage of agricultural crops that can promote exports and domestic ag-ricultural markets (input and output markets), have not been successful. Consideration should be giv-en to encourage the entry of offshore private inves-tors with experience in the provision of these types

Table 6.6: Imports of Foodstuffs, Beverages and Tobacco(US$ million at current prices cif)

Product 2004 2005 2010 2011 2012 2013 2014

Foodstuffs

Wheat 256 374 945 690 811 1,027 1,046

Wheat flour 2 10 32 21 25 15 36

Sugar 3 8 502 506 529 646 460

Tea 34 37 76 61 50 59 70

Coffee 32 26 38 36 36 38 34

Dairy products 28 48 103 90 90 82 58

Fish and canned fish 0 0 5 8 6 3 2

Meat and meat products 0 0 8 9 6 8 ..

Vegetables 10 13 62 39 61 63 68

Fruits 10 16 36 42 39 44 37

Confectionary, sweets and biscuits 10 17 30 18 16 17 21

Lentils 13 20 29 40 49 41 52

Animal & vegetable oils 21 33 152 148 154 149 213

Spices 4 6 7 6 7 8 11

Rice 9 12 30 26 24 24 30

Other 87 190 311 149 145 147 110

Sub-total 519 811 2,366 1,888 2,049 2,372 2,248

Beverages & tobacco

Softdrinks 24 22 41 25 25 27 33

Cigarettes & tobacco 16 21 36 44 35 49 63

Sub-total 40 43 77 68 60 76 96

Total food, drinks and tobacco 558 853 2,443 1,956 2,109 2,448 2,344

Source: Central Bank of Sudan, Annual Reports and Foreign Trade Statistical Digests, various issues.


of services, to enter the Sudan market under joint ventures or other types of arrangements.

• In addition, a revitalised initiative to develop the do-mestic markets should aim to encourage the pri-vate sector to invest in market facilitating services, including marketing information and research, advisory and extension services, and training for management and personnel. This would be further to the above-mentioned conventional investment in market facilities, such as storage and transport infrastructure. More training, coverage and intensi-ty is required on total quality management (TQM) and quality management systems (QMS) and their creation/adaptation.

6.2.25 Private investment in domestic distribution ser-vices is essential. It can be started by modern agribusi-ness models to improve distribution of perishable prod-ucts. The poor packaging and packing of food industry products is a major impediment to successful entry into regional and international markets. To overcome these limitations in the domestic packaging industry, efforts should be made to encourage the private sector to in-vest in the industry, particularly for food products. The alternative would be to create linkages with packaging firms outside the country. Such initiatives need to be complemented by increased emphasis on establishing and strengthening consultancy services that focus is on business processes.

Status of the Market Infrastructure

6.2.26 In general, domestic trade in Sudan lacks ade-quate laws and regulations on licensing and inspection functions. The existing framework does not encourage the private sector to invest in trade services relating to agriculture. Private sector investments in transport and storage are needed in order to improve efficiency of

domestic distribution as a key channel for supporting trade facilitation and exports, as well as develop more reliable backward linkages to agriculture. A Market In-formation System (MIS) was developed by SIFSIA N in the 2007-2012 period. However, at this early stage, the MIS has limited crop and geographical coverage and scope. It provides limited information on prices of cere-als, livestock and a few cash crops in selected markets, but other information, such as present and prospective supplies and stocks, remain outside the system’s cov-erage. Information is usually collected through separate studies that require frequent updating (Ismail 2004.b). This includes marketing costs and margins, institution-al arrangements (legal system, grades, weights, and measures); infrastructure (roads, warehouses, pro-cessing plants and vehicles); organisations and insti-tutions (government parastatal entities, privates firms, trade unions, municipals and councils); and entrepre-neurial activities (financial resources, stockholding and risk bearing).

6.2.27 Farmers’ and Traders’ Organisations. The various unions and associations of farmers, shepherds and traders play an important role in agriculture by strengthening and supporting the development of pro-ducer, commodity, location, and industry associations to mitigate production and market risks, and maximise business opportunities as well (Giovannucci 2001). Such associations have valuable roles in supporting joint action, networking among members, facilitating linkages with other enterprises and organisations, and enhancing participation in policy and planning. Other roles often performed by trade unions, particularly pro-ducer organisations, include strengthening farmers’ ca-pacities to understand and meet market requirements, and also assist small producers to achieve economies of scale by buying inputs and marketing their prod-

Table 6.7: Imports and Exports of Petroleum Products

2000 2001 2005 2010 2011 2012 2013 2014

Quantity ('000 mt)

Exports 523 639 468 473 292 263 108 172

Imports 495 350 623 522 750 865 1,294 n.a.

Value (US$ mill)

Exports 100 107 239 286 301 257 102 163

Imports 137 130 322 428 735 1,052 1,460 1,524

Net imports (37) (23) (83) (141) (434) (795) (1,358) (1,361)




ucts.103 Commodity and industry associations are par-ticularly important for improving sector coordination and for representing private sector interests in policy dialogue.

6.2.28 In practice, the overall performance can be con-sidered to be modest, as these organisations are unable to perform their role effectively. Some trade unions are not fully democratic. They are self-centred and oppor-tunistic. Even though, they tend to provide support to producer, commodity and industry associations to im-prove their effectiveness and competitiveness in provid-ing services to their members and enhance their viability and sustainability. Ismail (2004.b) showed that private institutions such as trade unions and chambers of com-merce are often organised in small commodity groups that serve its members at a limited geographical loca-tion. Their scope and function are somewhat limited.

103 An important element of the rationale for agribusiness development is to enhance market opportunities and increase services for farmers. However, as agribusiness and agro-industries develop, there are impacts on traditional farming and marketing systems. Rapid agro-industrial development can pose risks to small-scale farmers, traders, processors, wholesale markets and retailers.

6.2.29 Farmers’ organisations and their trade unions need to be strengthened to ensure that they have cur-rent information about market requirements and op-portunities, and that they can respond to new techno-logical advancements in the food and agro-process-ing industries. One of the challenges facing the trade unions of Sudanese farmers/producers is how to inte-grate the smallholders and large-scale producers into effective agriculture/agribusiness associations. The problem is that there is a lack of information on mem-bers, improper networking among and across associ-ations, and delicate solidarity with members of unions from other sub-sectors due to conflict of interest (Ismail 2004.b). Farmers typically make individual decisions on products to be supplied rather than look to collective decisions through their unions. This approach is not fa-voured by international procurers, who need stable and sufficient production to supply to the food industry and other agro-processors. The inability of these unions to organise farmers/producers into efficient associations or groupings and oblige them to produce consistently good quality products for both local and export mar-kets impedes their capacity to integrate and enrol into larger operations that meet international demand sus-tainably.104

6.3 Prospects for the Manufacturing Sector

6.3.1 As the foregoing discussion indicates, Sudan is endowed with a wide variety of crops, fruits and vege-tables, some of which have been used by the agro-pro-cessing sector to produce high quality products. Howev-er, much of this produce is sold in the domestic market at quality levels that are not internationally competitive. The importance of the manufacturing sector lies in its potential contribution to future growth based on much greater exploitation of the opportunities presented by the proposed increases in agricultural production as outlined in Chapter 5. Food processing, and textile and leather goods are all seen as having the potential to make a major contribution in both the domestic and export markets. However, there are also increasingly important opportunities in manufacturing that are un-related to agro-industrial production. As the discus-sion below indicates, a strong growth performance is expected for the construction industry in the decade

104 To improve the performance of the sector, the suggestion of Giovannucci (2001) was to organise farmers’ associations into multi-purpose unions that would be more suit-able than the prevailing sectoral “status quo”.

Table 6.8: Imports of Selected Products in 2013 and 2014 (US$ million)

Product 2013 2014

Consumer goods

Medicines 412 411

Electrical appliances 242 265

Ready made clothes 172 179

TVs, radios, recorders 98 78

Perfumes and cosmetics 97 91

Footwear 90 79

Refrigerators 37 29

Toys and sports goods 8 6

Sub-total 1,157 1,138

Manufactures

Manufactured plastics 226 172

Iron and steel 711 640

Jute and sacks 89 95

Paper products 141 117

Ceramics 53 46

Sub-total 1,219 1,070

Equipment

Cars, trucks and buses 524 373

Tractors 172 128

Tires and tubes 142 138

Auto spares parts 149 125

Sub-total 987 764

Total 3,363 2,972

% of non-oil imports 39.8 38.7

Source: Central Bank of Sudan.


ahead, driven by increased levels of public and private investment that, in turn, will result is sustained strong growth in demand for a wide range of construction ma-terials.105

Substantial Opportunities for Import Substitution

6.3.2 The most recent trade data for Sudan suggest that there were substantial opportunities for expansion of domestic capacities for supply of agricultural prod-ucts that could replace imports. Imports of foodstuffs and beverages have increased substantially in the past decade, and now account for almost 30 percent of to-tal non-oil imports. From about US$430 million in 2001,

105 Ricardo Hausmann and Bailey Klinger argue that both the oil industry and tropical and other raw materials require specific endowments and do not easily prepare the country to enter into production of other goods. By contrast, light manufactures, electronics and capital goods tend to involve skills and assets that are much closer to those required by other industries, and hence facilitate the transition from one product to another.

these imports increased fourfold to about US$2,450 mil-lion in 2013 (Table 6.6). Wheat and wheat flour account-ed for about 40 percent of the increase, along with sugar and animal/vegetable oils that also accounted for about 40 percent (Table 2.11). There has also been substan-tial growth in a wide range of agricultural commodities, including dairy products, fruits and vegetables, which accounted for about 8 percent of the increase. Imports of goods for the agricultural and agro-industrial sector stood at about US$570 million in 2001. By 2013, im-ports of these products had increased to about US$3.2 billion – equivalent to 38 percent of total non-oil imports, compared to the 26 percent that prevailed in 2001.

6.3.3 The position taken in this Report is that consid-eration be given to a broad-based programme of sup-port aimed at promoting private investment in the food and beverage industry supply chains with the objective of providing domestic supplies of products that can com-

Table 6.9: Exports of Agricultural, Animal and Agro-Industrial Manufactured Products (US$ million at current prices fob)

Product 2004 2005 2010 2011 2012 2013 2014

Agricultural products

Sesame 179 119 167 231 224 472 466

Gum arabic 61 108 24 81 67 135 97

Cotton 94 107 34 27 12 103 34

Sorghum 3 0 0 26 14 78 6

Hibiscus flowers 30 15 7 18 14 17 18

Fruits and vegetables 37

Other 18 15 4 14 16 52 81

Sub-total 384 364 237 397 346 857 739

Animal products

Sheep and lambs 119 95 116 250 286 477 550

Camels 16 16 13 41 62 98 208

Other live animals 3 3 8 14 24 18 35

Meat 18 18 44 18 38 16 20

Hides and skins 26 22 14 40 37 73 44

Other 2 1 - - - - -

Sub-total 184 155 193 363 447 681 857

Manufactures

Groundnut & sesame oils 1 2 - - - 14 3

Sugar and molasses 20 25 - 15 3 7 6

Other 2 0 2 4 4 65 78

Sub-total 23 27 2 19 7 86 87

Total 592 546 432 779 800 1,625 1,683

Memo items:

Total non-oil exports 607 637 1,712 2,384 3,112 3,073 3,096

Sub-total as % of non-oil exports 97.5 85.8 25.3 32.7 25.7 52.9 54.4

Source: Central Bank of Sudan, Annual Reports & Foreign Trade Statistical Digests, various issues.



pete effectively with these imports. Success for farmers and manufacturers in the domestic food and non-food agricultural market can then provide a platform for suc-cess in the international market.

6.3.4 In the case of products unrelated to food and non-food agro-industrial production, there appear to be a growing number of opportunities for expansion of domestic manufacturing activities. In addition, there appears to be a strong case for expansion of domes-tic manufacture of petroleum products. Net imports of these products have expanded rapidly, especially since the secession of South Sudan. By 2013 and 2014, the value of net imports stood at US$1.36 billion (Table 6.7). As the discussion in Chapter 7 indi-cates, with continued strong growth in domestic de-mand, exports of these products are likely to come to an end in the next five years. According to Table 7.6, domestic consumption of these products is projected to increase from about 4.3 million mt in 2013 to about 11 million mt by 2030. The domestic industry current-ly supplies about 3.5 million mt a year. To meet this growth in demand, a substantial increase in the capac-ity of the domestic refining industry will be required.

6.3.5 Other opportunities for domestic manufac-tures of non-agriculture products include construction materials of various kinds, a range of consumer goods unrelated to agriculture, and local assembly and or pro-duction of specific types of capital goods linked to the domestic consumer market. Table 6.8 provides a list of illustrative group of products that were imported in 2013 and 2014. It includes about US$1.1 billion worth of consumer goods and another US$1.1 billion worth of various manufactures. In addition, there was about US$1 billion worth of imports of transport equipment, tractors and related parts and supplies in 2013. More analysis needs to be undertaken to assess the eco-nomic and financial attractiveness of these various op-portunities for additional private sector investment. In a number of cases, there may be scope for establishing joint ventures with offshore business groups to under-take local manufacture of products and assembly of transport equipment with some degree of local content used (for example, paint, tires and tubes, etc.). Such an assessment also needs to look at the opportuni-ties for export of these products to landlocked neigh-bouring countries (South Sudan, Uganda and Chad), as well as the prospects for strong competition from

other international suppliers of these products. As part of this promotional initiative, international investment promotion conferences could then be organised by the government in various countries, including those in the Middle East, China, and other states that do not im-pose economic sanctions on Sudan.

Programmes for Export Promotion

6.3.6 The contribution of agriculture-related exports to the Sudanese economy is modest, and their growth performance in the past decade has been mixed. As Table 6.9 indicates, in 2005 exports of agricultural, animal and related manufactures accounted for 86 percent of total non-oil exports. However, the value of these exports declined from a peak of almost US$600 million in 2004 to US$380 million by 2007. By 2008, the share of these products in total non-oil exports had declined to about 73 percent. Since 2010, there has been an impressive recovery of agriculture-related ex-ports to US$1.6 billion in 2013 and US$1.7 billion in 2014. However, with the rapid increase in gold exports in recent years, the above-mentioned agriculture and related products still accounted for only a little more than half of total non-oil exports of US$3.1 billion in 2013 and about 54 percent in 2014.

6.3.7 The recent large increase in exports of these agriculture-related products has been driven primarily by sesame, gum arabic, cotton and sorghum, and by livestock products (exports of live animals, especially sheep, lambs and camels). Exports of agro-industrial manufactures have played a minimal role in the past decade. In the mid-2000s, they accounted for about 5 percent of the total exports of agriculture-related products, but have now declined to less than 2 percent of the total. A large share of Sudan’s agricultural ex-ports goes to the countries of the Arabian Peninsula, in particular the United Arab Emirates and Saudi Arabia, whereas exports of these products to the other mem-ber countries of COMESA are quite limited. In 2013, only about 6 percent of the agricultural product exports went to the other member countries. Reform of cus-toms and duties procedures and loosening of admin-istrative burdens would very likely make it easier for agro-industry manufacturers to export their products and import goods from neighbouring COMESA coun-tries.


6.3.8 Despite the potential market avenues Sudan has in the arena of international and regional trade with neighbouring countries (particularly the above-men-tioned three landlocked countries), the growth and diversification of exports is constrained by a number of shortcomings. The volume of trade of agricultural commodities is extremely variable and frequently af-fected by government policy, the exchange rate, and other factors. The latter include poor product quality, seasonal and unreliable supply of agricultural produce, inefficient transport and logistics, technical barriers to trade, and burdensome export procedures. Moreover, the Sudanese business community has limited access to market information about the regional and interna-tional supply and demand situation. Because of poor packaging and packing capacities within the domes-tic industry, Sudan’s agro-industry is unable to meet regional and international product standards. There is a lack of awareness within the domestic business community about these quality standards. As a re-sult, Sudanese products cannot compete effectively in world markets. The Sudanese Standards and Metrol-ogy Organisation (SSMO) is making efforts to address these shortcomings with regular training workshops on grades and standards applicable to local, regional and international markets, but these programmes need to be expanded.

An Action Programme for Agricultural Related Business

6.3.9 Challenges for diversification in agri-busi-ness and agro-industry. As the foregoing analysis in-dicates, despite its potential significance to the national economy, the agro-industrial sector is underdeveloped and has largely remained without significant institutional, technical and financial support. The development of the agro-industry sector in the Sudan should be an integral part of the overall development of the agriculture and manufacturing sectors. With well-designed policies and programmes, agri-business and agro-industry, including large enterprises and SMEs, can play a pivotal role in the expansion and diversification of the agricultural sector. Lambert identified the role of agro-processing in reduc-ing the seasonality of supply and also consumption of a range of processed foods, and in increasing the viabili-ty, profitability and sustainability of production systems through their positive impact on farm incomes, rural em-ployment and foreign exchange earnings. Additionally, they reduce marketing risks (Lambert 2001).

6.3.10 Agro-industrial processing that transforms pri-mary agricultural products to usable food and non-food products, adds value to them by vertically integrating primary production and food processing systems and minimises post-harvest losses, faces tremendous chal-lenges, as is the case with the agriculture sector itself. As mentioned earlier, good management and business organisation, adequate finance and market avenues are key determinants of success in agro-industry. Promotion and advertising are, of course, essential for international competition. This calls for increased capacities within the business community for regular assessments of con-sumer preferences through market research to speed up the pace of development of the industry.

6.3.11 The problem of seasonality of supply. One of the most serious problems in the industry has been the seasonality of the supply of agricultural raw materials. This has had an adverse impact on the prospects for pri-vate investment in product development and processing facilities. For some agro-processing industries such as mango and tomato, the availability of suitable and ade-quate indigenous raw material determines the prospects for large-scale processing. Most of the commonly known fruits, such as pumpkins, aradeeb (tamarindus indicus) and gungulais have been used in jams and production

Table 6.10: Production of Miningand Related Products (in tons)

Commodity 2012 2013

Gold 45 70

Silver 16 n.a.

Chromite 18,300 30,870

Copper 25 n.a.

Manganese n.a. 3,250

Kaolin 11,579 26,000

Gypsum 117,073 132,000

Salt 26,315 20,800

Mica 324 500

Marble (m³) 115 1,000

Clinker ('000) 2,885 3,200

Iron 96,400 339,390

Fluorspar 26,283 31,700

Talc 60 n.a.

Fluorite 950 n.a.

Source: Ministry of Minerals, andCentral Bank of Sudan.



of fruits nectars and drinks respectively. However, their availability in large quantities for large processing is un-certain. Other commonly known materials include herbs, spices and vegetables (okra and Jews mellow), but quantities for a viable agro-processing industry through-out the year cannot be sustained. Typical examples are mango fruits and vegetables produced in Jabel Marra Mountains (West Darfur), Abu Gebeiha (South Kordofan) and Giessan of the Blue Nile, where harvest could not be transported to processing sites during the rainy season because of poor road infrastructure.

6.3.12 A comprehensive approach to solving the problem is required. It should include, for example, fur-ther development of infrastructure, increasing access to improved seed varieties, and having processing plants near the supply regions. Attention should be given to the promotion and organisation of domestic production to supply raw material for the development of the agro-in-dustry sector through a clear policy framework that focus on the production and utilisation of these commodities. The question of seasonality of supply of raw materials for processing throughout the year can be solved through applied research aimed at developing know-how for bet-ter processes for the utilisation of indigenous products, and through improved storage facilities for crops that are seasonal.

6.3.13 Product standards and packaging technol-ogies. Little attention has been given to the importance of such factors as standards, quality control, packaging and product presentation. Low levels of packaging tech-nology associated with inappropriate packaging mate-rials and high packaging costs have hampered devel-opment of the industry. Action on these issues requires that agro-processors be aware of market requirements in order for their products to be competitive with imports. In order to compete in price and quality, they have to de-velop strict parameters that include sourcing out for rel-evant technologies and upgrading packaging standards and equipment.

6.3.14 Research and technical support for agro-industrial development. Problem solving ap-plied research, technology adoption/development and technical support as incubation by research institutes/universities are key drivers for agro-industrial develop-ment. The process of making jams, biscuits, dry vege-tables and fruit nectars, including other beverages, has been well established by the Food Research Centre (FRC) of Sudan since the early Seventies. 106 However, the technology used in the small-scale processing sector has remained relatively static and traditional. The slow pace of technology adoption by the agro-industry sec-tor stems from a combination of factors. They include low utilisation of research innovations/technology, lack of finance, lack of well-trained cadres, and inadequate technical and managerial and marketing support.

6.3.15 With some policy reforms and improved sup-port services, the agro-processing sector can absorb and utilise fully, the technological packages and services provided by Food Research Centre and other research and development institutions. These institutions can ap-ply science-based approaches to the industry and also help set standards in the processing of food products that will open up opportunities for national, regional and international trade. Such examples are “instant nasha”, developed by Sit El Nafar and Lila Munaoor of the FRC in the 1970’s, and “composite flour” in 1979.

6.3.16 Inappropriate or obsolete processing and ancillary equipment, the use of which is often sub-optimal. The non-food agro-industry processing plants, both private and public, have experienced de-clining growth that has stemmed from underinvestment, high operating costs and management inefficiencies. In the case of the textile and ginning industries, and the production of leather and hides, the adoption of the most appropriate and current technology is lagging be-cause of lack of capital and appropriate management. These problems are exacerbated in the case of SME agri-business, as owners typically do not have access to sufficient financial resources or reliable credit facilities to

106 The Food Research Centre (FRC) is the cornerstone in any agro-industrial/food pro-cessing development programme in the country. It conducts research on food and provides research services on food to the industry. FRC assists in training food indus-try personnel from both the public and private sector. The centre involves more than 60 researchers from junior to senior scientists, and has disseminated hundreds of in-novations, techniques and uses of indigenous food products. With this huge potential, both public and private sector entrepreneurs in food processing can liaise with FRC to develop the food industry in areas of basic principles of food/nutrition and applied food research in processing, hygiene and sanitation, quality assurance and standards, product development as well as food microbiology, labelling and packaging.

Table 6.11: Quantity and Value of Gold Exports

Indicator 2010 2011 2012 2013 2014

Amount (in mt) 30.0 34.0 44.5 70.0 30.4

Value (US$ million) 1,018 1,450 2,158 1,048 1,271

Average price per ton (US$ mill)

34 43 48 15 42

Source: Central Bank of Sudan, Annual Reports, various issues.


enable them to invest in new processes, skilled human resource, better management and technological innova-tions.

6.3.17 Other factors that have contributed to un-derdevelopment of the industry. In addition to the above-mentioned problems of standards and packaging and seasonality of supply, a number of other obstacles have hampered the development of agro-industry in Su-dan.• Agricultural input and product markets are gener-

ally not well developed. As a result, they do not enhance the leverage of the agribusiness and the agro-industrial sectors.

• The poor quality of raw material supplied. They may either be genetically poor or gathered from various sources/areas with inconsistent quality. There is also a general lack of proper hygiene and sanita-tion practices that meet international standards.

• The poor road condition and lack of cold storage facilities lead to high losses during transport from farm to processing plants/factories.

• Manpower of the agro-industry sector is poor-ly trained. Qualified food technologists are either lacking or are high cost.

• Lack of technical support for the agro-industrial sector (incubation, capacity building, and incentive support) as well as absence of good management of the processing facilities.107

6.3.18 Accelerating development of the food in-dustry. A review of options for the food industry under-taken for this Report suggests that further development of a number of value chains based on increased private investment would contribute substantially to sustained

107 Incubation is meant for start-up agribusiness companies and also facilitation of net-working among business entrepreneurs. More important, however, is the elimination of bureaucratic obstacles to start-up businesses.

strong growth in the decade ahead. The key value chains are as follows:• Bakeries and wheat-based products manufactur-

ing (wheat flour, macaroni, spaghetti, and biscuit manufacturing);

• Dairy products (yoghurt, cheese, and butter, etc.);• Edible oil production and processing;• Fresh fruit and vegetable processing (marmalade,

tomato paste, and tomato juice);• Dried fruits and vegetables production and pro-

cessing;• Meat processing and exporting (frozen, chilled and

perhaps canned products); and• Processing of forest products (fruits as aradeb,

gonglius, gudaeim, including gum arabic.

6.3.19 Further development of the non-food agro-industrial sector. A comparable review of options for the non-food industry suggests that further develop-ment of a number of value chains based on increased private investment would contribute substantially to sus-tained strong growth in the decade ahead. The key value chains are as follows:• Textiles;• Ginning and spinning industry as well as yarn dye-

ing, weaving and knitting;• Clothing, including a wide range of garments, trou-

sers and shirts;• Leather and skin tanning (tannery industry) pro-

cessing and leather goods; and• Shoes and other footwear.New market opportunities were identified in the areas of packaging facilities that produced packing material for agricultural and other exportable products, compa-rable to international specifications and standards.

6.3.20 There will be a need for selectivity in the de-

Table 6.12: Increase in Supply of Cement and Other Construction Materials, 2001-2013(In '000 metric tons)

Indicator 2001 2005 2006 2007 2008 2009 2010 2011 2012 2013

Cement

Production 190 331 202 326 247 622 2,113 2,905 2,922

Imports 1,144 915 837 1,127 1,115 1,103 173 28 44

Total supply 1,475 1,118 1,163 1,373 1,737 3,216 2,933 2,966

Import of other materials

Iron and steel 2,658 804 752 668 830 990 760 788 727

Ceramics 67 99 101 99 100 101 105 111 127

Total imports 3,869 1,818 1,691 1,893 2,045 2,194 1,038 927 898

Source: Central Bank of Sudan, Annual Report, various issues.



velopment of these various opportunities. The position taken in this Report is that the best opportunities for the medium-term are in value chains linked to the sup-ply of foods, and in selected areas of production in the non-food agricultural industries. To ensure success of private sector agro-industry development, incubation services need to be part and parcel of the investment costs until value chains get mature for both domestic and international distribution. For example, the availabil-ity of livestock products for processing, such as leather hide and skin, is adequate, but the quality of finishing is lagging.

6.4 Prospects for Other Industrial Sectors

Gold and Other Mining Activities

6.4.1 As noted in Chapter 2, Sudan has an extensive mineral base that can provide a range of raw materials

for the manufacture of products for both the domestic market and export. Mining activity in Sudan was start-ed by the ancient Kushite Kingdom along the Nile valley in the 18th century, when the common perception was that the kingdom was rich in mineral wealth. The Nu-bian Sudanese were famous as great miners. In fact, the word “Nubia” was used to mean Gold land. One of the main objectives of the Egyptian/Turkish invasion of Sudan at the time was the search for gold. The Geo-logical Research Authority of the Sudan (GRAS) was established in 1905 as the main technical arm of the ruling Government. In 2010, the Ministry of Minerals was established and GRAS continued to be the techni-cal arm of the Ministry. In 2011, the Sudan Government reactivated the Joint Exploitation Agreement with the Saudi Ministry of Minerals, signed in 1980.

6.4.2 Table 6.10 includes recent production data for 2012 and 2013 as reported by the Ministry of Miner-als and the Central Bank of Sudan. Over the past five

Table 6.13: Projected Growth in Industrial Sectors Under Moderate Growth Scenario

Sector Actual/estimate Projection

2012 2013 2014 2015 2020 2025 2030

Value added (SDG millions at 2012 constant prices

Mining (excl. oil) 4,752 6,226 6,849 7,396 10,471 14,686 20,598

Manufactures 21,677 21,288 22,991 24,830 36,484 56,135 86,371

Construction 11,525 11,547 11,893 12,488 18,687 29,687 45,677

Utilities 2,181 2,204 2,303 2,430 3,424 5,031 7,392

Total 40,135 41,265 44,036 47,145 69,066 105,539 160,037

Annual growth rate (% p.a.)

Mining (excl. oil) 215.7 36.0 10.0 8.0 7.0 7.0 7.0

Manufactures 18.1 1.5 8.0 8.0 8.0 9.0 9.0

Construction 5.8 2.0 3.0 5.0 10.0 9.0 9.0

Utilities 3.2 3.0 4.5 5.5 8.0 8.0 8.0

Total 15.9 2.6 6.7 7.1 8.4 8.7 8.7

Composition (% of total industry value added)

Mining (excl. oil) 11.8 15.1 15.6 15.7 15.2 13.9 12.9

Manufactures 54.0 51.6 52.2 52.7 52.8 53.2 54.0

Construction 28.7 28.0 27.0 26.5 27.1 28.1 28.5

Utilities 5.4 5.3 5.2 5.2 5.0 4.8 4.6

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Total fixed investment

ICOR 3.0 3.1 3.2 3.5 3.8 3.8

Investment (SDG mill) 7,250 3,390 8,591 9,947 18,690 31,995 48,633

Investment (US$ mill) 2,029 949 2,404 2,784 5,231 8,955 13,611

Investment as % GDP 3.0 1.3 3.3 3.7 5.5 7.2 8.2

GDP (SDG million) 243,413 252,326 261,898 272,441 341,444 445,523 591,036

Exchange rate 3.573 3.573 3.573 3.573 3.573 3.573 3.573

Source: Annex Table 3.5


years, the contribution of the mining sector (mainly gold) to Sudan exports and GDP has increased substantial-ly. The areas covered in Sudan, include North Eastern, North/Central, South/Central, West/South Darfur. Ar-senal mining covers (81) plots scattered in at least 14 States with 501 companies and a labour force of more than half a million people. Miners use primitive mining techniques, starting with surface metal detectors, and use mercury with all its negative environmental impact and health hazards to the miners-themselves.108 A re-cent study has shown that sand/rock leftovers of arse-nal/traditional mining contain sizeable amounts of gold. Extraction of gold from these leftovers would reduce the environmental impact of the use of mercury.

6.4.3 In an effort to boost gold export revenues, the government opened the first gold refinery in 2012-13 (using Italian technology) with an annual capacity of 150 tons of refined gold and 30 tons of silver. This represents a forward step in the value-added chain for manufacturing. The main destination for gold exports is United Arab Emirates (UAE). However, realising the full value added benefits of gold refining must await recog-nition of the refinery by the London Bullion Market As-sociation, the international official body that certifies the purity of refined gold. Given the US and European eco-nomic sanctions, this will take some time to achieve. In the interim, Sudan gold sells at discount from inter-national gold prices. In 2012, the Central Bank of Su-dan became the official sole local buyer and exporter of gold.

6.4.4 However, because of the vast borders of Su-dan, some traditional miners and traders smuggle gold out of the country. Table 6.11 reports proceeds from official gold exports for the 2010-2013 period. Modern technology is very much needed in the gold industry at this stage. Efforts should therefore be made to encour-age the Sudan private sector to cooperate with/attract the major international mining groups from Europe, Australia and South Africa.

6.4.5 In addition, a range of other initiatives should be considered for further development of the industry. These include the following:

• Review and amend the Mineral Resources De-

108 Because of the negative health and environmental impact of mercury, the International Mercury Usage Declaration of 2013 calls for a reduction in the use of mercury in mining to 50 percent by 2013 and to zero by 2017.

velopment Act of 2007 and Precious Metal Act of 2008, to accommodate new developments in investment, organise arsenal/ traditional mining, and take into consideration environmental/health issues.

• Establish modern laboratory facilities in the various states under supervision of Standard and Metal-lurgy Department. In addition, the Standards and Metallurgy Department should set standards for all commodities, machinery, equipment, chemi-cals and other materials used in mining or refin-ing processes, with the ultimate objective of pro-tecting the environment, reducing health hazards and maximising returns. This should be carried in close association with the Ministry of Environment, Higher Council for Environment, United Nations In-dustrial Development Organisation (UNIDO) Arab Industrial Mining Organisation and East/Southern Africa Mining Centre.

• Capacity building through intensive training of Sudanese personnel in areas of remote sensing and the Geographical Information System. Given the vast scattered mining areas, this is very much needed to minimise costs, maximise returns and save time and effort. The focus should be on achieving safe and environmentally responsible mining processes.

• Another initiative that has been put forward, per-haps controversial, proposes an amendment to the 2005 National Constitution captions on land allocation and taxes that in effect transfers owner-ship of the mineral resources from state and local authorities to the Federal Government. The stated objective of this proposal is to avoid conflicts with state authorities and among local authorities, pop-ulations and private investors.

6.4.6 As Table 6.1 indicates, the non-oil minerals sub-sector has made a substantial contribution to the growth of the economy in recent years, with its share of GDP increasing from an average of 0.2 percent through-out the past decade, to 2.4 percent in 2013. The rapid growth in recent years has been driven by large increas-es in gold production, raw materials for cement produc-tion that increased from 0.25 million mt in 2008 to 2.92 million tons in 2013, and a range of other minerals. For the purposes of this report, it is assumed that the non-oil mining and quarrying will increase by an average of 7-8 percent a year during 2015-30 (Table 6.13).



Construction Industry

6.4.7 The construction industry has not been a lead sector in promoting economic expansion in Sudan in the past decade. As Table 6.1 indicates, construction currently accounts for about 4.8 percent of the GDP of Sudan. This compares with an average of about 4 percent during the 2000-2010 period. The growth in construction value added this period averaged about 8 percent a year in real terms, but the pace of expansion was volatile, reflecting significant changes in the level of investment spending in the economy. Since the se-cession of Sudan in 2011, the growth in construction declined from 10 percent in 2011 to 2 percent in 2013.

6.4.8 The growth in the supply of construction-re-lated products such as cement, asphalt, lumber, roof-ing materials, metallic structures, ceramics and various other products have also grown at about the same rate as construction activities. With the exception of cement and some building materials, a substantial part of the products required for the construction industry have been imported.

6.4.9 As Table 6.12 indicates, overall demand for cement has increased appreciably in the past decade. Total consumption increased from an average of about 1.1 million tons a year in the mid-2000s to an average of 2.95 million tons a year in the 2012-2013 period. In the mid-2000s, imports of cement accounted for about 80 percent of total supply, but as a result of substantial additional investment in the domestic industry, Sudan has all but eliminated imports of cement since 2010. There are now seven cement plants in operation in Su-dan with a total installed capacity of seven million tons. Five of the seven plants are new and started produc-tion in 2009/2010. Private investors hold a majority of the equity in all seven of these plants, with more than 60 percent of this equity coming from offshore private investment. Two of the plants are owned completely by Arab private investors. Most of the recent investors in this industry were targeting the markets of neigh-bouring landlocked countries in addition to meeting the demand in Sudan. In 2014, for the first time, Sudan exported 125 thousand tons of cement that generated US$12 million in foreign exchange earnings. Informal reports indicate that had it not been for the security situation in Western/Southern Sudan, higher levels of capacity utilisation and exports could have been

achieved. When the National Transport Plan (2010) was prepared, the expectations were for a very rapid increase in cement exports to about 10 million tons a year by 2020.

6.4.10 The projected growth of the construction indus-try is linked to the projected levels of fixed investment in the economy. It is assumed that the weak growth of the sector will continue through 2015 because of the ongoing macroeconomic stabilisation programme that has constrained public investment and increased un-certainties for private investment. With a successful re-turn to macroeconomic stability in 2016, it is assumed that public and private investment will increase steadily to about 21 percent of GDP by 2020 from about 18 percent in 2013. In the 2020s, fixed investment is pro-jected to grow in line with GDP at about 6 percent a year. The implication is that the construction industry would grow at a similar rate.

Utilities

6.4.11 The Sudan utilities industry that supplies elec-tricity, water and gas is quite small. As Table 6.1 indi-cates, the utility industry accounts for about 1 percent of GDP. There has been a substantial increase in sup-ply of these services, largely as a result of increased investment in the power sector since the mid-2000s. Chapter 8 provides a more detailed discussion of the developments in this sector in the past decade, and the prospects for expansion in the decade ahead. As Table 8.13 indicates, the consumption of electric power is projected to grow at about 12 percent a year during the 2013-2030 period, while the number of household connections to improved water and sanitation is pro-jected to grow at about 7 percent a year in the same period. If these proposed expansion plans for power and water are realised, the growth in value added by the utilities sector would increase to about 8 percent a year in the medium-term and remain at that level during the 2020s.

6.5 Growth Prospects for the Industrial Sector

6.5.1 With a broad-based programme of reforms over the next 3 to 5 years to improve the operating environment for private sector investment in mining


and manufacturing along the lines outlined in Chapter 4, and an aggressive programme to address the wide range of supply constraints associated with production of agricultural raw materials as discussed in Chapter 5, the foundations would be laid for the emergence of a period of sustained strong industrial growth in Sudan in the next decade.

6.5.2 Table 6.13 provides a summary of the pro-jected growth performance of the industrial sector for the 2014-2030 period. As discussed above, the non-oil mining sector is projected to grow at about 7 per-cent a year in the decade ahead, driven by growing exports of gold, processed minerals and raw materials. The growth performance of the manufacturing sector is projected to remain in the range of 9 percent a year for much of the period as the proposed programme for development of private sector, agricultural reform and infrastructure development are implemented. As

discussed earlier, the projected increase in private in-vestment in the non-oil economy, and public and pri-vate investment in infrastructure, is expected to result in an extended period of strong growth in construction activities. The construction sector is projected to grow by about 10 percent a year for several years, and then slow down to about 9 percent a year during the next decade. In the case of the utilities sub-sector, growth is projected to increase to about 8 percent a year as the enlarged programme for development of the pow-er sector and domestic water and sanitation services gains momentum.

6.5.3 In this Moderate Growth scenario, the aggre-gate investment in the industrial sector increases from a projected US$2.4 billion in 2014 to US$14 billion a year by 2030 (at 2012 constant prices), at which time the investment level would be equivalent to almost 9 percent of GDP.




7.1 Development of the Industry Since the 1970s

The Setting

7.1.1 Considerable exploration for oil in Sudan led to important discoveries in the 1970s and 1980s. Be-cause of the internal conflict that persisted for much of the period since independence, oil exploration prior to the secession of South Sudan was confined largely to the central and south-central regions of the former Su-dan. Most of the proven reserves of crude oil and natural gas of Sudan and South Sudan are located in the Mug-lad and Melut basins, which extend into both countries. According to the BP (2013) Statistical Review of World Energy, South Sudan has approximately 3.5 billion bar-rels of proven reserves, while those of Sudan are put at 1.5 billion barrels. The proven reserves of natural gas are estimated at about 3 trillion cubic feet.

7.1.2 The development of these fields was hampered by civil unrest in these areas. The production of crude oil began in 1996. It grew rapidly, and by 1998, imports of crude oil were discontinued. Exports began in 1999. The major oil refineries, ports, and pipelines that service the industry are located in (north) Sudan. Oil is transported through two main pipelines that extend from South Su-dan to Port Sudan in the North. By 2007, production of crude oil had peaked at 23.8 million tons a year, at which time Sudan was the third largest oil producer in Sub-Sa-haran Africa. As a result of the CPA signed in 2005, oil revenues were shared 50:50 between the National Gov-ernment of Sudan and the Government of South Sudan (GoSS). Neither country currently produces natural gas. It is either flared or re-injected.

7.1.3 When South Sudan gained its independence in 2011, it had control over most of the areas that were producing oil. But given that it is a landlocked coun-try, it remains dependent on Sudan as it must use its northern neighbours pipelines to Port Sudan and its processing facilities for the export of oil and petroleum products. Following South Sudan’s secession, Sudan requested transit fees of US$32-36 per barrel in an ef-fort to make up for the lost oil revenues. In response, South Sudan offered a transit fee of less than US$1 per barrel. Tensions escalated in the latter part of 2011 when Sudan began to confiscate a portion of South Sudan’s oil as payment for unpaid transit fees. South Sudan responded by shutting down all its oil produc-tion in January 2012. After lengthy negotiations, South Sudan restarted oil production in April 2013. There are, however, unresolved differences between the two gov-ernments. As a result, there is a risk that production in South Sudan could be curtailed or shut down again in the future. Map 7.1 provides an overview of the con-cession blocks that are controlled by Sudan, those that are controlled by South Sudan, and those that are shared.

Oil Sector Regulation and Role of International Oil Companies

7.1.4 The Ministry of Finance and National Economy (MoFNE) regulates domestic refining and imports. The Sudanese Petroleum Corporation (SPC) is responsible for exploration, production and distribution of crude oil and petroleum fuels in accordance with regulations set by the MoFNE.

7.1.5 There are three major consortia that operate in

7. CHANGING ROLE OF THE OIL SECTOR




the oil sectors of both countries. These are the Greater Nile Petroleum Operating Company, the Dar Petroleum Operating Company, and the Sudd Petroleum Oper-ating Company. International oil companies from Asia dominate the oil sector of Sudan (and South Sudan). Table 7.1 provides a summary of the main oil compa-nies operating in Sudan and South Sudan.

Production and Consumption of Petroleum Products

7.1.6 Production of crude and petroleum prod-ucts. As noted earlier in this Report, oil has played an important role in the economy of Sudan since the start of the oil boom in 1999. Table 7.2 provides a summary of trends in the production and import of crude and pe-troleum products for the 1990-2014 period. Prior to the secession of South Sudan, crude oil production peak-ed at 23.8 million metric tons in 2007, while domestic production of petroleum products peaked at 4.6 million metric tons in 2009. As noted earlier, there was a sharp decline in the production of crude oil in 2012, along with a decline in domestic production of petroleum products in 2011 and 2012 that was partly offset by increased imports of these products. Sudan set an ambitious tar-get for recovery in the production of crude oil to more than 180,000 bbl/d in 2012. As Table 7.2 indicates, the actual outcome was about 102,000 bbl/d.109 At the end of 2012, Sudan brought two new fields into production. These fields were expected to reach their combined pro-duction capacity level of 30,000-35,000 bbl/d in 2013. However, Sudan’s total production increased to about 124,000 bbl/d in 2013 and was estimated at about 127,000 bbl/d in 2014 – equivalent to about 27 percent of the pre-secession production level.

109 In the case of Sudan, one metric ton of oil is equivalent to 7.452 barrels of oil.

7.1.7 The quality of Sudan’s oil varies substantially among fields, with a significant portion of production of relatively low quality. The exported crude oil is of two standard qualities: Nile Blend and Dar Blend. Nile Blend is a good quality crude oil that is readily saleable on international markets, but the Dar Blend has char-acteristics that include a high acid content that make it difficult to sell to most refineries. Most of the Dar Blend comes from fields that are located in the South. A third crude blend, Fula, is produced in fields located in Su-dan. The quality of this oil is lower than the Dar Blend and is therefore sold only in the domestic market.

7.1.8 Sudan has two oil refineries with a total capac-ity of 121,700 bbl/d, and three topping plants, which are small-scale, less complex refineries with a total ca-pacity of 22,000 bbl/d. The largest refinery, the Khar-toum (or al-Jaili) refinery, is located just north of Khar-toum and has a distillation capacity of 100,000 bbl/d. It became operational in 2000 with a capacity of 50,000 bbl/d to process the Nile Blend. The refinery’s capac-ity was expanded in 2006 to also process Sudan’s highly acidic Fula Blend. According to one of its oper-ators, China’s CNPC, the Khartoum Refinery was the world’s first modern refinery with a delayed coking unit for high-acid and high-calcium crude oil. The country’s other full conversion refinery is the Port Sudan refinery (21,700 bbl/d). The three small topping plants are El Obeid (10,000 bbl/d), Shajirah (10,000 bbl/d), and Abu Gabra (2,000 bbl/d). The Malaysian company, Petro-nas, had planned to construct a 100,000 bbl/d refin-ery in Port Sudan, but no progress has been reported. There are no oil refineries in South Sudan.

7.1.9 Export of crude and petroleum products and domestic consumption. Exports of crude oil be-

Table 7.1: Main Oil Companies Operating in Sudan and South Sudan

Consortium/Subsidiary Share of Subsidiary Held by International and Domestic Companies (%)

China Malaysia India Sudan South Egypt Yemen Other

Sudan (Egypt Kuwait (Ansan partners

(CNPC) (Sinopec) (Petronas) (ONGC) (Sudapet) (Nilepet) Holding) Wikfs)

Greater Nile Petroleum Operating Co

40.0 30.0 25.0 5.0

Dar Petroleum Operating Co. 41.0 6.0 40.0 8.0 3.6 1.4

Sudd Petroleum Operating Co 33.9 24.1 41.9

Petro Energy 95.0 5.0

Star Oil 34.0 66.0

Source: U.S. Energy Information Administration (2013), Sudan and South Sudan. Country report, September, 2013.



gan in 1999 and grew rapidly to a peak of 18.5 million metric tons during the 2007-2009 period. Exports of petroleum products also rose rapidly to a peak of about 730,000 metric tons in 2007, after which these exports have declined steadily, largely because of a sharp de-cline in domestic production of these products.

7.1.10 During the 1990s, domestic consumption of petroleum products was relatively stable, with domes-tic production accounting for about 45 percent of total consumption in this period. With substantial addition-al investment in refinery capacity from 1999, domestic production grew rapidly, peaking at about 4.6 million tons in 2009. At the same time, imports of these prod-ucts declined from the higher levels that prevailed in the 1990s. Driven by increased industrialisation, car ownership and access to electricity, there has been substantial growth in domestic consumption of petro-leum products in the past decade. There was a tem-porary decline in domestic consumption in 2011-2012, but demand recovered strongly in 2013-2014. With a continued sharp reduction in domestic refining of crude oil, imports of petroleum products have doubled since 2011. In 2014, imports stood at an estimated 1.5 mil-lion metric tons.

7.1.11 As Table 7.3 indicates, the transport sector is the largest consumer of petroleum products, account-ing for about 70 percent of total domestic consumption

Table 7.2: Supply and Utilization of Crude Oil and Petroleum Products in Sudan(In '000 metric tons)

Indicator 1990 1995 2000 2005 2010 2011 2012 2013 2014

Crude oil

Supply

Production - - 8,857 15,250 23,104 14,238 5,019 6,065 6,200

Imports 837 761 - - - - - - -

Sub-total 837 761 8,857 15,250 23,104 14,238 5,019 6,065 6,200

Utilization

Refinery use 818 712 1,943 3,464 5,546 2,496 2,523 3,945 4,711

Exports - - 6,622 11,786 17,558 11,742 2,496 2,120 1,489

Discrepancy 19 49 292 - - - - - -

Sub-total 837 761 8,857 15,250 23,104 14,238 5,019 6,065 6,200

Petroleum products

Supply

Production 805 706 1,840 3,190 4,442 2,221 2,245 3,511 4,193

Imports 945 713 495 623 522 750 865 1,294 1,468

Stock changes (27) 7 90 - - - - - -

Sub-total 1,723 1,426 2,425 3,813 4,964 2,972 3,110 4,806 5,661

Utilization

Domestic consumption 1,686 1,382 1,725 2,923 4,055 2,274 2,530 4,334 5,176

Energy industry own use - - 37 101 152 78 79 124 125

Exports - - 523 468 473 292 263 108 110

Bunker use 37 41 113 321 285 328 238 240 250

Discrepancy - 3 27 - - - - - -

Sub-total 1,723 1,426 2,425 3,813 4,964 2,972 3,110 4,806 5,661


Table 7.3: Domestic Consumption of PetroleumProducts, 2012

Indicator Amount Share

('000 MT) (%)

Transport

Domestic transport 2,750 63.8

Aviation & marine bunker 238 5.5

Electric power generation 611 14.2

Industry & commercial 316 7.3

Residental 214 5.0

Agriculture 66 1.5

Refinery own use 33 0.8

Other 81 1.9

Total 4,309 100.0

Memo item

Exports 259

Source: International Energy Agency database.


in 2012. The next most important consumer, account-ing for 14 percent of consumption, is the electric power sector that generates a substantial portion of electricity from thermal plants that use fuel oil and diesel. Indus-trial, commercial and agricultural activities account for about 9 percent of consumption, with residential users accounting for about 5 percent. During 2000-2010, to-tal domestic consumption grew at an average of 9.3 percent a year, while GDP grew in real terms at 6.3 per-cent a year. The growth in demand for these products relative to GDP growth was therefore 1.5 – a multiplier effect that is broadly in line with the experience of other countries.

Economic Contribution of the Oil Sector

7.1.12 As the discussion in Chapter 1 indicates, the oil boom had a significant economic impact on the Su-dan economy. The peak of the oil boom was in 2008. At that time, export income peaked at about US$11.1 billion, and accounted for about 90 percent of total merchandise exports. Oil revenues for the government increased to about 14.5 percent of GDP, and value added by the oil industry accounted for 13.4 percent of GDP (Table 7.4).

7.1.13 From the 2008 peak period, the importance of oil has declined, accelerated by the secession of South Sudan in 2011. By 2014, oil exports were equivalent to only 2 percent of GDP, compared with close to 19

percent in 2008. The contribution of oil to government revenues had declined to 9 percent of total revenues in 2014, compared to the peak of 68 percent in 2008. Moreover, in 2014 the value of oil imports exceeded oil export earnings for the first time since the onset of the oil boom. As Table 7.8 indicates, the oil trade account had a negative balance of US$270 million in 2014. The industry now faces a range of challenges that will shape the manner in which the production of petroleum products evolved in the coming years.

7.2 Key Challenges Facing the Industry in Sudan

7.2.1 As the discussion in Chapter 3 indicates, the economy has been dependent on petroleum since the start of the oil boom in 1999. Fiscal and exchange rate policies were heavily influenced by the oil sector. The oil sector provided large budget revenues that allowed the government to maintain a low tax burden on the non-oil economy. It also provided the bulk of the country’s for-eign exchange earnings and allowed the maintenance of an overvalued exchange rate. Sudan faces some key challenges with the development of the petroleum sec-tor during the 2015-2030 period. These uncertainties are related to the following: (i) The international supply and demand for oil and related price prospects in the near and longer-term; (ii) the prospects for oil and gas exploration and production in the decade ahead; (iii) the likely growth in domestic demand for oil and gas

Table 7.4: Economic Contribution of the Oil Sector (At current prices and exchange rate)

Indicator 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Oil exports

Crude (US$ million) 1,308 3,948 4,704 8,053 10,846 7,008 9,406 8,378 1,755 1,617 1,091

Petroleum products (US$ million)

100 239 383 366 249 228 286 301 257 102 163

Total (US$ million) 1,408 4,187 5,087 8,419 11,094 7,237 9,692 8,679 2,012 1,719 1,254

Exports as % total exports of goods

75.5 85.8 87.5 94.6 87.9 89.5 76.3 78.4 39.3 35.9 28.8

Exports as % of GDP 10.8 12.2 11.4 15.9 18.6 12.3 13.8 12.4 3.0 2.7 1.9

Oil revenues

Oil revenues (US$ million) 548 3,699 4,049 5,403 8,867 4,575 7,518 7,020 1,187 1,352 716

Oil revenues as % total revenue

43.2 61.2 57.0 58.0 68.4 52.5 61.3 58.9 20.0 19.7 9.4

Oil revenue as % GDP 4.2 10.8 9.1 10.2 14.9 7.8 10.7 10.0 1.7 2.2 1.1

Oil sector value added

Value added (US$ million) 896 2,652 4,364 5,021 7,969 4,179 6,788 3,474 2,266 1,903 -

Value added as % GDP 6.8 7.8 9.8 9.5 13.4 7.1 9.7 5.0 3.3 3.0 -

Source: Annex Tables 2.1 and 2.4.



products; and institutional arrangements for the sector.

Oil Prices and Production Costs

7.2.2 A major concern related to the outlook for the industry centres on the international price for crude oil. The recent large decline in international oil prices has raised serious issues related to the possible implica-tions for production in Sudan in the near term and the prospects for the industry in the longer term. These price uncertainties also have important implications for forecasts of export earnings and government revenues. For the purposes of this Report, the most recent price projections (that were released in January 2015) of the World Bank have been used for 2015-25. The average export price for Sudan crude oil is discounted in the international market, in part as a result of sanctions. As Table 7.5 indicates, the average price of Sudan crude oil is projected to be about US$48 a barrel in 2015.110 The Ministry of Petroleum has indicated that the av-erage cost of crude oil production in Sudan is in the range of US$26 per barrel while the cost of transport to refineries and ports is in the range of US$6-7 per barrel. It would therefore appear that production would continue in Sudan even at the current low international prices for crude oil.

7.2.3 Based on the World Bank projections, the av-erage price of Sudan crude oil is projected to increase slowly in the decade ahead, but in real terms, the price of crude oil would only get back to the 2012-13 levels by about 2030 (at 2012 constant prices). A related is-sue then is the prospects for additional foreign invest-

110 The World Bank released its revised commodity price projections in January 2015. The results can be found on the web site http://econ.worldbank.org under Prospects for Commodity Markets. The benchmark price used by the World Bank is the average spot price for Brent Crude. The World Bank projections were used for this Report as they were more up-to-date than those of the IMF. The 2014 IMF Country Report for Sudan (Report No.14/364 of December 2014) had the average price of US$95.2 per barrel for Sudan crude oil in 2015, declining to US$85.4 per barrel by 2019 (both at current prices).

ment in new production. The prospect of low prices in the decade ahead may deter investors from further exploration and drilling in Sudan.

Exploration and Production

7.2.4 As noted earlier, the most recent estimate puts the recoverable reserves of crude at about 1.5 billion barrels of oil. There is considerable uncertainty about the prospect for new oil discoveries around the existing producing areas and in new areas in Sudan. There is a clear case for expansion of exploration efforts for oil and gas in Sudan. The power sector is an important con-sumer of energy, mainly in the form of diesel and fuel oil. In the absence of substantial increases in genera-tion capacities that make use of hydropower and other renewable energy sources (see discussion in Chapter 8 about these options), thermal power generation based on natural gas would be a preferable lower cost op-tion for Sudan. However, at this stage, the natural gas deposits of the country are not being harnessed. The gas is either flared or re-injected. And domestic capac-ities for production of fuel oil are quite limited. If the gas reserves of the country could be developed, it would provide a low cost and relatively low-carbon fuel for power generation, industry and households. To facili-tate these exploration activities, the Government may need to review existing contract arrangements related to the discovery and development of the gas resources and related marketing arrangements.

7.2.5 If there are no new discoveries of crude oil in the near future, there will be a rapid decline in oil production in the decade ahead. In a number of ma-ture fields, production is already on the decline. Areas adjacent to existing fields need to be explored more intensely, along with increased attention to exploration in new areas. According to the US Energy Information

Table 7.5: Projected Average International Price for Sudan Crude(In US$ per barrel)


2012 2013 2014 2015 2020 2025 2030

Sudan average crude price

In US$ per barrel at current prices 94.6 94.6 87.5 48.4 67.4 94.1 103.9

In US$ per barrel at 2012 constant prices 94.6 93.6 86.9 48.1 61.7 79.2 91.8

World Bank projection for Brent Crude

Price per barrel at 2012 constant prices 105.0 103.0 95.4 52.8 67.8 87.0 100.9

Sudan price as % of World Bank price 90.1 90.9 91.0 91.0 91.0 91.0 91.0



Administration (EIA), Sudan recently launched bidding for blocks that are clearly located within it, along with some offshore acreage.111

7.2.6 Another uncertainty related to the future pro-duction of oil in Sudan concerns the recovery factor for oil from existing and new fields.112 The World Bank (2009) reported that the government expected that the recovery factor for existing fields would be 26 percent. It went on to note that the global average was around 35 percent, and based on government data, an increase of 5 percent in recovery factors would increase Sudan’s remaining proven reserves by 30 percent. There is a compelling case for maintaining production in existing fields and increasing the recovery factor. According to the EIA (2013), the Middle East Economic Survey has recently reported that Sudan signed a protocol with Norway in 2012 to increase oil recovery rates in ex-isting fields from 23 percent to 47 percent. This pro-gramme is reported to be a strategy for the longer-term that suggests it will be several years before increases in production are evident.

Domestic Consumption of Petroleum Products

7.2.7 A key concern for some time has been the ex-tent of subsidies for fuel purchases in Sudan. The SPC purchases crude oil at a subsidised price from MoFNE and the China National Petroleum Corporation (CNPC). After purchasing the crude, SPC contracts local refin-eries to carry out the processing. It then sells the do-mestically refined and imported fuels to distribution and marketing companies at subsidised prices set by the MoFNE. According to the IMF (2014.a), the fuel sub-sidies accounted for about 13 percent of total govern-ment expenditures in 2012, and more than 14 percent of expenditures in 2013. Because fuel prices are lower than in neighbouring countries, there is reportedly sub-stantial smuggling of petroleum products from Sudan.

7.2.8 Sudan’s loss of substantial amounts of oil rev-enue, following South Sudan’s secession, has led the country to rethink its fuel subsidies. Sudan initiated a subsidy reform programme in 2011, and in Septem-ber 2013, it implemented the third phase of the pro-

111 See US Energy Information Administration (2013), Sudan and South Sudan. www.eia.gov/countries.

112 A recovery factor is the proportion of the total oil contained in a reservoir (field) that is expected to be produced commercially using current technology.

gramme, which substantially increased prices for gaso-line, diesel and LPG. The weighted average increase in these prices was about 68 percent. However, the price increases were followed by mass protests and unrest in Khartoum and nearby cities, resulting in dozens of civilian deaths. As noted in Chapter 2, the Staff-Moni-tored Programme (SMP) for 2014 concluded with the IMF. The Government has undertaken to phase out fuel subsidies by 2017.

Institutional and Other Issues

7.2.9 Comprehensive data about the oil industry is not readily available to the public or the business com-munity. Given the importance of the sector, there is a clear case for regular publication of basic information about the industry, including reserves, production, con-sumption and trade. The government will undertake a comprehensive restructuring of the Sudan Petroleum Corporation (SPC) and improve corporate governance in their operations. This will include production of quar-terly reports showing detailed operating accounts and financial statements on the sources of revenues, the main expenditure components and the extent and de-tails of the financing gap.

7.3 Prospects for Oil Production and Exports

Alternative Growth Scenarios for the Oil Sector

7.3.1 The foregoing uncertainties about the pros-pects for the oil sector in the decade ahead means that there can be a wide range of possible outcomes for oil production, export volumes and earnings and govern-ment revenues.

7.3.2 Scenarios for production of oil and gas: For the purposes of this Report, the following scenarios have been considered for the supply of crude oil and natural gas.113

• Base Case: Production in the older fields and expansion in the activities of the Petrodar Devel-opment and Operating Company (PDOC) remain

113 Based on data provided by the Ministry of Energy and Mining (MoEM), the World Bank (2009) set out three scenarios for future oil production in Sudan (This exercise preceded the secession of South Sudan in 2011). These various scenarios did not address the above-mentioned issue of the manner in which steady growth in domestic demand for petroleum products would be met, nor did it anticipate the recent large decline in the international price of crude oil.



Table 7.6: Projected Supply of Crude Oil and Petroleum Products and their Utilization, 2012-30(In '000 metric tons)

Indicator Actual/estimate Projection Increase % p.a.

2012 2013 2014 2015 2020 2025 2030 2014-30

Crude oil production and consumption

Production 5,019 6,065 6,200 6,401 8,098 10,583 13,832 5.2

Utilization

Refinery use 2,523 3,945 4,711 4,868 6,320 8,572 11,612 5.7

Exports 2,496 2,120 1,489 1,533 1,777 2,011 2,220 3.1

Total 5,019 6,065 6,200 6,401 8,098 10,583 13,832 5.2

Production and consumption of petroleum products

Supply

Production 2,245 3,511 4,193 4,332 5,625 7,629 10,334 5.7

Imports 865 1,294 1,468 1,720 2,674 3,959 5,853 10.1

Total 3,110 4,806 5,661 6,052 8,299 11,589 16,187 7.1

Utilization


2,530 4,334 5,176 5,538 7,767 10,894 15,280 7.3

Energy industry own use

79 124 125 152 197 267 362 6.8

Exports 263 108 110 100 - - - -

Bunker use 238 240 250 263 335 428 546 4.7

Total 3,110 4,806 5,661 6,052 8,299 11,589 16,187 7.1

Composition of supply and utilization (%)

Share of crude production

Exports of crude

49.7 35.0 24.0 24.0 21.9 19.0 16.1

Refinery use 50.3 65.0 76.0 76.0 78.1 81.0 83.9

Shares of petroleum product supply

Imports of product

27.8 26.9 25.9 28.4 32.2 34.2 36.2


81.3 90.2 91.4 91.5 93.6 94.0 94.4

Exports of crude

8.5 2.2 1.9 1.7 - - -

Other 10.2 7.6 6.6 6.8 6.4 6.0 5.6


Table 7.7: Investment Requirements and Growth in Oil Sector Value Added, 2012-30(SDG millions at 2012 constant prices)


2012 2013 2014 2015 2020 2025 2030

Oil investment 2,850 2,550 2,500 2,550 2,700 3,500 4,500

Oil sector value added 8,095 10,306 10,534 10,876 13,759 17,982 23,502

Memo items:

Growth in value added (% p.a.) (67.4) 27.3 2.2 3.2 5.5 5.5 5.5

Oil sector investment as % GDP 1.2 1.0 1.0 0.9 0.8 0.8 0.8

Source:Annex Table 3.1, Annex Table 3.2 and estimates by authors.


stable. Recovery factors are assumed to increase modestly in all fields.

• Low Case: A conservative outlook with production in mature areas continues to decline in the decade ahead. In the absence of major new discoveries of oil, continued growth in domestic demand for petroleum products means that oil exports decline steadily over the medium and longer-term. With declining production, imports of petroleum prod-ucts increase more rapidly.

• High Case: Adds to the Base Case, an increase in recovery factors and exploration that brings large new fields on stream in the decade ahead. In this scenario, the additional production flows into increased exports of crude oil and petroleum products. Given the prospect of continued low in-ternational prices for crude oil for some years to come, it would appear that this scenario has a low probability of being realised.

7.3.3 Future growth in domestic demand for oil and gas products: In the event that Sudan is success-ful in its efforts to promote private sector-led growth and diversification that results in an extended period of broad-based and strong economic growth, the domes-

tic demand for petroleum products will continue to rise rapidly. A key issue for the design of the strategy for the oil sector in the decade ahead centres on the manner in which the expected continued strong growth in do-mestic demand for petroleum products will, in fact, be met. In the event that there is no significant increase in the size of the country’s recoverable reserves of crude (the above-mentioned Low Case), policy makers and potential investors will need to consider several possi-ble scenarios for further development of the industry in Sudan:• Perhaps the most plausible scenario for meet-

ing the growing domestic demand for petroleum products is to promote a steady increase in do-mestic refining capacity that makes use of domes-tically produced crude. In this case, the volume of crude oil exports would decline steadily. Given the expected strong growth in domestic demand for petroleum products, the most plausible scenario is that Sudan would be a net importer of petroleum throughout the 2015-30 period. In the event that domestic production of crude does not increase (the above-mentioned Low Case) and there is only very limited development of natural gas supplies to meet domestic demand for energy, it is likely that

Table 7.8: Value of Petroleum Exports and Imports, 2012-30

(In US$ million at current prices)


2012 2013 2014 2015 2020 2025 2030

Value of exports

Crude 1,755 1,617 1,091 553 893 1,410 1,719

Petroleum products 257 102 163 48 - - -

Total 2,012 1,719 1,254 602 893 1,410 1,719

Value of imports

Petroleum products 1,052 1,460 1,524 957 2,074 4,284 6,995

Net exports 960 259 (270) (356) (1,181) (2,874) (5,275)

Product prices

Exports at current prices

Crude (US$ per barrel) 95 95 88 48 67 94 104

Petroleum products (US$ per mt)

977 948 1,484 484 - - -

Exports at 2012 constant prices

Crude (US$ per barrel) 95 94 87 48 62 79 92


977 958 1,496 488 - - -

Imports at current prices


1,217 1,128 1,038 557 775 1,082 1,195




Sudan would become a substantial net importer of petroleum products in the decade ahead.

• Another option is that Sudan continues to export most of its crude oil to China and other countries that have a continuing demand for the product. With somewhat slower growth now expected for China at least, it is very likely that the growth in crude oil exports would be more modest than in the past decade. In this scenario, there is only lim-ited further development of the domestic capacity for processing locally produced crude oil to meet domestic demand, in which case imports of pe-troleum products would meet most of the future growth in this demand. The foreign exchange earned from export of crude oil would be used to meet a portion of the cost of these petroleum im-ports.

• The third possible scenario is that through some combination of improved recovery from existing oil fields and new findings of oil and gas, Sudan can continue to export substantial amounts of crude and or petroleum products, while meeting the growth in domestic demand from domestic sourc-es oil and gas.

The Base Case Scenario

7.3.4 For the purposes of this Report, the Base Case scenario for the production of oil has been incor-porated in the analysis. It is assumed that over the next 15 years, Sudan will have modest success in bring-ing some new fields into production and that the Nor-way-led effort to improve recovery from existing fields will be successful. As Table 7.6 indicates, crude pro-duction is projected to increase from 6.2 million metric tons in 2014 to 8.1 million tons by 2019 and 13.8 mil-lion metric tons by 2030 – an average annual increase of about 5.2 percent. This scenario is broadly in line with the projection for crude production during the 2014-2019 period contained in the most recent IMF Report for Sudan (Country Report No. 14/364 issued in December 2014). The IMF projected a steady increase in crude production from 6.2 million metric tons (46.2 million barrels) in 2013 to 7.7 million metric tons (57.2 million barrels) by 2019.

7.3.5 For the Base Case, it is assumed that domes-tic demand for petroleum products will increase by about 7 percent a year during the 2014-30 period if the

non-oil GDP growth rate is in the range of 5-6 percent a year as suggested by the Moderate Growth Scenario set out in Chapter 2. The share of crude production that is exported declines steadily from an estimated 54 percent in 2014 to about 39 percent by 2030, with the domestic market accounting for an increasingly large share of the production.

7.3.6 Domestic consumption of petroleum prod-ucts, own use of fuels by the energy sector and bun-ker use for the aviation and marine industries increas-es from an estimated 4.0 million mt in 2014 to 11.8 million mt by 2030 – equivalent to an average annual increase of 6.5 percent a year (Table 7.6). Domestic consumption accounts for the bulk of the use of petro-leum products, with substantial demand coming from the transport sector, and also from energy for power generation. It is further assumed that it will take several years to increase the existing capacity of oil refineries in Sudan. As a result, the exports of petroleum products are projected to come to an end in 2017 as output of the existing refinery capacity is fully absorbed by the local market. Of course, more rapid growth in domestic demand, driven by sustained high growth rates in the non-oil economy, cannot be rule out. Such increased demand could be accommodated by further reduc-tions in exports of crude oil, or by increased imports of petroleum products.

7.3.7 Implications for growth and investment. Table 7.7 sets out some indicative projections for the growth in value added by the oil sector during the 2012-2030 period. Consistent with the above-mentioned as-sumption about continued growth in oil production in the 2014-30 period, modest amounts of investment in exploration and development of recoverable reserves is expected to resume in the decade ahead, along with increased investment in recovery from existing oil fields. Because of the lack of information about the prospects for development of Sudan’s gas reserves, no provision is made for investment in the development of these re-sources in the decade ahead.

7.3.8 Implications for the external trade balance of the oil sector. The foregoing Base Case Scenario developed for this Report has important implications for the external accounts of Sudan. Table 7.8 provides a summary of Sudan’s external accounts associated with trade in crude oil and petroleum products. As


noted earlier, the underlying assumption in the Base Case Scenario is that Sudan would continue to export crude oil, while at the same time importing increasing amounts of petroleum products to meet the growth in domestic demand. Based on the above-mentioned January 2015 World Bank projections for the interna-tional price of crude oil, the nominal value of oil-related exports is projected to increase from about US$1.3 bil-lion in 2014 to about US$1.7 billion by 2030. Given the projected growth in domestic demand for oil-related products, the nominal value of imports increases from

US$1.5 billion in 2014 to US$8 billion by 2030. As a re-sult, the net value of oil imports increases from US$270 million in 2014 to US$6.2 billion by 2030.

7.3.9 A much more detailed analysis of the trade-off between exporting the crude oil versus channelling it to an increasingly large domestic oil processing industry is beyond the scope of this Report, but such analy-sis would facilitate consideration of the policy options available to the Government.




8.1 Current Status of Sudan’s Infrastructure

Overview of the Infrastructure

8.1.1 Sudan has invested heavily in infrastructure in recent years. Power generation capacity has more than tripled in the past decade, increasing from about 1,000 MW in 2005 to almost 4,000 MW by 2012. In the lon-ger-term, Sudan has the potential to be an exporter of hydropower if additional capacities are developed and transmission links to other Nile Basin countries are strengthened. Sudan has made large strides in liber-alising the ICT sector, and as a result, has attracted significant amounts of private capital. Mobile penetra-tion increased from less than 1 percent in 2000 to 74 percent by 2012. Recent connectivity to an undersea fibre-optic cable has led to an expansion in access, im-provements in quality, and reduction in prices.

8.1.2 As Ranganathan and Briceño-Garmendia (2011) indicate, Sudan’s infrastructure development has had a predominantly national focus. Thus, a lot more work is necessary to achieve greater regional in-tegration.114 While internal road corridors in Sudan are developed, connectivity with neighbours is largely ab-sent. Sudan has a natural gateway to the sea through Port Sudan, but the port’s performance is severely hampered by long dwell times, high costs, and capac-ity constraints. Ranganathan and Briceño-Garmendia (2011) indicate that addressing Sudan’s infrastructure challenges will require sustained expenditures of almost

114 Ranganathan, Rupa, and Cecilia M. Briceño-Garmendia (2011), Sudan’s Infrastruc-ture: A Continental Perspective. World Bank, Washington DC, Policy Research Work-ing Paper 5815, September 2011. See also, World Bank (2009), Sudan: The Road Toward Sustainable and Broad-Based Growth. World Bank, Washington DC, Decem-ber 2009.

US$4.2 billion per year for a decade. For the decade ahead, this would represent a tripling of the annual av-erage of infrastructure spending to about 7 percent of GDP. For the near and medium-term at least, the main challenges for further development of infrastructure to improve broad-based access to quality services are in the water and transport sectors, and in mobilising the large amount of funding required for expansion and up-grade.

8.2 Transport Infrastructure

The Setting

8.2.1 Road transport is said to be the most predom-inant mode of transport in Sudan, accounting for 95 percent of import/export traffic and 98 percent of pas-senger traffic. The predominance of road transport is a result of the virtual collapse of the rail and river trans-port modes. Despite having the largest market share, road transport operations are said to be hampered by poor infrastructure in several parts of the country, as well as cumbersome administrative procedures on-route, especially at border crossing points. Taxes are levied by the different levels of government, namely, the Federal (Central) Government, the State Governments and Locality Governments. This inevitability leads to high transport costs and high costs of doing business, which curtail production and trade competitiveness. Sudanese authorities attribute the decline of rail trans-port mainly to the sanctions imposed on Sudan, ow-ing to the fact that rail equipment was sourced from western countries enforcing the sanctions.115 It has

115 In the case of Sudan Railways Corporation, American made locomotives (General Electric) constitute 54 percent of the total fleet of 130 mainline locomotives. German locomotives (Henchel) constitute 30 percent of the fleet, and Indian and Chinese lo-

8. INFRASTRUCTURE SERVICES: AN AGENDA FOR ACTION






become difficult to maintain the rail track and rolling stock due to lack of spare parts. However, competition from road transport itself could be a major factor in the reduction in rail market share. In addition, the worsen-ing economic situation has resulted in loss of qualified personnel to other countries, resulting in severe human capacity gaps. River transport operations have been dealt a severe blow by the prevailing security situation in both the Republic of Sudan and South Sudan. 116

8.2.2 The road and rail infrastructure connect Khar-toum with Port Sudan on the Red Sea through Atbara, with links to the Egyptian border, the eastern side of the country and the south-western side of the country. A large portion of the west and north-west of the country is almost devoid of transportation infrastructure, prob-ably on account of the level of economic activities. Rel-ative to its size, Sudan is said to have a low density of transport infrastructure, when compared with other Sub-Saharan African countries. With regard to civil avi-ation, the key issue is the need to build infrastructure that meets ICAO standards, which requires that invest-ments be focused on air safety related infrastructure and essential airports capacity improvements, espe-cially on the airside (runways, taxiways, and aprons).

8.2.3 Deficiencies in transport infrastructure often have a negative impact on the economy by constrain-ing productivity and international competiveness. High transport costs, as a result of poor infrastructure, can raise production costs and lead to reduced levels of production. The performance of the country’s main for-eign trade route that links Khartoum with Port Sudan is said to be well below par, in comparison with other port corridors in Eastern and Southern Africa. As with other African countries, Sudan has failed to grow its export trade even where preferential market access is offered by the EU and the USA, largely due to poor infrastruc-ture and backbone services, transport and logistics in-efficiencies that raise production and trade costs.

8.2.4 The inadequate road network, particularly at the state level, is constraining agricultural production, by limiting access to local and regional markets. The virtual collapse of rail transport may be impacting neg-

comotives make up the remaining 16 percent of the total fleet. In 2014, 83 mainline locomotives were out of service.

116 The countries had formed the Nile River Navigation Company, partly owned by the private sector (70 percent) and partly owned by the two governments (30 percent) and which controlled 80 percent of market share. Due to insecurity, operations were suspended two years ago.

atively on Sudan’s regional trade and global trade com-petitiveness, as it is usually more cost effective and en-vironmentally friendlier than road transport. Rail trans-port was previously the preferred mode between Port Sudan and Khartoum, and was also the most cost-ef-fective way of moving livestock from remote areas, such as Darfur, to the central market in the Khartoum area and for export. Therefore, continued deficiencies in transport infrastructure in Sudan will likely curtail pri-vate sector development and job creation.

8.2.5 The transport sector as a whole is still under-going reforms. The Ministry of Transport, Roads and Bridges (MTRB) has the overall responsibility for the sector, which had hitherto been managed through semi-autonomous agencies having regulatory roles at-tached to MTRB. In the National Transport Master Plan (NTMP) of 2010, it was suggested that MTRB be reor-ganised either along modal lines (roads, railways, mari-time transport, inland waterways, civil aviation) or func-tional lines (including planning, technical and economic regulation, implementation, and international agree-ments), each covering several modes of transport. In either case, decision support systems would rely on a much expanded transport database. Moreover, such reorganisation may also require that institutions like the National Highways Authority, Sea Ports Corporation, Civil Aviation Authority, and Sudan Railways Corpora-tion become fully autonomous.

Road Infrastructure and Services

8.2.6 Road transport provides more than 90 percent of inland transport services in Sudan. The total road network is estimated to be about 32,000 km, includ-ing both paved and unpaved national, state and urban roads. This translates into a road density of about 1.8 km per 100 sq. km of land area – one of the lowest road densities in all of Africa. About 24 percent of the network is paved. The main internal corridors in Sudan are well developed and generally in good condition, but they do not extend to many adjacent communities. Map 8.1 provides an overview of the existing region-al road network that includes road transport links to Egypt, Ethiopia, Eritrea, and South Sudan. Moreover, there are proposals for links to Chad, Central Africa and Libya.

8.2.7 As noted in Chapter 5, agricultural land is very


lightly used in Sudan, in part because of an inadequate road network. Sizable parts of the economically pro-ductive areas are isolated from the markets. Develop-ment of the road network is a necessary precondition to exploiting the agricultural potential of the country. Sudan has roughly 650,000 sq. km. of land with high agricultural potential, but 75 percent of it is farmed at only 10 to 50 percent capacity.

8.2.8 Institutional arrangements for the roads sector. The management of road infrastructure in Su-dan is shared between the National Highways Authority (NHA) and the state governments. The NHA is respon-sible for the national highway network that connects major cities and state capitals, while the states are re-sponsible for networks that connect towns and rural communities and their links to the national network.

8.2.9 NHA’s functions include: Management of all national roads and bridges in accordance with the gov-ernment policy; setting technical standards for all road construction in the country; giving technical direction and advice to the States on roads and bridges adminis-tration; and constructing and administering toll stations on national roads and ensuring appropriate collection of tolls from road users. Besides the headquarters in Khartoum, NHA has regional offices in Atbara, Nyala, El Obeid, Sinnar and Khashm al Qirbah.

8.2.10 The lack of a recognisable road maintenance and management system was pointed out in the Na-tional Transport Master Plan study (2010). The study indicated that although NHA had a department for planning and maintenance programming, it was largely concerned with receiving and collating estimates from the sector offices and forwarding them individually or collectively for budget allocation purposes. The study further indicated that there was no recognised system-atic approach to routine or periodic maintenance, and no obvious evidence of cyclic routine maintenance be-ing carried out. The impetus for maintenance (or more correctly, repairs and rehabilitation whenever failures occurred) came from local engineers originally posted in regional localities as project engineers assigned on specific road projects. They had remained at the sites of original assignments and were utilising the original project offices, now called sector offices, even though with reduced facilities. The responsibility for the man-agement of the national highway network has therefore

been notionally divided between the five sector-offices mentioned above.

8.2.11 The states are responsible for a sizeable length of the road network connecting state capitals with locality capitals. However, the states are said to have very limited road network management capacity. Generally, they do not have the capability to design, build, or manage and operate any roads that require detailed engineering design, or that require a pro-grammed maintenance management system to ensure their design life is optimised. In this regard, the National Transport Master Plan Study (2010) had proposed that the roles of the states for road network management in the future be limited to the maintenance of local earth feeder roads and tracks serving remote villages, or col-lections of villages, following the urgently required road re-classification exercise that was to be carried out to distribute assets and design appropriate management systems. The justification for restricting the states to minor localised networks requiring only minor mainte-nance works that utilised labour-intensive methodol-ogies, was that state authorities had limited ability to fund major road maintenance works.

8.2.12 The National Transport Master Plan (NTMP) indicated that the main issue for the roads sector was how to improve its management, performance and sustenance. The NTMP recommended early action on a revised system of road classification to distribute as-sets and to design an appropriate road management system. The introduction a Road Asset Management System (RAMS) is essential for sustainability of the network. The findings of this Report support early ac-

Table 8.1: Existing Road Network of Sudan(In km)

Road category

National Urban Rural Total

Paved 7,165 500 7,665

Gravel 735 500 3,065 4,300

Earth & tracks

20,000 20,000

Total 7,900 1,000 23,065 31,965

Memo items:

Road density per 100 km²

0.4 0.1 1.3 1.8

Source: Ministry of Transport, Roads and Bridges and estimates by authors for the composition of the urban network.



tion on this matter. The road re-classification exercise should also facilitate the adoption of a system for trans-ferring roads under state jurisdiction to national roads, and vice-versa. Meanwhile the NHA itself is practically a department of the Ministry of Roads and Bridges, with limited powers. NHA should be strengthened through appropriate legislation, making it an autonomous insti-tution. Furthermore, the lack of capacity of States to manage the networks under their jurisdiction should be addressed.

8.2.13 Existing road network. Although the road network increased substantially following the oil boom, almost doubling in length, large parts of the country lacks roads. The total road network was reported in 2012 to cover approximately 32,000 km, of which ap-proximately 7,700 km were paved and 4,300 km were gravelled. The remaining 20,000 km were earth roads and tracks. Urban roads totalled about 1,000 km. Be-ing such a large country, Sudan’s road density is rath-er low (1.8 km of road per 100 km2). Whereas nearly 90 percent of the national highways network is paved, most roads managed by the States are either gravel or earth roads, and are largely in poor condition. 117 In some parts of the country, notably the Darfur region where only two percent of the network is paved, move-ment becomes almost impossible during the rainy sea-son. Poor-quality roads not only drastically undermine the efficiency of transport services, but also curtail pro-duction and delivery of social services. Use of agricul-tural land in Sudan, for example, is said to be quite low, partly on account of inadequate roads that are also responsible for isolation of rich agricultural areas from 117 The national highway network connects state capitals with the national capital and

national ports and includes connections with neighbouring countries.

markets. In addition, the poor-quality of roads under-mines private sector business opportunities.

8.2.14 Road Transport Industry. With regard to cargo flows, 26.3 million tons of cargo moved on Su-danese roads 2012, with freight volumes dropping to 20.1 million tons in 2013 (Table 8.2). Major commod-ities transported include flour, petroleum products, sugar, cotton, mineral products (salt, chromate, gyp-sum), cereals (wheat, sorghum, millet), gum arabic, oil seeds (sesame, groundnuts, sunflower), livestock and livestock products, fertilizer and construction materials (including cement). Major road transport corridors in-clude: Khartoum-Port Sudan; Khartoum-Kosti; Khar-toum-El Obeid-Nyala; Port Sudan-Kassala-Gedarif.

8.2.15 The cost of moving freight by road in Sudan is comparable with the average for Africa. The aver-age tariff between Khartoum and Port Sudan is about US$0.05 per ton km.

8.2.16 A provisional set of estimates and projections for freight movements during the 2013-2030 peri-od have been prepared for this Report. As Table 8.2 indicates, total land freight carried by road and rail is projected to increase to about 64 million tons by 2030 – equivalent to an average annual increase of 7 per-cent a year. As the discussion below indicates, with a successful rehabilitation of the rail network and transi-tion to standard gauge lines in the decade ahead, the competitiveness of the railways in hauling bulk freight is expected to improve. However, the road network is expected to continue to account for 93 percent of road freight by 2030, compared with 95 percent in 2013.

Table 8.2: Projected Growth in Annual Movement of Freight by Road and Rail(In million tons)

Indicator Actual Projection Growth rate (% p.a.)

2011 2012 2013 2014 2015 2020 2025 2030 2011-13 2013-2030

Total road and rail freight

Road 25.3 26.3 20.1 20.8 21.8 30.5 42.5 59.3 (10.9) 6.5

Rail 1.0 1.1 1.1 1.2 1.3 1.9 2.9 4.4 3.0 8.5

Total 26.3 27.4 21.2 22.0 23.1 32.4 45.4 63.7 (10.2) 7.1

Memo items:

Growth in total freight (% p.a.)

2.5 3.0 3.8 5.3 7.0 7.0 7.0

Road as % of total

96.2 96.0 94.8 94.5 94.4 94.1 93.6 93.1

Source: Central Bank of Sudan for 2011-2013 data & estimates by authors for 2014-30 projections


8.2.17 Ongoing and Proposed Roads Pro-gramme. In a submission to Sudan Office of AfDB dated 15th March 2014, the National Highways Author-ity indicated that construction of 7,200 km of asphalt and 765 km of gravel roads have been completed. Also concluded is the rehabilitation of 2,000 km of roads. Some 4,195 km of asphalt roads are under construc-tion. Roads for which detailed engineering design stud-ies have been undertaken total 4,811 km, and those still under rehabilitation total 778 km. During the next five years (2015-19), NHA’s list of high priority road proj-ects, including links with neighbouring countries, are as shown in Table 8.3.

8.2.18 For the longer-term, the government plans to expand and upgrade 2,836 km of the existing national road network and construct 7,028 km of new roads, including 6,533 km of paved roads and 495 km of gravel roads and construction of 19 new bridges. Ta-ble 8.4 provides a summary of road projects for which feasibility and engineering design studies are required. The NHA estimates that road construction costs in Su-dan range from US$350,000 to US$850,000 per km. Successful implementation of this programme would ensure access to the highest value agricultural land, deepen the reach to other rural areas with high pro-ductive potential, and bring the primary and second-ary road network to good condition. For the purposes

of this Report, the average cost of road construction is assumed to be US$600,000. The indicative capital cost of this programme is US$6 billion. Funding for these road projects is being sought.

Railways

8.2.19 Current Status of the Railways Network. The Sudan railway is a single line network of 1,067 mm gauge and totals 4,180 km. The core network extends from Port Sudan via Atbara to Khartoum up to Nyala, via Kosti, El Obeid and Babanusa, a distance of roughly 2,105 km. Another major line runs from Port Sudan to Sennar via Kassala, with an extension to Ed Damazine. Northern branch lines run from Atbara to Wadi Halfa (594 km) and Karima to Abu Hamed (225 km). Much of the network was built between 1897 and the 1920s, using 75 and 50 pound rails, which are rather light. The most recent rail extensions built between 1995 and 2012 include the following: (i) A 10 km line linking El Obeid to the oil refinery at Abu Khiraize for transpor-tation of petroleum; (ii) a 14 km line in River Nile State from El Ban station to link with cement factories and the Merowe Dam; and (iii) an 18 km line to link Elgaili Oil Refinery and the Free Zone at Garey with Khartoum. Map 8.2 provides an overview of the regional rail net-work in Sudan and South Sudan.

8.2.20 There is also a rail connection of some 198 km from Babanusa to the border with South Sudan. It continues for another 248 km to the town of Wau. This line had been rehabilitated after heavy damage during the past civil conflict. It was reopened in 2010. Prior to the recent conflict in South Sudan, there had been discussions about the possibility of extending this Wau branch to Juba and then to connect it with the Ugandan rail network. This would then provide Sudan with access to the interconnected Eastern Africa rail system, which includes Kenya (African Development Bank, 2013).118

8.2.21 Historically, rail was the dominant mode of transport in Sudan. However, degradation occurred over most of the old sections of the rail network, lead-ing to a reduction in travel speeds and a decline in the volume of passenger traffic and freight carried by rail (Table 8.5). Whereas the design speeds of 50-60 kph were already quite low, the deterioration of rail infra-118 See African Development Bank (2013), South Sudan: An Infrastructure Action Plan – A

Programme for Sustained Strong Economic Development. AfDB, Tunis, Tunisia, 2013.

Table 8.3: Development Program for National Roads 2015-19

Road program Expansion & or upgrade

Total length (km) 4,317

Total cost (US$ million) 3,345.6

Cost per km (US$ '000) 775.0


Table 8.4: Proposed Roads Program for 2020-30

Road program Expansion & New Total

or upgrade construction

Length (km) 2,836 7,028 9,864

Capital cost (US$ million)

Feasibility & design

19.9 46.4 66.3

Construction 1,701.6 4,216.8 5,918.4

Total 1,721.5 4,263.2 5,984.7

Cost per km (US$'000)

607.7 606.6 606.7

Source: Annex Table 8.2 and estimates by authors.



structure over the past several years resulted in speed restrictions of 15 to 20 kph.119 The low travel speeds, coupled with load restrictions, has resulted in a poor quality of rail service relative to that of road transport. Major maintenance works, such as re-ballasting and replacement of sleepers, are required. The signalling and telecommunications system for the rail network is very old and in need of modernisation. Similarly, the five regional workshops (Atbara, Port Sudan, Khartoum, Kosti, and Babanusa) are said to be poorly equipped, with old or obsolete machinery.

8.2.22 In summary, a number of factors have contrib-uted to the decline of this mode of transport. • Deterioration of the network due to lack of funding

for maintenance and renewal of infrastructure and rolling stock led to a drop in the level of service.

• Expansion of the road network, especially in the central and eastern parts of the country, led to in-tense competition from road transport industry and a decline in the market share of the rail network. Any competitive edge that the railways might have had between Port Sudan and Khartoum over road transport due to a shorter distance, was lost follow-ing construction of the road from Atbara to Haya, that reduced the road distance between Port Su-dan and Khartoum by approximately 400 km.

• Liberalisation of the road freight industry that led to acquisition of large fleets of trucks by the private sector, including large tractor-trailer combinations, capable of carrying two 40ft containers, resulting in most containers imported in Sudan being trans-ported by road.

• Recent civil strife in several parts of the country that not only damaged the rail infrastructure, but also affected the production of agricultural com-modities on which the railways depended.

• Economic sanctions by the US and European

119 The maximum axle load for heavy locomotives is 16.5 tons. For light locomotives, it is 13.5 tons. The maximum curve for main lines is 4°30´ (388 m), while for the sub-lines is 12° 48´ (137 m).

countries that have made it difficult in recent years to import spare parts for locomotives and work-shop equipment.

8.2.23 Institutional arrangements for the railways sub-sector. Sudan Railways Corporation (SRC) is both the rail infrastructure manager and a provider of rail ser-vices. SRC continues to operate trains. It has also been able to attract seven private rail operators that utilise their own rolling stock through payment of track access fees. A key policy issue here is to consider making SRC an asset management company and regulator, leaving rail services to be provided entirely by private compa-nies on concession basis. Such a policy would have to be accompanied by appropriate legal and institutional reforms.

8.2.24 Ongoing programme for rehabilitation and

Table 8.5: Key Indicators for Railway Operations, 2000-2013

Indicator 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013

Railway network (km)

4,599 5,478 5,478 5,478 4,578 4,508 4,508 4,706 4,313 n.a.

Passengers (million passenger-km)

205 40 40 40 34 n.a. n.a. 25 18 n.a.

Freight (million ton-km)

1,164 756 766 765 766 n.a. n.a. 925 770 n.a.

Source: World Bank World Development Indicators database.

Table 8.6: Proposed Investment Program for Railways(In US$ million at 2012 constant prices)

Program Medium-term Long-term Total

2014-20 2021-30 2015-30

Rehabilitation of existing lines

546.1 733.7 1,279.8

Reconstruction of lines to 100 kph

- 720.1 720.1

Construction of standard gauge network

1,245.9 138.0 1,383.9

Re-equipment of workshops

30.0 30.0

Locomotives & other rolling stock

Signaling systems

115.0 105.0 220.0

Studies of cross-border network links

6.0 6.0

Capacity building

2.0 1.5 3.5

Total 1,945.0 1,698.3 3,643.3



upgrade of the rail network. In view of the present state of rail infrastructure and the low traffic volumes, the Government will have to consider a number of ini-tiatives to facilitate a recovery in rail transport, including, for example, revision of investment policy to provide in-centives that may attract private sector investment in the subsector. The government is determined to see the revival of this mode of transport, which is better suited for long distance bulky freight, besides being friendlier to the environment. In order to revitalise rail services, rehabilitation of important sections of the net-work has been undertaken in recent years, beginning with the Port Sudan to Khartoum single track mainline, which was rehabilitated as a joint venture between SRC and GIAD at a cost of US$350 million. The Babanusa to 63 km mark southbound was also reconstructed under a joint venture with GIAD. Rehabilitation of the section of the mainline network linking Khartoum to Kosti and Babanusa was undertaken following the completion of the section from Port Sudan to Khartoum. This partic-ular line segment is of great strategic importance as it provides the only rail access to the branch line at El Obeid, where an oil refinery is located. It also provides the link with the western line to Nyala in the Darfur re-gion.

8.2.25 Besides rehabilitation of important sections of the network, the government has also been investing in the procurement of locomotives and other rolling stock, mainly from China. These acquisitions include the sup-ply of rails, five new locomotives, 400 bogies and five rail motor trolleys. The programme also includes reha-bilitation of existing SRC locomotives. (See Annex Ta-ble 8.3 for details.)

8.2.26 The construction of a standard gauge line from

Khartoum to Port Sudan, via Atbara, was supposed to have commenced in 2007, but funding was not secured. Nevertheless, the government has an am-bitious plan for the development of a standard gauge rail network in order to revamp rail services. There are a number of arguments in favour of standard gauge, including: (i) The wider availability of locomotives and wagons costing 15-20 percent less than the narrow gauge equipment; (ii) the higher horse-power loco-motives provided by manufacturers that permit opera-tion of longer and heavier trains, thereby reducing unit costs; and (iii) higher operating speeds that are possi-ble, thereby improving the level of service and providing effective competition to road transport. In this regard, a number of parallel standard gauge projects had been planned, but funding has become problematic, partly as a result of loss of oil revenues. They include:• Port Sudan to Khartoum New Standard Gauge

Parallel Line. A loan agreement was signed by GoS and China in 2007 for US$1.2 billion for the con-struction of this line. A contract was then signed with a consortium of Chinese firms (TRANSTECH Engineering Corporation and China Railway In-ternational) for the construction of the parallel standard gauge line, but the required 10 percent down-payment (US120 million) by the Sudan Government was not met, thereby delaying com-mencement of the project. SRC has listed the proj-ect as still awaiting funding.

• Khartoum to Wad Medani New Line. Prior to the se-cession of South Sudan in 2011, the Government of National Unity (GNU) of Sudan and the Govern-ment of India entered into discussions about the scope, timing and loan amount needed to realise the project. The required funding was not mobil-ised as this depended upon the Port Sudan-Khar-

Table 8.7: Freight Traffic Through Port Sudan, 2009-2013(In metric tons)

Category 2009 2010 2011 2012 2013

Export tonnage

Containers 631,246 668,991 688,143 668,453 866,662

Cargo 662,365 513,925 443,426 384,345 547,882

Sub-total 1,293,611 1,182,916 1,131,569 1,052,798 1,414,544

Import tonnage

Containers 2,082,131 2,649,320 2,560,149 2,670,425 2,751,747

Cargo 5,786,412 5,335,948 4,806,322 4,993,871 5,825,749

Sub-total 7,868,543 7,985,268 7,366,471 7,664,296 8,577,496

Total tonnage 9,162,154 9,168,184 8,498,040 8,717,094 9,992,040

Source: Sea Ports Corporation. Note: These data exclude exports of crude oil.



toum standard gauge project going forward.• Babanusa to Abu Jabra to Nyala Parallel Line. The

construction of a parallel line linking Babanusa to Nyala was initiated. A standard gauge line was considered initially, but was dropped in favour of the 1,067 mm line. Funding for the first 130 km from Babanusa to Abu Jabra was allocated by the government, leaving a further section of 205 km unfunded. The current status of this project is not clear in view the financial problems facing the government. The line is of great importance to the eventual reintegration of the agriculturally rich Dar-fur region with the rest of the country.

• Babanusa to Wau in South Sudan. Prior to the se-cession of South Sudan, the World Bank had spon-sored a study to assess the viability of putting to-gether a Public-Private Partnership to reconstruct the line to Wau with private sector participation and financing. However, following the secession of South Sudan, the future of this project is not clear.

8.2.27 In addition to the above rail projects, the Gov-ernment of Sudan intends to develop standard gauge rail links with the neighbouring countries of Egypt, Er-itrea, Ethiopia, Central African Republic and Chad. The proposed standard gauge lines include:• Atbara/Abu Hamed/Wadi Halfa (Egypt border) -

630km;• Nyala/Geneina/Adri (Chad border) – 350km;• Nyala/Um Defoug/Biro (CAR border) – 280km; and• Al Azara/Abdalrafi (Ethiopia border) – 765km

8.2.28 Economic viability and engineering design studies of these proposed lines are yet to be car-ried out. However, preliminary estimates put the cost of construction in the range of US$3,024 million to US$5,033 million for design speeds of 120 kph and 160 kph, respectively. The position taken in this Report is that priority should be given to rehabilitation of the existing network to restore design speeds of 60 kph and subsequently upgrade the network to standard gauge. This would have to be accompanied by appro-priate policy, legal and regulatory measures to attract private investment into the rail sector. In the meantime, studies of the economic and commercial viability of the proposed standard gauge links with neighbouring countries could be undertaken. As Table 8.6 indicates, an amount of US$6 million is proposed for these stud-ies.

8.2.29 In the medium-term (2014-20), the govern-ment would like to attract funding for the rehabilitation of the existing lines and for the construction of new parallel rails, including the standard gauge. In the lon-ger-term (2021-30), the objective of the government is to extend the rail network to link with those of the neighbouring countries in order to promote regional trade and for the conveyance of transit traffic across the borders. The required investments related to these objectives are estimated to be about US$3.6 billion for 2014-2030 as a whole (Table 8.6).

Ports

8.2.30 Current status of port infrastructure and services. Sudan has several ports along its 850 km coastline on the Red Sea. These ports provide services for Sudan, as well as nearby landlocked countries, including Chad, Central African Republic and South Sudan. Except for the Bashyer Petroleum terminal op-erated by the Ministry of Energy, the Sudan Ports Cor-poration runs all ports on the Red Sea, namely Port Sudan, Marsa Halaib, Marsa Oseif, Muhama Goal, Marsa Salak, Marsa Fijab, El Khair, Sawakin, Trinkitat and Agig. Currently, most of the ports have adequate infrastructure and are operating below capacity. For ex-ample, Port Sudan, which is the main port where most maritime activities take place, has an installed through-put capacity to handle 1.2 million twenty foot equiva-lent units (TEUs), but in 2013 it handled only 449,800 TEUs, implying that the terminal operated at only 35 percent of available capacity. The old and new contain-er terminals have a combined terminal area that can hold a total of 39,000 TEUs. The old container terminal has a draft of 12 metres and a quay of 420 metres, while the new container terminal has a draft of 16 me-tres with a quay of 780 metres. Both terminals are ei-ther equipped with Panamax or Post-Panamax gantry cranes. The old container terminal operates four Sea to Shore Gantry (SSG) cranes and 15 Rubber Tyre Gantry (RTG) cranes, while the new container terminal oper-ates four SSGs and eight RTGs. Port Sudan also has a good terminal operating system. However, there are no interfaces with other key government institutions, such as the Sudanese Customs department, or with systems of the business community using the port. A single window system, incorporating port clients and the customs authorities would be ideal.


8.2.31 The capacity for general and containerised cargo at Port Sudan has undergone three phases of upgrades. Between 1980 and 1982, capacity was ex-panded from 3.5 to 5 million tons. In the 1982-86 peri-od, capacity was expanded to 8 million tons, and since 1989, it has been expanded to 11 million tons.

8.2.32 Actual traffic for the period 2009-2013 indi-cates a marginal increase from 9.2 million tons in 2009 to 10.0 million tons in 2013 – an increase of only 9 percent over the five-year period (Table 8.7). The very modest growth in freight stems from the fact that the volume of general cargo has declined during this pe-riod. In the case of container traffic, however, there was a 33 percent increase in throughput at Port Su-dan during the 2007-2013 period. This increase has created serious port congestion problems, adding to delays to the movement of freight. According to the World Bank (2011), Port Sudan was already operating at 80 percent of capacity by 2010, a level of operations that contributes to the problem of congestion. While improved efficiency in port operations can moderate these problems, it is clear that substantial additional capacity will be required at Port Sudan.

8.2.33 One of the immediate priorities is to improve the efficiency of port operations. Compared to regional benchmarks, container dwell time of 27 days at Port Sudan is more than four times that of global best prac-tices and among the worst in Sub-Saharan Africa. Truck cycle times for receipt and delivery of cargo at Port Sudan are 24 times higher than global benchmarks, and crane productivity is less than a third of what is

observed in several parts of Africa. Even though port fees are lower than in other African ports, inefficiencies in port operations are a major deterrent to increased usage of the port.

8.2.34 The below-par performance of Port Sudan stems from a number of operational challenges. First and foremost, economic sanctions against Sudan have made it increasingly difficult to acquire spare parts for various types of port equipment. The sanctions have also been linked with the high cargo dwell time at the port, as the scarcity of foreign exchange, partly a con-sequence of economic sanctions, is a major impedi-ment to traders wishing rapid clearance of cargo from the port. Second, constraints on capacity utilisation imply lower revenue earnings, and when coupled with fixed overhead costs, results in limited disposal income

Table 8.8: Proposed Performance Indicators for Sudan Sea Ports, 2015-19

Indicator 2015 2016 2017 2018 2019

Value of performance indicator

No. of container vessels 376 402 434 473 520

Total freight handled (mill tons) 14.4 15.4 16.6 18.1 19.9

Containers ('000 equivalent containers) 474 507 547 596 656

Livestock exports (million head) 4.2 4.5 4.9 5.3 5.8

No. of passengers ('000) 328 351 379 413 454

Annual increase (in percent)

No. of container vessels 6.0 6.9 8.0 9.0 9.9

Total freight handled (mill tons) 6.0 6.9 7.8 9.0 9.9

Containers ('000 equivalent containers) 6.0 7.0 7.9 9.0 10.1

Livestock exports (million head) 6.0 7.1 8.9 8.2 9.4

No. of passengers ('000) 6.0 7.0 8.0 9.0 10.0

Source: Sea Ports Corporation.

Table 8.9: Proposed Priority Investments for Maritime Sub-Sector(In US$ million at 2012 constant prices)

Project Medium-term Long-term Total

2014-20 2021-30

New livestock and fisheries terminal near Sawakin Port

100.0 400.0 500.0

New passenger terminal at Sawakin Port

42.0 42.0

Iron ore terminal at Osief Port

30.0 30.0

Saloom inland container port (ICD)

200.0 200.0 400.0

Rehabilitation of Digna Port

30.0 30.0

Capacity building 7.5 10.5 18.0

Total 409.5 610.5 1,020




for implementation of development plans. Third, unless the rail infrastructure between Port Sudan and Khar-toum, together train services, can improve substantially in the immediate future and Port Sudan-Kassala-Sen-nar railway line revived, there will be an urgent need to upgrade the road links with the port. For example, the Sea Ports Corporation cited the urgent need to widen the Port Sudan-Haiya road (203 km) to become a dual carriageway with two lanes either side. The power sup-ply to the port was also said to be problematic, hence affecting operations. Last but not least is the issue of human capacity and training. As discussed earlier in this Report, the deteriorating economic situation in the past decade led to the departure of more qualified personnel for offshore employment opportunities, with those remaining on the job requiring training or retrain-ing. However, according to the World Bank (2008), the Sea Ports Corporation (SPC) acknowledges that its container port was overstaffed by some 7,300 workers in the mid-2000s.120

8.2.35 Institutional arrangements for the mari-time transport sub-sector. The Sea Ports Corpora-tion is still essentially a department within the Ministry of Transport, Roads and Bridges. A draft law to make the Sea Ports Corporation an autonomous institution is currently under consideration and needs to be fast tracked. The position taken in this Report is that the proposed law should make the Corporation a landlord institution that will take ownership of assets of the sea ports. Actual management of these assets, as well as port operations, could be contracted to private firms

120 World Bank (2008), “Revitalising Sudan’s Non-Oil Exports: A Diagnostic Trade Integra-tion Study (DTIS),” Prepared for the Integrated Framework Programme, World Bank, Washington DC.

under suitable PPP arrangements. Already, a part of Port Sudan (Southern Port) is under a management contract with a Malaysian firm, International Contain-er Terminal Services Inc. The Sea Ports Corporation would also have to be restructured in accordance with its new mandate.

8.2.36 Furthermore, there is a need for legal and reg-ulatory reforms. An Act of Parliament establishing the Sea Ports Corporation as an autonomous corporate body is required. Appropriate legislation is also need-ed for the establishment of a Maritime Institute for the development and retraining of personnel on maritime affairs.

8.2.37 Projections of port performance indica-tors. According to the National Transport Master Plan (2010) that was drawn up in the latter part of the 2000s, projections for Port Sudan indicated that traffic growth for all commodities would increase from about 25 mil-lion tons in 2009 to about 72 million tons in 2030.121 The forecasts had predicted a significant increase in exports from year 2009 to year 2015, mainly due to increase in cement exports (13 times the 2009 level), and exports of refined sugar, which was projected to increase by 17 times over the same period. In addition, exports of cereals, such as sorghum and millet, and exports of other agricultural products, such as ground-nuts, were also projected to increase tremendously. However, stagnation of the total volume of exports was forecast for the 2015-2030 period due to a decrease in crude oil exports.

121 National Transport Master Plan (2010).

Table 8.10: Passenger and Traffic Forecasts for Major Airports

Indicator Existing Actual Projected

capacity 2007 2011 2016 2021 2026 2031

Passenger traffic ('000)

Khartoum 1,987 1,826 2,342 3,653 6,067 9,178 12,959

Other airports 1,210 516 650 931 1,399 2,109 3,033

Total 3,197 2,341 2,992 4,583 7,466 11,287 15,992

Freight ('000 mt)

Khartoum 79 79 100 143 190 256

Other airports 21 19 15 12 14 18

Total 101 98 115 156 205 274

Freight per passenger (kg)

43 33 25 21 18 17



8.2.38 Whereas the traffic projections seem to in-dicate that Port Sudan would run out of capacity by 2020, this may not be the case, following the recent economic downturn and the secession of South Su-dan. The latter is seeking to develop other transit routes through Kenya or Ethiopia and Djibouti, which is bound to have a negative impact of the traffic forecasts. De-spite the potential loss of cargo business to and from South Sudan, the Sea Ports Corporation is optimistic that transformation of the national economy, coupled with growth in transit traffic from other countries, no-tably Eritrea and Ethiopia, will lead to increased traffic. SPC has therefore elaborated a five-year medium-term plan, the objective of which is to increase growth rates from a target of 6 percent in 2015 to 10 percent by 2019, as summarised in Table 8.8.

8.2.39 In addition to these performance indicators, the SPC has earmarked on a number of priority proj-ects, for which private sector participation is required. They include the following:• Construction and operation of the livestock and

fisheries terminal at Sawakin port. The facility would be 600 metres long and 12 metres deep, to include water systems, a butchery unit, veterinary unit, refrigeration and access roads. Phase I of the

project is estimated to cost US$100 million out of the total estimated cost of US$500 million;

• A passenger facility at Sawakin Port with a holding capacity of 3,000 passengers,122 estimated to cost US$42 million;

• Construction of new berth at Osief Port, 260km north of Port Sudan, for handling iron ore and oth-er metal exports. The facility would be 320 metres long, 16/20 metres deep, and capable of handling vessels of 70,000-100,000 dead weight tons, with estimated project cost of US$30 million;

• Saloom Inland Container Depot, to be located 8 km south-west of Port Sudan. The total area is 12,000 square metres, capable of holding up to 75,000 TEUs. Total project cost is estimated at US$400 million, to include land preparation and handling equipment. It is aimed at easing pressure on the storage and capacity and custom area at the sea port; reducing the waiting time for goods at the sea port and thus increasing the accommodating capacity of the port; securing large space for the storage of goods and for containers and providing all logistical services relating to the ICD; and

• Rehabilitation of the Digna port at an estimated cost of US$60 million. The work calls for complet-

122 Sawakin Port is important for handling pilgrims to Mecca during the Haj.

Table 8.11: Capital Development Program for Civil Aviation(In US$ '000 at 2012 constant prices)

Category 2010-16 2017-21 2022-26 2027-30 Total

Airport infrastructure

Existing airports

Khartoum 41,466 23,305 32,004 102,423 199,197

Other airports -

Sub-total 64,678 40,845 41,769 123,771 271,063

New airports

Khartoum n.a n.a. n.a. n.a. n.a.

Zalingei & Ed Daein

n.a 61,966 24,760 8,760 95,486

Sub-total - 61,966 24,760 8,760 95,486

Total airport infrastructure

64,678 102,811 66,529 132,531 366,549

Air navigation system 16,000 10,000 10,000 10,000 46,000

Capacity building

Training programs 6,300 4,300 4,300 4,300 19,200

Civil aviation master plan

1,100 500 750 500 2,850

Institutional development

6,600 3,000 3,000 3,000 15,600

Total 14,000 7,800 8,050 7,800 37,650

Grand total 94,678 120,611 84,579 150,331 450,199




ing the construction of the two berths and prepar-ing the land and operational equipment as well as preparing the container handling and storage area at the back of the berth covering an area of 200,000 square meters.

8.2.40 In addition to the above projects, there will be need to establish a corridor management structure for Port Sudan to facilitate the movement of goods and vehicular traffic along the corridor and to simplify docu-mentation and procedures. In order to meet the projected traffic demands, the Sea Ports Corporation has prioritised a number of invest-ments as summarised in Table 8.9, as well as a ca-pacity building programme. The SPC encourages pri-vate sector participation in these investments. The total cost of the proposed investments is US$1,020 million at 2012 constant prices, with US$410 million proposed for 2014-2020 and the balance of US$610 million to be spent during the 2021-2030 period.

Civil Aviation

8.2.41 Being a very large country with low density and dispersed population, civil aviation plays a vital role in Sudan. As noted in the foregoing discussion, land transport infrastructure is not evenly developed, leaving large parts of the country without reliable road connec-tions. Sudan has also developed a strong international gateway for air transport in Khartoum.

8.2.42 Current status of the civil aviation sub-sector. With regard to airport infrastructure, there are 10 main airports in Sudan, namely: Khartoum In-ternational Airport; Nyala, El Fasher and El Geneina in Darfur region; El Obeid in Northern Kordofan; Dongola in the Northern State; Ed Damazin in Blue Nile State; Kassala in Kassala State; Kadugli in Southern Kordo-fan; and Port Sudan in Red Sea State. Existing air con-nectivity in Sudan is largely oriented toward the Mid-dle East and Egypt, with Addis Ababa being the main connection point with the rest of Africa. Following the liberalisation of the air transport industry in the 1990s, the main issues of concern for the government are the provision of reliable air navigation and airport facilities, and effective safety, security regulations and economic regulations. The Sudan Civil Aviation Authority (CAA) is the sub-sector regulator, and is also responsible for the provision of air navigation services and airport infra-

structure. The key issue relating to infrastructure is the need to build facilities that meet ICAO standards. This requires that infrastructure investments be focused on air safety and essential airports capacity improve-ments, especially on the airside (runways, taxiways, aprons, etc.). The other key issue is to ensure that the CAA has the necessary human and financial resources to perform its functions.

8.2.43 Institutional arrangements for civil avia-tion. The Sudan CAA is currently supervised by the Office of the President. An organisational issue here is whether to put CAA under the Ministry of Transport or to create a separate Ministry of Aviation. Another is-sue is how to increase funding for the CAA to enable it to build infrastructure, including NAVAIDS that meets ICAO standards. Options that CAA should explore for increasing its CAA revenue include: (i) Increasing tariffs, such as aircraft landing fees; and (ii) pursuing PPPs for the development and management of airports.

8.2.44 There is a lack of regulatory oversight in the air transport sector. A number of small, domestic carriers, registered generally as charter airlines, are operational. They do not report information to a booking or ticket sales agency. Such operators, especially in countries with poor oversight, pose air safety problems as they operate aircraft maintained on minimal budgets, with maintenance crew and pilots whose skills may not be consistent with international standards.

8.2.45 Existing and projected airport traffic. Over-all traffic in Sudan has increased, largely driven by inter-continental traffic. Table 8.10 provides information on actual traffic at major airports in 2007, and projections of traffic that were prepared for the National Transport Master Plan (2010).123 In the case of passenger traffic, a number of airports, such as, Khartoum, Port Sudan, Nyala and El Fasher have high traffic forecasts, as they are expected to continue to handle both domestic and international passengers. On the other hand, airports providing mainly domestic services, such as, Damazin, El Obeid and, Kadugli, have negative traffic forecasts. The main reasons for this negative forecast are the im-provements of road infrastructure and expected ces-sation of UN operations in the near future, particularly

123 The Sudan Air Company has made available projections for growth in capacity, pas-senger traffic and freight for the period 2015-2019. See Annex 8 for details. The pro-jections for passenger traffic and freight would account for about 16 percent and 14 percent of the respective totals set out in Table 8.10.


around El Obeid. Khartoum, Nyala and El Fasher had been forecast to operate well above their installed pas-senger terminal capacities by 2011. Port Sudan was forecast to surpass the passenger terminal capacity by 2021. Airports like Dongola, Damazin, El Obeid Kadug-li and Kassala were not expected to surpass their in-stalled passenger terminal capacities even by 2031. As Table 8.10 indicates, the growth in cargo is essentially driven by passenger growth as the volume of cargo is projected to decline from 43 kg per passenger in 2007 to 17 kg per passenger by 2013. Due to lack of data, it was not possible to establish the actual trends for 2007-13.

8.2.46 In terms of airport capacity, the main concerns identified in the NTMP were:• The unsatisfactory runway length at Port Sudan,

Dongola, Khartoum, El Fasher, El Obeid and Nyala. Whereas the runway length at these airports were said to be sufficient for aircraft operations at the time NTMP preparation, the most demanding air-craft in terms of runway length requirements would be forced to take-off with restricted take-off weight in terms of payload and fuel.

• The most critical element at the Khartoum airport was the airport geometry; comprising runway ex-

its taxi-lanes, and aircraft positions. The location and number of exits limit runway capacity, while the apron geometry does not allow the circulation and operation of certain types of aircraft due to the distance of the apron from taxi-lane to the parked aircraft.

• Khartoum, El Fasher and Nyala airports require ex-tension of the passenger terminal facilities to meet existing and future demands as depicted in Table 8.11.

8.2.47 Besides the terminal building facilities, the most critical factor at airports in Sudan concern com-pliance with international standards as set by the Inter-national Civil Aviation Organisation (ICAO). The facilities that need improvement include the runway length to accommodate the most critical aircraft design, runway exits and apron manoeuver area, as well as communi-cation and navigation systems. Table 8.11 summarises investment requirements in the civil aviation subsector for the short-term, medium-term and the long-term as provided for in the National Transport Master Plan (2010) and the CAA.

8.2.48 The estimates for new investment have been adjusted to cover the period 2014-2030. Investments

Table 8.12: Access of Population to Electricity(In GWh)

Indicator Actual and estimates Projections

2000 2010 2011 2012 2013 2015 2020 2025 2030

Population ('000)

Urban 9,011 11,794 12,106 12,416 12,726 13,393 15,575 18,220 21,393

Rural 18,719 23,858 24,325 24,779 25,238 26,220 28,924 31,456 33,685

Total 27,730 35,652 36,431 37,195 37,964 39,613 44,499 49,676 55,078

Population with access to electricity

Share of population (%)

Urban n.a. 64.1 63.7 66.4 68.7 70.0 80.0 90.0 100.0

Rural n.a. 22.0 22.0 22.3 22.5 24.7 33.8 50.5 67.3

Total n.a. 35.9 35.9 37.0 38.0 40.0 50.0 65.0 80.0

Number of persons ('000)

Urban n.a. 7,564 7,709 8,249 8,748 9,375 12,460 16,398 21,393

Rural n.a. 5,249 5,351 5,513 5,679 6,470 9,789 15,891 22,670

Total n.a. 12,813 13,061 13,762 14,426 15,845 22,250 32,289 44,062

Consumption (kwh)

Per connected person n.a. 307 334 283 323 360 400 450 500

Per connected household

n.a. 1,903 2,039 1,699 1,907 2,052 2,080 2,295 2,500

Source: Sudan Electricity Distribution Company, Annex Table 1.1 and estimates by authors.



amounting to US$153.3 million in airport infrastruc-ture, navigation systems and capacity building will be required during the period 2014-20, while another US$201.4 million will be required for these activities during the 2021-2030 period. The new Khartoum Air-port is not included in these estimates.

River Transport

8.2.49 For many years before the secession of South Sudan in 2011, the White Nile provided a means of transport for freight and passengers in the greater Sudan. After the secession of South Sudan, the river services of Sudan were privatised. The Nile River Trans-port Co. was established, along with the River Naviga-tion Authority. Further work is required to determine the investment requirements for full development of these river services.

8.2.50 Commercial transport services are fairly regu-lar on the barge route known as the “Southern reach” of the White Nile, which stretches from Kosti to Juba (1,436 km), through El Renk, Malakal, Shambe, Diam Diam, Bor and Mongala. The water level slope between Juba and Bor is relatively steep, resulting in river flow velocities of some 2 to 3 m/s. Between Malakal and Kosti, water level slopes are very mild and the flow ve-locity of the river is very low, around 0.5 to 0.7 m/s on average. In addition, river services are provided on a number of the other waterways in Sudan, including the Kosti/Khartoum/Berber line, the Wadi/Halfa/Akasha/ Dongola line, and the Dongola/Kharima line.

8.2.51 River conditions and lack or inadequacy of navigation aids are significant impediments to effective

development of river transport. The number of buoys and navigation sign boards installed along the river is insignificant. Operators rely on their knowledge of the river characteristics at different locations to avoid and pitfalls along the navigation. Companies are increasing-ly using new technologies, such as Global Positioning System (GPS), satellite phones and high frequency ra-dios, to track barge movements. Main difficulties relate to passage through narrow points, sometimes in be-tween rocks, sharp bends and flood plains that hide the main channel. The main bottleneck is the narrow section with sharp bends between Mongala and Juba. There are also hazards in the form of unmarked rocks, wrecks, silt build-ups, shoals, water hyacinth growth, and siltation, especially near ports. Risks increase when water level is low, sometimes dropping below 1m in a very low yearly discharge, notwithstanding the re-lated limitation in terms of boat draught.

8.2.52 Sudan reported that the volume of freight car-ried by river transport amounted to about 114,000 met-ric tons in 2010. But following the secession of South Sudan in 2011, the river transport system declined substantially. The Central Bank of Sudan (2014) reports that only 1,000 tons of freight was transported in 2012 and 2,000 tons in 2013. Passenger traffic was reported to be only 1,500 persons in 2012. While there was no passenger traffic reported for 2013. For the purposes of this Report, the future scope for rebuilding the river transport system has not been investigated in detail. One of the priorities is to obtain up-to-date informa-tion about the volume of river services being provided on each of the routes. This would require installation of traffic monitoring arrangements at each of the major ports.

Table 8.13: Consumption of Electricity in Sudan(In GWh)

Indicator Actual and estimates Projections Increase (% p.a.)

2000 2010 2011 2012 2013 2015 2020 2025 2030 2013-30

Consumption

Households 3,932 4,365 3,896 4,663 5,704 8,900 14,530 22,031 9.6

Commercial/ industrial 1,815 2,015 3,327 3,529 4,185 7,711 14,208 26,177 12.4

Agriculture 302 336 387 413 464 621 831 1,112 6.0

Total 2,170 6,049 6,715 7,610 8,605 10,353 17,232 29,569 49,320 10.8

Memo items:

National consumption per capita (kWh)

78 170 184 205 227 261 387 595 895 8.6

Population (million) 27.7 35.7 36.4 37.2 38.0 39.6 44.5 49.7 55.1 2.2

Source: Table 8.14 for supply data and total consumption, and estimates by authors.


8.3 Electric Power and Energy

Overview of the Energy Sector

8.3.1 Sudan’s total primary energy production in 2009 amounted to 15,815 Ktoe,124 68 percent of which was biomass. Hydro made up two percent, with crude oil and products accounting for the balance. The high proportion of biomass is due a large population located in rural areas with little or no access to the electricity grid that relies heavily on biomass to meet heating and cooking needs.

8.3.2 The renewable energy resources of the coun-try that are of particular interest for the power sector include solar and wind energy, biomass, hydropower and geothermal energy. Average solar radiation in the country is roughly 6.1 kWh/ m²/day, indicating a high potential for solar energy use. In the case of wind, av-erage wind speeds are estimated at 3-6 m/s, with high-er speeds recorded along the Red Sea coast. Wind energy in Sudan is currently used for pumping water 124 A ton of oil equivalent (toe) is the amount of energy released by burning one ton of

crude oil. It is equivalent to 4.2 Gigajoules.

from deep and shallow wells to provide drinking water and irrigation through the use of wind pumps. There is also an active co-generation industry in Sudan, with installed capacity estimated at 56 MW in sugar facto-ries, mainly for their own use. There are plans to further expand cogeneration in sugar production with more advanced plant equipment. In addition, plans are cur-rently being developed to use an agricultural pest, the Mesquite shrub, for household energy production.

8.3.3 Geothermal potential is estimated at 400 MW of power generation capacity. Potential geothermal fields have been identified near the Jabel Marra volca-no, the Tagbo and Meidob hills, the Bayud volcanic field and the Red Sea coast. The potential for hydropower is estimated to be in excess of 6,000 MW. However, with the recent completion of the Merowe and Roseires dams, about 60 percent of this potential has already been developed. There are more than 200 suitable sites for the use of in-stream turbines along the Blue Nile and the main Nile. The total potential of mini-hydro is estimated to be 67 GWh/year for the southern region of the country.

Table 8.14: Generation Capacity and Electricity Supply in Sudan

Indicator 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013

Installed capacity (MW)

Hydropower 995 995 995 995 995 2,245 2,245 2,245 2,245 3,765

Thermal power n.a. n.a n.a 1,566 1,566 1,566 1,566 1,566 1,538 1,538

Off-grid thermal plants n.a. n.a n.a 126 130 135 140 140 140 140

Total n.a. n.a n.a 2,687 2,691 3,946 3,951 3,951 3,923 5,443

Available capacity

Hydropower

Thermal power

Off-grid thermal plants

Total 293 437 516 573 629 741 884 982 1,085 1,211

Electricity supply (GWh)

Hydropower 1,183 1,261 1,370 1,451 1,463 3,228 6,199 6,466 6,619 8,317

Thermal power 1,386 2,565 3,151 3,570 4,043 3,263 1,548 2,134 2,816 1,970

Off-grid thermal plants

Imports from Ethiopia 74 320

Total supply 2,569 3,826 4,521 5,021 5,506 6,491 7,747 8,600 9,509 10,607

Losses 399 784 1,045 1,177 1,207 1,423 1,698 1,885 1,899 2,002

Available supply 2,170 3,042 3,476 3,844 4,299 5,068 6,049 6,715 7,610 8,605

Memo items:

Available capacity as % of total n.a. n.a n.a 21.3 23.4 18.8 22.4 24.8 27.7 22.5

Hydropower capacity as % of total

n.a. n.a n.a 37.0 37.0 56.9 56.8 56.8 57.2 69.2

Losses as % supply 15.5 20.5 23.1 23.4 21.9 21.9 21.9 21.9 20.0 18.9

Source: Table 8.13, World Bank development indicators, and estimates by authors.



Access to Electricity and Consumption in Sudan

8.3.4 Current Levels of Access and Consump-tion. Electricity consumption in Sudan has risen steadily over the past decade, rising from 1,771 GWh in 2000 to 8,665 GWh in 2013, with household con-sumption accounting for approximately 54 percent of electricity use in the country in 2013. Industrial and commercial consumption is estimated to account for 30 percent, while the remaining 5 percent is attributed to agriculture. It is estimated that over 60 percent of all the electric power generated is consumed within Khar-toum area.

8.3.5 Survey data for 2010 indicates that about 36 percent of the population had access to electricity in

2010, with the urban population enjoying greater ac-cess (64 percent) at that time. Most of the rural com-munities do not have access to electricity. The Sudan Electricity Distribution Company (SEDCO) estimates that only 22 percent of the 25 million people who live in rural and isolated communities have access to elec-tricity. The remaining 20 million people largely depend on biomass to meet their energy needs. Table 8.12 provides estimates of recent trends in household ac-cess to electricity in Sudan. It is estimated that about 14 million people (38 percent of the population) had access to electricity in 2013. However, there are large disparities in power access within Sudan. For example, apart from Khartoum, access in the Northern, Eastern and Central regions has been reported to be 25, 17 and 16 percent respectively. In the case of the Darfur region, access to electricity is below 5 per cent, as the

Table 8.15: Projected Increase in Power Generation, 2013-2030

Indicator Actual Projected Increase (% p.a.)

2012 2013 2015 2020 2025 2030 2013-2030

Installed capacity (MW)

Hydro 2,245 3,765

Thermal 1,538 1,538

Other 140 140

Total 3,923 5,443 6,000 6,150 7,450 11,025 4.2

Available capacity (MW)

Hydro

Thermal

Other

Total 1,085 1,211 1,441 2,460 4,098 6,615 10.5

Electricity supply (GWh)

Total supply 9,509 10,607 12,625 21,550 35,894 57,947 10.5

Losses 1,899 2,002 2,273 3,663 5,025 5,795 6.7

Available supply

7,610 8,605 10,353 17,886 30,869 52,153 11.2

Consumption

Domestic 7,610 8,605 10,353 17,232 29,569 49,320 10.8

Surplus/deficit - - - 654 1,300 2,832 -

Total 7,610 8,605 10,353 17,886 30,869 52,153 11.2

Memo items:

Losses as % of supply

20.0 18.9 18.0 17.0 14.0 10.0

Capacity utilization (%)

27.7 22.5 24.0 40.0 55.0 60.0

National consumption per capita (kwh)

205 227 261 387 595 895 8.4

Source: Table 8.14 and estimates by authors.


existing power grid systems in Sudan do not include the Darfur region.

8.3.6 Table 8.13 provides rough estimates for the composition of electricity consumption in Sudan. The Central Bank of Sudan (2014) reports that total con-sumption in Sudan was 8,665 GWh in 2013. Given the estimated population of 38 million in 2013, this implies national electricity consumption of about 228 kWh per person, which is about 40 percent of the average for Sub-Saharan Africa (SSA) as a whole. The World Bank reports average consumption per capita at 555 kWh per person for Sub-Saharan Africa as a whole, but if South Africa is excluded, the average is about 190 kWh per person, roughly comparable to that for Sudan.125

125 Generally, access to electricity by populations in Sub-Saharan Africa is in the region of 20 percent or less, except for Ghana, South Africa, Zimbabwe and the island countries of Mauritius and Seychelles, which exceed 40 percent access rate. For more details

8.3.7 Household consumption of electricity is esti-mated to account for about 65 percent of total con-sumption at the present time. The current low levels of access to grid-based power in Sudan retard business activity. Because of the erratic supply and high reliance on backup generators, industrial and commercial con-sumers account for only about 30 percent of electricity utility consumption. Consumption of power for agricul-ture and other uses is around 5 percent. By way of con-trast, industrial and commercial consumers account for 92 percent of all billings in South Africa, with residential consumers accounting for the remaining 8 percent. Ac-cording to the World Bank (2014) Doing Business pro-file for Sudan, the country ranks 113 out of 188 coun-tries with respect to the ease by which entrepreneurs get access to electricity. The average time required to gain access is reported to be 70 days, compared with best case in SSA, which is Rwanda, at 30 days. More-over, the cost of getting access is very high relative to per capita income levels. Given the high level of power outages each year, many firms report that power is a constraint for business. About 41 percent of firms are reported to have their own generators.126 Excessive re-liance on small, high cost diesel generators increases production costs and reduces competitiveness.

8.3.8 Future demand for electricity. For the pur-poses of this Report, various scenarios for the future growth in demand for electricity have been prepared, the main determinants of which are household con-sumption and commercial and industrial demand.

8.3.9 In the case of household consumption, the Government of Sudan has recently set a national target of 83 percent of households gaining access to electric-ity by 2031. The objective of this ambitious electrifica-tion target is to promote agriculture, industry and social development with a view to improving living standards in Sudan. Table 8.12 sets out the electrification targets used in this Report. It is assumed that the national elec-trification rate would be 80 percent by 2030, with 100 percent of the urban population with access to electric-ity at that time. The implication is that about two-thirds of the rural population would have access to electric-

on these electrification rates see Annex Table 8.10 and Economic Commission for Af-rica (2010), Assessing Regional Integration in Africa IV: Enhancing Intra-African Trade. United Nations, Addis Ababa, Ethiopia, May 2010.

126 According to the World Bank (2011), the firms that share or own generators ranges from 36 percent in North Kordofan to 96 percent in Red Sea. The share of electricity consumption produced by generators in these states was 66 percent and 72 percent respectively.

Table 8.16: Capital Cost of Transmission Line Expansion, 2014-31

Transmission line

Length Capital cost (US$ million) Cost per km

(km) 2014-20 2021-31 Total (US$'000)

KV specified

500 KV lines 1,760 67.0 910.0 977.0 555

220 KV lines 4,194 1,206.8 1,249.2 2,456.0 586

110 KV lines 483 340.9 340.9 706

Sub-total 6,437 1.273.8 2,500.1 3,773.9 586

KV unspecified

257.7 243.0 500.7

Total program 1,531.5 2,743.1 4,274.6


Table 8.17: Expansion od Distribution Network, 2012-16

(in km)

Indicator 2012 2013 2014 2015 2016 Total

KV 11 network

1,563 1,068 1,130 926 912 5,599

KV 33 network

965 681 718 516 574 3,454

Total 2,529 1,748 1,849 1,442 1,485 9,053

Source: Compiled from information provided by SEDCO.

Table 8.18: Potential for Production of Electricity from Solar Energy

Indicator Total

Average radiation per day (Kwh/m²/day 5.813

Area ('000 km²) 1,882

Daily producable energy ('000 GWh/day) 10,940

Maximum available energy (GWh) 75,280

Annual producable energy ('000 GWh) 131,285




ity at that time. The achievement of these ambitious targets would mean that the number of people with access to electricity would increase from an estimated 14.4 million in 2013 to 44 million by 2030.

8.3.10 With the ambitious target for electrification, household consumption of electricity is projected to in-crease by an average of 9.6 percent a year within the 2013-2030 period, while commercial and industrial de-mand is projected to increase by about 12 percent a year as a result of the good progress with the proposed private sector led programme for economic diversifica-tion in the decade ahead. In this scenario, households would account for about 45 percent of total consump-tion by 2030 compared with 54 percent in 2013, while the share of commercial/industrial consumption would increase from 41 percent to 53 percent in the same pe-riod. Overall domestic consumption of electricity would grow by about 10.8 percent a year during the 2013-2030 period.

Institutional Arrangements for the Power Sector

8.3.11 Sudan’s power sector was restructured in 2010. The former National Electricity Corporation was disbanded and five different companies were created, namely: Sudan Hydro Electricity Generation Company; Sudan Thermal Generation Company, Merowe Elec-tricity Company; Sudan Electricity Transmission Com-pany; and Sudan Electricity Distribution Company.

8.3.12 The country has the potential to raise power generation capacity from 3,951 MW in 2012 to 11,310 MW by 2030. However, the required investments are huge. Since the country is already heavily indebted, it would be appropriate to enact laws to facilitate greater private sector participation in power generation, espe-cially through PPPs. All of the five existing power com-panies are owned by the government. Consideration should be given to the option of attracting strategic investors to take equity in some of the companies as a way of raising capital or selling shares to the public through the stock exchange. The other available option would be to mobilise local resources through issuance of public bonds, which can also be purchased by local financial institutions. The GoS should review all avail-able options.

8.3.13 Energy sector liberalisation in Eastern Africa has a mixed history, whereby space is opened for pri-vate sector engagement in the generation and distribu-tion systems, while tightly regulating tariffs and keep-ing transmission in the public domain. This operating environment has resulted in numerous challenges for the industry. The inability to set cost-reflective tariffs, without due compensation in the form of subsidy ends up limiting investment in generation capacity that ulti-mately drives up the cost of energy. On the other hand, freeing tariffs poses a public policy dilemma in that gov-ernments often believe that cheaper power will result in increased access and less use of wood fuel, which is more destructive to the environment. Tariff levels are particularly a difficult preposition when it comes to rural electrification, where purchasing power is very low. As a result, private sector engagement in rural electrifica-tion has been poor, and is often encouraged with even larger subsidies and a degree of flexibility in tariff set-ting. Madagascar, for example, offers 70 percent cost sharing in initial investment for rural electrification, a 23 percent return on capital guarantee and free feasibil-ity study to coax the private sector into the business of rural electrification. These matters deserve careful consideration in the case of Sudan, where the govern-ment’s objective is to achieve 83 percent access by 2031.

8.3.14 The other policy consideration for Sudan is engagement in regional energy trade with the neigh-bouring countries. Ethiopia, in particular, is working on establishing a large power export capacity by 2020. Sudan may therefore consider meeting some of its needs in the medium-term at least, with imports from Ethiopia. In the longer-term, Sudan may also be in a position to supply power to some of its neighbouring

Table 8.19: Proposed Program for Rural Energy Development(At 2012 constant prices)

2012-16 2017-21 2022-26 2027-31 Total

Targeted households ('000)

150 250 300 400 1,100

Financing

Local (SDG million)

Installation 30 50 60 80 220

Operating costs 49 105 175 210 539

Foreign (US$ million) 75 125 150 200 550

Total funding (US$ million)

92 158 199 261 710

Source: Sudan Electricity Distribution Company and estimates by authors.


states. Power supply projects to neighbouring states could be quite attractive to private sector investments.

Status of the Electric Power Infrastructure

8.3.15 Power plants are not producing to full capac-ity in Sudan. In the case of the original Roseires dam with a capacity of 280 MW, low water levels have of-ten caused its capacity to fall to about 100 MW. More-over, the facility was often attacked by rebel groups in the past. Thermal generation plants are estimated to operate at about 55 percent of installed capacity. Erratic power outages, coupled with power transmis-sion and distribution losses in excess of 20 percent, have contributed to high private generator ownership, particularly in the commercial and industrial sectors. In 2009, approximately 41 percent of the business com-munity owned and used private generators. This heavy reliance on backup generators not only increases pro-duction costs, but also leads to higher costs of doing business.

8.3.16 Current Status of Power Generation. The installed capacity in 2000 was in the range of 1,500 MW. Completion of the Merowe hydroelectric project brought the total installed capacity in (north) Sudan to

about 3,946 MW in 2009, with Merowe Dam alone ac-counting for 1,250 MW. In 2013, the expansion pro-gramme for the Roseires hydropower plant on the Blue Nile that increased capacity from 280 MW to 1,800 MW was completed, thus taking total installed capacity to about 5,443 MW. At that time, there was 3,765 MW of hydroelectric capacity and the El Jaili gas turbine plant that had been commissioned in 2007, with a capac-ity of 460 MW.127 The remaining installed capacity of about 1,220 MW was made up of various diesel plants located throughout the country.

8.3.17 The two main sources of power generation in Sudan are hydro and fossil fuel generation. The coun-try’s main hydro power generating facilities are the Ro-seires, Merowe, Shereyk and the Kajbar dams. These dams are located on the Blue Nile, White Nile, River Nile, and Atbara River respectively. They account for 3,700 MW, equivalent to 68 percent of the current to-tal installed capacity of the country. The Sudanese Hy-dro Power Generation Company operates four power stations. The Sudanese Thermal Generation Company also operates four main stations, with total installed ca-pacity of 1,380 MW. These are: Khartoum (380 MW);

127 The listed capacity for Sudan in 2007 included six hydroelectric power plants: Ro-seires with 280 MW of installed; Shereyk and Kajbar with capacities of 350 MW and 300 MW respectively; Jabal Awlia with a capacity of 35 MW built in 1937; and two small plants each with a capacity of 15 MW.

Table 8.20: Capital Expenditure Requirements for Proposed Power Program(In US$ million)


2014-20 2021-30

Generation

Rehabilitation of 3 thermal plants 58.5 58.5

Construction of 6 new hydro-power plants

4,500.0 4,500.0 9,000.0

Sub-total 4,558.5 4,500.0 9,058.5

Transmission network

110 KV lines 340.9 340.9

220 KV lines 1,256.7 1,700.0 2,956.7

500 KV lines 977.0 977.0

Sub-total 1,256.7 3,017.9 4,274.6

Distribution network

Network expansion 199.4 n.a. 199.4

Reduction in distribution losses 150.0 150.0 300.0

Rural electrification program 214.6 375.0 589.6

Sub-total 564.0 525.0 1,089.0

Capacity building 0.3 0.3 0.6

Total 6,379.5 8,043.2 14,422.7

Source: Sudan Power Generation, Transmission and Distribution companies.



Garey (400 MW), Kosti I (110 MW);128 and Kosti II (500 MW). In addition, there are several small off-grid plants that are primarily associated with the sugar industry, with total installed capacity of 140 MW. The Sudan Thermal Generation Company indicated that most of their plants were operating well below installed capac-ity due to delayed maintenance and spare parts prob-lems. Rehabilitation of the three thermal plants that are still in service requires Euro 45 million, due to delayed maintenance. Because of the low productivity of the other plants, the recently completed Merowe Dam cur-rently provides over 50 percent of hydro-electric power supply.

8.3.18 In terms of installed capacity and power sup-ply, there has also been a significant shift toward hy-dropower generation in the past decade. In 2007, hy-dropower plants accounted for about 37 percent of in-stalled capacity, but by 2013, the share had increased to almost 70 percent. In terms of power supply, the hydro plants accounted for about 46 percent of total supply in 2000. By 2010, their share had increased to 80 percent. According to the Central Bank of Sudan (2014), power generation increased from 9,509 GWh in 2012 to 10,607 GWh in 2013 (Table 8.14). System

128 This plant is currently out of service and requires major overhaul.

losses are estimated at about 21 percent of total sup-ply.

Development Programme for the Power Sector

8.3.19 Projected increases in power generation ca-pacity. The Eastern Africa Power Pool (EAPP)/East Afri-can Community (EAC) Regional Power System Master Plan Study indicated that Sudan had the potential to increase its power generation capacity to about 15,000 MW by 2030. (See Annex Table 8.11.) 129 At this stage, a detailed strategy for full development of this poten-tial, including the possibility of exports to neighbouring states, is not in place. For the purposes of this Report, consideration has not been given to exploiting the po-tential for exports. The increase in capacity required to meet the projected domestic demand of the coun-try during the 2015-2030 period would require about 5,600 MW of additional capacity.

8.3.20 At this stage, the Government has plans for six more hydroelectric power stations north of Khartoum, with total capacity of 2,412 MW. They include: Saba-

129 See EAPP/EAC (2011), Regional Power System Master Plan and Grid Code Study. Report prepared by SNC Lavelin International Inc., and Parsons Brinkerhoff. May 2011.

Table 8.21: Access to Improved Water and Sanitation, 2000-12

Indicator 2000 2005 2006 2007 2008 2009 2010 2011 2012

Access to improved water

Population ('000)

Urban 6,875 7,367 7,454 7,549 7,638 7,711 7,784 7,990 8,194

Rural 10,317 11,110 11,240 11,385 11,526 11,668 11,789 12,193 12,449

Total 17,193 18,478 18,694 18,934 19,165 19,378 19,573 20,183 20,643

Percent of total population

Urban 76.3 71.2 70.1 69.1 68.1 67.0 66.0 66.0 66.0

Rural 55.1 52.3 51.6 51.1 50.5 50.0 49.4 50.1 50.2

Total 62.0 58.5 57.7 57.0 56.3 55.6 54.9 55.4 55.5

Access to improved sanitation

Population ('000)

Urban 4,334 4,760 4,849 4,938 5,025 5,098 5,177 5,315 5,450

Rural 2,709 2,821 2,830 2,835 2,804 2,813 2,809 3,247 3,328

Total 7,043 7,581 7,678 7,773 7,829 7,912 7,986 8,561 8,778

Percent of total population

Urban 48.1 46.0 45.6 45.2 44.8 44.3 43.9 43.9 43.9

Rural 14.5 13.3 13.0 12.7 12.3 12.1 11.8 13.3 13.4

Total 25.4 24.0 23.7 23.4 23.0 22.7 22.4 23.5 23.6

Source: Annex Table 1.2 for population and World Bank Development Indicators database for access


loga (260 MW), Sheriek (420 MW), Dagash (312 MW), Mugarat (312 MW), Kajibar (360 MW) and Dal (748 MW). Work on the engineering design of these power projects are currently ongoing, with each one of them estimated to cost approximately US$1.5 billion. The balance of about 3,200 MW would then have to come from other renewable sources, such as solar, wind, and geothermal, from additional biomass production, and from gas and heavy oil fired plants.

8.3.21 Power transmission network. Power trans-mission in Sudan is the responsibility of the Sudan Electricity Transmission Company (SETCO). Sudan’s transmission network consists of two interconnected grids: the Blue Nile Grid and the Western Grid. The transmission network consists of 500 KV, 220 KV and 110 KV lines. These lines radiate out from Khartoum, with one line running through Kosti to Al Rank in White Nile State with a link to Ed Damazin. This line branches off at Kosti to the west, through En Rahud, El Obeid, and Abu Zabad to Almuglad. The second line runs from Khartoum through Singa to Ed Damazin, branching off at Singa to Gedarif and Kassala. A third line runs from Khartoum through Atbara to Port Sudan.

8.3.22 Following the construction of Merowe Dam, Khartoum and Atbara are connected with 500 KV lines, with a 220 KV line running from Merowe to Wadi Haifa on the Egyptian border. The existing electricity transmission network leaves a sizable section of the country uncovered. To address these shortcomings, there a number of ongoing projects. They include: (i) Construction of 318 km transmission line at a cost of US$115 million, to link El Obeid- Dibabat-Abu Zabad-Al Fula-Babanusa together with four sub-stations; (ii) interconnection with Eritrea, a 70 km line of 66 KV to-gether with one sub-station, at a cost of US$13.5 mil-lion; (iii) the Static Variation Compensation project for nine sub-stations at the cost of US$23.5 million; (iv) Showak-Atbara transmission line (28 km) at the cost of US$7 million; and (v) River Nile Projects for US$218 million. On completion, these projects will add about 420 km to the existing network.

8.3.23 In addition, there are a number of projects at advanced stages of implementation. They include the following: (i) 620 km transmission line with 11 sub-sta-tions in South Kordofan at the cost of US$274 million; (ii) 90 km transmission line with two sub-stations from

Babanusa to Adila, US$60 million; (iii) 350 km trans-mission line, Nyala-Kass-Zalingei-Geneina, with four sub-stations at the cost of US$205 million; and (iv) 60 km transmission line, Haya-Sinkat-Sawakin with three substations at the cost of US$90 million. Proj-ects already under construction and those for which construction are about to commence, have a total fi-nancing requirement of US$1,006 million. In addition, there are several power transmission projects that are proposed for implementation during the 2015-2031 perios, as detailed in Annex Table 8.12, whose funding is yet to be secured.

8.3.24 The proposed programme for expansion of the transmission network of Sudan would add more than 6,400 km to the existing network. It includes 1,760 km of 500 KV lines, about 4,200 km of 220 KV lines and about 480 km of 110 KV lines. The total cost of the proposed programme is estimated to be about US$4.3 billion (Table 8.16). This will require on average, annu-al investment of US$285 million in power transmission projects for the next 15 years. The current policy does not allow private sector participation in power trans-mission projects. In the absence of a change in this policy, the required funding would have to be mobilised by the national government.

8.3.25 Power distribution network. Responsibility for the distribution network rests with the Sudan Elec-tricity Distribution Company (SEDCO), which is current-ly 100 percent government owned. The majority of the distribution network is in central part of the country, with off-grid systems for parts of the country not connect-ed to the national grid. As indicated earlier, distribution networks comprise 33KV, 11KV and 415V lines. Net-work infrastructure includes 9,496 km of overhead lines (1,428 km in Khartoum and 8,068 km in other states), approximately 150 sub-stations, and 18,000 consum-er transformers. Distribution networks cover all cities, including those served from off-grid power systems.

Table 8.22: Domestic Water Consumptionper Person per Day (in liters)

Country group Consumption

Sudan (2009) 53

Low income countries (mid-2000s) 51

Middle income countries (mid-2000s) 196

Resource rich countries (mid-2000s) 115

Source: Ranganathan & Briceño-Garmendia (2011)



Sub-stations are financed by the central government, while the overhead lines are financed by SEDCO or the customers, in case of the low voltage lines (415V).

8.3.26 For the 2012 to 2016 period, SEDCO plans to expand the main distribution network by over 9,000 km in order to improve power supply and meet new demand (Table 8.17). The plan also entails supply and installation of transformers of different capacities and carrying out related civil works for 24 new distribution stations. The total cost of this undertaking, together with related equipment, is US$199.4 million.

8.3.27 A major challenge for the management of the network is the substantial distribution losses that have been experienced for some years. From a peak of 34 percent in 2001, losses have gradually declined to about 22 percent at the present time. A study undertaken by SEDCO in 2012 indicated that out of a total of 8,613.32 GWh of energy supplied to SEDCO, distribution losses amounted to 1,550.5 GWh (18 percent of total), result-ing in revenue loss of SDG 361.5 million (equivalent of US$65.7 million). In order to minimise distribution pow-er losses, SEDCO plans to reduce power losses in two phases: from 18 percent in 2013 to 14 percent in the first five years and to 11 percent within a further five-year period. It is estimated that US$150 million will be required for each phase. The main elements of the plan include: network rehabilitation and reinforcement; pur-chase of tools and machinery; provision and installation of energy metres; provision and installation of power losses compensators; and administration costs.

Table 8.23: Proposed Expansion in Access to Improved Water and Sanitaion(% of population)


2012 2013 2014 2015 2020 2025 2030

Access to improved water (%)

Urban 66.0 69.0 72.0 75.0 90.0 100.0 100.0

Rural 50.2 51.9 53.6 55.4 62.3 71.6 91.8

Total 55.5 57.6 59.8 62.0 72.0 82.0 95.0

Access to improved sanitation (%)

Urban 43.9 49.2 54.6 60.0 80.0 100.0 100.0

Rural 13.4 15.4 17.3 19.2 33.8 47.9 75.5

Total 23.6 26.7 29.9 33.0 50.0 67.0 85.0

Population ('000)

With access to improved water 20,643 21,879 23,178 24,560 32,039 40,734 52,324

With access to improved sanitation 8,778 10,135 11,573 13,072 22,250 33,283 46,816

Source: Table 8.21, Annex Table 1.2 and estimates by authors.

Table 8.24: Capital Cost of Proposed Program for Water andSanitation (In US$ million)

Indicator 2014-2020 2021-2030 Total

Water services

Urban water 1,479.4 2,360.1 3,839.5

Rural water 233.1 710.0 943.1

Sub-total 1,712.5 3,070.1 4,782.6

Sanitation services

Urban sanitation

1,387.3 2,322.5 3,709.9

Rural sanitation

1,976.0 5,784.6 7,760.6

Sub-total 3,363.3 8,107.1 11,470.4

Emergency preparedness

70.0 117.0 187.0

Institutional & capacity building

13.9 23.0 36.9

Total 5,159.7 11,317.2 16,476.9

Memo items

Urban WSS total

2,866.7 4,682.6 7,549.3

Rural WSS total 2,209.1 6,494.6 8,703.7

National programs

83.9 140.0 223.9

Source: Estimates by authors.

8.3.28 Rural Electrification Programme. SEDCO is also responsible for rural electrification. In order to in-crease the very low levels of electrification in rural areas, SEDCO has begun installation of rural solar systems (100 watts and 200 watts) with the aim of covering the whole country by grid and solar systems by 2031 (80 percent coverage by the grid and 20 percent coverage by solar). The company will exploit the abundant solar


energy potential. Sudan’s geographic location enables it to receive large amounts of solar energy, which is es-timated at 640 watt/hour per square metre and is avail-able for more than 10 hours per day throughout the year. This provides the country with a good opportunity for use of solar energy to generate electricity, particu-larly for rural electrification. Sudan’s potential in solar energy by each State is shown in Table 8.18. According to the SEDC, the potential annual production of elec-tricity for such a solar programme is put at 131,285 terawatt hours (TWh). This level of potential for electric-ity production is substantially larger than the estimated total demand of 52.2 TWh a year by 2030 (Table 8.15). A project recently funded by the Global Environmental Facility (GEF) and UNDP utilised PV to electrify 13 rural and peri-urban communities, with some 45,000 house-holds in the country now using PV systems.

8.3.29 With the above potential, SEDCO has a long-term plan to install solar home systems (SHS) for 1.1 million rural households, covering the period 2012-31. As Annex Table 1.1 indicates, the total number of households in Sudan in 2030 is projected to be about 9.3 million, 5.7 million of which would be in rural ar-eas. The proposed programme, if successfully imple-mented, would therefore provide electricity to about 17 percent of these rural households – a little less than the above-mentioned target of 20 percent. Accord-ing to SEDCO estimates, the programme would cost about SDG 759 million and US$550 million (equivalent to about US$710 million at 2013 constant prices and exchange rate). The scheme has already been pilot-ed with the importation of 100 SHS units, 80 of which have been installed in six select States. The Plan for

the distribution of the SHS Units is among all states of Sudan is set out in Annex Table 8.14.

8.3.30 The proposed development programme for the power sector during the 2014-30 period is estimat-ed to cost about US$14.4 billion (Table 8.20). Invest-ment requirements for power generation are estimat-ed at US$9.1 billion, during in the next 15 years, while power distribution projects will need US$1.1 billion during the same period. The proposed power trans-mission programme will need US$4.3 billion, out of which US$1,006 million has been procured to finance the following projects:• Construction of 318 km transmission line at a cost

of US$115 million, to link El Obeid – Dibabat –Abu Zabad – Al Fula – Babanusa together with four sub-stations;

• Interconnection with Eritrea, a 70 km line of 66 KV together with one sub-station, at a cost of US$13.5 million;

• Static Variation Compensation project for nine sub-stations at the cost of US$23.5 million;

• Showak-Atbara transmission line (28 km) at the cost of US$7 million;

• River Nile Projects for US$218 million;• The 620 km transmission line with 11 sub-stations

in South Kordofan at the cost of US$274 million;• The 90 km transmission line with two sub-stations

from Babanusa to Adila, US$60 million; • The 350 km transmission line, Nyala-Kass-Zalin-

gei-Geneina, with four sub-stations at the cost of US$205 million; and

• The 60 km transmission line, Haya-Sinkat-Sawakin, with three substations at the cost of US$90 million.

Table 8.26: Growth of the Sudan Telecommunications Industry

Indicator 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013

Fixed line subscribers ('000)

387 570 499 345 366 370 545 484 425 416

Fixed lines per 100 persons

n.a. n.a. n.a. 0.85 0.88 0.87 1.25 1.33 1.14 1.09

Mobile phone subscriptions ('000)

23 1,828 4,683 8,218 11,991 15,340 18,093 25,056 27,659 27,658

Mobile cell phone per 100 persons

0.1 5.0 n.a. 20.4 29.0 36.1 41.5 68.8 74.4 72.9

Internet users (per 100 persons)

0.1 1.3 n.a. 8.7 n.a. n.a. 16.7 17.3 21.0 22.7

Fixed wire broadband ('000)

n.a. n.a. n.a. 45.2 44.6 n.a. 13.5 17.4 24.8 44.7

Fixed wire broadband (% population)

n.a. n.a. n.a. 0.11 0.11 n.a. 0.03 0.05 0.07 0.12

Source: International Telecommunications Union and World Bank Development Indicators database.



8.4 Water Supply and Sanitation

Water and Sanitation Services

8.4.1 Water Supply and Sanitation. There has been a steady deterioration in the levels of access to improved water and sanitation in the past two decades. Sudan now faces a major challenge in improving ac-cess to these services in the decade ahead. As Table 8.21 indicates, the share of population with access to improved water declined from 62 percent in 2000 to 55 percent by 2010, with sharp declines in access levels in both urban and rural areas. In the case of sanitation, the share of population with access to improved ser-vices declined from about 25 percent in 2000 to 24 percent in 2012. Most of the decline occurred in urban areas as access in rural areas remained at about 13 percent for most of the past decade. In 2012, about 17 million people did not have access to improved water and 28 million had no access to improved sanitation, about 75 percent of them living in rural areas. 130

8.4.2 Only about 15 percent of the population has access to utility water, which is well below all other Afri-can benchmarks. Census data for all parts of Sudan in-dicate that in 1993, about 60 percent of the population had access to utility water. The very steep decline in access to utility water stemmed from the lack of main-tenance of water supply by the public utility. It appears that the public utilities in Sudan have a poor record of collection of revenues for service provision. In addition, system losses of the Khartoum Water Corporation and the South Darfur Water Corporation in 2005 are report-ed to have been 40 percent and 49 percent respective-ly (Ranganathan and Briceño-Garmendia, 2011).

8.4.3 The level of urban access to improved water in Sudan is substantially lower than the average for Sub-Saharan African (SSA) countries. The latter stood at 83 percent in 2010, whereas the level of access to improved sanitation was comparable to the average for SSA. In rural areas of Sudan, 50 percent of the SSA population had access to improved water and 13 per-cent had access to improved sanitation. Access to im-proved water was better than for SSA, which stood at 42 percent in 2010. In the case of sanitation, however,

130 There is a range of estimates for the number of people in Sudan, with access to safe water and improved sanitation services. According to the Fellowship for African Relief (FAR), a Canadian international NGO with headquarters in Khartoum, 30 percent of the population does not have access to clean water. Among the rural populations, only 24 percent have access to improved water facilities.

access in Sudan was substantially lower than the aver-age of 23 percent for SSA as a whole.

8.4.4 The regions that are considered to have spe-cial water needs include Darfur, the Red Sea State and North Kordofan State. In the case of the Red Sea State, Port Sudan city alone requires 120,000 m3 per day, but only 35,000 m3 is available per day. This forces the State Water Corporation to ration supply to consum-ers. There are four desalination plants for Port Sudan city with a total installed capacity of 12,500 m3 per day, but total output is only 10,000 m3 per day due to lack of spare parts for the American sourced plant equipment. The balance of 35,000 m3 per day is obtained from two other water sources, one 23 km away and the other 40 km away. A project to supply Port Sudan with 100,000 m3 per day from a site 464 km away is stalled because of lack of funds. The Director General of the Red Sea State Water Corporation indicated that approximately 20 water harvesting plants are required to cover the whole State.

8.4.5 In the case of the Darfur region, an assessment made by the World Bank in 2010 indicated that only 25 percent of the population had access to improved water, with per capita availability limited to 5 litres per day. According to this assessment, only 15 percent of demand is being met. The Darfur International Con-ference on Water for Sustainable Peace held in June 2011, which sought to establish a more effective way to manage the region’s natural resources in the longer term, identified 65 projects requiring over US$1.0 bil-lion, to be implemented as part and parcel of the Darfur Recovery and Reconstruction Strategy (2013-2019).

8.4.6 Institutional Arrangements for Water and Sanitation Services. A number of institutional and legislative measures for water supply and environmen-tal sanitation sector are underway. The national water supply and environmental sanitation policy has provid-ed for the establishment of a National Commission for the water and environmental sanitation, with represen-tatives from the Ministry of Water Resources and Elec-tricity, Ministry of Health, Ministry of Education, Ministry of International Cooperation, Ministry of Environment, Ministry of Finance. The Public Water and Environmen-tal Sanitation Corporation (PWSC) and other key sector partners to coordinate, supervise, harmonise, monitor and evaluate sector performance and decisions. At the


state level, the policy provided for the establishment of state councils for the water supply and environmental sanitation sector, with representatives from the State Ministry of Physical Planning and Public Utilities, State Ministry of Health, State Ministry of Finance, State Min-istry of Education and State Water and Environmental Sanitation Corporation to ensure sector coordination and the successful achievement of policy objectives. It would appear that these institutional reforms are yet to be implemented.

8.4.7 In addition, state water resource legislation that allows states to control all the water resources within their state boundaries was to be reformed or created. However, consideration would be given to water-scarce states, which would allow the transfer of water from nearby water-rich states. The Federal Gov-ernment, with the agreement of the related states and through the Ministry of Water Resources and Electricity (MoWRE), would have a legal mandate to decide on state-to-state water rights and transfer issues.

8.4.8 Proposed programme for water and sani-tation. In September 2010, Sudan adopted a domes-tic Water Supply and Environmental Sanitation Policy whose overall objective was to contribute to the im-provement of the health status and living conditions of the population and the economic growth of the nation by providing the entire population with adequate and sustainable access to WASH basic services and hy-gienic practices. Key guiding principles of Sudan’s do-mestic water and sanitation policy emphasise the im-

portance of water for life; water as a human right; social conditions necessary for the delivery of water; protec-tion and conservation of water; access to environmen-tal sanitation as human dignity and focus on hygiene promotion as a major vehicle for preventive health; accountability to prevent water pollution and protect water sources; giving priority to vulnerable communi-ty sections in the development programmes of water supply and environmental sanitation; and meeting Mil-lennium Development (MDG) goals. The important role of the private sector has also been recognised as one of the key guiding principles. Following the adoption of the domestic Water Supply and Environmental San-itation Policy, the government elaborated a five-year Strategic Plan to make it operational. The Plan includes construction of new infrastructure, the maintenance of existing ones, as well as strengthening of institutional, organisational and human capacities in the sector, in order to ensure sustained water, sanitation and hygiene services.

8.4.9 One of the key objectives for the programme was to increase domestic water consumption. As Table 8.22 indicates, average daily consumption of water in Sudan is relatively low. It was estimated to be about 53 litres per person per day in 2009, comparable to that for all low income countries in the mid-2000s, but sub-stantially lower than that for middle income countries at that time. The policy objective was to increase the rates of access to safe water supply in rural areas by 20 litres per person per day and by 90 litres per person per day in urban areas. The policy aimed at achieving the

Table 8.27: Development Expenditures for Proposed InfrastructureProgram, 2014-2030 (In US$ million at 2012 prices)


2014-20 2021-30

Transport

Roads 3,345.6 5,984.7 9,330.3

Railways 1,945.0 1,698.3 3,643.3

Ports 409.5 610.5 1,020.0

Civil aviation 153.3 296.9 450.2

Sub-total 5,853.4 8,590.4 14,443.8

Power 6,379.5 8,043.2 14,422.7

Water resource supply 600.0 1,400.0 2,000.0

Domestic water and sanitation 5,159.7 11,317.2 16,476.9

Irrigation 800.0 2,200.0 3,000.0

ICT 324.0 300.0 624.0

Total 19,116.6 31,850.8 50,967.4

Source: Table 8.3, Table 8.4, Table 8.6, Table 8.9, Table 8.11, Table 8.20, and Table 8.24.



Government’s Quarter Century Strategic Plan for 2007-2031 that called for the level of access to safe water to reach 50 litres per capita per day in rural areas and 150 litres per capita per day in urban areas, in addition to full coverage of all schools, public health facilities and reli-gious premises by the end of Quarter Century Strategic Plan in 2031. Achieving this longer-term goal would put the national average consumption of water at about 90 litres per person per day. (See Annex Table 8.15 for state level details for the water targets for 2016).

8.4.10 To achieve the MDG targets for 2015 that called for 82 percent of the population having access to im-proved water and 67 percent of the population with ac-cess to improved sanitation (see Table 1.7 in Chapter 1), the government’s action plan called for a very rap-id build-up in these services and related facilities. The road map required access to improved water to reach 60 percent in 2010, 82 percent in 2015, 90 percent in 2020 and 100 percent in 2031. The Plan also set tar-gets for access and improved sanitation for each state for 2016, the details of which are given in Annex Table 8.16.

8.4.11 Currently, the most recent actual data for the levels of water and sanitation access are for 2012, and as Table 8.23 indicates, these stood at 56 percent and 24 percent respectively. Given the limited progress towards the MDG targets prior to 2013, the position taken in this Report is that it is highly unlikely that the MDG targets for 2015 will be met. Perhaps the greatest challenge to water and sanitation services is the short-age of finance, and yet most of the water systems are in need of rehabilitation, especially the domestic water and sanitation system in Khartoum and similar units in the States. The current scarcity of foreign exchange and the fluctuating exchange rates have further wors-ened the situation. As indicated earlier, lack of funds among other factors is hindering the executions of wa-ter projects.

8.4.12 For the purposes of this Report, it is assumed that the MDG targets would be met by 2025, rather than 2015. Table 8.23 sets out the indicative set of tar-gets used in this Report. The basic assumption is that financial constraints will continue to hinder progress for several more years, but that progress in providing im-proved access to these services will begin to acceler-ate during the 2015-2020 period. For the 2013-2030

period as a whole, a total of 30 million people would gain access to improved water, and almost 40 million would gain access to improved sanitation. By 2025, all urban residents would have access to improved wa-ter and sanitation services. And by 2030, more than 90 percent of rural residents would have access to im-proved water and 75 percent would have access to improved sanitation.

8.4.13 Table 8.24 sets out provisional estimates of the capital cost of the proposed programme for expanding access to improved water and sanitation services and improving the quality of services, along with funding for emergency preparedness responses, institutional de-velopment and capacity building that includes training programmes for personnel involved in the programme. Full implementation of the programme for 2014-2030 would require capital outlays of US$16.5 billion (at 2012 constant prices). Given the current low level of access to improved sanitation in urban and rural areas, the proposed sanitation programme accounts for 70 percent of the total capital outlays.

Water for Irrigation and Livestock

8.4.14 According Sudan’s National Water Policy, the national government is responsible for the supply of water to large-scale agricultural schemes, whether government owned or private. Major water projects in the states, such as the construction of water reservoirs (small dams and hafirs) are usually handled by federal government, which then hands them over to the States for their management. The responsibility to supplying water to private small and medium-scale schemes is assigned to the states, together with provision of do-mestic water and sanitation.

8.4.15 Water for Irrigation and Livestock. Large-scale water projects (dams) are part and parcel of pow-er generation projects. Some of the six new dams for hydroelectric power stations, whose construction costs are included in Table 8.20, will be multipurpose dams that also supply water for irrigation. Water harvesting for livestock farming is particularly important in Darfur, Kordofan, Blue Nile and Kassala regions. Estimates are not available for required investments in water for live-stock farming.

Management of Water Resources


8.4.16 Effective management of water resources, especially at the state level, is vital for sustainability of water supply, yet this is where there is lack of capaci-ty. Strengthening capacities for management of water resources will require the formulation of coherent water resources development and management strategies and action plans. Funding has been provided for ca-pacity building, training and technical support at the state level (Table 8.24).

8.5 Information and Communication Technology

ICT Infrastructure and Services

8.5.1 There has been impressive progress in the ICT sector in the past decade. The ICT sector in Sudan is said to be one of the most liberalised in Africa. As a consequence, the country has been able to attract significant private capital and investment in the sector, which is said to be making substantial contribution to Sudan’s GDP and per capita growth.

8.5.2 Private Provision of Communications Ser-vices. In the early 2000s, about 60 percent of the pop-ulation was covered by a GSM signal, but by 2010, more than 80 percent of the population was covered. The growth in mobile telephony has been impressive. As a result, with a mobile penetration rate of 73 per-cent, Sudan now has the highest level in the Eastern Africa region. Kenya is at 71 percent, Rwanda at 57 percent, Tanzania at 56 percent and Uganda at 44 per-cent. As with many other African countries, there has been little or no growth in the landline segment of the market. The share of population with landline subscrip-tions has remained at about one percent since the early 2000s.

8.5.3 The Sudan telecommunications network is also considered to be quite modern as most of it com-prise fibre-optic cables and microwave systems. The recent connectivity to an undersea fibre-optic cable led to expansions in access, improvements in quality, and reduction in prices. Access to undersea fibre-optic cables has enabled Sudan to develop a strong ICT in-frastructure backbone. Three undersea cable systems, including the East Africa Submarine Cable System (EASSy), land in Port Sudan. In addition, there are ter-

restrial links to Egypt and Ethiopia and a 10,000 km do-mestic fibre backbone (Sudatel 2009). The emergence of competition in gateways as a result of connectivity to the undersea cable network has facilitated very attrac-tive prices for ICT services in Sudan. Sudan has made impressive progress in liberalising its ICT market, and is now one of the most liberalised economies in Africa.

8.5.4 The national ground optical fibre backbone network extends for about 20,000 km to the borders of Egypt, Ethiopia, Chad and Eritrea. It is linked with in-ternational networks through two marine audio cables. The Ministry of Energy possesses optical fibre networks of 3,130 km along the oil pipelines, from production ar-eas to Port Sudan. There is also a cable that belongs to the National Electricity Corporation extending from Rosaries to Khartoum at the length of 1,153 km.

8.5.5 The geographic area coverage of the telecom-munications network is estimated at 40 percent, while the population area coverage is estimated at 80 per-cent. Mobile penetration soared from less than 1 per-cent in 2000 to 33 percent in 2009, and was in 2014 estimated at 57 percent. Whereas mobile cellular sub-scribers have risen from 8.2 million in 2007 to 27.65 million in 2013, fixed line subscribers have declined from over 1 million in the year 2000 to 415,571 sub-scribers in 2013 (Table 8.25). Data use is still limited, but is reported to have picked up during the past two years, mainly due to increased use of social networks, such as Tango, Whatsapp, and others. Revenue arising from mobile telephony is estimated at SDG 5.9 billion per annum, while that from data services is estimated at SDG 25.4 million per annum. The slight decrease in cellular phone subscriptions in 2013 in comparison with 2012, has been attributed to the switching off of unregistered numbers.

8.5.6 As can be seen from Table 8.25, mobile cellu-lar telephone penetration in Sudan has increased from 20 persons per 100 inhabitants in 2007 to 73 persons per 100 inhabitants in 2013. In this respect, Sudan is well ahead of most of the Eastern Africa countries and compares favourably with countries like Kenya, Nigeria and Zambia (see Annex Table 8.18). Only Zimbabwe, Ivory Coast and Ghana surpass Sudan in this respect. In the case of fixed (wired) broad-band subscriptions, while the figures are rather miserable for all compara-tor countries, Sudan still compares favourably with its



peers, as shown in Annex Table 8.19.

8.5.7 Development of E-Government Applica-tions. During the past three years, the Government of Sudan has developed its own Internet Switch Centre, dubbed the National Information Centre at a cost of US$21 million. The backbone is provided by SUDATEL and CANARTEL. The technology connects all the gov-ernment units at the central level as well as the state level, for purpose of running E-Government applica-tions. The key features of the programme are as fol-lows:• Deployment a Metropolitan Area Network (MAN)

for Khartoum that connects all federal ministries to the national network, using fibre optics backbone, and deployment of MAN for 18 states;

• Deployment of WAN (Wide Area Network) that connects the MAN networks to the government Data Centre;

• Deployment of a local area network (LAN) in all fed-eral ministries and some government units;

• Deployment of a voice over IP (VoIP) application in all federal ministries and HQ of states, cover area all capital cities of states; and

• Deployment of video conference system between the Ministry of the Cabinet and all Headquarters of States and some national government units and federal ministries.

8.5.8 In conjunction with these initiatives to develop various e-government applications in Sudan, there has been considerable progress in the developing comple-mentary applications. These include the following: (i) A national data centre, in service now for the government units; (ii) the Sudan Internet Exchange Point that is now in service; (iii) a fibre network and data centre for the Ministry of Water Resources and Electricity; (iv) a fibre network for the Ministry of Petroleum; (v) a data centre for the Africa City for Technology; and (vi) an Army Wi-Max Network. The technical details for these various applications are set out in Annex Table 8.20.

Policy and Institutional Arrangements for the Sector

8.5.9 The National Telecommunication Corporation (NTC), the industry regulator, was established in 2001. The provision of ICT services was licensed to private operators. One operator, Sudatel, was established in

1994 as a public company and subsequently floated on the regional stock market. There are four main tele-communications service providers in Sudan, namely: SUDATEL131 (fixed line/mobile plus ISP); CANARTEL (fixed line plus ISP); ZAIN and MTN, both being mo-bile telephone service providers. The sector is already largely in the hands of the private sector, either local or foreign. Except for SUDATEL, which is 25 percent government owned, the other companies are wholly owned by the private sector.

8.5.10 Policy, institutional and legal issues in the ICT sector at this juncture are limited to two key concerns. The first relates to the impact of sanctions. As with oth-er sectors in the economy, the concern is about the impact on the availability of equipment for the sector and for spare parts and replacements. The second concern relates to taxation of the industry. The issue here is the extent to which the industry should contrib-ute to the realisation of universal coverage in Sudan. Until recently, there was a value added tax (VAT) of 30 percent on all telecommunications services and a tax of 30 percent on profits. Service providers complained that this level of taxation was excessive and that the taxes eroded their earnings. Subsequently, the prof-it tax was replaced by a tax of 2.3 percent of gross revenue as telecommunications service providers were said to be evading the profit tax by declaring low prof-its. Revenues from the 2.3 percent tax are then divid-ed among the industry regulator, the NTC, and the ICT Fund that has been established for the purpose of de-veloping government ICT infrastructure and extension of services to areas that are not economically viable. The regulator receives 56.5 percent of the revenue with the balance of 43.5 percent going into the ICT Fund. Network coverage in the rural areas is still a challenge, forcing some of the operators to use VSAT technology, which is considered to be rather expensive. Neverthe-less, the President of the Republic has established a committee that is tasked with ensuring that services are extended to the rural areas.

Expanding Access to Communications

8.5.11 The broad goals of the National Communica-tions Corporation (NCC) include: (i) Modernisation of the ICT sector and boosting its use in all spheres of economic activity and e-governance; (ii) extending ICT 131 SUDANI Mobile is the subsidiary company of SUDATEL that provides mobile telepho-

ny services.


services in all parts of the country, thereby providing universal access to GSM signals and public broadcast facilities; (iii) adopting policies and regulations to attract more private sector investment into the sector; and (iv) legislative and institutional reforms, as well as human capacity building.

8.5.12 The NCC is expecting that mobile phone sub-scribers will rise to 47 million within five years from 2015 to 2019. The number of subscribers is therefore expected to be higher than the population when the single subscriber has more than one mobile phone line. During the same period, NCC expects the fixed phone subscribers to increase marginally from the present fig-ure of just over 400,000 to 500,000. Continued rapid growth in the number of mobile telephony subscribers, as well as the expected growth in the number of people using internet services, will require the companies to upgrade their ICT infrastructure facilities. Among other things, this will require substantial additional base sta-tions in urban areas.

8.5.13 According to the NCC, telecommunications companies also need to make additional investments in order to increase their network coverage, particular-ly in rural areas. Achievement of the goal of universal access will require a substantial number of additional base stations in rural parts of the country. NCC esti-mates that for network upgrade and extension, each of the current four operators needs to spend a minimum of US$15 million per annum over the next 10 years. Meanwhile, and on account of the growing number of subscribers, there may still be scope for new service providers to come into the market. New entrants are required to pay US$130 million for a 15 year license. In addition to private sector investments, the government plans to upgrade its INTRANET to facilitate the connec-tion of all government units by 2016, at an estimated cost of US$42 million.

8.5.14 The public and private parts of the communi-cations industry face a number of important challeng-es at this stage of its development. These include the following: (i) Shortage of qualified technical cadres at middle and top levels; (ii) the need to improve terms and conditions of service for the public sector em-ployees and elimination of discrepancies in the levels of pay, taking into account professional qualifications of staff and hardships imposed by geographical loca-

tions where staff are based; (iii) the need to establish an automatic and direct data collection system from the service providers; and (iv) the need to adopt a new Communications Act for better regulation of the ICT sector.

8.6 Infrastructure Expenditures and Financing

Proposed Development Expenditures

8.6.1 The proposed programme of development expenditures for the infrastructure sectors for 2014-2030 amount to US$51 billion. As Table 8.26 indicates, the transport and power sectors would each require about US$14 billion, while the requirements for the provision of water and sanitation services to commu-nities throughout the country total about US$16 billion. Detailed assessment of requirements for development of water resource supplies and irrigation development were not available at the time this Report was prepared. A notional amount of US$5 billion is therefore included in Table 8.26 for capital works in these areas during the 2014-2030 period. The average annual expenditure on development of the infrastructure assets and services of Sudan amounts to about US$2.7 billion a year for the 2014-2020 period, and about US$3.2 billion a year for 2021-2030. Under this programme, total public and private investment in infrastructure in the Moderate Growth Case increases from an estimated 2.3 percent of non-oil GDP in 2012, to a peak of about 3.7 percent in 2018. It then declines steadily to only 2 percent of non-oil GDP by 2030.

8.6.2 A major concern with this proposed pro-gramme is that the level of investment in infrastructure will not be sufficient to meet the needs of a Sudan economy growing at close to 6 percent a year in real terms by the mid-2020s. Experience with infrastructure programmes elsewhere in Sub-Saharan Africa sug-gests that levels of investment of up to 8 percent of GDP may be required to close the infrastructure gap in countries such as Sudan. The foregoing estimates for infrastructure investment are substantially lower than those of Ranganathan and Briceño-Garmendia (2011). They put the annual capital expenditure requirement for infrastructure at US$3,303 a year for the 2006-2015 period. After adjusting their estimate from 2006 to 2012 constant prices, their estimate is equivalent to



an average investment of US$3.7 billion a year at 2012 constant prices. On an annual basis, the proposed ex-penditures for transport and ICT set forth in Table 8.26 are substantially lower than the adjusted estimates of Ranganathan and Briceño-Garmendia (2011). The an-nualised expenditure for power, on the other hand, is higher than that of Ranganathan and Briceño-Garmen-dia. Further work on investment requirements for the transport sector will likely find that a much larger invest-ment in the secondary and tertiary road network will be required for a successful programme of broad-based economic diversification.

Sources of Financing for the Programme

8.6.3 In the recent past, infrastructure financing for Sudan has mainly come from Arab Funds, China and the Government of Sudan. Funding from traditional multilat-eral institutions, such as the African Development Bank and the World Bank, are currently on hold due to debt arrears, while official development assistance (ODA) is negligible and access to commercial debt financing in the US and European markets is severely constrained because of the economic sanctions applied by these countries.

8.6.4 Much of the infrastructure funding for Sudan in the recent past has been skewed towards the power sector and road construction. The Merowe power proj-ect, which was jointly funded by a number of agencies at the cost of €1.2 billion, provides a good example. The China Export Import Bank provided 20 percent of the funding. Five development funds from the region provid-ed 47 percent of the funding, while the Government of Sudan provided the remaining 33 percent. (see Annex Table 8.21 for details.) A number of power projects cur-rently under construction or about to commence con-struction have committed funding of US$1,006 million, while more than 700 kilometres of roads are currently under construction. In contrast, ongoing rail projects cost only US$13 million. The private sector has funded most of the ICT infrastructure and is engaged in limited rehabilitation of rail lines.

8.6.5 Early action will be required to translate the fore-going broad programme for infrastructure development in Sudan into a series of specific infrastructure projects suitable for public and or private financing. In the case of the latter, close attention will need to be given to the identification and further design of projects that could be proposed for development under public private partner-ship arrangements.





9.1 Key Challenges for the Decade Ahead

9.1.1 The discussion throughout this Report has highlighted the importance of key service sectors in promoting broad-based economic growth in the non-oil economy of Sudan, which includes a strong recov-ery in the agriculture sector and promotion of small and medium-scale business activities in the rest of the economy. Infrastructure and financial services, and fur-ther development of labour market skills, have been identified as critical components of the strategy for ac-celerated economic growth. The proposed programme for infrastructure development is discussed at length in Chapter 8. This Chapter addresses the issues related to further development of the financial sector, and the need for an increasingly broad range of skills in the la-bour force.

9.1.2 As the discussion in Chapter 2 indicates, the development of the financial sector in Sudan needs to be accelerated and given high priority. Sustained strong growth in the non-oil economy during the 2015-2030 period will require increased levels of investment. Con-tinued economic sanctions against Sudan, and slow progress in resolving the ongoing problems of arrears clearance with offshore creditors and start-up of the proposed HIPC initiative means that Sudan will contin-ue to have limited access to offshore funding for invest-ment. The required high levels of domestic investment will therefore have to be financed primarily from within Sudan for some years to come. As the discussion in Chapter 1 indicates, prior to the secession of South Sudan in 2011, the oil boom had resulted in a national savings rate of 21 percent of GDP for much of the past

decade. However, the savings rate plummeted to about 10 percent of GDP in 2012-13. As further discussed in Chapter 2, a substantial share of the high levels of do-mestic investment required for successful implemen-tation of the proposed diversification programme will have to be financed from increased domestic savings, a substantial portion of which will have to be mobilised by financial sector so that these resources can then be applied to productive investments throughout the non-oil economy. The basic problem at the present time is that the amount of domestic savings that is monetised and held within the financial sector of Sudan is very small. The present level of financial savings is far short of what will be required in the decade ahead to finance the investment and working capital requirements of an increasingly diversified non-oil economy.

9.1.3 The labour market in Sudan has grown rapid-ly in the past few decades, driven by high population growth rates. As noted in Chapter 1, the key charac-teristics of this market include low levels of participation by the adult population, especially among women, low levels of skills and productivity and high unemployment rates. At the same time, there has been substantial out-migration of Sudanese labour, especially to oil-rich Arab states. And since the start of the oil boom in the latter part of the 1990s, a substantial influx of skilled workers into Sudan due to the severe skill shortages within the country has been witnessed. The major chal-lenge for the decade ahead is that the labour force is expected to increase to about 22.1 million by about 2030 – essentially a doubling of the labour force. Cre-ating productive employment opportunities for an an-nual average of 610,000 new entrants into the labour force during the 2014-2030 period, compared to the

9. ROLE OF OTHER KEY SERVICES IN PROMOTING GROWTH



average of about 330,000 in the 2000-2013 period, is one of the biggest challenges that Sudan faces in the decade ahead. These trends in the labour force under-score the political and economic importance of the pro-posed diversification programme. They also highlight the challenges associated with the task of providing productive employment for these new entrants, while at the same time raising the existing low levels of pro-ductivity of a substantial portion of those already in the labour force. They additionally point to the challenge of providing opportunities for the 15 percent of the labour force that has been unemployed each year for the past decade.

9.2 Expanding the Role of the Financial Sector

Current Status of the Financial Sector

9.2.1 Like many developing countries, the Sudanese financial sector is still young and underdeveloped, fol-lowing years of repression, political and economic in-stability upheld by a long period of civil war. Historically, Sudan’s financial system has been characterised by heavy government interventions and regulations, cen-tralised lending by the central bank to public enterpris-es, absence of indirect monetary policy instruments, lax bank supervision and an inadequate accounting sys-

tem. While experiencing substantial growth in recent years, Sudan’s financial system remains small relative to its regional peers. Intermediation is low, the equity and foreign exchange markets are shallow. Non-bank financial markets and institutions are small and under-developed. Sudan continues to be under-banked, giv-en the low ratios of deposits and credit to GDP. Most banking and financial institutions are concentrated in Khartoum, the capital, and nearby areas. Only a small share of the population has access to bank services. Enterprises often face difficulties in obtaining fund-ing from banks or capital markets. Sudanese banks are small, even compared with Islamic banks in other countries.

9.2.2 As noted in Chapter 3, with a fully-fledged Islamic banking system, the monetary policy frame-work has lacked adequate instruments for monetary operations, liquidity management and non-inflationary financing of government deficits. As the IMF has ob-served, these constraints have limited the development of efficient instruments for interbank market and central bank credit facilities.132 As a result, the lack of adequate monetary instruments has led to high intermediation costs and persistent inflationary pressures that, in turn, have adversely affected the opportunities for develop-ment of the private sector in the non-oil economy.132 IMF (2013), Sudan: Selected Issues. IMF Country Report No. 13/320, IMF, Washing-

ton DC, September 5, 2013.

Table 9.1: Financial Sector Assets

Indicator 2005 2006 2007 2008 2009 2010 2011 2012 2013

Assets (SDG mill)

Commercial banks

Foreign assets 1,612 1,303 1,523 2,076 1,169 2,242 1,713 3,100 2,700

Domestic assets 5,580 9,910 11,850 14,092 20,682 23,555 26,625 37,453 42,717

Total 7,192 11,213 13,373 16,168 21,851 25,797 28,338 40,553 45,417

Total

Foreign assets (579) (1,844) (2,574) (2,378) (4,587) (4,187) (5,876) (7,271) (12,729)

Domestic assets 6,977 12,385 14,812 17,476 24,338 39,799 47,790 66,064 79,174

Total 6,398 10,541 12,238 15,098 19,751 35,612 41,914 58,793 66,445

Assets (% of GDP)

Commercial banks

Foreign assets 1.9 1.3 1.4 1.7 0.9 1.4 0.9 1.3 0.9

Domestic assets 6.7 10.3 11.1 11.3 15.2 14.5 14.3 15.4 14.5

Total 8.6 11.6 12.6 13.0 16.1 15.9 15.2 16.7 15.4

Total

Foreign assets (0.7) (1.9) (2.4) (1.9) (3.4) (2.6) (3.1) (3.0) (4.3)

Domestic assets 8.4 12.8 13.9 14.0 17.9 24.5 25.6 27.1 26.9

Total 7.7 10.9 11.5 12.1 14.6 22.0 22.5 24.2 22.6

Source: Annex Table 2.1 and IMF, various Sudan country reports.


9.2.3 As part of its economic and structural adjust-ment programme, the government adopted a com-prehensive package of financial policy reforms in the 1990s. The objective was to create a better business environment by relaxing some of the financial sector restrictions, to modernise the financial sector to cope with the new achievements in the banking industry, and to build more efficient financial market to promote economic growth through a more efficient allocation of credit. The reform agenda of 1997 improved the financial sector of Sudan in terms of supervision and regulation, with a shift from direct instruments of mon-etary control to one with more weight on indirect in-struments.133 The direct instruments included directed credit to priority sectors, centralised lending to public enterprises, fixed rates of return that were negative in real terms and restrictions on interbank transactions. The use of market-based instruments was initiated in 1998 under the open market operations that are Islam-ic by principle (they are Shariah based).

9.2.4 Continued financial sector reform and devel-opment is an essential pillar for Sudan’s medium and long-term prospects. While progress has been made in deepening financial intermediation, Sudan’s financial system remains relatively underdeveloped. Sudan’s fi-nancial system is relatively small compared with coun-tries in similar stage of development. There is no inter-bank market. The equity and foreign exchange mar-kets are shallow, and nonbank financial institutions are small.

9.2.5 Table 9.1 indicates that the ratio of domestic financial assets to GDP was only 8 percent as recently as 2005. It increased to 27 percent by 2012 and 2013. Moreover, the share of these assets held by the com-mercial banking network is only a little more than half of

133 Kireyev, Alexi (2001), Financial Reforms in Sudan: Streamlining Bank Intermediation. IMF Working Paper, IMF Geneva Office, May 2001.

that of the total for the industry. Without further action, the low level of assets relative to GDP for the industry as a whole and the commercial banks in particular, un-derscores the inability of the financial sector to play a larger and more important role in providing funding for the diversification programme in the decade ahead.

9.2.6 The financial system of Sudan consists of the Central Bank of Sudan, which regulates and supervises the system that includes 37 commercial banks and a number of non-bank financial institutions (NBFIs). The sector is dominated by the banking industry that is concentrated in the big cities. Most of the remaining assets are held by insurance companies. Micro-finance organisations and the stock exchange account for min-imal shares of the financial assets of the country. Only a small share of the population has access to bank ser-vices, and enterprises often face difficulties in obtaining funding from banks or capital markets.

9.2.7 Authorities have recently embarked on a se-ries of reforms in attempts to strengthen the financial system and improve the performance of the banking sector. Supervisory and legal and regulatory frame-works have been improved, particularly in the areas of corporate governance, risk management, and provi-sioning. Restructuring processes are also underway for two banks, including the Omdurman National Bank, to improve their financial position.

Recent Developments in the Banking Industry

9.2.8 Like many developing countries, the Suda-nese financial sector is dominated by commercial banks rather than by bond and equity markets that require mature systems of accounting and financial information. The banking sector forms the backbone of Sudan’s financial system and is the primary source

Table 9.2: Commercial Bank Branches per 100,000 Adults in Sudan and Comparator

Countries

Country 2005 2006 2007 2008 2009 2010 2011 2012 2013

Egypt 3.8 3.9 4.2 4.5 4.6 4.6 4.6 4.7 4.9

Kenya 2.6 2.7 3.5 4.1 4.4 4.7 5.0 5.5 5.6

South Africa 7.2 7.4 6.1 7.9 9.4 10.1 10.5 10.4 10.3

Sudan 2.4 2.3 2.3 2.4 2.8 2.2 2.9 2.9 3.1

Tunisia 12.2 13.0 13.7 14.5 15.0 16.5 17 17.7 18.3

Uganda 1.2 1.2 1.3 2.0 2.3 2.4 2.3 2.6 2.9

Source: World Bank, World Development Indicators database.



of financing for the domestic economy. At the present time, there are 21 public-private (jointly-owned) banks in the country, as well as six foreign banks and two banks that are branches of foreign banks, and four state-owned banks (including one commercial bank and three specialised banks). Publically-owned banks dominate the sector and account for around 50 per-cent of total banking sector assets.

9.2.9 As Safiat (2013) has noted, Sudan’s banking system remains largely cut off from the international fi-nancial system.134 The offshore activities of Sudanese banks are confined largely to export finance and re-mittance transfers. Although some Sudanese banks have foreign shareholders, and there are a number of jointly-owned banks, the transfer of international expe-rience has been slow, given the low levels of offshore investment in Sudan.

9.2.10 Access to banking services in Sudan is uneven. Enterprises often face difficulties in obtaining

134 Safiat, Ali Saber Ali (2013), Financial Intermediation and Economic Growth in Sudan: An Empirical Investigation, 1970-2011. British Journal of Economics, Management and Trade, 3 (4), pp. 332-358, July 2013.

funding from banks (and capital markets). And large segments of the population have very limited access to these services, especially in rural areas. The Cen-tral Bank of Sudan has no regulation on the number of bank branches for commercial banks, suggesting that decisions on the number of branches are specific to individual bank enterprises. Despite a recent increase in the number of bank branches in Sudan, the num-ber of branches per 100,000 adults in the country is low compared to countries like Kenya and Egypt. Table 9.2 shows commercial banks branches per 100,000 adults in Sudan and five comparator countries in Afri-ca.135 Commercial bank branches per 100,000 adults increased from 2.4 in 2005 to about three by 2013. Sudan is comparable to Uganda, but is low compared to Kenya, Egypt, Tunisia and South Africa.

9.2.11 Allocation of Bank Credit to the Private Sector. Bank financing of the private sector is essen-

135 For purpose of comparison in this Chapter, Egypt, Kenya, South Africa, Tunisia and Uganda are used as comparator countries. All these countries have relatively strong manufacturing sectors, a characteristic that Sudan will have to acquire if its diversifi-cation programme is to be successful. The share of manufacturing in Sudan’s GDP is about 6 percent, whereas it ranges from 9 percent for Uganda to 17 percent for Tunisia.

Table 9.3: Bank Credit to the Private Sector of Sudan and ComparatorCountries (Percent of GDP)

Country 2000 2005 2010 2011 2012 2013 2014

Egypt 52.0 51.2 33.1 31.2 29.1 27.8 27.3

Kenya 25.6 26.1 27.1 30.4 29.5 31.7 34.4

South Africa 69.1 68.8 70.4 67.6 68.4 67.4 67.2

Sudan 2.3 10.4 11.9 10.8 12.0 10.4 8.5

Tunisia 53.4 55.5 65.1 72.5 72.1 71.9 n.a.

Uganda 5.7 8.5 13.3 15.3 13.6 13.4 14.3


Table 9.4: Commercial Bank Lending by Economic Sector in Sudan(Share of loans outstanding at end year in %)

Sector 2001 2005 2010 2011 2012 2013 2014

Agriculture 17.6 8.8 12.5 11.7 14.8 16.0 16.7

Industry 14.8 10.9 10.3 10.8 12.6 15.9 14.6

Trade

Exports 19.6 3.9 2.5 3.0 3.4 3.6 3.7

Imports 3.7 26.2 11.3 10.4 3.2 3.0 2.0

Domestic trade 18.8 22.8 14.3 14.4 13.2 9.7 9.1

Construction n.a. n.a 9.2 9.9 11.0 10.9 16.7

Other sectors 25.5 27.4 39.9 39.8 41.8 40.9 37.2

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Memo item:

Loan balance (SDG mill) 1,464 6,954 17,205 20,202 24,815 32,667 40,006



tial for the growth of the economy. However, access to credit by the business community in Sudan is a major concern. According to the 2014 Sudan economy pro-file reported by the World Bank (2014), Sudan ranked 170 out of 189 countries in ease of obtaining credit. In the 1996-2000 period, commercial bank claims on the private sector were the equivalent of only about two percent of GDP. In response, the central bank intro-duced a series of reforms in 2000 aimed at strengthen-ing the (mainly state-owned) banks and increasing their commercial independence, while tightening supervi-sion. As Table 9.3 indicates, bank credit to the private sector increased substantially in the past decade, rising to about 12 percent of GDP by 2010. It declined to only 8.5 percent in 2014.

9.2.12 This level of access to bank financing by the private sector is still quite low in comparison with Egypt, Kenya, South Africa and Tunisia. As Table 6.13 in Chapter 6 indicates, the share of manufacturing in Sudan’s GDP is projected to increase to about 15 per-cent of GDP by 2030, roughly comparable to the cur-rent average for these four comparator countries. The implication is that the share of bank credit to the private sector in Sudan may have to increase to at least 30-40 percent of GDP by 2030 to meet the domestic private sector demand for bank financing. This would repre-sent a very substantial increase over the level of credit provided in 2013. These illustrative projections under-score the importance attached to further development of the banking system in Sudan in the decade ahead. Extending bank credit to the private sector is one of the major components of the ongoing reform programme for 2014 agreed upon with the IMF.

9.2.13 Allocation of Bank Credit Among Sectors.

Table 9.4 shows the distribution of bank credit to the various sectors of the Sudanese economy. In the early 1990s, banks were instructed to allocate 50 percent of their lending to agriculture. As a result, the share of agriculture in total bank lending rose to 32 percent by 1993. However, following the financial liberalisation and reform programme, coupled with the high risk and relatively low or even negative real rate of return on agricultural finance, the share of agricultural loans de-clined steadily to only 9 percent by 2005. The increase in lending to agriculture during the 1990s was accom-panied by a sharp fall in lending to the industrial and export sectors.

9.2.14 In spite of agriculture being the largest sec-tor of the economy, it attracted only about 12 percent of total bank credit as recently as 2010-2011. Since 2011, the share of agriculture has increased steadily to almost 17 percent at the end of 2014. This pattern of lending by the commercial banks may stem from the notion that lending to agriculture and industry carries more risk than these service sectors. Another factor relates to the use of Islamic modes of finance in Su-dan. In the past decade, most of the bank credit went to trade and other service sectors. The other striking change in recent years is the large increase in the share of credit allocated to the construction industry. At the same time, there has been a substantial decline in the share of credit allocated to domestic trade activities.

9.2.15 Bank Lending by Type of Instrument. As noted earlier, banking and other financial practices in Sudan are based on Islamic modes of financing. Box 9.1 provides a summary of the modes in use in Sudan. Some of these modes of finance are not considered ef-ficient in financing agriculture. For example, because of

Table 9.5: Mode of Financing for the Private Sector(As percent of total)

Islamic instrument 2001 2005 2010 2011 2012 2013 2014

Murabaha 39.5 43.3 55.5 61.4 49.9 53.2 52.2

Musharaka 31.0 30.8 9.4 6.6 10.9 11.1 9.4

Mudaraba 6.2 4.2 7.1 6.1 5.4 5.2 5.4

Salam 5.0 2.1 1.2 0.7 1.9 2.0 3.8

Mugawla - - 10.4 8.4 9.0 11.6 13.4

Others 18.3 19.6 16.4 16.8 22.9 16.9 15.8

Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Memo item:

Total flow (SDG million) 1,464 6,954 22,107 23,329 24,103 33,822 38,679




the participation required by banks in the management of projects they finance, the banks are not usually will-ing to have a Musharaka (profit sharing) contract with operators in the agricultural sector (Kireyev, 2001).

9.2.16 Sudanese banks have a clear preference for Murabaha over other Islamic modes of finance (Table 9.5), perhaps because it is the mode of Islamic finance closest to conventional banking in the sense that the loan is collateralised and hence offers greater securi-ty.136 In the past decade, there has been a steady in-crease in the share of this instrument in total financing extended to the private sector. Banks are usually not willing to enter into a Murabaha contract with projects related to the agricultural sector, in spite of the fact that agriculture is the biggest contributor to GDP. This is not unconnected to the notion that the investor has no ob-ligation to guarantee no loss from investment, though the investor is expected to do the best to ensure the success of the project.

9.2.17 The very low and generally falling share of Salam, the main mode of financing agriculture, is a clear indication of the declining role of commercial banks in the agricultural credit market in Sudan. Moreover, the profit sharing modes of financing, Mudaraba and Musharaka, which are more suitable for entrepreneurs with limited capital of their own, have declined from 37 percent in 2001 to 16 percent in 2010. These trends in Salam, Musharaka and Mudaraba suggest that me-dium and long-term financing by Sudanese banks is low and generally falling. They also suggest that the current structure of the Sudanese financial sector is not conducive to providing the private sector, especially

136 According to the Central Bank of Sudan directives, banks may use all Shariah-com-patible instruments, other than Mudaraba Mutlaga, to finance various activities and sectors. Mudaraba Mutlaga is an unrestricted form of Mudaraba and has the lowest share of bank financing in Sudan.

SMEs and small-scale farming, with term financing for investment in activities that can boost production and productivity.

9.2.18 Quality of Bank Loan Portfolios. Systemic risk is estimated to be low, largely due to low levels of intermediation, the small size of the financial sector and its relative isolation from global financial markets. However, capital adequacy ratios are below required levels for most institutions in the sector. A high share of the loan portfolio in Sudan is classified as non-per-forming. Nearly half of all non-performing loans (NPLs) was held by one bank, the Omdurman National Bank, which represented almost 25 percent of total bank lending, but had almost 40 percent of its loan portfolio non-performing. The high proportion of non-performing loan in the banking system adversely affects the asset quality of banks that then has negative consequence for bank profitability as well as the expansion of loans. The high level of NPLs has hindered the capacity of the banks to act as effective financial intermediaries. This is inimical to private sector development. Table 9.6 reports the non-performing loans as a percentage of total loans in Sudan and for the earlier mentioned comparator countries. Non-performing loans in Sudan declined from 15.4 percent in 2000 to 8.4 percent in 2004, but increased thereafter to 14 percent in 2010. The non-performing loan ratio in Sudan was lower than in Kenya, Egypt and Tunisia from 2002-2004, but with the subsequent deterioration, Sudan’s asset quality in 2012 was lower than four of the five comparator coun-tries. By 2013, the share of non-performing loans in Sudan had declined to 8.4 percent again. However, the objective for Sudan should be to get the ratio down to the 4-5 percent range of South Africa and Kenya.

Table 9.6: Non-Performing Loans in Sudan and Comparator Countries (As % of total loans outstanding)

Country 2000 2005 2010 2011 2012 2013 2014

Egypt 13.6 26.5 13.6 10.9 9.8 9.3 8.9

Kenya 33.3 25.6 6.3 4.4 4.6 5.0 5.5

South Africa n.a. 1.5 5.8 4.7 4.0 3.6 3.3

Sudan 15.4 n.a 14.0 n.a. 11.9 8.4 n.a.

Tunisia 21.6 20.9 13 13.3 14.9 16.5 16.2

Uganda 9.8 2.3 2.1 2.2 4.2 5.6 4.1

Source: Central Bank of Sudan, Annual Reports and World Bank, World Development Indicators database.


Financial Intermediation and Financial Sector Efficiency

9.2.19 Conventional banking allows banks to manage their liquidity through borrowing on an inter-bank mon-ey market. Such markets facilitate borrowing in order to manage bank’s assets and liabilities and ensure that there is no risk of a mismatch between durations of assets and liabilities. Islamic banking requires all trans-actions to be based on underlying tangible assets, such as commodities, physical assets and services. As such, inter-bank money markets in the conventional sense are not permissible in accordance with Islamic banking principles. While this ensures that banks will not invest in high risk financial products and any se-curitisation will have an underlying physical asset, mis-matches between the duration of banks’ liabilities and assets can present a management challenge because of reliance on short-term deposit funding. This then limits the extent to which deposits can be used for lon-ger term financing. The financial sector of an economy with high financial intermediation contributes more to the growth of the private sector and the real sector of the economy than one with low financial intermediation

since the intermediation process involves lending to the private sector for investment purposes.

9.2.20 Financial Intermediation is at an Early Stage of Development in Sudan. Progress in the past decade or more notwithstanding, the current level of financial intermediation in Sudan is low in compari-son to other lower middle income countries in Africa. One commonly used measure of the level of financial intermediation is the level of broad money (M2) as a percentage of GDP.137 As Table 9.7 indicates, the most recent data indicate that the level of M2 peaked at 24 percent of GDP in 2012 and then declined to 19 per-cent of GDP in 2013, somewhat lower than Uganda, but well below that of Egypt, Kenya, South Africa and Tunisia, both of which were at 65 percent in 2012. A number of other characteristics stand out in compar-ison with these five countries, including a high prefer-ence for cash and near cash in Sudan:• Currency in circulation is close to 30 percent of the

money supply in Sudan, compared with about 18

137 The M2 measure of money supply, which is also referred to as broad money, or money and quasi-money, includes the sum of currency outside the banks, demand deposits other than those of the central government, and the time, saving and foreign currency deposits of resident sectors other than the central government.

Table 9.7: Selected Indicators for Levels of Financial Intermediation in Sudan and Comparator Countries

Indicator Sudan Comparator data for 2012 (in local currency mill)

2000 2005 2010 2011 2012 2013 Egypt Kenya Sth Africa Tunisia Uganda

Amount (SDG million)

Demand deposits

841 4,369 11,593 13,719 18,365 21,035 133,903 706,679 496,413 13,062 5,102

Quasi money

1,067 5,340 13,801 15,248 23,504 26,218 828,237 886,752 1,473,752 26,785 4,775

Currency 1,558 3,761 10,068 12,850 16,751 19,178 205,020 147,753 81,057 6,550 2,246

Total M2 3,467 13,470 35,462 41,817 58,620 66,431 1,167,160 1,741,184 2,051,222 46,397 12,123

Composition of M2 (%)

Demand deposits

24.3 32.4 32.7 32.8 31.3 31.7 11.5 40.6 24.2 28.2 42.1

Quasi money

30.8 39.6 38.9 36.5 40.1 39.5 71.0 50.9 71.8 57.7 39.4

Currency 44.9 27.9 28.4 30.7 28.6 28.9 17.6 8.5 4.0 14.1 18.5

Total M2 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Memo items:

M2 as % of GDP

10.3 16.2 21.9 22.4 24.1 22.5 75.7 50.6 65.0 65.1 24.3

Commercial bank reserves (SDG mill)

815 1,940 4,619 5,555 9,745 11,723 52,021 111,137 61,934 1,427 1,293

Reserves as % of total deposits

42.7 20.0 18.2 19.2 23.3 24.8 5.4 7.0 3.1 3.6 13.1

Source: Annex Table 2.1, World Bank World Development Indicator database and IMF country report, various issues.



percent for Egypt and Uganda, ranging down to less than 10 percent for Kenya and South Africa.

• With the exception of Uganda, the other compar-ator countries all have high proportions of broad money supply in the form of quasi-money.138

9.2.21 Other measures of financial intermediation all reinforce the point that the Sudanese financial system is underdeveloped. In 2012, the total deposits of the banking system were equivalent to about 20 percent of GDP. This compares with 46 percent for Kenya, and 62 percent for Egypt and for South Africa, and 56 percent for Tunisia. The weak private deposit base stems from institutional and historical factors. Under the limitations of the Islamic financial system, most banks cannot ex-pand their deposit base quickly because most types of deposits are not remunerated. In recent years, de-posits have been growing in real terms, but the share of investment-type instruments – the only type of de-posits that can be remunerated under Sharia – has re-mained unchanged. Some observers have suggested that since the government imposed limits on deposit withdrawals in 1991, people have not trusted banks and have preferred to keep cash at home. The poor quality of many banking services has compounded the problem of limited use of banking services by the gen-eral populace in Sudan.

9.2.22 The other concern related to the further in-crease in financial intermediation concerns the high level of currency deposits in the banking system. In 2012, demand deposits accounted for 44 percent of total bank deposits in Sudan, compared to 14 percent for Egypt, 26 percent for South Africa and 32 percent for Tunisia. However, in both Kenya and Uganda the share of demand deposits in 2012 was roughly compa-rable to that of Sudan. The strong preference for cash in Sudan has negative implications for financial inter-mediation.

9.2.23 To offset the heavy dependence on short-term deposit funding, the government has been issuing government certificates that are highly liquid and that have high returns. These are issued against underlying infrastructure assets and projects. The domestic pri-vate sector has been contributing to the financing of

138 Quasi money typically includes such instruments that can easily be converted to cash as time and savings deposits, government treasuries, bonds that are near their re-demption dates and widely traded foreign currencies such as the US dollar, euro and yen.

infrastructure development through investment in these government certificates. Banks are allowed to invest up to 30 percent of their overall investment portfolios in liquid assets. However, while providing an important source of funding for infrastructure investments, the government certificates have crowded out bank financ-ing to the private sector and opportunities for invest-ment in other productive activities. The high yields on these certificates raised budgetary expenditures and contributed to increases in the budget deficit.

9.2.24 The cost of borrowing in Sudan is high. High credit risks and the lack of competition among banks contribute to the high cost of borrowing in Su-dan. The minimum Murabaha rate is set by the Bank of Sudan at 6 percent, but it is not binding, and lending for Musharaka takes place at about 30 percent. Because of lack of competition in the market, the spreads on Murabaha lending can range from 10 to 14 percent, while returns on investment deposits, and especially foreign currency deposits, range from 8 to 20 percent. There are several reasons for these high rates. A sig-nificant part of the banking system is still state owned, with privatisation moving slowly. Many banks continue to depend on the direct credit and refinancing facili-ties of the Central Bank of Sudan. Market information is also scarce, and the interbank market is used only sporadically to recycle surplus funds. The latter then precludes development of efficient open market oper-ations for monetary management. Inefficient banking technologies, uneconomic settlement systems, and deficiencies in the training of bank employees contrib-ute to the high cost of credit. Lending in Sudan remains genuinely risky, and high bank fees can be expected.

9.2.25 Institutional issues related to financial in-termediation.139 Ongoing weaknesses in the lending environment and supporting institutions such as col-lateral legislation and the judicial system, creditor rights and lack of reliable information and a credit information infrastructure have also contributed to lack of progress in expanding financial intermediation in Sudan. These weaknesses affect small and medium enterprises more than large ones, since micro, small and medium enter-prises often rely on secured and cash flow lending for access to finance and depend on a lending environ-

139 This Section draws heavily on the discussion about financial intermediation contained in Ranganathan, Rupa, and Cecilia M. Briceño-Garmendia (2011), Sudan’s Infrastruc-ture: A Continental Perspective. World Bank, Washington DC, Policy Research Work-ing Paper 5815, September 2011.


ment that supports these modes of financing.

9.2.26 The lack of credit analysis, due diligence and risk management skills has also contributed to weak-nesses in the banking sector, insufficient internal con-trols and risk. Efficient financial intermediation to the private sector requires bank staff to be trained in mod-ern credit management techniques and risk assess-ment tools to enable them to assess, price and man-age risks in order to lend prudently. This also requires representative and standardised statements of borrow-ers to reflect their financial standing that can then be verified and certified by qualified auditors. The banks’ capacities to evaluate risk, particularly that associated with small firms, is also weak. In Sudan, a significant proportion of approved loans have been based on rela-tionship lending and the securities provided rather than the soundness of the project proposals and associated due diligence. The asymmetric information in the mar-ket for bank loans can be minimised by making it man-datory for the credit profile of every loan applicant to be diagnosed from the credit reference bureau.

9.2.27 The development of a reliable and compre-hensive credit information system is essential for the proper functioning of the credit market and for diver-sifying the scope of lending to SMEs. A fully functional credit information system will allow banks to evaluate risks on clients rather than on individual transactions. This will allow banks to price risks or manage credit limits per client. Difficulty in obtaining information about financial standing, credit history and creditworthiness and identity of prospective clients discourages finan-cial institutions from expanding their lending business to new segments of the market. In 2011, the CBoS established the Credit Information and Scoring Agency (CIASA) – the first credit bureau in Sudan. The Agen-cy has made considerable progress in the past three years in building a reliable and comprehensive report-ing capability, but further substantial improvements are required.140

9.2.28 Inefficient land and property registries limit the ability of banks to offer secured lending products and longer-term finance. Protection of creditor rights and in-solvency systems are necessary for greater confidence

140 For a recent review of the challenges associated with the development of credit report-ing systems in Sudan, see Hussein, Elwaleed Kamal Eldin (undated), “Challenges with Data Acquisition.” A Case Study of the Credit Information and Scoring Agency. CIASA, Khartoum, Sudan.

in commercial contracts and facilitating the manage-ment and resolution of default risk. In the absence of a credit bureau in Sudan, banks often assess risk using a transaction-based rather than a client-based perspec-tive.

9.2.29 Potential for more intermediation. There is a high preference for cash relative to deposits and for demand deposits relative to investment and savings deposit in Sudan. The key challenge for the decade ahead is to put in place policies and programmes that will substantially improve the role of financial interme-diation in the country’s economy. The proposed strat-egy for diversification and accelerated development of the non-oil sectors of the economy will require a major ramp-up in programmes that promote the scale and effectiveness of intermediation by the financial sector in the decade ahead. These initiatives will be an important step in expanding private sector access to the domes-tic financial resources of the country for a broad-based development of the economy.

9.2.30 It is clear from international experience that an economy with a low preference for cash compared to preference for deposits is in a better position to in-crease financial intermediation to the extent that banks lend from deposits. In addition, in an economy where there is less preference for demand deposits compared to investment and savings deposits, the ability of banks to lend to the private sector is low because banks use investment and savings deposits at their discretion to satisfy the demand for loans (unlike demand deposits). With a low preference for cash relative to deposits and low preference for demand deposits relative to invest-ment and savings deposits, the potential for intermedi-ation increases. Increased intermediation, in turn, can have a positive impact on growth of the private sector and overall economic growth.

Non-Bank Financial Services

9.2.31 The financial system of Sudan includes a num-ber of non-bank financial institutions (NBFIs), although their role in providing financial services is very limited at the present time. The NBFIs include 15 insurance companies that offer risk covers; development finance companies that fund projects; social funds that deal with issues of pension and social insurance; a depos-it insurance guarantee fund that serves to strengthen



confidence in the banking system for financial system stability and safety purposes; the Khartoum Stock Ex-change; the Sudan Financial Services Company that is responsible for production and marketing of instru-ments of Islamic Securities, including Shahama, Sarah, Igarah and others; and 28 foreign exchange bureaus, including seven that handle foreign exchange transfers.

9.2.32 The position taken in this Report is that a con-certed effort is required to build the human and insti-tutional capacities of this part of the financial market in ways that will accelerate the growth of the capital market in Sudan and ensure that the private sector will have increased access to a growing range of non-bank financial instruments and services, including for exam-ple, both public offerings and private placements to raise new capital. More work is also needed to develop the existing very small primary market for securities and to promote the development of the secondary market for such securities. Both the money market and capital market have important roles to play in this regard. With the prospect of further growth and development of these markets, an important next step is to strengthen the capacities for independent regulation of core non-bank financial institutions. As noted below, oversight is currently carried out by institutions that do not have full authority or are not completely independent.

9.2.33 The market for fixed income financial in-struments is small. In conventional financial systems, government borrowing through the issue of treasury bills and bonds is typically used to finance fiscal defi-cits of the government. Sudan’s fixed income market is quite small and is based on Islamic Sharia fundamen-tals. The issue of government financial paper in accor-dance with Shariah rules is the mechanism that is used for financing budget deficits. The main activity in the primary market is the issue of Government Musharaka Certificates and Government Investment Certificates, similar to conventional treasury bills and government bonds, as well as Central Bank Igarah Certificates (ad-ditional Islamic certificates).

9.2.34 The SFSC is the vehicle for managing mone-tary policy and financing government deficit by issuing Government Musharaka certificates (GMC) and Devel-opment Certificates (Government Investment Certifi-cates) respectively. The SFSC issues GMC four times in a year and the maturity of certificates is one year. The

rates of return (not interest rate) on these certificates are currently higher than at banks, but lower than the domestic inflation rate. It is supervised by the Shari-ah Supervisory Board. The Commission markets and trades all government securities, but these transactions are not based on a minimum competitive bidding pro-cess. Instead, restrictions are imposed on purchasing amounts when demand exceeds available supply. The SFSC operation has been used to fund a number of infrastructure projects, as well as the import of medical equipment. However, the economic embargo that also extends to the health sector and the agricultural sector is a constraint to the expansion of the projects financed by the SFSC.

9.2.35 There is also a very small corporate bond mar-ket at an early stage of development. As of mid-2010, only three corporate entities had been issuing debt in-struments. One of the key challenges for Sudan in the decade ahead will be the further development of pri-mary markets for these products, as well as supporting the emergence of a secondary market for both public and private issues of debt instruments.

9.2.36 Another challenge is the low level of aware-ness of investment certificates in Sudan. The directive of the CoBS that puts a 20 percent ceiling on bank par-ticipation is an inhibiting factor in the further develop-ment of this market, since individuals hold only about 25 percent of total value of certificates. The objective of the ceiling is to promote individual holdings of cer-tificates, but given the very limited holdings of individu-als, it restraints banks holding of certificates in spite of the weak interbank activities and the strong desire of banks to hold these certificates.

9.2.37 Micro-Finance Services. Since the mid-1990s, in an effort to reduce the incidence of poverty, the government has encouraged the growth of micro-fi-nance institutions and encouraged commercial banks to lend to small enterprises. Several micro-finance in-stitutions were set up to provide micro-finance. How-ever, decades of civil war and political instability have prevented Sudanese microfinance efforts from having any noticeable impact. According to the World Bank (2007), by the mid-2000s microfinance efforts only cov-ered 1 to 3 percent of the potential market.141 Since the signing of the CPA in 2005, a number of global organ-141 World Bank (2007), Project Information Document: Sudan Microfinance Development

Facility Project. World Bank, Washington DC, 2007.


isations have joined in to support the development of microfinance services. In 2006, the CBoS signed an agreement with the World Bank to launch a US$50 mil-lion microfinance fund. The purpose of the fund was to support then current microfinance efforts and establish a microfinance department within the CBoS. With the formation of the Sudan Microfinance Development Fa-cility (SMDF) in 2007, both sides agreed to “take an institutional approach to supporting microfinance” and act like investors in retail providers rather than finan-ciers of a project. Investments were tied to defined and agreed upon performance targets, and the SMDF was expected to invest in a diverse pool of retail providers. Diversity was both in terms of services provided to var-ious industries and market segments served (includ-ing gender, geographic location, and socioeconomic status). In addition to financial investments, the SMDF was expected to invest in support organisations to give retail providers the greatest chance of success.

9.2.38 To further increase access to finance, the Cen-tral Bank of Sudan established a Microfinance Unit in 2007. And in response to the fact that commercial bank lending to micro-finance entities did not exceed four percent of total bank lending, in 2009 the Central Bank required all commercial banks operating in the country to establish microfinance offices and allocate 12 percent of total loans to microfinance lending oper-ations. A circular describing the SMDF and detailing the role that Sudanese banks were to play in the provision of microfinance was issued at that time. The Central Bank also introduced the Private Sector Development Project in 2009 that offers grants to prospective entre-preneurs via a business plan competition.

9.2.39 Prior to the 2009 Directive, some commercial banks had been providing microfinance services for over 15 years. These include the Agricultural Bank of Sudan and the Savings and Social Development Bank (which serves as an intermediary for INGOs and UN agencies), and to a lesser extent, the Sudanese Islam-ic Bank, the Faisal Islamic Bank, Albaraka Bank, and the Islamic Cooperative Development Bank. However, various non-government organisations (NGOs) have been the main providers of microfinance to low income people in urban and rural areas in the past decade or more.142 Community‐based organisations (CBOs) lo-cated mainly in or around Khartoum have focused on 142 For more details about these various programmes, see Meloni (World Bank), Bott

(UNDP), Hansohm (UNDP). Microfinance in Sudan. 2007.

urban community initiatives. These have included the Port Sudan Association for Small Enterprise Develop-ment. Elkifaya Bank, the Sudanese Development As-sociation, Sudanese Red Crescent and the Women’s Fund of the Women’s Union of Khartoum State all sup-port CBOs focused on the urban poor and especially on women.

9.2.40 The Central Bank of Sudan has provided ca-pacity building support and advisory services to these institutions. Given the limitations of the formal financial markets of Sudan, and the need to ensure that small- and medium-scale business activities and individual farmers and entrepreneurs have increased access to financing, there is a compelling case for the further de-velopment of the microfinance industry in Sudan. One issue is whether the Central Bank of Sudan, in its usu-al supervisory role, should impose penalties on banks that do not meet the minimum 12 percent requirement for total loan portfolio given to SMEs as microfinance.

9.2.41 An alternative to this penalty approach is to build and strengthen non-bank microfinance institu-tions for boosting SMEs with strong growth potential, through increased access to microfinance loans. Much remains to be done to build these services and improve access to them. Recent estimates suggest that cur-rent access to microfinance services covers less than 5 percent of potential demand in Sudan. The experience of many other African countries in the past decade or so suggests that an effective remedy for the current limited reach of microfinance in Sudan may lie with the mobile phone industry. One of the newer microfinance institutions, North Kordofan Microfinance Bank (Gu-daim), has already begun to invest in the Management Information System (MIS) and Mobile Payment Platform needed to make this a reality. As indicated in Chapter 8, Sudan’s mobile phone network now covers more than 70 percent of the population. The CBoS Microfinance Unit is aware of the potential of mobile banking and recently placed a request for a feasibility study towards the development of this potential. When completed, this study may then provide a basis for development of policies and programmes that can accelerate the use of mobile banking services in Sudan.

9.2.42 Insurance Industry. Insurance business in Sudan is based on Islamic principles. The first insurance companies were established by existing Islamic banks



in Sudan, the latter requiring that their insurance com-panies operate on Islamic principles. The conventional insurance companies in existence in 1992 were trans-formed to Islamic insurance following a Ministerial De-cree in 1992. Currently, there are 15 insurance compa-nies in Sudan, two of which offer reinsurance services. Sheikan Insurance Co., which is state-owned, controls more than 50 percent of the market. All of these com-panies are domestically-owned as no foreign insurance companies are licensed to operate in Sudan. The size of the sector is small, with the public sector accounting for about 40 percent of the total market premiums paid each year. The gross value of premiums in the industry is SDG 1.3 billion, (about US$360 million), compared to US$6.6 billion in South Africa, US$1.9 billion in Nigeria, US$1.0 billion in Algeria and US$1.1 billion in Kenya. The penetration rate is less than one percent, com-pared to 15 percent in South Africa. The growth of the insurance industry appears to be constrained by lack of awareness among the populace and by the low levels of income of SMEs that are potential customers for the industry.

9.2.43 The Insurance Supervisory Authority (ISA), which is a unit in the Ministry of Finance and Nation-al Economy, is responsible for regulation of insurance companies in Sudan. The powers of the ISA are rela-tively weak, and even though the authorities have made efforts to improve the regulatory framework, most of the insurance market still does not comply with principles set by the International Association of Insurance Super-visors (IAIS). The regulatory body of insurance compa-nies in most developed insurance industries elsewhere in the continent and beyond falls under an independent body or the purview of the central bank. In these cases, the regulators have full authority for oversight of the in-dustry. The core challenges of the industry in Sudan are the lack of well trained staff and the fact that the regu-latory body is a unit under the Ministry of Finance and National Economy without complete independence.

9.2.44 Khartoum Stock Exchange. The KSE start-ed dealing in shares of the first listed companies in 1995. Electronic trading was launched in 2012, follow-ing a trial run in 2011. As a result, there has been a substantial increase in the volume of trading. By 2013 the volume of trading stood at SDG 134 million. About 40 brokerage firms operate on the market. Secondary market activity is limited to over-the-counter trades,

and is largely dominated by government securities. Ac-cess to securities markets is open to local and foreign investors, including banks, corporate entities, financial institutions, and individuals, with the exception of Igar-ah Certificates, which are restricted to banks.

9.2.45 As with most of the Sudan financial institutions, the KSE operates on the basis of Islamic Sharia and is supervised and regulated by the Central Bank of Sudan rather than a specialised institution, as is the case for most developed stock exchanges elsewhere.143 Com-pany shares and financial certificates (Sukuk), specif-ically Government Musharaka Certificates (Shahama) are traded at the KSE with the latter taking about 95 percent of the traded value. There were 58 and 47 listed companies and Sukuk and investment funds re-spectively in 2012, and 60 and 47 listed companies and Sukuk and investment funds respectively in 2013. Market capitalisation was SDG 9.6 billion and SDG 11.6 billion in 2012 and 2013 respectively.

9.2.46 The major drawbacks for Sudan’s stock mar-ket are the limited public awareness of the role of the KSE in development of the domestic capital market, the slow pace of the privatisation exercise and the slow pace of establishing an independent security commis-sion for the supervision of the exchange. In addition, no settlement bank has been chosen, hence financial clearance for the daily trading is on manual basis. An action plan for further development of the securities market should therefore be built around the following:• The ongoing privatisation programme for public

enterprises should be strengthened and acceler-ated.

• The authorities should fast track the establishment of the Security Commission for the supervision of the Khartoum Stock Exchange.

• The ongoing efforts to encourage more listing of companies on the KSE must continue.

9.2.47 In connection with the third point above, there is no specific programme in place to target SMEs for listing on the exchange, especially among those busi-ness entities with high growth potential that may need access to additional funding to realise their potential. The supervisory body of the Khartoum Stock Ex-change should therefore consider a marketing initiative that targets new and existing SMEs with high potential.

143 The board of directors for the KSE is responsible for day-to-day oversight.


Consideration could also be given to introduction of a funding facility that potential new listing entities could access to pay for the cost of advisory services associ-ated with preparations for listings.

9.2.48 Sudan financial service company. The Sudan Financial Service Company (SFSC) was estab-lished in 1998 by the Central Bank of Sudan to provide financial services by managing financial papers issued by the government according to Shariah rules. It gets funds from surplus units who do not want to save at banks and pass them to the Ministry of Finance and National Economy (MFNE) for investment in develop-ment projects. The Central Bank of Sudan owns 99 percent of the assets of the SFSC, with the remaining 1 percent held by the Ministry of Finance and National Economy. In terms of operation, the SFSC issues initial public offerings (IPOs) that are then given out to the KSE for trading. At maturity (after one year), owners of the certificates refer to the SFSC. The capital of the SFSC is about SDG 100 million (US$17.5 million) while it is dealing with about SDG 16 billion (US$2.8 billion) of government certificates.

9.2.49 One of the key challenges of the SFSC, how-ever, is that it does not have the technology required to link all the institutions involved in its operation, especial-ly with regards to settlement data and information shar-ing. These institutions are the CBS, KSE and MFNE. Settlement is currently done on a manual basis in spite of the fact that there are up to 44 brokers in operation. In addition, there is a training gap for new skills, which are required to manage financial paper. The required training equally extends to brokers. A priority should be given to early action on upgrading of the technology required for effective operations by these entities. The relevant infrastructure would enable the Sudan Finan-cial Services Commission to link electronically the in-stitutions under its operation, which are the Khartoum Stock Exchange, the Central Bank of Sudan and the Ministry of Finance and National Economy.

Reform and Modernisation in the Financial Sector

9.2.50 Given its important role in financial intermedia-tion and savings mobilization, the further development of the financial sector is critical for sustained strong growth by the private sector and successful diversifi-

cation of the economy. Improved access to financial services and improved efficiency are essential compo-nents of proposed programme for diversification in Su-dan.

9.2.51 Action programme for the near-term. Au-thorities have recently embarked on a series of reforms in attempts to strengthen the financial system and im-prove the performance of the banking sector. Supervi-sory and legal and regulatory frameworks have been improved, particularly in the areas of corporate gover-nance, risk management, and provisioning. Restruc-turing processes are also underway for two banks, in-cluding the Omdurman National Bank, to improve their financial position.

9.2.52 The IMF has called for further reforms to im-prove the competitiveness, efficiency and resilience of the banking sector. In the annual consultations with the IMF, it was agreed that a comprehensive evaluation of the banking sector would be undertaken by the gov-ernment to build on the earlier evaluation in 2013 (IMF, 2013.d).144 Under the proposed programme of reforms, priority would be given to the following key concerns:• Make further progress on adoption of best prac-

tices in bank supervision, inspection and enforce-ment;

• Update risk-based manuals for offsite and onsite supervision;

• Terminate direct ownership of banks by the Central Bank of Sudan; and

• Upgrade the legal, regulatory, and institutional framework of the financial sector to enhance fi-nancing deepening.

9.2.53 Another action for the near-term concerns the interbank market for overnight and short-term trades within the financial sector. As noted in Chapter 3, the interbank market of Sudan is currently very weak. The Authorities should develop the interbank market in an effort to absorb excess liquidity in the banking system and pave the way for more effective monetary policy in Sudan. The 20 percent ceiling on bank participation in the market for Government Musharaka Certificates and Government Investment Certificates should be abolished as holding of these certificates by banks is an opportunity to reduce excess liquidity in the banking system. 144 See IMF (2014.a). Sudan. IMF Country Report No. 14/203. IMF, Washington DC, July

2014.



9.2.54 Financial Market Reforms in the Medium and Longer-Term. A developed financial system will have certain architectural and organisational structures that are well-functioning. Indeed, it is these structures and their functioning that make a financial system de-veloped. While it is important to have a wide array of financial assets in the interest of financial sector de-velopment in Sudan, it is not an easy task to design securities, such as the futures and options market, or other types that are desired by investors within and out of Sudan, and at the same time maintain the Islamic principles of financing.

9.2.55 For the medium and longer-term, a well-de-signed programme that can support expansion of the domestic financial market will need to address a range of issues related to further development of the mon-ey market, the payment system, and capital markets. This Report proposes that a separate study on financial sector reform should be undertaken. It will need to ad-dress a broad range of issues, while taking full account of the fact that an important part of the financial sys-tem operates within the Islamic constraints of permit-

ting only asset-backed transactions (hence no interest payments allowed) as well as avoiding contracts and transactions involving certain risks and uncertainties.145 • Money market development. An active money

market benefits monetary policy, the government, as well as portfolio managers, banks, and securi-ties markets. To facilitate the evolution of well-func-tioning and active markets in financial products, the authorities need to take resolute steps to en-sure certain desirable qualities of the environment. These relate to the legal framework, the clear-ing and settlement systems, the efficiency of the banking system, and macroeconomic stability. Well-functioning and efficient credit rating organ-isations would also be desirable, as would fairly good internal credit rating systems of the banks. The Central Bank should also investigate ways to further improve its data base to help provide some of the information that the banks need in their cred-it assessment tasks. The role of the Central Bank in the existing money market may need to be re-viewed as well. As part of its role in the market, the Central Bank could, for example, help ensure

145 See, Ayub (2007) and the papers in Hassan and Lewis (2007).

Table 9.8 Projected Growth in the Labor Force

Indicator Estimate Projected

2013 2015 2020 2025 2030

Population 15-64 years ('000) 21,124 22,263 25,738 29,424 33,252

Labor force ('000) 11,443 12,133 14,051 16,274 18,847

Participtation rate (%) 54 55 55 55 57

Labor force growth rate (% p.a.) 3.0 3.0 3.0 3.0 3.0


Table 9.9: Economically Active Population According to Economic Sectors(As % of the economically active work force in Sudan)

Sector Female Male Total

1993 2004 2008 1993 2004 2008 1993 2004 2008

Agriculture, forestry & fisheries

21.9 18.5 16.0 38.8 32.6 32.6 60.7 51.1 48.6

Industry

Manufacturing 0.5 0.5 0.4 4.8 4.0 3.1 5.4 4.5 3.5

Mining, construction, utilities

0.1 0.5 0.3 4.3 3.6 3.8 4.4 4.1 4.1

Sub-total 0.7 1.0 0.7 9.1 7.6 6.9 9.7 8.6 7.7

Services 4.5 6.5 7.3 23.5 24.0 24.3 28.0 30.5 31.6

Unclassified 0.4 2.5 8.3 1.1 7.3 3.9 1.5 9.8 12.2

Total 27.5 28.5 32.3 72.5 71.6 67.7 100.0 100.0 100.0

Source: World Bank (2010).


high standards that banks need to meet to be al-lowed to participate. It could also insist on specify-ing or approving the maturities and the limits (e.g. in relation to deposits or capital) to prevent exces-sive borrowing or short-term borrowing becoming long-term.146

• Payment system development. At least one large value payment system that satisfies the 10 core principles for systemically important payment sys-tems is desirable for efficient and well-functioning financial markets (see CPSS, 2001). In terms of or-ganisation, countries typically find it useful to set up a National Payments Council (NPC), comprising at least the Central Bank and a number of commercial banks, and probably also other financial organisa-tions that actively participate in the payment sys-tem. Within such a coordination body, ideas can be openly discussed, information on demand for pay-ment services obtained, and a consensus reached on important public policy issues related to institu-tions (including the legal framework), competition policy, and the role of the central bank. Consensus can further be reached on technological and oth-er choices for major (especially large-value) sys-tems (namely, policies such as types of payment instruments, queuing mechanisms, availability and

146 This is an area where Islamic banking seems to be challenged. But even here, chang-es are occurring. For instance, an Islamic Inter-bank money market was established in Malaysia in 1994. On this topic, see, e.g., Hassan and Lewis (2007).

pricing of intraday liquidity, overnight credit, avail-ability of information to participants, and time of settlement finality); and risk control measures such as use of collateral and backup and contingency plans (see Johnson et al, 1998). Support from the NPC can indeed greatly enhance cooperation, at the implementation stage of major initiatives, there-by lowering implementation cost. A well-developed depository system for securities should comple-ment the development of the clearing and settle-ment system. Having dematerialised securities and making sure that the speed of settlement of stock transactions meets international standards would also help the development of the capital market (discussed below).

• Regulatory Strategy. There are at least three major consequences of a high-quality regulatory system for financial sector development. First, a high quali-ty regulatory environment will have a positive effect on cooperation among the firms in the financial sector since all the firms will trust each other more than if the regulatory standards were suspect. Second, financial firms outside the country will look favourably on building relationships with the financial firms and markets in the country. Third, authorities in other countries will be less prone to imposing tight regulatory standards on dealings of their local financial firms and markets with those in

Table 9.10: Economically Active Population According to Skill Level(As % of the economically active work force in Sudan)

Female Male Total

2004 2008 2004 2008 2004 2008

White collar

High skilled 14.8 2.9 14.1 8.6 14.3 11.6

Low skilled 9.1 5.8 19.0 7.1 16.2 12.9

Blue collar

Medium skilled 69.6 15.3 46.9 28.6 53.3 43.9

Low skilled 6.5 4.5 20.0 21.1 16.3 25.6

Not stated - 3.9 - 2.3 - 6.2

Total

High skilled 14.8 2.9 14.1 8.6 14.3 11.6

Medium skilled 69.6 15.3 46.9 28.6 53.3 43.9

Low skilled 15.6 10.2 39.0 28.2 32.5 38.4

Not stated - 3.9 - 2.3 - 6.2

Total 100.0 32.3 100.0 67.7 100.0 100.0

Memo item:

Medium and low skilled

85.2 25.5 85.9 56.8 85.7 82.3

Source: World Bank (2010).



Sudan (see Johnson, 2009). The regulatory strat-egy in a high-quality regulatory environment must achieve two overriding objectives. First, it must en-sure clear understanding by regulators and finan-cial firms of risks faced by the financial firms and how those risks could be managed. Second, the regulatory strategy must be clear about the role of regulation versus the market in ensuring that the financial risks are efficiently managed and con-trolled.

9.2.56 The regulatory agency or agencies of the country must ensure that the human and non-human capacity is available – within the regulatory community and the financial firms – to understand and manage the financial risks in the markets in which the financial firms in the country operate.147 The regulatory agen-

147 Many different types of risks are identified in literature. The most important ones are li-quidity, credit, interest rate, market, foreign exchange, operational, technological, sov-ereign, legal, and fraud. Note that the risks faced by Islamic banks will be affected by

cies must set standards, sometimes in great detail, and must also oversee internal processes of firms to make sure that they are appropriate and sound. An optimal regulatory regime and strategy will balance regulatory rules, supervisory review, and market discipline. Llewel-lyn (2002), for instance, argues that several problems emerge with a highly prescriptive approach to regula-tion. For example, the risks under consideration may be too complex for simple rules. Prescriptive rules may prove inflexible and not sufficiently responsive to mar-ket conditions. The rules may have perverse effects in the sense that they are regarded as actual rather than minimum standards. A central issue is the extent to which regulation differentiates among banks according to their risk characteristics and their risk analysis, man-agement, and control systems. An important theme in this framework is that regulation can never be an alter-native to market discipline. On the contrary, regulation needs to reinforce, not replace, market discipline within the regime.

9.2.57 The balance between regulation on the one hand and market discipline on the other, is bound to remain of major concern among policy makers. Some of the determining factors for a country like Sudan would be the availability of expertise within financial firms and within regulatory agencies, the nature of the risks faced by the financial firms and the relative so-phistication and efficiency of the pool of others who could monitor the management of financial firms. Pub-lic policy for crisis prevention and resolution has includ-ed concerted efforts to improve early warning signals and the promptness of response to crises. Policy in the area of early warning signals has at least two interrelat-ed aspects. One is developing the ability to recognise and comprehend signals from financial firms that they are experiencing serious problems, especially liquidity and credit challenges. The second involves putting in place a forward-looking risk-based supervision frame-work that could alert the authorities to problems aris-ing with respect to both individual firms and a financial subsector or market. A risk-focused bank supervision framework that is forward-looking can be an import-ant component of an early warning system (Baldwin, 2002). Risk-focused supervision requires the super-

the fact that they get involved in trade, leasing and investments (via partnerships) more directly than conventional banks. But, unlike conventional banks and other financial firms, they do not get involved in certain risky activities such as derivatives [see Khan and Ahmed (2001) and Ayub (2007)]. The regulatory authorities will therefore need to devise rules according to the particular system, which could make for a challenging environment when the country has a dual system.

Table 9.11: Selected Indicators for Status of Education in Sudan

Indicator 2000 2005 2010 2011 2012

Adult literacy rate (%)

Female 52 n.a. 62 n.a. 65

Male 72 n.a. 80 n.a. 82

Total 61 n.a. 71 n.a. 73

Gross enrolment rates (%)

Female

Primary 44 59 67 64 66

Secondary

n.a. 37 39 35 39

Tertiary 6 13 16 15 16

Male

Primary 52 67 75 73 74

Secondary

n.a. 39 45 39 43

Tertiary 6 11 14 14 14

Total

Primary 48 63 71 69 70

Secondary

25 38 42 37 41

Tertiary 6 12 15 15 15

Primary completion rate (%)

Female 35 n.a. 54 n.a. 53

Male 39 n.a. 67 n.a. 61

Total 37 n.a. 61 n.a. 57



visor to make qualitative assessments and develop a thorough understanding of a bank’s risk profile and risk management capabilities. Forward-looking and pro-active, risk-focused supervision also requires flexibility in supervisory programme design. The approach, in brief, involves identifying different categories of banks and then developing supervisory programmes tailored to the specific needs of each category. Statutory su-pervisory requirements must be sufficiently flexible to accommodate such an approach.

9.3 Programmes for Skills Development in the Labour Force

Key Characteristics of the Labour Market

9.3.1 The labour force will grow rapidly in the decade ahead. As Annex Table 1.3 indicates, the la-bour force has grown at a little more than 3 percent a year in the past two decades, driven largely by high population growth rates in the 1960s, 1970s and 1980s. The labour force participation rate of those in the 15-65 year age group is relatively low and has only increased rather slowly in the past decade (from 52 percent in 2000 to an estimated 55 percent by 2013). As a result, the labour force increased by four million from 7.7 million in 2000 to an estimated 11.7 million in 2013. The net number of new entrants into the labour force averaged about 307,000 a year in this 13-year period. Driven by these past high population growth rates and a modest, but steady increase in participation rates during the 2015-2030 period, the labour force is projected to increase by an average of 3.4 percent a year, rising to about 22.1 million by 2030 (Table 9.8).

9.3.2 Creating productive employment opportunities for a labour force that will essentially double in size by 2030 is one of the biggest challenges that Sudan fac-es in the decade ahead. The proposed programme of private sector led diversification faces the task of pro-viding productive employment for these new entrants, while at the same time raising the productivity of a sub-stantial portion of those already in the labour force, and contributing to a reduction in the persistent high levels of unemployment that continue to be in the range of 15 percent of the labour force.

9.3.3 Agriculture, forestry and fisheries ac-count for a large share of employment. As Table 9.9 indicates, about half of the labour force was em-ployed in the agriculture, forestry and fisheries sector by 2008, down from about 60 percent in the early 1990s. Employment in the industrial sector has shown very little growth over the past two decades and con-tinues to account for less than 10 percent of total em-ployment. The weak employment performance of the sector stems from the fact that its economic growth performance in the past two decades has been poor (after excluding the oil sector). At the same time, there has been a steady increase in the share of employment accounted for by services, driven in part by a rapid increase in jobs created in the government services. However, interpretation of these trends in employment needs to be qualified because of the increase in the share of those employed for whom a sectoral classifi-cation was not reported. According to the 2008 survey data, about 12.2 percent of those employed at the time were in this category – equivalent to about one million of the people who were reported as being employed in 2008. It is very likely that many of these people are employed in the informal economy of Sudan.

9.3.4 There are significant differences in employment patterns of men and women in Sudan. According to the 2008 population census data, the labour force par-ticipation rate for women was 31.1 percent, compared with 72.2 percent for males. The census data suggests that participation rates for both men and women are higher in rural areas than in urban areas, perhaps re-flecting greater difficulties of finding employment in ur-ban areas that then lead people (especially women) to report that they are not seeking employment.

9.3.5 Labour force skill levels and a brain drain are also a problem in Sudan. The Sudanese labour force has a relatively low level of skills. This situation stems from the fact that in past decades, Sudan has had low school attendance that, in turn, has resulted in low levels of education attainment and literacy among those now in the labour force. The problem of weak skill levels in the labour force has been compounded by a large outward migration of semi-skilled and skilled Sudanese labour, especially to oil rich countries in the Arab Gulf.



9.3.6 As Table 9.10 indicates, in the past decade, a majority of Sudanese workers were employed in medi-um and low skilled jobs. In 2004, 86 percent of males and 85 percent of females were employed in medium and low skilled work. And by 2008, only 12 percent of the workforce was employed in high skilled jobs, largely as a result of a sharp decline in share of females in the work force that were employed in skilled jobs. In 2004 and 2008, about 70 percent of those in the work force were employed in “blue” collar occupations.

9.3.7 For a long time, Sudan has been a labour exporting country. The migration of highly skilled indi-viduals has resulted in a “brain drain”. Annual reports of the Ministry of Labour and Public Service indicate that during the 2005-2008 period, about 53,000 peo-ple went abroad with legal employment contracts. Ac-cording to the World Bank (2010), the main reasons for the large outflow were the lack of adequate reward in Sudan for high levels of skills, and the low standard of living, added to the highly limited employment op-portunities in Sudan and economic instability. There are considerable costs to the Sudan economy as a result of this brain drain as the loss of skills contributes to the persistent underdevelopment of the Sudan economy.

9.3.8 Moreover, the skills shortages in the country have resulted in an inflow of skilled foreign workers in the past decade. This inflow appears to stem from the large increase in FDI in the past decade and the asso-ciated dependence on skilled foreign workers. Status of Formal and Vocational Education in Sudan148

9.3.9 Educational Attainment in Sudan has been Low. The literacy rate in Sudan for adult females and males was 65 percent and 82 percent respectively in 2012, with a resulting national average of 73 percent (Table 9.11). This represented a substantial improve-ment over the national average of only 61 percent as recently as 2000. With improved access to education, the literacy rates for young adults in the 15-24 year age group are higher than the national averages. Accord-ing to the NBHS (2009), the average was 77 percent in 2008 (84 percent for males and 71 percent for fe-males).

9.3.10 However, problems persist in the education

148 This Section of Chapter 9 draws heavily on IMF (2013.c), Sudan: Interim Poverty Re-duction Strategy Paper. IMF, Washington DC, Country Report No. 13/318, October 2013.

programmes of the country. Drop-outs have remained high in basic education. About 90 percent of children enrol in the first grade of basic school, but only about 57 percent of them remain in school by grade 8, in-dicating a drop-out rate that averages 7 percent per grade. As a result, the primary completion rate – a key indicator of progress towards universal primary com-pletion – was only 57 percent in 2012. Retention at the secondary level, at 74 percent, is lower than in prima-ry education when adjusted for length of the cycles. A retention rate of 74 percent corresponds to a dropout rate of 13 percent per year in the first two years of the cycle. Student dropout is therefore a serious concern. A high rate of dropout could indicate that students are not learning enough, i.e. that the quality of schooling is simply too low to justify students’ time and the direct cost in terms of parental contributions. More research is needed to understand the causes and risk factors for dropout in Sudan so that appropriate measures to improve retention can be put in place.

9.3.11 With relatively low gross enrolment rates, the number of children who have never attended school is high. Out of the population of six million 10-17 year-olds in Sudan, it is estimated that one in six, or close to one million, never attended school in 2010. Of these out of school children, 62 percent are girls, and 84 percent are from rural areas. The longer distances to schools in rural areas may pose more of a constraint to school attendance for girls than for boys in addition to early marriage for girls and the lower value assigned to girls education by parents in rural areas.

9.3.12 The low levels of public expenditures in educa-tion have resulted in physical deterioration of schools and facilities and limited geographical spread. Since 2000, the share of education in total public spending has increased by about four percentage points to 12 percent. As a share of GDP, it has more than doubled to 2.7 percent. However, these are still low levels. With the decentralisation since the 2005 CPA, education spending has increased at the state level and, in 2009, 83 percent of public education spending took place at state level. However, teacher training has fallen be-hind. The result has been the deterioration in the quality of teachers, with an estimated 50 percent of primary school teachers unqualified. While pre-schools and ba-sic schools have student-teacher ratios of about 33, there is a very wide variation among states. The Darfur


states have high student-teacher ratios, with West Dar-fur at 65.7, nearly double the national average. Over-crowded classrooms and untrained teachers make for poor education. The dearth of trained teachers was aggravated by significant waves of brain drain to Gulf countries.

9.3.13 Household out-of-pocket payments cover a large share of school running costs, in particular for basic education, implying that basic education is not always free in practice. Moreover, education accounts for a larger share of consumption for poor rural house-holds than in non-poor rural households, with implica-tions for equity in access to education.

9.3.14 Education opportunities for vulnerable groups, nomads and internally displaced persons (IDPs) remain a significant challenge due to their non-sedentary life-style. 149 Northern Sudan is host to 4.3 million IDPs lo-cated in the three Darfur states and Khartoum state, equivalent to nearly 14 percent of the total population. Nomads account for about 9.1 percent of the total population in Northern Sudan. In 2008/09, 8.7 percent of basic schools in (north) Sudan were nomadic and 1.6 percent were IDP schools (these schools are typi-cally much larger than nomadic schools).

9.3.15 Strategy and Priorities for Basic Educa-tion. The main education priorities are the following, with special focus on areas that were particularly affect-ed by civil strife, drought and/or desertification (lagging regions):• Bridging the gap between States in enrolment and

thereby raising the average enrolment and increas-ing the completion rate in primary school from 57 percent in 2009 to 70 percent in 2011, with further improvements in subsequent years;

• Bridging the enrolment gap that persist between boys and girls in some states so as to eliminate gender disparities in access to education at the basic level and achieve gender equality;

• Improving the literacy rate of those between ages 15-24 through programmes targeting school drop-outs, especially those between 9 and 14 years of age; and

• The preparation of an education sector strategy for the medium-term to bring focus to these pri-orities as well as on the quality of education, and

149 United Nations and World Bank (2005), Framework for Sustained Peace, Develop-ment and Poverty Reduction. Joint Assessment Mission, Volume I, March 18, 2005.

help to develop concrete actions and targets. The proposed strategy should give particular attention to programmes that will support increased partic-ipation by women in the labour force, especially in medium and high skilled jobs.

The strategy for the medium-term should also set out policies and programmes for improving access to ed-ucation at all the three levels for vulnerable groups, no-mads and internally displaced people.

9.3.16 The above priorities will be implemented with the concentration of the expansion of primary educa-tion in disadvantaged states. This programme would entail the building an estimated 2,519 classrooms, training of 14,000 teachers and improving the school environment by providing every child and teacher with educational aids books as well as school furniture. In recognition of the large size of the country and the ef-fect this has on attendance, the programme calls for the establishment of boarding schools for pupils from distant areas within each state. In this respect at least four boarding schools are planned for each state in Su-dan. Along the same lines and also in recognition of local conditions, the programmes call for the provision of one nutritious meal each day for some three-quarter million primary school students.

9.3.17 Improved access to and quality of education will require increased numbers of high quality teachers. This, in turn, will require an increase in the number and quality of teachers’ training institutes and other asso-ciated facilities. An urgent priority is introduction of in-centives to halt and reverse the brain drain and retain the good teachers in the system. Moreover, incentives are needed to make it attractive for teachers to work in rural areas. These incentives could include addition-al financial compensation and assistance for housing and transport. Without these incentives, emphasis on spreading primary education and reducing the distance to school in neglected rural communities would not materialise.

9.3.18 Priorities and programmes for technical and vocational education. The various initiatives to improve access to basic education need to be supplemented with increased support for vocational education and training. The proposed diversification programme will require a large expansion in the number of entrants into the labour force with skills developed in vocational



education and training programmes (TVET). The posi-tion taken in this Report is that Sudan needs to review its TVET policy, including the associated institution-al and organisational environment, to ensure that the programme is coherent enough to foster rapid private sector development, while ascertaining the technical and financial effectiveness of any policy interventions. An assessment of the policy framework would need to address the following three broad issues: • Improve participation of potential candidates in

the national TVET programme. The stagnant en-rolment in technical secondary schools may indi-cate a strong preference for academic secondary schools. It raises questions about whether the skills acquired from this subsector are preparing students adequately for higher technical education or providing them the skills that match the labour market requirements. A reform of this subsector is necessary to provide it with the appropriate focus and structure to meet its goals, and in particular to determine whether these schools are secondary schools with provision to acquire technical skills, or vocational training centres that impart professional technical skills to meet the demand of the industrial sector for skilled labour.

• Increase formal employment of participants. Tech-nical and vocational education and training should be responsive to the market. Thus, to begin with, the Sudan authorities should make sure that they understand important elements of the labour mar-ket. These important aspects will include the sup-ply of and the demand for certain specific skills (or set of skills); size, age, gender, and geographical distribution of the labour force; employment, un-employment and under-employment; wage flexibil-ity; the competitiveness of the labour market; the efficiency of the market; the informal sector and its relationship with the formal sector; and social impediments to labour force activities and partici-pation (e.g. employment and constraints on role of women). Policymakers also need facilities (schools, teachers, equipment), especially those in the pri-vate sector—for profit as well non-profit organisa-tions.

• Increase substantially the earnings of participants after completion of training. The expectations of trainees will be affected by the information they have about returns to vocational training. Indeed, some observers seem to have identified a tenden-

cy towards over-optimistic perceptions of many trainees about the returns to vocational training. This so-called over-optimism in expectations may be overstated, particularly once the informal sec-tor is taken into account. For example, in African countries, persons well-trained in skills like electri-cal engineering, plumbing, carpentry, masonry, and motor mechanics often become self-employed or work part-time in the informal sector. Hence, data on their true earnings can be difficult to obtain by official agencies and researchers.

9.3.19 As regards the institutional and organisational environment, in response to the proposed private sec-tor led diversification programme, there is a clear need for TVET governance arrangements that foster cooper-ation of government, business, and other non-govern-ment trainers, including national coordinating bodies and national training authorities. International experi-ence with these types of programmes increasingly in-dicates that in developing sound institutional and or-ganisational arrangements, consideration needs to be given to the following:• Getting the policies right to spur competitive train-

ing markets within a level playing field;• Encouraging self-governance and self-regulation

where sensible;• Decentralisation of decision making in public sector

training in areas such as fees, staffing, programme content, and methods of instruction; and

• In government financing, a gradual shift toward cri-teria related to performance/output (e.g., courses completed) and outcomes (e.g., job placements) as opposed to simply inputs (number of trainees enrolled).

9.3.20 Consideration needs to be given to ensuring that domestic training programmes for technicians such as electricians are aligned with standards estab-lished by the International Organisation for Standards (ISO). Domestic training institutions and programmes that are certified by the ISO would contribute substan-tially to the hire of locally trained technicians by domes-tic and offshore investors that contract to provide ser-vices in Sudan, enter into joint ventures with domestic partners, or make investments in Sudan without enter-ing into local partnerships.

9.3.21 In addition to these concerns about the insti-


tutional and organisational environment, there are im-portant questions in five specific policy areas that have become the focus of discussions of TVET in the African context.150 These are as follows: (i) The issue of adding vocational training to the academic curriculum; (ii) the role of government in TVET; (iii) the role of the formal non-government sector; (iv) the skills development for the informal economy; and (v) the resource mobilisation and allocation requirements for TVET. Annex 9 includes a more detailed discussion of these five issues. In some African countries, the trend is towards establishing na-tional coordinating or consultative bodies to address all the major challenges. In other African countries, min-istry-based governance systems remain in place, but they are being supplemented by new bodies to enrich ministry-based governance systems. Such bodies tend to focus on particularly difficult areas, such as the man-agement of training funds and creation and manage-ment of labour observatories.

9.3.22 Strategy and Priorities for Tertiary Edu-cation. Although tertiary education targets are not in-cluded in the MDGs, high quality and relevant tertiary education is crucial for shared growth and sustained poverty reduction strategy. From the 1990s, tertiary ed-ucation has expanded rapidly in Sudan with the num-ber of universities going from 4 in 1990 to 30 public and 6 private universities at the present time, and 48 spe-cialised degree granting colleges. In 1990, the student intake was 6,000 per annum. This rose to an annual intake of 160,000 with a student population exceeding 500,000, equivalent to an enrolment rate of 10 percent

150 For a good introduction to the subject matter and the issues, as well as the experience in Sub-Saharan Africa, see Johanson and Adams (2004).

of the relevant population compared with only 6 per-cent as recently as 2000. Over half the students are females. However, the expansion has not been accom-panied by matching financial resources and the quality of tertiary education has been deteriorating.

9.3.23 The main challenge facing the tertiary educa-tion sector is to improve the quality of education. The National Council of Higher Education in the Ministry of Higher Education and Research that is responsible for setting policies and regulating the system of tertiary ed-ucation, has set up a commission for quality assurance. This will monitor and evaluate quality of education and set standards.

9.2.24 The Council has promoted the establishment of internal quality monitoring and evaluation units in some universities, as well as a pilot programme to ap-ply the standards it developed before they are gener-alised. Another challenge to the tertiary education is to have a definitive policy towards technical education that recognises the importance of technical knowledge and skills to growth and diversification, and makes technical education an attractive option for students. Furthermore, as public universities are poorly funded by the federal and state governments, the universities are increasingly relying on cost-sharing with students for additional resources. While the cost-sharing schemes take family income into account, there is a risk that the costs could be excluding poor people from access to tertiary education.



Annex Table 1.1: Comparison of Population Estimates for Sudan

2008 2009 2010 2011 2012 2013 2014

CBS, Sudan 30,894 31,899 32,923 33,976 35,056 36,164 37,289

United Nations (2012 revision) 34,040 34,853 35,652 36,431 37,195 37,964 38,764

World Bank 34,040 34,853 35,652 36,431 37,195 37,964 38,764

African Development Bank 35,725 36,383 37,863 37,763 38,482 39,208 39,929

Source: data bases of respective agencies.

Annex 1: Demographic Data

There are significant differences between the popula-tion estimates reported by the Central Bureau of Statis-tics (CBS) and by various international agencies for the 2008-2014 period. Annex Table 1.1 provides a sum-mary of the population estimates reported by the CBS, the United Nations, World Bank and African Develop-ment Bank. The 2008 population census as reported by the CBS indicated that the population of (north) Su-dan was 30, 894 thousand. However, the UN, World Bank and AfDB, all report a larger population for the census year, suggesting that these agencies may have concluded that the 2008 census underestimated the total population at that time.

There are substantial differences in the population

ANNEXES

growth rates reported by each agency. The CBS proj-ects population growth during 2008-2014 to be 3.2 percent a year, whereas the UN and World Bank proj-ect the population growth rate to be 2.2 percent a year for the same period. The AfDB population estimates imply a population growth rate of 1.9 percent a year. Because of these differences in population growth rates, there is only a modest difference among these estimates for Sudan’s population in 2014.

Because the population projections prepared by the UN include a substantial amount of important detail re-quired for the analysis undertaken for this Report, the most recent UN projections reported in World Popula-tion Prospects: The 2012 Revision, have been used in this Report.


Anne

x Ta

ble

1.2:

Act

ual a

nd P

roje

cted

Pop

ulat

ion

for N

orth

Sud

an

Indi

cato

r19

6019

6519

7019

7519

8019

8519

9019

9520

0020

0520

0620

0720

0820

0920

1020

1120

1220

1320

1420

1520

2020

2520

30

Popu

latio

n ('0

00)

M

ale

3,7

77

4,3

83

5,1

34

6,0

60

7,2

37

8,5

84

10,

047

12,

316

13,

918

15,

848

16,

255

16,

666

17,

079

17,

487

17,

888

18,

278

18,

661

19,

046

19,

446

19,

871

22,

313

24,

896

27,

587

Fe

mal

e 3

,751

4

,355

5

,099

6

,016

7

,181

8

,514

9

,962

1

2,21

3 1

3,81

2 1

5,73

8 1

6,14

3 1

6,55

2 1

6,96

1 1

7,36

6 1

7,76

4 1

8,15

3 1

8,53

4 1

8,91

8 1

9,31

8 1

9,74

2 2

2,18

6 2

4,78

0 2

7,49

1

To

tal

7,5

28

8,7

38

10,

233

12,

076

14,

418

17,

098

20,

009

24,

529

27,

730

31,

586

32,

398

33,

218

34,

040

34,

853

35,

652

36,

431

37,

195

37,

964

38,

764

39,

613

44,

499

49,

676

55,

078

Popu

latio

n di

strib

utio

n ('0

00)

Ur

ban

809

1

,169

1

,691

2

,288

2

,878

3

,922

5

,725

7

,906

9

,011

1

0,34

8 1

0,63

3 1

0,92

5 1

1,21

6 1

1,50

8 1

1,79

4 1

2,10

6 1

2,41

6 1

2,72

6 1

3,04

8 1

3,39

3 1

5,57

5 1

8,22

0 2

1,39

3

Ru

ral

6,7

19

7,5

69

8,5

42

9,7

88

11,

540

13,

176

14,

284

16,

623

18,

719

21,

238

21,

765

22,

293

22,

824

23,

345

23,

858

24,

325

24,

779

25,

238

25,

716

26,

220

28,

924

31,

456

33,

685

To

tal

7,5

28

8,7

38

10,

233

12,

076

14,

418

17,

098

20,

009

24,

529

27,

730

31,

586

32,

398

33,

218

34,

040

34,

853

35,

652

36,

431

37,

195

37,

964

38,

764

39,

613

44,

499

49,

676

55,

078

Ur

bani

zatio

n (%

) 1

0.7

13.

4 1

6.5

18.

9 2

0.0

22.

9 2

8.6

32.

2 3

2.5

32.

76

32.

8 3

2.9

33.

0 3

3.0

33.

1 3

3.2

33.

4 3

3.5

33.

7 3

3.8

35.

0 3

6.7

38.

8

Popu

latio

n by

age

gro

up ('

000)

0-

14 y

ears

3,3

78

3,9

72

4,7

17

5,6

40

6,7

71

7,9

51

9,0

96

10,

908

12,

125

13,

647

13,

923

14,

199

14,

471

14,

737

14,

992

15,

206

15,

410

15,

610

15,

819

16,

042

17,

203

18,

395

19,

601

15

-64

year

s 3

,906

4

,496

5

,208

6

,076

7

,222

8

,646

1

0,32

4 1

2,89

7 1

4,77

7 1

6,98

0 1

7,48

4 1

7,99

6 1

8,51

3 1

9,02

8 1

9,53

9 2

0,06

8 2

0,59

2 2

1,12

4 2

1,67

8 2

2,26

3 2

5,73

8 2

9,42

4 3

3,25

2

65

yea

rs a

nd o

ver

244

2

70

308

3

60

425

5

01

589

7

24

828

9

59

991

1

,023

1

,056

1

,088

1

,121

1

,157

1

,193

1

,230

1

,268

1

,308

1

,558

1

,857

2

,225

To

tal

7,5

28

8,7

38

10,

233

12,

076

14,

418

17,

098

20,

009

24,

529

27,

730

31,

586

32,

398

33,

218

34,

040

34,

853

35,

652

36,

431

37,

195

37,

964

38,

764

39,

613

44,

499

49,

676

55,

078

Hous

ehol

d po

pula

tion

('000

) 2

8,70

7 2

9,41

3 3

0,09

2 3

0,76

0 3

1,43

4 3

2,13

5 3

2,87

9 3

7,15

7 4

1,72

8 4

6,54

1

No o

f hou

seho

lds

('000

) 4

,650

4

,744

4

,933

5

,127

5

,328

5

,541

5

,768

7

,146

8

,182

9

,308

Aver

age

size

of h

ouse

hold

s 6

.2

6.2

6

.1

6.0

5

.9

5.8

5

.7

5.2

5

.1

5.0

Hous

ehol

d po

pula

tion

as %

tota

l 8

2.4

82.

5 8

2.6

82.

7 8

2.8

82.

9 8

3.0

83.

5 8

4.0

84.

5

Mem

o ite

ms:

Popu

latio

n gr

owth

rate

(% p

.a.)

3.0

3

.1

3.2

3

.4

3.6

3

.5

3.2

4

.2

2.5

2

.6

2.6

2

.5

2.5

2

.4

2.3

2

.2

2.1

2

.1

2.1

2

.2

2.2

2

.2

2.1

Nom

adic

pop

ulat

ion

('000

) 6

,146

6

,239

6

,339

6

,435

6

,530

6

,629

6

,734

7

,342

7

,948

8

,537

Sour

ces:

UN (2

013)

, Wor

ld P

opul

ation

Pro

spec

ts: T

he 2

012

Revis

ion. D

epar

tmen

t of E

cono

mic

and

Socia

l Affa

irs, N

ew Yo

rk, 2

013,

and

UN

(201

4), W

orld

Urb

aniza

tion

Pros

pect

s: 20

14 R

evisi

on.

Depa

rtmen

t of E

cono

mic

and

Socia

l Affa

irs, N

ew Yo

rk, 2

014.

The

200

9 da

ta fo

r hou

seho

lds

in N

orth

ern

Suda

n ar

e re

porte

d in

Cen

tral B

urea

u of

Sta

tistic

s (2

009)

, Sud

an N

ation

al Ba

selin

e Ho

useh

old S

urve

y, 20

09: N

orth

Sud

an Ta

bulat

ion R

epor

t. Kh

arto

um, 2

010.

The

hou

seho

ld d

ata

for 2

010-

2030

are

est

imat

es b

y aut

hors

.

Anne

x Ta

ble

1.3:

Dem

ogra

phic

Indi

cato

rs fo

r Nor

th S

udan

, 196

0-20

30

Indi

cato

r19

60-6

519

65-7

019

70-7

519

75-8

019

80-8

519

85-9

019

90-9

519

95-0

020

00-0

520

05-1

020

10-1

520

15-2

020

20-2

520

25-3

0

Popu

latio

n gr

owth

rate

(% p

.a.)

3.0

3

.2

3.4

3

.6

3.5

3

.2

4.2

2

.5

2.6

2

.4

2.1

2

.3

2.2

2

.1

Crud

e bi

rth ra

te (b

irths

per

1,0

00 p

opul

atio

n) 4

6.6

46.

9 4

6.9

46.

1 4

4.2

42.

1 4

1.6

40.

3 3

8.9

36.

1 3

3.7

31.

7 3

0.0

28.

4

Crud

e de

ath

rate

(birt

hs p

er 1

,000

pop

ulat

ion)

16.

8 1

5.4

14.

2 1

3.4

12.

9 1

2.3

11.

7 1

1.0

10.

0 8

.9

8.4

8

.0

7.7

7

.5

Net i

n-m

igra

tion

rate

-

0.0

0

.1

0.3

0

.3

0.2

1

.2

(0.5

) (0

.3)

(0.3

) (0

.4)

(0.0

) (0

.0)

(0.0

)

Life

exp

ecta

ncy

at b

irth

(yea

rs)

49.

2 5

1.2

53.

1 5

4.0

54.

5 5

5.1

56.

0 5

7.2

58.

9 6

0.9

61.

9 6

2.9

63.

8 6

4.7

Sour

ce: U

N (2

013)

.


PRIVATE SECTOR-LED ECONOMIC DIVERSIFICATION AND DEVELOPMENT IN SUDANAn

nex

Tabl

e 1.

4: L

abor

For

ce G

row

th in

(nor

th) S

udan

Indi

cato

r19

6019

6519

7019

7519

8019

8519

9019

9520

0020

0520

1020

1120

1220

1320

1420

1520

2020

2520

30

Tota

l pop

ulat

ion

15-6

4 ye

ars

('000

) 3

,906

4

,496

5

,208

6

,076

7

,222

8

,646

1

0,32

4 1

2,89

7 1

4,77

7 1

6,98

0 1

9,53

9 2

0,06

8 2

0,59

2 2

1,12

4 2

1,67

8 2

2,26

3 2

5,73

8 2

9,42

4 3

3,25

2

Labo

r for

ce ('

000)

2,7

20

3,0

18

3,3

45

3,7

85

4,2

80

4,9

62

5,7

50

6,7

66

7,7

28

8,9

99

10,

479

10,

790

11,

110

11,

443

11,

782

12,

133

14,

051

16,

274

18,

847

Unem

ploy

men

t ('0

00)

817

9

68

1,1

75

1,3

32

1,5

51

1,5

97

1,6

44

1,7

39

1,7

91

1,8

20

1,9

67

1,9

53

1,8

85

Empl

oyed

labo

r for

ce 4

,934

5

,798

6

,554

7

,667

8

,928

9

,193

9

,465

9

,704

9

,991

1

0,31

3 1

2,08

4 1

4,32

1 1

6,96

2

Mem

o ite

ms:

Parti

cipa

tion

rate

(%)

69.

6 6

7.1

64.

2 6

2.3

59.

3 5

7.4

55.

7 5

2.5

52.

3 5

3.0

53.

6 5

3.8

54.

0 5

4.2

54.

4 5

4.5

54.

6 5

5.3

56.

7

Labo

r for

ce g

row

th ra

te (%

p.a

.) 3

.0

3.0

3

.0

3.0

3

.0

3.0

3

.0

3.0

3

.0

Grow

th in

em

ploy

men

t (%

p.a

) 3

.0

3.0

3

.0

2.5

3

.0

3.2

3

.2

3.3

3

.4

Unem

ploy

men

t rat

e (%

of l

abor

forc

e) 1

4.2

14.

3 1

5.2

14.

8 1

4.8

14.

8 1

4.8

15.

2 1

5.2

15.

0 1

4.0

12.

0 1

0.0

Sour

ce: A

nnex

Tabl

e 1.

2 fo

r the

15-

64 ye

ar o

ld p

opul

ation

. Par

ticip

ation

rate

s fo

r 200

0-20

13 a

re fr

om th

e W

orld

Ban

k de

velop

men

t ind

icato

r dat

abas

e. F

or 2

014-

2030

par

ticip

ation

rate

s ar

e es

timat

es b

y au

thor

s.

Anne

x Ta

ble

2.1:

Nat

iona

l Inc

ome

Acco

unts

by

Indu

stria

l Orig

in(In

loca

l cur

renc

y at

cur

rent

mar

ket p

rices

)19

81/8

219

82/8

319

83/8

419

84/8

519

85/8

619

886/

8719

87/8

819

88/8

919

89/9

019

90/9

119

91/9

219

92/9

319

93/9

419

94/9

519

9619

9719

9819

99In

Ls

hund

reds

of m

illion

sIn

SDD

hun

dred

s of

milli

ons

Agric

ultu

re, f

ores

try

& fis

herie

s

Crop

s

Live

stoc

k

Fore

stry

Fish

erie

s

Sub-

tota

l 2

6 3

1 3

6 4

2 6

3 1

38

179

3

33

390

7

95

1,6

85

3,6

30

7,7

41

17,

992

4,2

18

7,3

63

8,6

99

9,9

30

Indu

stry

Pe

trole

um 4

6 4

3 5

9 4

17

Ot

her m

inin

g/qu

arry

ing

0

0

0

0

0

0

0

1

1

1

4

26

55

104

9

8

Man

ufac

ture

s 6

8

1

0 1

4 1

6 2

1 3

4 5

7 7

4 1

00

262

4

94

934

2

,774

8

21

1,0

36

1,3

25

1,6

10

El

ectri

city

& w

ater

1

1

2

3

3

5

6

8

16

20

44

111

1

94

310

7

4 9

7 1

25

168

Cons

truct

ion

4

6

7

8

10

16

20

25

55

101

1

94

449

1

,130

1

,697

4

48

598

2

,016

1

,655

Sub-

tota

l 1

0 1

5 1

8 2

5 3

0 4

2 6

1 9

1 1

45

222

5

04

1,0

80

2,3

13

4,8

84

1,3

89

1,7

74

3,5

25

3,9

48

Serv

ices

Co

mm

erce

, res

taur

ants

, hot

els

9

15

21

33

44

78

84

192

2

70

408

9

71

2,6

56

4,3

47

7,2

93

1,8

82

2,6

34

3,7

02

4,6

13

Tr

ansp

ort a

nd c

omm

unic

atio

n 7

9

1

1 1

2 1

4 4

2 5

6 7

9 8

7 1

48

291

5

37

1,2

90

4,6

67

1,1

74

1,5

49

2,5

86

3,8

86

Fi

nanc

e, in

sura

nce,

real

est

ate

& bu

sine

ss s

ervi

ces

8

11

13

19

24

34

39

53

78

166

4

31

706

1

,518

2

,262

9

13

1,3

01

1,7

74

2,2

22

Co

mm

unity

, soc

ial &

per

sona

l se

rvic

es 1

1

2

2

3

4

4

1

0 2

3 4

1 9

1 1

82

473

8

95

242

3

46

451

5

67

Fi

nanc

ial i

nter

med

iatio

n se

rvic

es (1

) (1

) (1

) (1

) (2

) (3

) (4

) (7

) (9

) (1

0) (9

4) (8

4) (1

30)

(270

) (6

0) (1

22)

(236

) (1

38)

Go

vern

men

t ser

vice

s 6

8

1

0 1

1 1

4 1

6 2

7 4

1 6

8 7

7 1

67

334

5

04

913

2

88

507

6

73

1,0

34

Pr

ivat

e no

n-pr

ofit s

ervi

ces

to

hous

ehol

ds 1

1

2

2

3

3

4

9

2

1 3

8 7

9 1

72

431

8

26

193

3

06

353

4

78

Su

b-to

tal

31

45

57

79

100

1

76

210

3

77

539

8

67

1,9

35

4,5

02

8,4

32

16,

586

4,6

32

6,5

20

9,3

02

12,

662

GDP

at fa

ctor

cos

t 6

7 9

0 1

12

146

1

93

355

4

50

801

1

,075

1

,884

4

,124

9

,212

1

8,48

7 3

9,46

2 1

0,24

0 1

5,65

8 2

1,52

6 2

6,54

0

Impo

rt du

ties

4

5

6

8

10

9

18

25

26

42

94

272

3

26

1,0

35

238

4

80

410

5

19

Ann

ex 2

: M

acro

eco

nom

ic A

cco

unts

and

Dat

a


GDP

at m

arke

t pric

es 7

0.4

95.

9 1

18.1

1

53.6

2

02.2

3

64.8

4

67.9

8

25.6

1

,101

1

,927

4

,218

9

,484

1

8,81

3 4

0,49

7 1

0,47

8 1

6,13

7 2

1,93

6 2

7,05

9 Co

mpo

sitio

n of

GDP

(% o

f GDP

at m

arke

t pric

es)

Agric

ultu

re, f

ores

try

& fis

herie

s

Crop

s -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Live

stoc

k -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Fore

stry

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Fi

sher

ies

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Su

b-to

tal

36.

6 3

2.5

30.

3 2

7.5

31.

1 3

7.7

38.

2 4

0.3

35.

4 4

1.3

39.

9 3

8.3

41.

1 4

4.4

40.

3 4

5.6

39.

7 3

6.7

Indu

stry

Pe

trole

um -

-

-

-

-

-

-

-

-

-

-

-

-

-

0

.4

0.3

0

.3

1.5

Othe

r min

ing/

quar

ryin

g 0

.1

0.1

0

.0

0.0

0

.0

0.0

0

.1

0.1

0

.1

0.1

0

.1

0.3

0

.3

0.3

-

-

-

0

.4

M

anuf

actu

res

8.0

7

.9

8.5

9

.1

8.0

5

.8

7.3

6

.9

6.7

5

.2

6.2

5

.2

5.0

6

.8

7.8

6

.4

6.0

5

.9

El

ectri

city

& w

ater

1.1

1

.0

1.5

1

.8

1.7

1

.4

1.4

1

.0

1.4

1

.1

1.0

1

.2

1.0

0

.8

0.7

0

.6

0.6

0

.6

Co

nstru

ctio

n 5

.4

6.3

5

.5

5.4

5

.0

4.3

4

.4

3.1

5

.0

5.2

4

.6

4.7

6

.0

4.2

4

.3

3.7

9

.2

6.1

Sub-

tota

l 1

4.5

15.

3 1

5.6

16.

4 1

4.7

11.

6 1

3.1

11.

1 1

3.2

11.

5 1

1.9

11.

4 1

2.3

12.

1 1

3.3

11.

0 1

6.1

14.

6 Se

rvic

es

Com

mer

ce, r

esta

uran

ts, h

otel

s 1

3.0

15.

5 1

7.7

21.

5 2

1.6

21.

5 1

7.9

23.

3 2

4.6

21.

2 2

3.0

28.

0 2

3.1

18.

0 1

8.0

16.

3 1

6.9

17.

0

Tran

spor

t and

com

mun

icat

ion

10.

0 9

.8

9.4

8

.1

7.0

1

1.4

12.

0 9

.6

7.9

7

.7

6.9

5

.7

6.9

1

1.5

11.

2 9

.6

11.

8 1

4.4

Fi

nanc

e, in

sura

nce,

real

est

ate

& bu

sine

ss s

ervi

ces

11.

1 1

2.0

11.

3 1

2.4

12.

0 9

.4

8.4

6

.4

7.1

8

.6

10.

2 7

.4

8.1

5

.6

8.7

8

.1

8.1

8

.2

Co

mm

unity

, soc

ial &

per

sona

l se

rvic

es 1

.4

1.5

1

.5

1.6

1

.6

1.2

0

.9

1.2

2

.0

2.1

2

.1

1.9

2

.5

2.2

2

.3

2.1

2

.1

2.1

Fi

nanc

ial i

nter

med

iatio

n se

rvic

es (1

.5)

(1.4

) (1

.2)

(0.9

) (0

.9)

(0.7

) (0

.9)

(0.8

) (0

.8)

(0.5

) (2

.2)

(0.9

) (0

.7)

(0.7

) (0

.6)

(0.8

) (1

.1)

(0.5

)

Gove

rnm

ent s

ervi

ces

8.3

8

.1

8.6

7

.2

7.0

4

.5

5.7

4

.9

6.2

4

.0

4.0

3

.5

2.7

2

.3

2.7

3

.1

3.1

3

.8

Pr

ivat

e no

n-pr

ofit s

ervi

ces

to

hous

ehol

ds 1

.1

1.1

1

.3

1.4

1

.3

0.9

0

.8

1.1

1

.9

2.0

1

.9

1.8

2

.3

2.0

1

.8

1.9

1

.6

1.8

Su

b-to

tal

43.

5 4

6.5

48.

6 5

1.2

49.

5 4

8.1

44.

9 4

5.7

49.

0 4

5.0

45.

9 4

7.5

44.

8 4

1.0

44.

2 4

0.4

42.

4 4

6.8

GDP

at fa

ctor

cos

t 9

4.5

94.

3 9

4.5

95.

0 9

5.3

97.

4 9

6.1

97.

0 9

7.6

97.

8 9

7.8

97.

1 9

8.3

97.

4 9

7.7

97.

0 9

8.1

98.

1

Impo

rt du

ties

5.5

5

.7

5.5

5

.0

4.7

2

.6

3.9

3

.0

2.4

2

.2

2.2

2

.9

1.7

2

.6

2.3

3

.0

1.9

1

.9

GDP

at m

arke

t pric

es 1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

So

urce

: Cen

tral B

urea

u of

Sta

tistic

s, Na

tiona

l Acc

ount

s Adm

inist

ratio

n.



nex T

able

2.1

: Nat

iona

l Inc

ome

Acco

unts

by

Indu

stria

l Orig

in(In

loca

l cur

renc

y at

cur

rent

mar

ket p

rices

)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

In S

DG m

illion

s

Agric

ultu

re, f

ores

try &

fish

erie

s

Cr

ops

38,

885

47,

817

Li

vest

ock

39,

773

49,

422

Fo

rest

ry 8

07

967

Fi

sher

ies

1,2

10

1,4

75

Su

b-to

tal

12,

067

14,

548

17,

986

21,

411

23,

369

28,

455

31,

191

32,

986

37,

481

44,

970

52,

691

63,

609

80,

675

99,

681

Indu

stry

Pe

trole

um 2

,303

2

,778

3

,193

3

,812

4

,761

6

,461

9

,478

1

0,12

2 1

6,65

5 9

,621

1

5,65

4 9

,248

8

,095

8

,962

Ot

her m

inin

g/qu

arry

ing

102

9

9 1

05

120

1

20

157

1

92

212

2

72

310

3

65

2,1

80

4,7

52

5,8

08

M

anuf

actu

res

2,2

76

3,3

54

4,4

27

4,8

62

6,3

93

7,3

22

8,0

42

8,7

82

9,7

26

11,

508

13,

673

16,

285

21,

677

26,

101

El

ectri

city

& w

ater

234

2

27

304

1

29

829

1

,071

1

,820

1

,981

2

,242

2

,513

2

,894

1

,606

2

,181

2

,644

Co

nstru

ctio

n 1

,159

1

,486

1

,893

2

,136

2

,615

3

,824

4

,243

4

,651

5

,239

6

,171

7

,458

8

,718

1

1,52

5 1

3,86

6

Su

b-to

tal

6,0

73

7,9

44

9,9

22

11,

058

14,

717

18,

835

23,

774

25,

748

34,

135

30,

123

40,

044

38,

037

48,

230

57,

381

-

Serv

ices

Co

mm

erce

, res

taur

ants

, hot

els

5,6

88

6,4

66

7,0

17

8,6

44

10,

773

12,

663

14,

328

16,

728

18,

376

21,

108

24,

827

30,

709

40,

720

48,

664

Tr

ansp

ort a

nd c

omm

unic

atio

n 3

,897

4

,308

4

,069

5

,581

8

,411

1

0,09

3 1

1,67

2 1

3,78

1 1

5,04

6 1

7,07

6 1

9,83

5 2

4,42

6 3

2,51

1 3

9,17

8

Fi

nanc

e, in

sura

nce,

real

est

ate

& bu

sines

s se

rvic

es 2

,787

3

,195

4

,117

4

,387

5

,340

6

,598

7

,613

7

,809

8

,961

1

0,39

9 1

1,86

1 1

4,53

1 1

8,91

1 2

2,71

2

Co

mm

unity

, soc

ial &

per

sona

l ser

vices

675

7

53

812

8

55

917

9

95

1,1

19

1,2

58

1,3

94

1,5

23

1,7

35

1,9

68

2,5

64

3,0

65

Fi

nanc

ial i

nter

med

iatio

n se

rvic

es (1

91)

(180

) (2

93)

(380

) (5

47)

(884

) (1

,026

) (7

20)

(789

) (8

73)

(1,4

18)

(1,6

25)

(2,1

23)

(2,5

49)

Go

vern

men

t ser

vices

1,3

94

2,2

28

2,4

33

2,6

62

3,8

46

4,2

69

5,2

97

5,9

44

6,6

81

7,4

82

8,3

62

9,9

98

15,

248

18,

466

Pr

ivate

non

-pro

fit s

ervic

es to

hou

seho

lds

542

5

94

639

6

69

708

7

44

861

9

96

1,1

09

1,2

07

1,3

09

1,5

02

1,9

54

2,3

52

Su

b-to

tal

14,

792

17,

364

18,

794

22,

417

29,

447

34,

477

39,

864

45,

797

50,

777

57,

921

66,

512

81,

509

109

,785

1

31,8

87

-

GDP

at fa

ctor

cos

t 3

2,93

1 3

9,85

6 4

6,70

2 5

4,88

7 6

7,53

3 8

1,76

7 9

4,82

8 1

04,5

30

122

,392

1

33,0

14

159

,247

1

83,1

55

238

,690

2

88,9

50

Im

port

dutie

s 7

32

803

1

,054

8

47

1,1

88

1,5

31

1,7

83

1,9

97

2,2

17

2,6

45

2,9

57

3,5

35

4,7

23

5,6

81

GDP

at m

arke

t pric

es 3

3,66

3 4

0,65

9 4

7,75

6 5

5,73

4 6

8,72

1 8

3,29

8 9

6,61

2 1

06,5

27

124

,609

1

35,6

59

162

,204

1

86,6

90

243

,413

2

94,6

31

403

,791

Com

posit

ion

of G

DP (%

of G

DP a

t mar

ket p

rices

)

Agric

ultu

re, f

ores

try &

fish

erie

s

Cr

ops

-

-

-

-

-

-

-

-

-

-

-

-

16.

0 1

6.2

Li

vest

ock

-

-

-

-

-

-

-

-

-

-

-

-

16.

3 1

6.8

Fo

rest

ry -

-

-

-

-

-

-

-

-

-

-

-

0

.3

0.3

Fi

sher

ies

-

-

-

-

-

-

-

-

-

-

-

-

0.5

0

.5

Su

b-to

tal

35.

8 3

5.8

37.

7 3

8.4

34.

0 3

4.2

32.

3 3

1.0

30.

1 3

3.1

32.

5 3

4.1

33.

1 3

3.8


Indu

stry

Pe

trole

um 6

.8

6.8

6

.7

6.8

6

.9

7.8

9

.8

9.5

1

3.4

7.1

9

.7

5.0

3

.3

3.0

Ot

her m

inin

g/qu

arry

ing

0.3

0

.2

0.2

0

.2

0.2

0

.2

0.2

0

.2

0.2

0

.2

0.2

1

.2

2.0

2

.0

M

anuf

actu

res

6.8

8

.2

9.3

8

.7

9.3

8

.8

8.3

8

.2

7.8

8

.5

8.4

8

.7

8.9

8

.9

El

ectri

city

& w

ater

0.7

0

.6

0.6

0

.2

1.2

1

.3

1.9

1

.9

1.8

1

.9

1.8

0

.9

0.9

0

.9

Co

nstru

ctio

n 3

.4

3.7

4

.0

3.8

3

.8

4.6

4

.4

4.4

4

.2

4.5

4

.6

4.7

4

.7

4.7

Su

b-to

tal

18.

0 1

9.5

20.

8 1

9.8

21.

4 2

2.6

24.

6 2

4.2

27.

4 2

2.2

24.

7 2

0.4

19.

8 1

9.5

Serv

ices

Co

mm

erce

, res

taur

ants

, hot

els

16.

9 1

5.9

14.

7 1

5.5

15.

7 1

5.2

14.

8 1

5.7

14.

7 1

5.6

15.

3 1

6.4

16.

7 1

6.5

Tr

ansp

ort a

nd c

omm

unic

atio

n 1

1.6

10.

6 8

.5

10.

0 1

2.2

12.

1 1

2.1

12.

9 1

2.1

12.

6 1

2.2

13.

1 1

3.4

13.

3

Fi

nanc

e, in

sura

nce,

real

est

ate

& bu

sines

s se

rvic

es 8

.3

7.9

8

.6

7.9

7

.8

7.9

7

.9

7.3

7

.2

7.7

7

.3

7.8

7

.8

7.7

Co

mm

unity

, soc

ial &

per

sona

l ser

vices

2.0

1

.9

1.7

1

.5

1.3

1

.2

1.2

1

.2

1.1

1

.1

1.1

1

.1

1.1

1

.0

Fi

nanc

ial i

nter

med

iatio

n se

rvic

es (0

.6)

(0.4

) (0

.6)

(0.7

) (0

.8)

(1.1

) (1

.1)

(0.7

) (0

.6)

(0.6

) (0

.9)

(0.9

) (0

.9)

(0.9

)

Go

vern

men

t ser

vices

4.1

5

.5

5.1

4

.8

5.6

5

.1

5.5

5

.6

5.4

5

.5

5.2

5

.4

6.3

6

.3

Pr

ivate

non

-pro

fit s

ervic

es to

hou

seho

lds

1.6

1

.5

1.3

1

.2

1.0

0

.9

0.9

0

.9

0.9

0

.9

0.8

0

.8

0.8

0

.8

Su

b-to

tal

43.

9 4

2.7

39.

4 4

0.2

42.

9 4

1.4

41.

3 4

3.0

40.

7 4

2.7

41.

0 4

3.7

45.

1 4

4.8

GDP

at fa

ctor

cos

t 9

7.8

98.

0 9

7.8

98.

5 9

8.3

98.

2 9

8.2

98.

1 9

8.2

98.

1 9

8.2

98.

1 9

8.1

98.

1

Im

port

dutie

s 2

.2

2.0

2

.2

1.5

1

.7

1.8

1

.8

1.9

1

.8

1.9

1

.8

1.9

1

.9

1.9

GDP

at m

arke

t pric

es 1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

Sour

ce: C

entra

l Bur

eau

of S

tatis

tics,

Nat

iona

l Acc

ount

s Ad

min

istra

tion.



nex T

able

2.2

: Nat

iona

l Inc

ome

Acco

unts

by

Indu

stria

l Orig

in(In

loca

l cur

renc

y at

198

1/82

con

stan

t pr

ices

) 1981

/82

1982

/83

1983

/84

1984

/85

1985

/86

1988

6/87

1987

/88

1988

/89

1989

/90

1990

/91

1991

/92

1992

/93

1993

/94

1994

/95

1996

1997

1998

1999

In L

s hu

ndre

ds o

f milli

ons

In S

DD h

undr

eds

of m

illion

s

Agric

ultu

re, f

ores

try &

fish

erie

s

Cr

ops

Li

vest

ock

Fo

rest

ry

Fi

sher

ies

Su

b-to

tal

25.

7 2

3.5

22.

4 1

9.6

22.

9 2

5.1

21.

9 2

9.1

23.

2 2

2.9

28.

5 2

9.0

27.

9 2

9.6

42.

8 4

7.0

50.

2 5

1.7

Indu

stry

Pe

trole

um -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

2

.0

Ot

her m

inin

g/qu

arry

ing

0.0

0

.1

0.0

0

.0

0.0

0

.0

0.0

0

.0

0.1

0

.1

0.2

0

.2

0.2

0

.2

0.3

0

.4

0.5

0

.5

M

anuf

actu

res

5.6

6

.1

6.0

6

.2

5.9

7

.1

7.3

7

.3

6.5

6

.7

8.7

8

.5

7.5

8

.0

10.

9 1

1.0

11.

8 1

2.3

El

ectri

city

& w

ater

0.8

0

.9

1.0

1

.1

1.1

1

.1

1.2

1

.2

1.2

1

.3

1.6

1

.8

1.7

1

.8

2.7

2

.9

3.0

3

.1

Co

nstru

ctio

n 3

.8

4.5

3

.8

3.5

3

.1

3.7

3

.5

3.3

4

.1

5.9

3

.4

4.5

4

.8

5.1

2

.1

2.3

6

.0

3.8

Su

b-to

tal

10.

2 1

1.5

10.

9 1

0.9

10.

1 1

1.9

12.

0 1

1.8

11.

8 1

4.0

13.

8 1

4.9

14.

2 1

5.0

16.

1 1

6.6

21.

3 2

1.6

Serv

ices

Co

mm

erce

, res

taur

ants

, hot

els

9.1

9

.7

8.2

8

.7

8.3

1

3.3

12.

3 1

2.2

10.

5 1

1.0

16.

2 1

6.4

17.

1 1

8.1

13.

7 1

4.2

14.

1 1

4.3

Tr

ansp

ort a

nd c

omm

unic

atio

n 7

.1

7.2

7

.1

6.4

8

.5

8.1

8

.8

7.7

7

.6

10.

6 1

1.5

12.

1 1

2.3

13.

0 1

1.9

11.

7 1

1.7

11.

6

Fi

nanc

e, in

sura

nce,

real

est

ate

& bu

sines

s se

rvic

es 7

.8

8.1

8

.2

8.1

8

.0

9.7

1

0.2

13.

2 1

2.9

10.

7 9

.8

11.

4 1

3.1

13.

8 1

5.8

16.

2 1

8.5

18.

9

Co

mm

unity

, soc

ial &

per

sona

l ser

vices

1.0

1

.1

1.2

1

.2

1.2

1

.3

1.3

1

.3

1.4

1

.5

1.4

1

.5

1.6

1

.7

1.7

1

.8

1.8

1

.9

Fi

nanc

ial i

nter

med

iatio

n se

rvic

es (1

.1)

(0.9

) (1

.0)

(0.9

) (0

.9)

(0.9

) (1

.0)

(1.1

) (0

.9)

(1.1

) (1

.8)

(2.4

) (1

.8)

(2.0

) (2

.1)

(3.1

) (4

.0)

(2.2

)

Go

vern

men

t ser

vices

5.8

6

.7

7.9

7

.0

6.6

6

.2

6.5

6

.7

10.

4 1

2.6

7.5

7

.8

8.2

8

.7

10.

0 1

2.4

12.

6 1

4.2

Pr

ivate

non

-pro

fit s

ervic

es to

hou

seho

lds

0.8

0

.8

0.9

0

.9

0.9

0

.9

0.9

1

.0

1.0

1

.0

1.1

1

.1

1.1

1

.2

1.2

1

.2

1.3

1

.3

Su

b-to

tal

30.

6 3

2.7

32.

4 3

1.3

32.

6 3

8.6

39.

0 4

1.0

42.

9 4

6.3

45.

6 4

7.9

51.

5 5

4.6

52.

3 5

4.4

56.

0 6

0.0

GDP

at fa

ctor

cos

t 6

6.6

67.

7 6

5.6

61.

8 6

5.6

75.

5 7

2.9

82.

0 7

8.0

83.

2 8

8.0

91.

9 9

3.7

99.

3 1

11.2

1

18.0

1

27.4

1

33.4

Im

port

dutie

s 3

.8

4.2

2

.6

2.1

1

.8

1.5

3

.8

1.6

1

.0

1.8

2

.6

2.8

2

.0

2.1

1

.9

2.0

2

.5

2.0

GDP

at m

arke

t pric

es 7

0.4

71.

9 6

8.3

64.

0 6

7.4

77.

0 7

6.8

83.

6 7

9.0

85.

0 9

0.6

94.

7 9

5.7

101

.4

113

.1

120

.0

129

.9

135

.4

GDP

annu

al g

row

th ra

te (%

p.a

.)

Agric

ultu

re, f

ores

try &

fish

erie

s

Cr

ops

Li

vest

ock

Fo

rest

ry

Fi

sher

ies

Su

b-to

tal

(8.9

) (4

.6)

(12.

2) 1

6.5

9.5

(1

2.5)

32.

8 (2

0.2)

(1.3

) 2

4.5

1.6

(3

.7)

6.0

4

4.6

9.7

6

.8

3.1


Indu

stry

Pe

trole

um

Ot

her m

inin

g/qu

arry

ing

35.

1 (1

4.0)

(4.7

) -

(3

6.6)

30.

8 4

1.2

47.

9 1

1.3

89.

9 5

.3

15.

8 6

.0

77.

3 6

.4

29.

5 (3

.0)

M

anuf

actu

res

8.7

(1

.2)

3.6

(5

.7)

20.

5 3

.0

0.1

(1

1.3)

3.7

2

9.9

(2.2

) (1

2.0)

6.0

3

6.6

1.5

7

.3

3.4

El

ectri

city

& w

ater

16.

9 1

2.5

11.

6 0

.3

(3.8

) 8

.9

4.4

(2

.8)

6.4

2

2.3

14.

4 (3

.3)

6.0

4

9.5

6.2

2

.2

4.7

Co

nstru

ctio

n 1

8.0

(16.

0) (7

.4)

(12.

9) 2

0.4

(4.9

) (6

.6)

25.

0 4

4.4

(42.

8) 3

2.1

7.2

6

.0

(57.

6) 7

.1

161

.4

(37.

4)

Su

b-to

tal

12.

9 (6

.0)

0.5

(7

.4)

17.

5 1

.2

(1.3

) (0

.2)

18.

1 (1

.1)

8.1

(4

.9)

6.0

7

.0

3.2

2

8.3

1.4

Serv

ices

Co

mm

erce

, res

taur

ants

, hot

els

6.2

(1

5.0)

6.2

(5

.3)

61.

2 (7

.7)

(1.1

) (1

3.5)

4.2

4

7.4

1.3

4

.4

6.0

(2

4.5)

3.4

(0

.3)

0.9

Tr

ansp

ort a

nd c

omm

unic

atio

n 1

.3

(0.8

) (1

0.4)

33.

1 (4

.3)

8.1

(1

2.7)

(1.4

) 4

0.5

7.9

5

.8

1.4

6

.0

(8.7

) (1

.3)

(0.7

) (0

.1)

Fi

nanc

e, in

sura

nce,

real

est

ate

& bu

sines

s se

rvic

es 3

.6

0.4

(0

.6)

(1.3

) 2

0.8

5.8

2

9.6

(2.3

) (1

7.6)

(8.6

) 1

7.3

14.

1 6

.0

14.

4 2

.0

14.

5 2

.4

Co

mm

unity

, soc

ial &

per

sona

l ser

vices

10.

9 2

.3

2.7

5

.3

4.3

(1

.8)

4.4

4

.4

4.7

(1

.7)

2.2

7

.6

6.0

3

.3

3.0

2

.8

4.4

Fi

nanc

ial i

nter

med

iatio

n se

rvic

es (1

3.5)

9.1

(8

.9)

(4.0

) 2

.7

10.

0 6

.5

(18.

5) 2

0.9

70.

3 3

3.8

(23.

1) 5

.9

7.8

4

5.0

30.

0 (4

3.7)

Go

vern

men

t ser

vices

14.

7 1

7.9

(11.

9) (4

.6)

(6.7

) 4

.6

4.0

5

4.1

21.

6 (4

0.3)

3.8

5

.3

6.0

1

5.1

23.

6 1

.3

13.

0

Pr

ivate

non

-pro

fit s

ervic

es to

hou

seho

lds

6.1

6

.1

(1.6

) (0

.7)

4.0

4

.1

3.7

3

.6

3.6

3

.3

2.3

2

.3

6.0

(1

.1)

2.8

2

.8

5.5

Su

b-to

tal

6.8

(0

.9)

(3.4

) 4

.2

18.

3 1

.0

5.3

4

.6

7.9

(1

.5)

5.0

7

.5

6.0

(4

.3)

4.1

2

.8

7.3

GDP

at fa

ctor

cos

t 1

.7

(3.0

) (5

.8)

6.1

1

5.1

(3.4

) 1

2.5

(4.9

) 6

.7

5.7

4

.4

2.0

6

.0

12.

0 6

.1

8.0

4

.7

Im

port

dutie

s 8

.3

(36.

9) (1

9.2)

(13.

1) (1

8.4)

155

.5

(58.

4) (3

5.1)

69.

0 4

7.0

9.9

(2

9.7)

6.0

(8

.0)

3.3

2

2.6

(18.

7)

GDP

at m

arke

t pric

es 6

.0

2.1

(5

.0)

(6.3

) 5

.4

14.

2 (0

.3)

8.9

(5

.5)

7.5

6

.6

4.6

1

.0

6.0

1

1.6

6.1

8

.2

4.2

Sour

ce: C

entra

l Bur

eau

of S

tatis

tics,

Nat

iona

l Acc

ount

s Ad

min

istra

tion.



nex T

able

2.2

: Nat

iona

l Inc

ome

Acco

unts

by

Indu

stria

l Orig

in(In

loca

l cur

renc

y at

198

1/82

con

stan

t pr

ices

)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

In S

DG m

illion

s

Agric

ultu

re, f

ores

try &

fish

erie

s

Cr

ops

Li

vest

ock

Fo

rest

ry

Fi

sher

ies

Su

b-to

tal

55.

7 5

9.3

60.

6 6

3.0

61.

8 6

4.7

70.

6 7

5.0

81.

0 8

6.0

92.

0 7

8.5

83.

0 8

6.3

Indu

stry

Pe

trole

um 7

.3

8.6

9

.7

11.

9 1

3.1

14.

7 1

6.0

24.

0 2

3.0

23.

0 2

2.0

18.

4 6

.0

8.0

Ot

her m

inin

g/qu

arry

ing

0.5

0

.4

0.4

0

.4

0.3

0

.4

0.3

0

.2

0.2

0

.2

0.3

0

.5

1.5

2

.1

M

anuf

actu

res

15.

2 1

8.5

23.

3 2

0.5

21.

0 2

1.6

22.

1 2

6.3

28.

3 3

0.4

32.

5 3

5.3

41.

7 4

2.3

El

ectri

city

& w

ater

2.6

2

.5

2.7

2

.5

3.9

4

.4

4.8

5

.1

5.6

7

.0

7.4

7

.0

7.2

7

.4

Co

nstru

ctio

n 2

.8

3.7

3

.9

4.4

5

.2

6.3

6

.6

7.2

8

.4

8.8

1

0.0

8.8

9

.3

9.5

Su

b-to

tal

28.

4 3

3.7

40.

1 3

9.8

43.

6 4

7.4

49.

8 6

2.8

65.

4 6

9.2

72.

2 7

0.0

65.

7 6

9.3

Serv

ices

Co

mm

erce

, res

taur

ants

, hot

els

14.

5 1

4.9

15.

3 1

6.6

16.

1 1

7.0

18.

0 1

9.2

20.

5 2

2.3

23.

4 2

3.6

24.

1 2

4.7

Tr

ansp

ort a

nd c

omm

unic

atio

n 1

2.3

12.

2 1

5.3

16.

6 1

8.2

19.

6 2

0.6

22.

8 2

5.1

27.

1 2

8.5

27.

9 2

9.5

30.

3

Fi

nanc

e, in

sura

nce,

real

est

ate

& bu

sines

s se

rvic

es 1

8.8

20.

4 2

1.4

23.

1 2

3.1

24.

7 2

7.1

29.

4 3

1.0

33.

0 3

3.5

32.

9 3

3.5

34.

4

Co

mm

unity

, soc

ial &

per

sona

l ser

vices

2.1

2

.2

2.3

2

.4

2.5

2

.8

2.9

3

.0

3.0

3

.1

3.6

3

.3

3.4

3

.5

Fi

nanc

ial i

nter

med

iatio

n se

rvic

es (2

.2)

(2.0

) (2

.8)

(3.8

) (3

.7)

(3.8

) (4

.3)

(4.1

) (4

.6)

(4.0

) (4

.0)

(5.3

) (5

.4)

(5.4

)

Go

vern

men

t ser

vices

13.

7 1

8.6

16.

1 2

0.6

25.

4 2

5.9

32.

9 3

3.6

36.

2 3

6.7

38.

6 3

2.8

30.

5 3

1.3

Pr

ivate

non

-pro

fit s

ervic

es to

hou

seho

lds

1.4

1

.4

1.5

1

.7

1.7

1

.8

1.9

1

.9

1.9

2

.0

2.0

2

.1

2.2

2

.2

Su

b-to

tal

60.

5 6

7.7

69.

1 7

7.3

83.

4 8

7.9

99.

1 1

05.9

1

13.0

1

20.1

1

25.7

1

17.3

1

17.8

1

21.0

GDP

at fa

ctor

cos

t 1

44.6

1

60.6

1

69.8

1

80.1

1

88.7

2

00.0

2

19.4

2

43.6

2

59.4

2

75.4

2

89.8

2

65.8

2

66.5

2

76.5

Im

port

dutie

s 2

.1

1.9

2

.5

3.1

3

.9

3.5

4

.2

4.3

4

.4

4.1

4

.2

4.3

4

.4

4.5

GDP

at m

arke

t pric

es 1

46.7

1

62.6

1

72.3

1

83.2

1

92.6

2

03.4

2

23.5

2

47.9

2

63.8

2

79.5

2

94.0

2

70.1

2

70.9

2

81.0

GDP

annu

al g

row

th ra

te (%

p.a

.)

Agric

ultu

re, f

ores

try &

fish

erie

s

Cr

ops

Li

vest

ock

Fo

rest

ry

Fi

sher

ies

Su

b-to

tal

7.6

6

.6

2.2

4

.0

(2.0

) 4

.8

9.0

6

.3

8.0

6

.2

7.0

(1

4.7)

5.7

4

.0


Indu

stry

Pe

trole

um 2

64.7

1

7.1

13.

3 2

2.6

10.

2 1

1.7

9.1

5

0.0

(4.2

) -

(4

.3)

(16.

3) (6

7.4)

33.

3

Ot

her m

inin

g/qu

arry

ing

6.5

(1

8.4)

4.2

3

.6

(22.

0) 1

6.0

(33.

8) (1

3.5)

(12.

1) (2

0.3)

95.

5 5

8.7

215

.7

36.

0

M

anuf

actu

res

24.

2 2

1.3

26.

3 (1

2.1)

2.3

3

.1

2.0

1

9.0

7.7

7

.3

7.0

8

.6

18.

1 1

.5

El

ectri

city

& w

ater

(17.

8) (0

.8)

8.3

(9

.7)

57.

5 1

3.0

9.8

6

.0

8.2

2

5.4

6.0

(5

.4)

3.2

3

.0

Co

nstru

ctio

n (2

4.8)

30.

9 5

.5

13.

7 1

8.1

19.

9 5

.5

8.4

1

6.7

4.5

1

3.9

(11.

9) 5

.8

2.0

Su

b-to

tal

31.

6 1

8.5

19.

1 (0

.8)

9.6

8

.7

5.1

2

6.1

4.2

5

.9

4.2

(3

.0)

(6.1

) 5

.4

Serv

ices

Co

mm

erce

, res

taur

ants

, hot

els

1.4

2

.8

2.7

9

.1

(3.3

) 5

.6

6.1

6

.3

6.7

8

.8

5.2

0

.8

2.1

2

.6

Tr

ansp

ort a

nd c

omm

unic

atio

n 6

.0

(1.1

) 2

5.5

8.4

9

.8

7.3

5

.1

11.

0 9

.8

8.1

5

.3

(2.3

) 5

.9

2.7

Fi

nanc

e, in

sura

nce,

real

est

ate

& bu

sines

s se

rvic

es (0

.6)

8.2

4

.9

8.2

(0

.1)

6.8

1

0.0

8.5

5

.2

6.4

1

.7

(2.0

) 2

.1

2.5

Co

mm

unity

, soc

ial &

per

sona

l ser

vices

9.3

6

.5

5.3

3

.9

4.3

1

0.1

3.4

3

.0

0.7

4

.4

14.

5 (6

.1)

2.0

1

.5

Fi

nanc

ial i

nter

med

iatio

n se

rvic

es (1

.0)

(7.9

) 3

6.8

37.

5 (2

.5)

2.4

1

3.0

(5.5

) 1

1.5

(13.

2) 0

.8

32.

5 2

.2

0.7

Go

vern

men

t ser

vices

(4.0

) 3

6.3

(13.

5) 2

8.0

23.

3 1

.9

27.

2 2

.2

7.6

1

.3

5.2

(1

5.1)

(7.0

) 2

.8

Pr

ivate

non

-pro

fit s

ervic

es to

hou

seho

lds

5.5

3

.4

4.2

1

5.9

(0.7

) 4

.1

2.5

2

.3

2.3

2

.4

2.4

4

.6

2.1

0

.2

Su

b-to

tal

0.8

1

1.8

2.1

1

1.9

7.8

5

.4

12.

7 6

.9

6.8

6

.3

4.6

(6

.6)

0.4

2

.7

GDP

at fa

ctor

cos

t 8

.4

11.

1 5

.7

7.9

5

.1

5.6

9

.9

10.

9 6

.4

5.9

5

.2

(8.1

) 0

.3

3.7

Im

port

dutie

s 5

.4

(9.2

) 3

2.1

21.

4 2

6.3

(10.

8) 1

9.9

2.9

2

.8

(5.6

) 1

.6

2.1

3

.0

0.8

GDP

at m

arke

t pric

es 8

.4

10.

8 6

.0

6.3

5

.1

5.6

9

.9

10.

9 6

.4

5.9

5

.2

(8.1

) 0

.3

3.7

Sour

ce: C

entra

l Bur

eau

of S

tatis

tics,

Nat

iona

l Acc

ount

s Ad

min

istra

tion.



nex

Tabl

e 2.

3: N

atio

nal I

ncom

e Ac

coun

ts D

eflat

ors

(In lo

cal c

urre

ncy

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

GDP

defla

tors

in S

DG a

t 198

1/82

con

stan

t pric

es

Agric

ultu

re, f

ores

try

& fis

herie

s

Cr

ops

Li

vest

ock

Fo

rest

ry

Fi

sher

ies

Su

b-to

tal

21,

683

24,

533

29,

683

33,

986

37,

833

43,

962

44,

192

43,

981

46,

272

52,

290

57,

273

81,

052

97,

220

115

,504

Indu

stry

Pe

trole

um 3

1,41

4 3

2,37

2 3

2,85

0 3

1,99

0 3

6,25

8 4

4,04

7 5

9,23

8 4

2,17

4 7

2,41

1 4

1,83

1 7

1,15

5 5

0,21

5 1

34,9

18

112

,029

Ot

her m

inin

g/qu

arry

ing

20,

722

24,

850

25,

180

27,

685

35,

638

40,

153

73,

977

94,

688

138

,071

1

97,3

25

118

,827

4

47,4

14

308

,966

2

77,7

52

M

anuf

actu

res

14,

962

18,

174

18,

992

23,

728

30,

497

33,

884

36,

470

33,

455

34,

393

37,

908

42,

076

46,

148

52,

004

61,

718

El

ectri

city

& w

ater

9,1

83

8,9

88

11,

076

5,1

98

21,

254

24,

298

37,

595

38,

624

40,

404

36,

106

39,

245

23,

029

30,

301

35,

651

Co

nstru

ctio

n 4

0,99

9 4

0,14

9 4

8,49

9 4

8,12

6 4

9,88

6 6

0,86

3 6

4,02

1 6

4,76

1 6

2,53

6 7

0,46

4 7

4,74

8 9

9,13

0 1

23,9

01

146

,097

Su

b-to

tal

21,

378

23,

597

24,

748

27,

818

33,

778

39,

770

47,

761

41,

009

52,

190

43,

510

55,

497

54,

368

73,

386

82,

815

Serv

ices

Co

mm

erce

, res

taur

ants

, hot

els

39,

343

43,

524

45,

984

51,

923

66,

910

74,

496

79,

468

87,

260

89,

815

94,

823

106

,005

1

30,0

78

168

,941

1

96,8

70

Tr

ansp

ort a

nd c

omm

unic

atio

n 3

1,56

1 3

5,28

4 2

6,54

9 3

3,58

5 4

6,10

3 5

1,56

3 5

6,75

1 6

0,35

7 6

0,03

3 6

3,02

8 6

9,51

7 8

7,58

8 1

10,1

01

129

,165

Fi

nanc

e, in

sura

nce,

real

est

ate

& bu

sine

ss s

ervi

ces

14,

801

15,

674

19,

256

18,

968

23,

115

26,

741

28,

047

26,

520

28,

933

31,

557

35,

375

44,

206

56,

373

66,

027

Co

mm

unity

, soc

ial &

per

sona

l ser

vice

s 3

2,47

6 3

4,02

0 3

4,83

1 3

5,29

9 3

6,30

5 3

5,77

7 3

8,92

1 4

2,50

7 4

6,76

2 4

8,95

8 4

8,72

2 5

8,82

9 7

5,15

5 8

8,49

6

Fi

nanc

ial i

nter

med

iatio

n se

rvic

es 8

,620

8

,804

1

0,51

6 9

,896

1

4,61

8 2

3,08

1 2

3,70

3 1

7,59

8 1

7,30

5 2

2,03

2 3

5,50

1 3

0,71

5 3

9,25

7 4

6,80

0

Go

vern

men

t ser

vice

s 1

0,20

9 1

1,96

9 1

5,12

3 1

2,92

1 1

5,14

6 1

6,49

6 1

6,09

2 1

7,66

9 1

8,46

0 2

0,40

3 2

1,67

2 3

0,50

7 5

0,01

0 5

8,90

3

Pr

ivat

e no

n-pr

ofit s

ervi

ces

to

hous

ehol

ds 3

8,75

8 4

1,07

2 4

2,38

2 3

8,29

4 4

0,80

1 4

1,19

0 4

6,49

0 5

2,58

0 5

7,21

0 6

0,76

0 6

4,39

3 7

0,61

2 8

9,94

0 1

08,0

20

Su

b-to

tal

24,

430

25,

657

27,

196

28,

991

35,

327

39,

232

40,

243

43,

264

44,

919

48,

223

52,

926

69,

474

93,

161

109

,006

GDP

at fa

ctor

cos

t 2

2,77

3 2

4,81

0 2

7,50

5 2

9,96

7 3

5,06

9 4

0,19

1 4

2,42

3 4

2,17

0 4

6,39

1 4

7,59

0 5

4,16

5 6

7,80

7 8

8,10

2 1

02,8

29

Im

port

dutie

s 3

4,67

6 4

1,91

1 4

1,66

8 2

7,57

2 3

0,61

9 4

4,24

9 4

2,97

3 4

6,77

8 5

0,50

3 6

3,81

4 7

0,21

1 8

2,21

3 1

06,6

55

127

,300

GDP

at m

arke

t pric

es 2

2,94

4 2

5,01

2 2

7,71

3 3

0,42

9 3

5,68

6 4

0,94

4 4

3,22

1 4

2,97

6 4

7,23

1 4

8,53

6 5

5,17

1 6

9,11

6 8

9,84

5 1

04,8

51

GDP

defla

tors

in S

DG a

t 201

2 pr

ices

Agric

ultu

re, f

ores

try

& fis

herie

s

Cr

ops

Li

vest

ock

Fo

rest

ry

Fi

sher

ies




nex T

able

2.4

: Nat

iona

l Inc

ome

Acco

unts

by

Indu

stria

l Orig

in(In

SDG

milli

ons

at 2

012

cons

tant

pric

es c

onst

ant p

rices

)

1981

/82

1982

/83

1983

/84

1984

/85

1985

/86

1988

6/87

1987

/88

1988

/89

1989

/90

1990

/91

1991

/92

1992

/93

1993

/94

1994

/95

1996

1997

1998

1999

GDP

by in

dust

rial o

rigin

(at

201

2 co

nsta

nt p

rices

)

Agric

ultu

re, f

ores

try &

fish

erie

s

Cr

ops

Li

vest

ock

Fo

rest

ry

Fi

sher

ies

Su

b-to

tal

25,

023

22,

803

21,

747

19,

090

22,

236

24,

357

21,

314

28,

312

22,

588

22,

285

27,

746

28,

203

27,

157

28,

787

41,

621

45,

651

48,

768

50,

299

Indu

stry

Pe

trole

um 2

,712

Ot

her m

inin

g/qu

arry

ing

114

1

54

133

1

27

127

8

0 1

05

148

2

19

244

4

63

488

5

65

599

1

,421

M

anuf

actu

res

2,9

13

3,1

68

3,1

31

3,2

42

3,0

57

3,6

84

3,7

96

3,7

99

3,3

68

3,4

93

4,5

38

4,4

40

3,9

05

4,1

39

5,6

54

5,7

39

6,1

60

6,3

71

El

ectri

city

& w

ater

232

2

71

305

3

40

341

3

28

357

3

73

362

3

86

472

5

40

522

5

53

827

8

78

898

9

40

Co

nstru

ctio

n 4

,732

5

,585

4

,693

4

,345

3

,783

4

,556

4

,334

4

,047

5

,060

7

,305

4

,177

5

,519

5

,918

6

,272

2

,660

2

,848

7

,445

4

,659

Su

b-to

tal

7,5

02

8,4

71

7,9

67

8,0

03

7,4

11

8,7

10

8,8

14

8,6

96

8,6

79

10,

248

10,

131

10,

957

10,

414

11,

038

11,

809

12,

181

15,

626

15,

839

Serv

ices

Co

mm

erce

, res

taur

ants

, hot

els

15,

414

16,

364

13,

904

14,

771

13,

982

22,

532

20,

787

20,

557

17,

791

18,

545

27,

335

27,

683

28,

896

30,

629

23,

136

23,

934

23,

861

24,

078

Tr

ansp

ort a

nd c

omm

unic

atio

n 7

,782

7

,881

7

,822

7

,010

9

,331

8

,931

9

,658

8

,436

8

,320

1

1,69

2 1

2,61

8 1

3,34

7 1

3,53

0 1

4,34

2 1

3,09

8 1

2,92

4 1

2,83

0 1

2,81

9

Fi

nanc

e, in

sura

nce,

real

est

ate

& bu

sines

s se

rvic

es 4

,417

4

,576

4

,595

4

,569

4

,510

5

,446

5

,760

7

,465

7

,297

6

,016

5

,499

6

,452

7

,365

7

,807

8

,935

9

,111

1

0,43

0 1

0,68

0

Co

mm

unity

, soc

ial &

per

sona

l ser

vices

763

8

46

866

8

89

936

9

76

958

1

,000

1

,045

1

,094

1

,075

1

,098

1

,181

1

,252

1

,293

1

,332

1

,369

1

,429

Fi

nanc

ial i

nter

med

iatio

n se

rvic

es (4

23)

(366

) (4

00)

(364

) (3

49)

(359

) (3

95)

(420

) (3

42)

(414

) (7

05)

(943

) (7

25)

(768

) (8

28)

(1,2

00)

(1,5

60)

(879

)

Go

vern

men

t ser

vices

2,9

19

3,3

48

3,9

46

3,4

78

3,3

19

3,0

96

3,2

39

3,3

69

5,1

92

6,3

13

3,7

66

3,9

08

4,1

15

4,3

62

5,0

19

6,2

06

6,2

89

7,1

08

Pr

ivate

non

-pro

fit s

ervic

es to

hou

seho

lds

712

7

55

801

7

89

783

8

15

848

8

80

911

9

43

975

9

97

1,0

21

1,0

82

1,0

70

1,1

00

1,1

31

1,1

93

Su

b-to

tal

28,

502

30,

453

30,

185

29,

161

30,

384

35,

953

36,

318

38,

242

40,

008

43,

172

42,

523

44,

660

48,

021

50,

903

48,

704

50,

693

52,

131

55,

937

GDP

at fa

ctor

cos

t 5

8,63

6 5

9,63

4 5

7,81

8 5

4,48

5 5

7,78

2 6

6,52

9 6

4,24

1 7

2,26

1 6

8,72

5 7

3,32

5 7

7,52

0 8

0,94

6 8

2,52

6 8

7,47

7 9

7,95

3 10

3,93

3 11

2,25

3 11

7,49

5

Im

port

dutie

s 4

,101

4

,442

2

,802

2

,264

1

,967

1

,605

4

,102

1

,705

1

,107

1

,871

2

,750

3

,020

2

,125

2

,251

2

,071

2

,141

2

,625

2

,134

GDP

at m

arke

t pric

es 6

3,25

1 6

4,55

5 6

1,32

2 5

7,47

0 6

0,58

2 6

9,19

8 6

8,96

8 7

5,12

8 7

1,01

7 7

6,35

2 8

1,37

0 8

5,09

2 8

5,94

9 9

1,10

5 10

1,63

6 10

7,79

3 11

6,68

5 12

1,61

8

Sour

ce: A

nnex

Tabl

es 2

.2 a

nd 2

.3 w

ith a

djus

tmen

ts to

201

3 by

aut

hors

.


Anne

x Tab

le 2

.4: N

atio

nal I

ncom

e Ac

coun

ts b

y In

dust

rial O

rigin

(In S

DG m

illion

s at

201

2 co

nsta

nt p

rices

con

stan

t pric

es)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

GDP

by in

dust

rial o

rigin

(at

201

2 co

nsta

nt p

rices

)

Agric

ultu

re, f

ores

try &

fish

erie

s

Cr

ops

38,

885

40,

052

Li

vest

ock

39,

773

41,

799

Fo

rest

ry 8

07

819

Fi

sher

ies

1,2

10

1,2

32

Su

b-to

tal

54,

103

57,

652

58,

911

61,

249

60,

053

62,

927

68,

618

72,

915

78,

748

83,

609

89,

443

76,

298

80,

675

83,

902

Indu

stry

Pe

trole

um 9

,890

1

1,57

6 1

3,11

4 1

6,07

6 1

7,71

5 1

9,79

1 2

1,58

7 3

2,38

0 3

1,03

1 3

1,03

1 2

9,68

2 2

4,84

9 8

,095

1

0,30

6 1

0,53

4

Ot

her m

inin

g/qu

arry

ing

1,5

14

1,2

36

1,2

88

1,3

35

1,0

41

1,2

08

800

6

92

609

4

85

949

1

,505

4

,752

6

,226

M

anuf

actu

res

7,9

10

9,5

97

12,

121

10,

656

10,

901

11,

238

11,

467

13,

651

14,

707

15,

787

16,

899

18,

352

21,

677

21,

288

El

ectri

city

& w

ater

773

7

67

831

7

50

1,1

82

1,3

35

1,4

67

1,5

54

1,6

82

2,1

09

2,2

35

2,1

13

2,1

81

2,2

04

Co

nstru

ctio

n 3

,501

4

,584

4

,837

5

,500

6

,494

7

,785

8

,211

8

,897

1

0,38

0 1

0,85

1 1

2,36

2 1

0,89

6 1

1,52

5 1

1,54

7

Su

b-to

tal

20,

847

24,

705

29,

421

29,

173

31,

974

34,

756

36,

529

46,

076

47,

998

50,

808

52,

952

51,

343

48,

230

50,

848

Serv

ices

Co

mm

erce

, res

taur

ants

, hot

els

24,

426

25,

100

25,

779

28,

124

27,

201

28,

717

30,

460

32,

386

34,

565

37,

606

39,

568

39,

883

40,

720

41,

786

Tr

ansp

ort a

nd c

omm

unic

atio

n 1

3,59

4 1

3,44

3 1

6,87

6 1

8,29

5 2

0,08

6 2

1,55

0 2

2,64

4 2

5,13

9 2

7,59

3 2

9,83

0 3

1,41

5 3

0,70

4 3

2,51

1 3

3,40

9

Fi

nanc

e, in

sura

nce,

real

est

ate

& bu

sines

s se

rvic

es 1

0,61

6 1

1,48

9 1

2,05

4 1

3,03

9 1

3,02

3 1

3,90

8 1

5,30

2 1

6,59

9 1

7,46

0 1

8,57

7 1

8,90

1 1

8,53

1 1

8,91

1 1

9,39

6

Co

mm

unity

, soc

ial &

per

sona

l ser

vices

1,5

62

1,6

64

1,7

52

1,8

20

1,8

98

2,0

89

2,1

60

2,2

25

2,2

40

2,3

37

2,6

76

2,5

14

2,5

64

2,6

03

Fi

nanc

ial i

nter

med

iatio

n se

rvic

es (8

70)

(801

) (1

,095

) (1

,506

) (1

,468

) (1

,504

) (1

,699

) (1

,605

) (1

,790

) (1

,555

) (1

,568

) (2

,077

) (2

,123

) (2

,139

)

Go

vern

men

t ser

vices

6,8

26

9,3

07

8,0

47

10,

302

12,

698

12,

943

16,

463

16,

824

18,

099

18,

339

19,

298

16,

391

15,

248

15,

681

Pr

ivate

non

-pro

fit s

ervic

es to

hou

seho

lds

1,2

58

1,3

01

1,3

55

1,5

71

1,5

60

1,6

25

1,6

66

1,7

04

1,7

44

1,7

86

1,8

28

1,9

12

1,9

54

1,9

58

Su

b-to

tal

56,

406

63,

050

64,

381

72,

037

77,

655

81,

870

92,

283

98,

615

105

,311

1

11,8

97

117

,075

1

09,2

98

109

,785

1

12,7

16

GDP

at fa

ctor

cos

t 1

27,3

99

141

,530

1

49,5

90

161

,367

1

69,6

60

179

,238

1

96,9

33

218

,383

2

32,4

38

246

,245

2

59,0

21

237

,974

2

38,6

90

247

,565

Im

port

dutie

s 2

,250

2

,042

2

,698

3

,276

4

,138

3

,690

4

,426

4

,554

4

,682

4

,421

4

,491

4

,586

4

,723

4

,760

GDP

at m

arke

t pric

es 1

31,8

15

146

,050

1

54,8

23

164

,560

1

73,0

16

182

,784

2

00,8

30

222

,704

2

37,0

37

251

,117

2

64,1

46

242

,682

2

43,4

13

252

,464

Sour

ce: A

nnex

Tabl

es 2

.2 a

nd 2

.3 w

ith a

djus

tmen

ts to

201

3 by

aut

hors

.



nex T

able

2.5

: Nat

iona

l Inc

ome

Acco

unts

by

Expe

nditu

re(In

nat

iona

l cur

renc

y at

cur

rent

pric

es)

Indi

cato

r19

6019

6519

69/7

019

74/7

519

79/8

019

84/8

519

89/9

019

90/9

119

91/9

219

92/9

319

93/9

419

94/9

519

9619

9719

9819

99

In L

s hu

ndre

ds o

f milli

ons

In S

DD (h

undr

eds

of m

illion

s)

Cons

umpt

ion

Pr

ivate

3

.1

3.6

3

.5

11.

7 3

4.8

144

.7

934

.5

1,6

47.0

3

,188

.8

7,8

10.1

1

5,57

8.3

31,

709.

3 9

,119

.8

14,

404.

1 1

8,64

7.0

23,

792.

7

Go

vern

men

t 0

.4

0.7

1

.5

2.1

5

.0

14.

5 7

7.8

94.

7 4

38.8

5

57.4

1

,025

.4

2,5

57.6

7

70.5

9

12.6

1

,041

.3

1,1

28.0

Su

b-to

tal

3.5

4

.3

5.0

1

3.8

39.

8 1

59.2

1

,012

.3

1,7

41.7

3

,627

.6

8,3

67.4

1

6,60

3.7

34,

266.

9 9

,890

.3

15,

316.

6 1

9,68

8.2

24,

920.

8

Gros

s in

vest

men

t

Ch

ange

in in

vent

orie

s

Fi

xed

inve

stm

ent

Publ

ic

Priva

te

Sub-

tota

l -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

To

tal g

ross

inve

stm

ent

0.5

0

.7

1.0

2

.7

3.8

6

.9

102

.7

258

.9

730

.5

1,8

79.6

4

,264

.4

8,9

40.5

1

,409

.1

2,8

42.9

5

,751

.4

4,4

24.5

Expo

rts o

f goo

ds &

ser

vices

0.6

0

.8

1.2

1

.8

3.9

1

0 4

7 2

5 1

58

423

9

02

2,5

40

577

8

13

1,0

30

2,0

23

Impo

rts o

f goo

ds &

ser

vices

(0.7

) (0

.9)

(1.0

) (3

.2)

(7.8

) (2

3) (6

0) (9

9) (2

98)

(1,1

86)

(2,9

57)

(5,2

50)

(1,3

99)

(2,8

35)

(4,5

33)

(4,3

09)

Net e

xpor

ts o

f goo

ds &

ser

vices

(0.1

) (0

.1)

0.1

(1

.3)

(3.9

) (1

2.8)

(13.

9) (7

4.0)

(140

.0)

(762

.6)

(2,0

55.2

) (2

,710

.0)

(821

.3)

(2,0

22.2

) (3

,503

.7)

(2,2

86.4

)

Gros

s do

mes

tic p

rodu

ct 3

.8

4.9

6

.0

15.

1 3

9.7

153

.3

1,1

01.1

1

,926

.6

4,2

18.2

9

,484

.5

18,

812.

9 4

0,49

7.4

10,

478.

1 1

6,13

7.4

21,

935.

9 2

7,05

8.8

Net f

acto

r inc

ome

Gros

s na

tiona

l inc

ome

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Shar

e of

GDP

(in

%)

Cons

umpt

ion

Pr

ivate

8

0.8

73.

6 5

7.9

77.

5 8

7.6

94.

4 8

4.9

85.

5 7

5.6

82.

3 8

2.8

78.

3 8

7.0

89.

3 8

5.0

87.

9

Go

vern

men

t 9

.7

14.

2 2

4.5

13.

8 1

2.6

9.4

7

.1

4.9

1

0.4

5.9

5

.5

6.3

7

.4

5.7

4

.7

4.2

Su

b-to

tal

90.

6 8

7.8

82.

4 9

1.2

100

.2

103

.8

91.

9 9

0.4

86.

0 8

8.2

88.

3 8

4.6

94.

4 9

4.9

89.

8 9

2.1

Gros

s in

vest

men

t

Ch

ange

in in

vent

orie

s -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Fi

xed

inve

stm

ent

Publ

ic -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Priva

te -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Sub-

tota

l -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

To

tal g

ross

inve

stm

ent

12.

0 1

4.1

15.

9 1

7.5

9.5

4

.5

9.3

1

3.4

17.

3 1

9.8

22.

7 2

2.1

13.

4 1

7.6

26.

2 1

6.4

Expo

rts o

f goo

ds &

ser

vices

16.

0 1

7.1

19.

2 1

2.1

9.9

6

.5

4.2

1

.3

3.8

4

.5

4.8

6

.3

5.5

5

.0

4.7

7

.5

Impo

rts o

f goo

ds &

ser

vices

(18.

5) (1

9.0)

(17.

4) (2

0.9)

(19.

7) (1

4.9)

(5.5

) (5

.2)

(7.1

) (1

2.5)

(15.

7) (1

3.0)

(13.

3) (1

7.6)

(20.

7) (1

5.9)

Net e

xpor

ts o

f goo

ds &

ser

vices

(2.5

) (1

.9)

1.8

(8

.8)

(9.8

) (8

.4)

(1.3

) (3

.8)

(3.3

) (8

.0)

(10.

9) (6

.7)

(7.8

) (1

2.5)

(16.

0) (8

.4)

Gros

s do

mes

tic p

rodu

ct 1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

Net f

acto

r inc

ome

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Sour

ce: C

entra

l bur

eau

of S

tatis

tics,

Nat

iona

l Acc

ount

s Ad

min

istra

tion


Anne

x Tab

le 2

.5: N

atio

nal I

ncom

e Ac

coun

ts b

y Ex

pend

iture

(In n

atio

nal c

urre

ncy

at c

urre

nt p

rices

)

Indi

cato

r20

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

13

SDG

milli

ons

Cons

umpt

ion

Pr

ivate

2

9,05

4.3

32,

625.

5 3

7,46

6.7

45,

466.

4 5

3,19

0.2

65,

566.

0 7

6,15

0.0

82,

088.

8 8

8,66

9.3

105,

783.

3 11

2,73

1.4

129,

852.

7 18

4,88

0.1

257,

294.

3

Go

vern

men

t 1

,845

.1

2,6

15.1

2

,915

.6

3,3

34.0

5

,862

.3

7,9

16.9

8

,154

.5

9,6

35.2

1

0,81

0.8

11,

758.

4 1

2,00

0.7

12,

741.

9 1

6,90

3.4

25,

211.

6

Su

b-to

tal

30,

899.

4 3

5,24

0.6

40,

382.

3 4

8,80

0.4

59,

052.

5 7

3,48

2.9

84,

304.

5 9

1,72

4.0

99,

480.

1 11

7,54

1.7

124,

732.

1 14

2,59

4.6

201,

783.

5 28

2,50

5.9

Gros

s in

vest

men

t

Ch

ange

in in

vent

orie

s 6

19.9

2

,023

.1

1,1

68.0

2

,465

.7

1,8

45.0

3

,490

.9

5,6

59.4

4

,396

.8

3,7

35.2

3

,208

.2

3,0

99.4

4

,867

.6

5,3

55.0

6

,513

.0

Fi

xed

inve

stm

ent

Publ

ic 2

19.8

3

61.2

3

,339

.8

1,7

87.8

2

,217

.0

3,6

02.7

1

,143

.3

470

.3

1,7

44.8

1

,510

.2

1,0

00.0

1

,700

.0

1,8

36.3

6

,673

.0

Priva

te 3

,047

.9

4,4

03.1

5

,918

.6

5,6

26.6

9

,007

.7

14,

092.

0 1

8,47

3.2

22,

368.

3 2

2,42

0.1

23,

866.

3 3

0,70

4.5

39,

915.

9 4

4,30

1.9

54,

366.

8

Sub-

tota

l 3

,267

.7

4,7

64.3

9

,258

.4

7,4

14.4

1

1,22

4.7

17,

694.

7 1

9,61

6.5

22,

838.

6 2

4,16

4.9

25,

376.

5 3

1,70

4.5

41,

615.

9 4

6,13

8.2

61,

039.

8

To

tal g

ross

inve

stm

ent

3,8

87.6

6

,787

.4

10,

426.

4 9

,880

.1

13,

069.

7 2

1,18

5.6

25,

275.

9 2

7,23

5.4

27,

900.

1 2

8,58

4.7

34,

803.

9 4

6,48

3.5

51,

493.

2 6

7,55

2.8

Expo

rts o

f goo

ds &

ser

vices

4,9

02.7

4

,417

.1

5,3

70.0

6

,703

.2

9,8

69.0

1

2,02

8.4

12,

718.

4 1

8,66

4.8

25,

401.

1 1

9,11

9.5

27,

521.

8 2

7,19

7.6

17,

960.

4 3

1,32

1.1

Impo

rts o

f goo

ds &

ser

vices

(6,0

27.1

) (5

,786

.6)

(8,4

22.6

) (9

,650

.0)

(13,

269.

7) (2

0,98

9.9)

(23,

579.

9) (2

3,60

6.6)

(25,

034.

6) (2

5,85

9.4)

(26,

411.

4) (2

9,71

9.4)

(27,

824.

2) (3

8,57

6.4)

Net e

xpor

ts o

f goo

ds &

ser

vices

(1,1

24.3

) (1

,369

.5)

(3,0

52.6

) (2

,946

.8)

(3,4

00.7

) (8

,961

.5)

(10,

861.

5) (4

,941

.8)

366

.5

(6,7

39.9

) 1

,110

.4

(2,5

21.8

) (9

,863

.8)

(7,2

55.3

)

Gros

s do

mes

tic p

rodu

ct 3

3,66

2.7

40,

658.

5 4

7,75

6.1

55,

733.

7 6

8,72

1.5

85,

707.

0 9

8,71

8.9

114,

017.

6 12

7,74

6.7

139,

386.

5 16

0,64

6.4

186,

556.

3 24

3,41

2.9

342,

803.

4

Net f

acto

r inc

ome

Gros

s na

tiona

l inc

ome



Shar

e of

GDP

(in

%)

Cons

umpt

ion

Pr

ivate

8

6.3

80.

2 7

8.5

81.

6 7

7.4

76.

5 7

7.1

72.

0 6

9.4

75.

9 7

0.2

69.

6 7

6.0

75.

1

Go

vern

men

t 5

.5

6.4

6

.1

6.0

8

.5

9.2

8

.3

8.5

8

.5

8.4

7

.5

6.8

6

.9

7.4

Su

b-to

tal

91.

8 8

6.7

84.

6 8

7.6

85.

9 8

5.7

85.

4 8

0.4

77.

9 8

4.3

77.

6 7

6.4

82.

9 8

2.4

Gros

s in

vest

men

t

Ch

ange

in in

vent

orie

s 1

.8

5.0

2

.4

4.4

2

.7

4.1

5

.7

3.9

2

.9

2.3

1

.9

2.6

2

.2

1.9

Fi

xed

inve

stm

ent

Publ

ic 0

.7

0.9

7

.0

3.2

3

.2

4.2

1

.2

0.4

1

.4

1.1

0

.6

0.9

0

.8

1.9

Priva

te 9

.1

10.

8 1

2.4

10.

1 1

3.1

16.

4 1

8.7

19.

6 1

7.6

17.

1 1

9.1

21.

4 1

8.2

15.

9

Sub-

tota

l 9

.7

11.

7 1

9.4

13.

3 1

6.3

20.

6 1

9.9

20.

0 1

8.9

18.

2 1

9.7

22.

3 1

9.0

17.

8

To

tal g

ross

inve

stm

ent

11.

5 1

6.7

21.

8 1

7.7

19.

0 2

4.7

25.

6 2

3.9

21.

8 2

0.5

21.

7 2

4.9

21.

2 1

9.7

Expo

rts o

f goo

ds &

ser

vices

14.

6 1

0.9

11.

2 1

2.0

14.

4 1

4.0

12.

9 1

6.4

19.

9 1

3.7

17.

1 1

4.6

7.4

9

.1

Impo

rts o

f goo

ds &

ser

vices

(17.

9) (1

4.2)

(17.

6) (1

7.3)

(19.

3) (2

4.5)

(23.

9) (2

0.7)

(19.

6) (1

8.6)

(16.

4) (1

5.9)

(11.

4) (1

1.3)

Net e

xpor

ts o

f goo

ds &

ser

vices

(3.3

) (3

.4)

(6.4

) (5

.3)

(4.9

) (1

0.5)

(11.

0) (4

.3)

0.3

(4

.8)

0.7

(1

.4)

(4.1

) (2

.1)

Gros

s do

mes

tic p

rodu

ct 1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

Net f

acto

r inc

ome

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Gros

s na

tiona

l inc

ome

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Sour

ce: C

entra

l bur

eau

of S

tatis

tics,

Nat

iona

l Ac

coun

ts A

dmin

istra

tion


Anne

x Tab

le 2

.6: N

atio

nal I

ncom

e Ac

coun

ts b

y Ex

pend

iture

(In n

atio

nal c

urre

ncy

at c

urre

nt p

rices

)

Indi

cato

r19

6019

6519

69/7

019

74/7

519

79/8

019

84/8

519

89/9

019

90/9

119

91/9

219

92/9

319

93/9

419

94/9

519

9619

9719

9819

99

In L

s hu

ndre

ds o

f milli

ons

In S

DD h

undr

eds

of m

illion

s

Gros

s in

vest

men

t

Ch

ange

in in

vent

orie

s -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Fi

xed

inve

stm

ent

Publ

ic

Oi

l sec

tor

No

n-oi

l sec

tor

Su

b-to

tal

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Priva

te

Oi

l sec

tor

No

n-oi

l sec

tor

Su

b-to

tal

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Tota

l fixe

d in

vest

men

t -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

To

tal i

nves

tmen

t 0

.5

0.7

1

.0

2.7

3

.8

6.9

1

02.7

2

58.9

7

30.5

1

,879

.6

4,2

64.4

8

,940

.5

1,4

09.1

2

,842

.9

5,7

51.4

4

,424

.5

Dom

estic

sav

ings

Publ

ic

Priva

te

Tota

l 0

.4

0.6

1

.1

1.3

(0

.1)

(5.9

) 8

8.8

184

.9

590

.5

1,1

17.1

2

,209

.2

6,2

30.5

5

87.8

8

20.7

2

,247

.7

2,1

38.1

Fore

ign

savin

gs

FDI n

et in

flow

-

-

-

-

28.

8 7

.0

87.

6 2

83.7

1

,345

.4

564

.8

Othe

r 2

,703

.0

733

.7

1,7

38.5

2

,158

.4

1,7

21.6

Tota

l for

eign

sav

ings

0.1

0

.1

(0.1

) 1

.3

3.9

1

2.8

13.

9 7

4.0

140

.0

762

.6

2,0

55.2

2

,710

.0

821

.3

2,0

22.2

3

,503

.7

2,2

86.4



Gros

s in

vest

men

t and

dom

estic

sav

ings

as

% G

DP

Gros

s in

vest

men

t

Ch

ange

in in

vent

orie

s -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Fi

xed

inve

stm

ent

Publ

ic

Oi

l sec

tor

No

n-oi

l sec

tor

Su

b-to

tal

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Priva

te

Oi

l sec

tor

No

n-oi

l sec

tor

Su

b-to

tal

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Tota

l fixe

d in

vest

men

t -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

To

tal i

nves

tmen

t 1

2.0

14.

1 1

5.9

17.

5 9

.5

4.5

9

.3

13.

4 1

7.3

19.

8 2

2.7

22.

1 1

3.4

17.

6 2

6.2

16.

4

Dom

estic

sav

ings

Publ

ic

Priva

te

Tota

l 9

.4

12.

2 1

7.6

8.8

(0

.2)

(3.8

) 8

.1

9.6

1

4.0

11.

8 1

1.7

15.

4 5

.6

5.1

1

0.2

7.9

Fore

ign

savin

gs

FDI n

et in

flow

-

-

-

-

0.0

(0

.0)

(0.0

) (0

.0)

0.0

(0

.0)

0.2

0

.0

0.8

1

.8

6.1

2

.1

Othe

r

Tota

l for

eign

sav

ings

2.5

1

.9

(1.8

) 8

.8

9.8

8

.4

1.3

3

.8

3.3

8

.0

10.

9 6

.7

7.8

1

2.5

16.

0 8

.4


Anne

x Tab

le 2

.6: N

atio

nal I

ncom

e Ac

coun

ts b

y Ex

pend

iture

(In n

atio

nal c

urre

ncy

at c

urre

nt p

rices

)

Indi

cato

r20

0020

0120

0220

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

13

In S

DG m

illion

s

Gros

s in

vest

men

t

Ch

ange

in in

vent

orie

s 6

19.9

2

,023

.1

1,1

68.0

2

,465

.7

1,8

45.0

3

,490

.9

5,6

59.4

4

,396

.8

3,7

35.2

3

,208

.2

3,0

99.4

4

,867

.6

5,3

55.1

6

,513

.3

Fi

xed

inve

stm

ent

Publ

ic

Oi

l sec

tor

No

n-oi

l sec

tor

Su

b-to

tal

219

.8

361

.2

3,3

39.8

1

,787

.8

2,2

17.0

3

,602

.7

1,1

43.3

4

70.3

1

,744

.8

1,5

10.2

1

,000

.0

1,7

00.0

1

,836

.3

6,6

73.0

Priva

te

Oi

l sec

tor

No

n-oi

l sec

tor

Su

b-to

tal

3,0

47.9

4

,403

.1

5,9

18.6

5

,626

.6

9,0

07.7

1

4,09

2.0

18,

473.

2 2

2,36

8.3

22,

420.

1 2

3,86

6.3

30,

704.

5 3

9,91

5.9

44,

301.

9 5

4,36

6.8

Tota

l fixe

d in

vest

men

t 3

,267

.7

4,7

64.3

9

,258

.4

7,4

14.4

1

1,22

4.7

17,

694.

7 1

9,61

6.5

22,

838.

6 2

4,16

4.9

25,

376.

5 3

1,70

4.5

41,

615.

9 4

6,13

8.2

61,

039.

8

To

tal i

nves

tmen

t 3

,887

.6

6,7

87.4

1

0,42

6.4

9,8

80.1

1

3,06

9.7

21,

185.

6 2

5,27

5.9

27,

235.

4 2

7,90

0.1

28,

584.

7 3

4,80

3.9

46,

483.

5 5

1,49

3.2

67,

552.

8

Dom

estic

sav

ings

Publ

ic 3

,887

.6

6,7

87.4

1

0,42

6.4

9,8

80.1

1

3,06

9.7

21,

185.

6 2

5,27

5.9

27,

235.

4 2

7,90

0.1

28,

584.

7 3

4,80

3.9

46,

483.

5 5

1,49

3.3

67,

553.

1

Priva

te

Tota

l 2

,763

.3

5,4

17.9

7

,373

.8

6,9

33.3

9

,669

.0

12,

224.

1 1

4,41

4.4

22,

293.

6 2

8,26

6.6

21,

844.

8 3

5,91

4.3

43,

961.

7 4

1,62

9.4

60,

297.

5

Fore

ign

savin

gs

FDI n

et in

flow

329

.1

1,4

84.9

1

,666

.7

2,8

99.3

3

,819

.5

5,7

36.8

7

,673

.7

6,1

20.6

5

,365

.0

6,1

74.0

6

,687

.4

7,0

96.9

8

,811

.0

14,

558.

6

Othe

r 7

95.3

(1

15.4

) 1

,385

.9

47.

5 (4

18.8

) 3

,224

.7

3,1

87.8

(1

,178

.8)

(5,7

31.5

) 5

65.9

(7

,797

.8)

(4,5

75.1

) 1

,052

.8

(7,3

03.3

)

Tota

l for

eign

sav

ings

1,1

24.3

1

,369

.5

3,0

52.6

2

,946

.8

3,4

00.7

8

,961

.5

10,

861.

5 4

,941

.8

(366

.5)

6,7

39.9

(1

,110

.4)

2,5

21.8

9

,863

.8

7,2

55.3



Gros

s in

vest

men

t and

dom

estic

sav

ings

as

% G

DP

Gros

s in

vest

men

t

Ch

ange

in in

vent

orie

s 1

.8

5.0

2

.4

4.4

2

.7

4.1

5

.7

3.9

2

.9

2.3

1

.9

2.6

2

.2

1.9

Fi

xed

inve

stm

ent

Publ

ic

Oi

l sec

tor

No

n-oi

l sec

tor

Su

b-to

tal

0.7

0

.9

7.0

3

.2

3.2

4

.2

1.2

0

.4

1.4

1

.1

0.6

0

.9

0.8

1

.9

Priva

te

Oi

l sec

tor

No

n-oi

l sec

tor

Su

b-to

tal

9.1

1

0.8

12.

4 1

0.1

13.

1 1

6.4

18.

7 1

9.6

17.

6 1

7.1

19.

1 2

1.4

18.

2 1

5.9

Tota

l fixe

d in

vest

men

t 9

.7

11.

7 1

9.4

13.

3 1

6.3

20.

6 1

9.9

20.

0 1

8.9

18.

2 1

9.7

22.

3 1

9.0

17.

8

To

tal i

nves

tmen

t 1

1.5

16.

7 2

1.8

17.

7 1

9.0

24.

7 2

5.6

23.

9 2

1.8

20.

5 2

1.7

24.

9 2

1.2

19.

7

Dom

estic

sav

ings

Publ

ic

Priva

te

Tota

l 8

.2

13.

3 1

5.4

12.

4 1

4.1

14.

3 1

4.6

19.

6 2

2.1

15.

7 2

2.4

23.

6 1

7.1

17.

6

Fore

ign

savin

gs

FDI n

et in

flow

1.0

3

.7

3.5

5

.2

5.6

6

.7

7.8

5

.4

4.2

4

.4

4.2

3

.8

3.6

4

.2

Othe

r

Tota

l for

eign

sav

ings

3.3

3

.4

6.4

5

.3

4.9

1

0.5

11.

0 4

.3

(0.3

) 4

.8

(0.7

) 1

.4

4.1

2

.1


Anne

x Tab

le 2

.7: B

udge

t Rec

eipt

s an

d Ex

pend

iture

s of

the

Cent

ral G

over

nmen

t of S

udan

(At c

urre

nt p

rices

)

Item

In S

udan

ese

dina

rs (b

illion

s)

1995

1996

1997

1998

1999

2000

2001

2002

2003

Reve

nues

and

Gra

nts

Reve

nues

Ta

x re

venu

e 2

8.9

53.

3 9

0.9

126

.4

153

.3

157

.4

189

.0

213

.4

270

.0

Oi

l rev

enue

s

Dom

estic

sal

es 3

7.1

86.

0 9

9.1

93.

1

Oil e

xpor

t rev

enue

s -

-

-

-

1

5.7

103

.8

64.

0 1

11.6

3

29.4

Sub-

tota

l -

-

-

-

1

5.7

140

.9

150

.0

210

.7

422

.5

Ot

her n

on-ta

x re

venu

es 7

.7

9.7

1

6.4

30.

5 3

6.5

28.

0 3

1.0

46.

6 4

9.4

To

tal r

even

ues

36.

6 6

3.0

107

.3

156

.9

205

.5

326

.3

370

.0

470

.7

741

.9

Gran

ts -

-

Tota

l rev

enue

s an

d gr

ants

36.

6 6

3.0

107

.3

156

.9

205

.5

326

.3

370

.0

470

.7

741

.9

Expe

nditu

res

Curre

nt e

xpen

ditu

res

W

ages

6.0

2

2.0

37.

5 5

7.3

80.

4 1

05.9

1

32.0

1

65.1

1

91.1

Go

ods

and

serv

ices

15.

6 2

4.4

45.

8 3

1.2

37.

9 5

3.3

49.

0 5

0.5

54.

5

In

tere

st 4

.0

10.

0 1

0.1

13.

9 2

0.2

34.

6 2

6.0

51.

1 7

3.0

Su

bsid

ies

7.5

8

.8

Tr

ansf

ers

(exc

l cap

ital t

rans

fers

) 3

.8

5.6

4

.7

8.9

1

2.8

18.

0 2

5.0

32.

9 5

1.4

Ot

her e

xpen

ditu

res

14.

0 2

9.9

11.

7 4

4.0

36.

3 5

4.8

90.

0 8

5.2

193

.8

Su

b-to

tal

43.

4 9

1.9

109

.8

155

.3

195

.1

275

.4

322

.0

384

.8

563

.8

Capi

tal

expe

nditu

res

Ne

t acq

uisit

ion

of N

FA

Tr

ansf

ers

to s

tate

s 1

2.8

Su

b-to

tal

6.7

5

.6

9.3

1

5.6

32.

2 7

4.5

79.

0 1

18.6

1

35.2

Tota

l exp

endi

ture

s 5

0.1

97.

5 1

19.1

1

70.9

2

27.3

3

49.9

4

01.0

5

03.4

6

99.0

Over

all b

alan

ce (1

3.5)

(34.

5) (1

1.8)

(14.

0) (2

1.8)

(23.

6) (3

1.0)

(32.

7) 4

2.9

Fina

ncin

g

Fore

ign

finan

cing

(net

) 4

.2

2.2

2

.6

3.4

8

.5

11.

7 5

.0

9.6

(1

5.2)


PRIVATE SECTOR-LED ECONOMIC DIVERSIFICATION AND DEVELOPMENT IN SUDANDo

mes

tic fi

nanc

ing

(net

)

Ce

ntra

l Ban

k 8

.9

32.

3 9

.2

10.

6 2

8.2

6.1

2

9.0

(22.

0) (3

1.9)

Co

mm

erci

al b

anks

(3.0

) 1

.2

2.0

(1

33.2

) 1

2.8

No

nban

k fin

anci

ng 1

.5

1.0

1

3.0

19.

1 2

8.7

Ac

coun

ts p

ayab

le (7

.0)

(8.4

) (3

0.0)

Pr

ivatiz

atio

n 3

.0

11.

1 2

.1

Su

b-to

tal

8.9

3

2.3

9.2

1

0.6

26.

7 8

.3

40.

0 (1

33.4

) (1

8.3)

Tota

l 1

3.1

34.

5 1

1.8

14.

0 3

5.2

20.

0 4

5.0

(123

.8)

(33.

5)

Disc

repa

ncy

0.4

-

(0

.0)

-

(13.

4) 3

.6

(14.

0) 1

56.5

(9

.4)

Mem

o ite

ms:

Oil r

even

ue (U

S$ m

illion

) -

-

-

-

6

2 5

48

580

8

00

1,5

91

GDP

at m

arke

t pric

es (S

DG m

illion

) 8

,034

1

0,47

8 1

6,13

7 2

1,93

6 2

7,05

9 3

3,66

3 4

0,65

9 4

7,75

6 5

5,73

4

Non-

oil G

DP a

t mar

ket p

rices

(SDG

mill)

8,0

34

10,

432

16,

094

21,

876

26,

642

31,

360

37,

881

44,

563

51,

922

Reve

nues

as

% G

DP 4

.6

6.0

6

.6

7.2

7

.6

9.7

9

.1

9.9

1

3.3

Oi

l rev

enue

s -

-

-

-

0

.6

4.2

3

.7

4.4

7

.6

No

n-oi

l rev

enue

s 4

.6

6.0

6

.6

7.2

7

.0

5.5

5

.4

5.4

5

.7

Recu

rrent

exp

endi

ture

s as

% G

DP 5

.4

8.8

6

.8

7.1

7

.2

8.2

7

.9

8.1

1

0.1

Capi

tal e

xpen

ditu

res

as %

GDP

0.8

0

.5

0.6

0

.7

1.2

2

.2

1.9

2

.5

2.4

Over

all b

alan

ce a

s %

GDP

(0.2

) (0

.3)

(0.1

) (0

.1)

(0.1

) (0

.1)

(0.1

) (0

.1)

0.1

Non-

oil r

even

ues

as %

non

-oil

GDP

0.5

0

.6

0.7

0

.7

0.7

0

.6

0.6

0

.6

0.6

Sour

ce: C

entra

l Ban

k of

Sud

an fo

r 201

2 an

d 20

13 o

utco

mes

, IM

F co

untry

repo

rts fo

r var

ious

yea

rs, e

stim

ates

by

auth

ors

for 2

014,

and

Ann

ex Ta

ble

1.2

for G

DP e

stim

ates

.


Anne

x Tab

le 2

.7: B

udge

t Rec

eipt

s an

d Ex

pend

iture

s of

the

Cent

ral G

over

nmen

t of S

udan

(At c

urre

nt p

rices

)

Item

In S

udan

ese

poun

ds (m

illion

s)

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Reve

nues

and

Gra

nts

Reve

nues

Ta

x re

venu

e 4

,205

4

,721

5

,099

6

,529

7

,680

8

,619

1

0,00

8 1

1,42

6 1

5,56

7 2

4,13

4 2

6,67

6

Oi

l rev

enue

s

Dom

estic

sal

es 1

,018

2

,933

3

,283

4

,155

4

,417

5

,025

7

,668

5

,955

4

,610

4

,093

Oil e

xpor

t rev

enue

s 4

,775

6

,077

7

,610

1

4,37

6 6

,115

1

2,31

1 1

1,01

8 1

9 1

95

355

Sub-

tota

l 5

,793

9

,010

8

,794

1

0,89

3 1

8,53

1 1

0,53

2 1

7,33

6 1

8,68

6 4

,242

6

,369

4

,448

Ot

her n

on-ta

x re

venu

es 1

,047

9

97

1,5

38

1,3

63

864

9

23

925

1

,627

1

,444

1

,776

1

6,14

8

To

tal r

even

ues

11,

045

14,

728

15,

431

18,

785

27,

075

20,

074

28,

269

31,

739

21,

253

32,

279

47,

272

Gran

ts -

-

3

61

522

3

6 4

7 9

76

618

9

15

2,0

33

2,1

49

Tota

l rev

enue

s an

d gr

ants

11,

045

14,

728

15,

792

19,

307

27,

111

20,

121

29,

245

32,

357

22,

168

34,

312

49,

421

Expe

nditu

res

Curre

nt e

xpen

ditu

res

W

ages

2,7

38

3,0

11

3,9

45

6,3

68

5,9

51

6,8

36

7,5

16

9,7

63

10,

731

13,

671

16,

012

Go

ods

and

serv

ices

710

7

24

930

1

,924

2

,919

2

,375

2

,417

2

,603

2

,027

2

,828

4

,919

In

tere

st 8

11

862

9

30

897

1

,088

1

,254

1

,669

2

,210

2

,525

1

,511

4

,061

Su

bsid

ies

2,3

75

1,7

77

1,2

87

1,5

55

265

8

45

2,7

12

4,2

87

9,7

68

8,0

27

Tr

ansf

ers

(exc

l cap

ital t

rans

fers

) 8

42

4,3

07

5,7

58

8,6

74

9,3

48

7,9

97

9,7

43

9,1

28

4,1

99

5,5

11

7,9

96

Ot

her e

xpen

ditu

res

2,3

22

2,3

84

2,7

72

684

2

79

1,0

97

813

6

21

1,0

37

963

3

,000

Su

b-to

tal

7,4

23

13,

663

16,

112

19,

834

21,

140

19,

824

23,

003

27,

037

24,

805

34,

252

44,

015

Capi

tal

expe

nditu

res

Ne

t acq

uisit

ion

of N

FA 2

,772

2

,276

3

,118

4

,525

3

,838

3

,572

3

,900

3

,032

3

,550

4

,590

5

,850

Tr

ansf

ers

to s

tate

s 2

,227

1

,802

1

,912

1

,909

1

,468

1

,926

3

,914

Su

b-to

tal

2,7

72

2,2

76

3,1

18

4,5

25

6,0

65

5,3

74

5,8

12

4,9

41

5,0

17

6,5

16

9,7

64

Tota

l exp

endi

ture

s 1

0,19

5 1

5,93

9 1

9,23

0 2

4,35

9 2

7,20

5 2

5,19

8 2

8,81

5 3

1,97

8 2

9,82

2 4

0,76

8 5

3,77

9

Over

all b

alan

ce 8

50

(1,2

11)

(3,4

38)

(5,0

52)

(94)

(5,0

77)

430

3

79

(7,6

54)

(6,4

56)

(4,3

58)

Fina

ncin

g

Fore

ign

finan

cing

(net

) 5

2 1

15

223

9

32

214

1

,120

5

99

1,0

38

268

1

,073

4

91

Dom

estic

fina

ncin

g (n

et)

Ce

ntra

l Ban

k (8

60)

470

1

,310

2

,000

Co

mm

erci

al b

anks

91

274

8

41

720

(3

02)

2,9

75

3,5

36

4,0

53



Nonb

ank

finan

cing

(133

) 3

49

961

1

,206

9

71

808

(3

,085

) (4

,505

)

Ac

coun

ts p

ayab

le 2

,194

(8

39)

(71)

(1,4

80)

(965

)

Pr

ivatiz

atio

n 3

1

03

Su

b-to

tal

(902

.0)

1,0

96.0

3

,215

.0

4,1

20.0

(1

70.0

) 3

,712

.0

(1,0

29.0

) (1

,417

.0)

7,3

85.2

5

,383

.2

3,8

67

Tota

l (8

50)

1,2

11

3,4

38

5,0

52

44

4,8

32

(430

) (3

79)

7,6

54

6,4

56

4,3

58

Disc

repa

ncy

-

-

-

-

50.

0 2

45.0

-

-

-

0

.0

-

Mem

o ite

ms:

Oil r

even

ue (U

S$ m

illion

) 2

,246

3

,699

4

,049

5

,403

8

,867

4

,575

7

,518

7

,020

1

,187

1

,352

7

16

GDP

at m

arke

t pric

es (S

DG m

illion

) 6

8,72

1 8

3,29

8 9

6,61

2 1

06,5

27

124

,609

1

35,6

59

162

,204

1

86,6

90

243

,413

2

94,6

31

435

,140

Non-

oil G

DP a

t mar

ket p

rices

(SDG

mill)

63,

961

76,

837

87,

134

96,

405

107

,955

1

26,0

38

146

,550

1

77,4

42

235

,318

2

85,6

69

403

,791

Reve

nues

as

% G

DP 1

6.1

17.

7 1

6.0

17.

6 2

1.7

14.

8 1

7.4

17.

0 8

.7

11.

0 1

0.9

Oi

l rev

enue

s 8

.4

10.

8 9

.1

10.

2 1

4.9

7.8

1

0.7

10.

0 1

.7

2.2

1

.0

No

n-oi

l rev

enue

s 7

.6

6.9

6

.9

7.4

6

.9

7.0

6

.7

7.0

7

.0

8.8

9

.8

Recu

rrent

exp

endi

ture

s as

% G

DP 1

0.8

16.

4 1

6.7

18.

6 1

7.0

14.

6 1

4.2

14.

5 1

0.2

11.

6 1

0.1

Capi

tal e

xpen

ditu

res

as %

GDP

4.0

2

.7

3.2

4

.2

4.9

4

.0

3.6

2

.6

2.1

2

.2

2.2

Over

all b

alan

ce a

s %

GDP

1.2

(1

.5)

(3.6

) (4

.7)

(0.1

) (3

.7)

0.3

0

.2

(3.1

) (2

.2)

(1.0

)

Non-

oil r

even

ues

as %

non

-oil

GDP

8.2

7

.4

7.6

8

.2

7.9

7

.6

7.5

7

.4

7.2

9

.1

10.

6

Sour

ce: C

entra

l Ban

k of

Sud

an fo

r 201

2 an

d 20

13 o

utco

mes

, IM

F co

untry

repo

rts fo

r var

ious

yea

rs, e

stim

ates

by

auth

ors

for 2

014,

and

Ann

ex Ta

ble

1.2

for G

DP e

stim

ates

.


Anne

x Tab

le 2

.8: B

alan

ce o

f Pay

men

ts fo

r Sud

an(In

US$

milli

ons

at c

urre

nt p

rices

)

Item

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Mer

chan

dise

exp

orts

Oil e

xpor

ts

Cr

ude

oil

Pe

trole

um p

rodu

cts

Su

b-to

tal

276

1

,408

1

,377

1

,511

2

,083

3

,101

Gold

Othe

r pro

duct

s 5

56

620

5

94

596

5

04

456

3

22

438

4

94

677

Sub-

tota

l 5

56

620

5

94

596

7

80

1,8

64

1,6

99

1,9

49

2,5

77

3,7

78

Mer

chan

dise

impo

rts

Oil a

nd p

rodu

cts

194

3

06

293

2

56

184

1

37

130

1

31

84

89

Othe

r pro

duct

s 1

,025

1

,241

1

,287

1

,669

1

,228

1

,416

1

,901

2

,022

2

,452

3

,497

Sub-

tota

l 1

,219

1

,547

1

,580

1

,925

1

,412

1

,553

2

,031

2

,153

2

,536

3

,586

Trad

e ba

lanc

e (6

63)

(927

) (9

86)

(1,3

29)

(632

) 3

11

(332

) (2

04)

41

192

Serv

ices

Ex

ports

132

5

2 3

0 1

6 5

1 2

8 1

5 4

7 5

2 4

4

Im

ports

137

8

1 4

0 4

3 1

39

368

7

29

771

8

46

1,0

64

Su

b-to

tal

(5)

(29)

(11)

(27)

(88)

(341

) (7

14)

(724

) (7

94)

(1,0

20)

Inco

me

Re

ceip

ts 2

5

1

8 1

4 1

9 5

1

8 1

9 1

0 2

2

No

n-oi

l pay

men

ts 9

16

958

1

,112

1

,160

1

,223

1

,269

8

92

614

6

03

678

Oi

l-rel

ated

exp

ense

s 1

14

623

5

68

631

7

40

1,0

38

Ne

t inc

ome

(914

) (9

53)

(1,0

95)

(1,1

46)

(1,3

18)

(1,8

87)

(1,4

42)

(1,2

26)

(1,3

33)

(1,6

94)

Tran

sfer

s

Pr

ivate

60

321

4

29

490

4

46

315

3

66

634

7

08

1,0

95

Of

ficia

l 4

4 4

1 2

3 1

7 4

1 2

9 6

3

2 1

0 2

8

Su

b-to

tal

104

3

61

452

5

07

487

3

44

372

6

66

718

1

,123

Curre

nt a

ccou

nt b

alan

ce (1

,479

) (1

,548

) (1

,639

) (1

,996

) (1

,551

) (1

,573

) (2

,116

) (1

,488

) (1

,368

) (1

,399

)

Capi

tal a

nd fi

nanc

ial a

ccou

nt

Ca

pita

l acc

ount

11

8

4

-

-

21

2

2

-

-

Fi

nanc

ial a

ccou

nt

Disb

urse

men

ts 8

6 2

9 1

9 1

3 4

4 4

1 2

2 3

0 8

5 8

0

Amor

tizat

ion

(288

) (2

80)

(233

) (2

19)

(207

) (2

65)

(157

) (1

66)

(239

) (2

80)

Net f

orei

gn a

sset

s of

ban

ks 5

4 (7

) (5

8) (1

9) (5

) (1

8) (3

7) (1

63)

(5)

(26)

Othe

r sho

rt-te

rm c

apita

l flow

s 3

31

121

1

2 8

4 1

08

117

1

20

189

1

38

(58)



Fo

reig

n di

rect

inve

stm

ent

12

70

180

6

70

224

1

28

574

6

33

1,0

92

1,4

81

Othe

r cap

ital fl

ows

Pu

blic

(24)

(26)

Pr

ivate

Sub-

tota

l 1

95

(67)

(80)

528

1

64

3

522

4

99

1,0

45

1,1

97

To

tal

206

(5

9) (7

6) 5

28

164

2

4 5

24

501

1

,045

1

,197

Erro

rs a

nd o

miss

ions

177

.9

430

.3

439

.9

170

.8

82.

2 4

36

711

5

89

23

383

Over

all b

alan

ce (1

,096

) (1

,176

) (1

,275

) (1

,297

) (1

,305

) (1

,113

) (8

81)

(398

) (3

00)

181

Fina

ncin

g

Ch

ange

in in

tern

atio

nal r

eser

ves

(20)

(7)

1

(5)

(36)

(108

) -

(1

97)

(204

) (8

55)

Sh

ort-t

erm

fore

ign

liabi

litie

s 1

7 (8

2) 2

4 (9

0) (1

25)

30

IM

F

Disb

urse

men

ts 3

7 3

0 3

4 4

0 3

0 3

5 3

1 1

6 1

4

Paym

ents

(40)

(36)

(58)

(60)

(40)

(63)

(55)

(24)

(27)

(33)

Ex

cept

iona

l fina

ncin

g

Chan

ge in

arre

ars

1,1

01

1,1

89

1,2

98

1,3

22

1,3

51

1,3

31

881

6

52

620

6

77

Othe

r 4

1 2

2

To

tal

1,0

96

1,1

76

1,2

75

1,2

97

1,3

05

1,1

13

881

3

98

300

(1

81)

Fina

ncin

g ga

p -

-

-

-

-

-

-

-

-

-

Mem

o ite

ms:

Inte

rnat

iona

l res

erve

s 1

63

107

8

2 9

1 1

89

138

5

0 2

49

529

1

,338

Rese

rves

as

mon

ths

of im

ports

1

.4

0.8

0

.6

0.6

1

.5

0.9

0

.2

1.0

1

.9

3.5

Sour

ce: I

nter

natio

nal M

onet

ary

Fund

dat

abas

e


Anne

x Tab

le 2

.8: B

alan

ce o

f Pay

men

ts fo

r Sud

an

(In U

S$ m

illion

s at

cur

rent

pric

es)

Item

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Mer

chan

dise

exp

orts

Oil e

xpor

ts

Cr

ude

oil

8,3

78

1,7

55

1,6

17

1,8

84

Pe

trole

um p

rodu

cts

301

2

57

102

2

01

Su

b-to

tal

4,2

40

5,2

44

8,4

43

12,

052

7,0

67

10,

991

8,6

79

2,0

12

1,7

19

2,0

85

Gold

112

4

03

1,0

18

1,4

42

2,1

58

1,0

48

1,1

72

Othe

r pro

duct

s 6

38

569

4

60

464

6

17

691

9

42

952

2

,025

1

,899

Sub-

tota

l 4

,878

5

,813

8

,902

1

2,62

8 8

,087

1

2,70

0 1

1,06

3 5

,122

4

,793

5

,156

Mer

chan

dise

impo

rts

Oil a

nd p

rodu

cts

283

3

64

256

6

40

293

3

85

662

9

47

1,3

13

1,6

12

Othe

r pro

duct

s 5

,663

6

,741

7

,466

7

,776

8

,429

8

,604

7

,650

7

,581

7

,612

6

,943

Sub-

tota

l 5

,946

7

,105

7

,722

8

,416

8

,722

8

,989

8

,312

8

,528

8

,925

8

,556

Trad

e ba

lanc

e (1

,068

) (1

,292

) 1

,180

4

,212

(6

35)

3,7

11

2,7

51

(3,4

06)

(4,1

32)

(3,4

00)

Serv

ices

Ex

ports

114

2

01

385

5

10

400

2

59

764

1

,159

1

,578

1

,861

Im

ports

1,7

55

2,8

90

3,3

19

2,2

65

1,9

07

2,3

21

2,1

53

2,0

33

1,8

05

1,7

30

Su

b-to

tal

(1,6

41)

(2,6

89)

(2,9

34)

(1,7

55)

(1,5

07)

(2,0

62)

(1,3

89)

(874

) (2

27)

131

Inco

me

Re

ceip

ts 4

4 8

9 1

84

42

37

138

1

08

14

9

-

No

n-oi

l pay

men

ts 7

62

749

8

57

1,7

98

1,7

65

1,9

32

1,8

86

2,2

20

2,5

33

2,3

52

Oi

l-rel

ated

exp

ense

s 1

,271

2

,292

3

,967

2

,151

2

,406

3

,333

9

85

216

2

49

333

Ne

t inc

ome

(1,9

89)

(2,9

52)

(4,6

40)

(3,9

07)

(4,1

34)

(5,1

27)

(2,7

63)

(2,4

22)

(2,7

73)

(2,6

85)

Tran

sfer

s

Pr

ivate

1,4

87

1,0

34

209

(2

86)

355

9

40

439

4

45

945

9

92

Of

ficia

l 2

34

356

3

73

671

6

57

1,1

91

673

4

18

436

4

45

Su

b-to

tal

1,7

21

1,3

90

582

3

85

1,0

12

2,1

31

1,1

12

863

1

,381

1

,437

Curre

nt a

ccou

nt b

alan

ce (2

,977

) (5

,543

) (5

,812

) (1

,065

) (5

,264

) (1

,347

) (2

89)

(5,8

39)

(5,7

51)

(4,5

17)

Capi

tal a

nd fi

nanc

ial a

ccou

nt

Ca

pita

l acc

ount

-

-

-

156

1

60

174

1

62

320

3

09

232

Fi

nanc

ial a

ccou

nt

Disb

urse

men

ts 3

09

431

5

93

485

9

78

569

6

06

376

3

44

261

Amor

tizat

ion

(290

) (3

36)

(270

) (3

82)

(492

) (4

85)

(445

) (4

02)

(381

) (4

05)

Net f

orei

gn a

sset

s of

ban

ks (2

04)

52

(95)

(198

) 4

21

(429

) 3

13

(61)

227

2

34



Ot

her s

hort-

term

cap

ital fl

ows

666

6

22

829

(2

,486

) (1

,338

) (1

,641

) (1

,362

) (7

31)

(515

) (7

65)

Fore

ign

dire

ct in

vest

men

t 2

,355

3

,533

3

,036

2

,567

2

,682

2

,900

2

,666

2

,466

3

,091

2

,322

Othe

r cap

ital fl

ows

Pu

blic

(1,4

22)

(473

) (1

,289

) (1

,388

) 5

56

580

6

24

Pr

ivate

(592

) 8

57

(1,2

50)

(1,5

50)

1,5

36

(133

) 3

26

Sub-

tota

l 2

,836

4

,302

4

,093

(2

,028

) 2

,635

(1

,625

) (1

,160

) 3

,740

3

,213

2

,597

To

tal

2,8

36

4,3

02

4,0

93

(1,8

72)

2,7

95

(1,4

51)

(998

) 4

,060

3

,522

2

,829

Erro

rs a

nd o

miss

ions

221

2

1.2

336

2

,147

5

1 (1

,720

) (7

10)

550

6

7 -

Over

all b

alan

ce 8

0 (1

,220

) (1

,383

) (7

90)

(2,4

18)

(4,5

18)

(1,9

97)

(1,2

29)

(2,1

62)

(1,6

88)

Fina

ncin

g

Ch

ange

in in

tern

atio

nal r

eser

ves

(745

) 5

00

437

(1

26)

446

(1

95)

249

(3

76)

75

(98)

Sh

ort-t

erm

fore

ign

liabi

litie

s (2

3) (3

0) 1

22

(246

) (8

4) (8

3) (5

1) (1

64)

230

-

IM

F

Disb

urse

men

ts

Paym

ents

(31)

(30)

(63)

(50)

(11)

(11)

(5)

(7)

(6)

(10)

Ex

cept

iona

l fina

ncin

g

Chan

ge in

arre

ars

719

7

80

887

1

,212

2

,067

4

,807

1

,804

1

,776

1

,863

1

,796

Othe

r

To

tal

(80)

1,2

20

1,3

83

790

2

,418

4

,518

1

,997

1

,229

2

,162

1

,688

Fina

ncin

g ga

p -

-

-

-

-

-

-

-

-

-

Mem

o ite

ms:

Inte

rnat

iona

l res

erve

s 1

,869

1

,660

1

,378

1

,816

1

,370

1

,566

1

,317

1

,693

1

,619

1

,716

Rese

rves

as

mon

ths

of im

ports

2

.9

2.0

1

.5

2.0

1

.5

1.7

1

.5

1.9

1

.8

2.0

Sour

ce: I

nter

natio

nal M

onet

ary

Fund

dat

abas

e


Anne

x Tab

le 2

.9: E

xpor

ts a

nd Im

ports

of M

erch

andi

se a

nd

Serv

ices

(US$

milli

on a

t cur

rent

pric

es)

Indi

cato

r19

9519

9619

9719

9819

9920

0020

0120

0220

0320

04

Mer

chan

dise

exp

orts

(fob

)

Pe

trole

um a

nd p

rodu

cts

-

-

-

-

1,4

08

1,3

77

1,5

11

2,0

48

3,1

71

No

n-oi

l

Gold

47

44

53

59

50

Agric

ultu

re &

agr

o-in

dust

rial p

rodu

cts

359

2

25

337

4

10

532

Othe

r 5

0 5

4 4

9 2

6 2

4

Sub-

tota

l 5

56

-

-

-

-

456

3

22

438

4

94

607

To

tal

556

-

-

-

-

1

,864

1

,699

1

,949

2

,542

3

,778

Mer

chan

dise

impo

rts (c

if)

Fo

odst

uff a

nd b

ever

ages

215

3

40

430

4

67

442

5

58

Pe

trole

um &

pro

duct

s 1

94

137

1

30

132

1

49

101

M

anuf

actu

res

810

1

,076

7

07

902

1

,085

1

,499

M

achi

nery

& tr

ansp

ort e

quip

men

t 7

71

877

1

,127

1

,820

Ot

her

263

6

9 7

9 9

6

To

tal

1,2

19

-

-

-

-

1,5

53

2,3

01

2,4

46

2,8

82

4,0

75

Mer

chan

dise

trad

e ba

lanc

e (6

63)

-

-

-

-

311

(6

02)

(497

) (3

40)

(297

)

Serv

ices

Ex

ports

132

2

8 1

5 4

7 3

6 4

4

Pa

ymen

ts 1

37

555

7

29

771

8

31

1,0

64

Ne

t ser

vices

(5)

-

-

-

-

(527

) (7

14)

(724

) (7

95)

(1,0

20)

Tota

l goo

ds a

nd s

ervic

es

Ex

ports

688

-

-

-

-

1

,892

1

,714

1

,996

2

,578

3

,822

Im

ports

1,3

56

-

-

-

-

2,1

08

3,0

30

3,2

17

3,7

13

5,1

39

Tr

ade

bala

nce

(668

) -

-

-

-

(2

16)

(1,3

16)

(1,2

21)

(1,1

35)

(1,3

17)

Mem

o ite

ms:

Tota

l exp

orts

as

% o

f GDP

9.9

-

-

-

-

1

4.5

10.

9 1

1.0

12.

3 1

4.3

Tota

l im

ports

as

% o

f GDP

19.

5 -

-

-

-

1

6.1

19.

3 1

7.7

17.

7 1

9.3

Trad

e de

ficit

as %

of G

DP (9

.6)

-

-

-

-

(1.6

) (8

.4)

(6.7

) (5

.4)

(4.9

)

Sour

ce: C

entra

l Ban

k of

Sud

an a

nd IM

F, va

rious

cou

ntry

repo

rts

for S

udan

.



nex T

able

2.9

: Exp

orts

and

Impo

rts o

f Mer

chan

dise

and

Se

rvic

es

(US$

milli

on a

t cur

rent

pric

es)

Indi

cato

r20

0520

0620

0720

0820

0920

1020

1120

1220

1320

14

Mer

chan

dise

exp

orts

(fob

)

Pe

trole

um a

nd p

rodu

cts

4,1

87

5,0

87

8,4

19

11,

094

7,2

37

9,6

92

7,3

04

2,0

18

1,7

25

1,2

01

No

n-oi

l

Gold

63

64

63

112

4

04

1,0

18

1,4

55

2,1

58

1,0

48

1,2

71

Agric

ultu

re &

agr

o-in

dust

rial p

rodu

cts

548

4

88

382

4

17

446

4

37

814

8

34

1,6

06

1,5

51

Othe

r 2

5 1

7 1

6 4

7 1

70

257

1

15

149

4

20

328

Sub-

tota

l 6

37

569

4

61

576

1

,020

1

,712

2

,384

3

,141

3

,075

3

,149

To

tal

4,8

24

5,6

57

8,8

79

11,

671

8,2

57

11,

404

9,6

89

5,1

59

4,8

00

4,3

50

Mer

chan

dise

impo

rts (c

if)

Fo

odst

uff a

nd b

ever

ages

853

7

93

878

1

,391

1

,702

2

,443

1

,956

2

,109

2

,448

2

,344

Pe

trole

um &

pro

duct

s 3

22

414

2

91

711

3

26

428

7

36

1,0

52

1,4

60

1,5

24

M

anuf

actu

res

2,3

55

2,4

27

2,8

32

2,9

21

3,6

93

3,3

87

3,1

29

3,0

18

3,0

55

2,8

44

M

achi

nery

& tr

ansp

ort e

quip

men

t 3

,122

4

,301

4

,659

4

,175

3

,805

3

,574

3

,213

2

,763

2

,649

2

,250

Ot

her

104

1

38

115

1

54

166

2

13

202

5

33

305

2

50

To

tal

6,7

57

8,0

73

8,7

75

9,3

51

9,6

91

10,

045

9,2

36

9,4

75

9,9

18

9,2

11

Mer

chan

dise

trad

e ba

lanc

e (1

,933

) (2

,417

) 1

04

2,3

19

(1,4

34)

1,3

60

453

(4

,316

) (5

,118

) (4

,861

)

Serv

ices

Ex

ports

114

2

01

385

5

10

392

2

54

839

1

,167

1

,578

18

61

Pa

ymen

ts 1

,755

2

,890

3

,319

2

,265

1

,907

2

,321

2

,153

2

,010

2

,772

26

85

Ne

t ser

vices

(1,6

41)

(2,6

89)

(2,9

34)

(1,7

55)

(1,5

15)

(2,0

67)

(1,3

15)

(844

) (1

,194

) (8

24)

Tota

l goo

ds a

nd s

ervic

es

Ex

ports

4,9

38

5,8

58

9,2

64

12,

181

8,6

49

11,

658

10,

527

6,3

26

6,3

78

6,2

11

Im

ports

8,5

12

10,

963

12,

094

11,

617

11,

598

12,

366

11,

389

11,

485

12,

690

11,

896

Tr

ade

bala

nce

(3,5

74)

(5,1

06)

(2,8

30)

564

(2

,949

) (7

08)

(862

) (5

,160

) (6

,312

) (5

,685

)

Mem

o ite

ms:

Tota

l exp

orts

as

% o

f GDP

14.

4 1

3.2

17.

5 2

0.4

14.

7 1

6.6

15.

0 9

.3

10.

2 9

.6

Tota

l im

ports

as

% o

f GDP

24.

9 2

4.6

22.

9 1

9.5

19.

7 1

7.6

16.

2 1

6.9

20.

3 1

8.3

Trad

e de

ficit

as %

of G

DP (1

0.5)

(11.

5) (5

.4)

0.9

(5

.0)

(1.0

) (1

.2)

(7.6

) (1

0.1)

(8.8

)

Sour

ce: C

entra

l Ban

k of

Sud

an a

nd IM

F, va

rious

cou

ntry

repo

rts

for S

udan

.


Anne

x Tab

le 2

.10:

Exp

orts

of A

gric

ultu

ral a

nd A

gro-

Indu

stria

l Pro

duct

s(U

S$ m

illion

at c

urre

nt p

rices

)

Indi

cato

r19

9519

9619

9719

9819

9920

0020

0120

0220

0320

04

Agric

ultu

ral e

xpor

ts

Cotto

n 4

4 6

2 1

08

94

Grou

ndnu

ts 9

6

0

2

Sesa

me

105

7

5 7

4 1

79

Gum

Ara

bic

24

32

35

61

Sorg

hum

(dur

a) 0

5

2

3

Mel

on s

eeds

14

11

Hibi

scus

flow

er 1

7 3

0

Senn

a po

ds 1

2

Henn

a 1

2

Lubb

an 1

Sun

flow

er s

eeds

Tref

oil

Onio

n

Vege

tabl

es 0

Frui

ts 2

2

Sub-

tota

l -

-

-

-

-

-

1

82

179

2

53

384

Anim

al p

rodu

cts

Shee

p an

d la

mbs

81

119

Goat

s 4

2

Cattl

e

Cam

els

12

16

Gaza

l & o

ther

2

117

0

Mea

t 1

4 1

7 2

2 1

8

Hide

s an

d sk

ins

4

3

19

26

Fres

h an

d fro

zen

fish

2

Sub-

tota

l -

-

-

-

-

-

2

0 1

38

137

1

84

Man

ufac

ture

s

Unre

fined

gro

undn

ut o

il 0

1

Sesa

me

oil

0

Suga

r & ra

w c

ane

12

11

7

13

Mol

asse

s 8

8

9

8

Yarn

-


PRIVATE SECTOR-LED ECONOMIC DIVERSIFICATION AND DEVELOPMENT IN SUDANEt

hano

l

Shel

ls 0

Cake

and

mea

l 3

2

2

2

Sub-

tota

l -

-

-

-

-

-

2

3 2

0 1

8 2

3

Tota

l -

-

-

-

-

-

2

25

337

4

08

592

Tota

l non

-oil

expo

rts 3

23

439

4

94

681

Agric

ultu

re a

s %

tota

l non

-oil

69.

7 7

6.7

92.

9 8

6.9

Sour

ce: C

BoS,

For

eign

Trad

e St

atist

ical

Dig

est,

vario

us is

sues

.

Anne

x Tab

le 2

.10:

Exp

orts

of A

gric

ultu

ral a

nd A

gro-

Indu

stria

l Pro

duct

s(U

S$ m

illion

at c

urre

nt p

rices

)

Indi

cato

r20

0520

0620

0720

0820

0920

1020

1120

1220

1320

14

Agric

ultu

ral e

xpor

ts

Cotto

n 1

07

82

68

62

42

34

27

12

103

3

4

Grou

ndnu

ts 2

0

1

1

-

0

1

3

4

3 6

Sesa

me

119

1

67

93

142

1

43

167

2

31

224

4

72

466

Gum

Ara

bic

108

5

0 5

2 6

1 3

3 2

4 8

1 6

7 1

35

97

Sorg

hum

(dur

a) 0

1

2

8 4

6 -

0

2

6 1

4 7

8 6

Mel

on s

eeds

10

5

4

3

7

3

9

8

3

17

Hibi

scus

flow

er 1

5 1

9 1

7 1

3 9

7

1

8 1

4 1

7 1

8

Senn

a po

ds 1

1

1

1

2

1

3

2

3

3

Henn

a 1

0

0

0

-

-

1

2

3

1

Lubb

an 0

0

0

0

3

Sun

flow

er s

eeds

0

2

0

-

-

-

-

Tref

oil

33

66

Onio

n 2

1

Vege

tabl

es 0

0

0

0

2

1

0

Frui

ts 1

1

1

0

2

2

1

5

6

6

Sub-

tota

l 3

64

327

2

65

329

2

38

237

3

97

346

8

57

755

Anim

al p

rodu

cts

Shee

p an

d la

mbs

95

99

63

44

146

1

16

250

2

86

477

5

50

Goat

s 3

3

2

1

5

5

9

9

1

1 2

2

Cattl

e 0

2

0

1

1

0

Cam

els

16

20

14

1

24

13

41

62

98

208

Gaza

l & o

ther

0

0

0

1

3

3

5

15

6

3

Mea

t 1

8 5

3

0

9

4

4 1

8 3

8 1

6 2

0


Hide

s an

d sk

ins

22

5

3

3

17

14

40

37

73

44

Fres

h an

d fro

zen

fish

1

0

0

0

0

Sub-

tota

l 1

55

132

8

7 5

1 2

05

193

3

63

447

6

81

857

Man

ufac

ture

s

Unre

fined

gro

undn

ut o

il 2

0

0

-

-

-

1

4 2

Sesa

me

oil

0

0

0

0

0

0

Suga

r & ra

w c

ane

13

10

19

15

19

-

6

-

-

97

Mol

asse

s 1

1 1

8 1

0 2

1 -

1

0 3

7

6

Yarn

-

-

-

-

0

Etha

nol

29

20

Shel

ls 0

0

0

0

Cake

and

mea

l -

-

1

1

-

2

4

4

3

6 1

2

Sub-

tota

l 2

7 2

8 3

0 3

8 1

9 2

1

9 7

8

6 1

37

Tota

l 5

46

487

3

81

418

4

62

432

7

79

800

1

,625

1

,749

Tota

l non

-oil

expo

rts 6

37

583

4

86

654

1

,027

1

,721

2

,385

3

,141

3

,073

3

,096

Agric

ultu

re a

s %

tota

l non

-oil

85.

8 8

3.6

78.

4 6

4.0

45.

0 2

5.1

32.

7 2

5.5

52.

9 5

6.5

Sour

ce: C

BoS,

For

eign

Trad

e St

atist

ical

Dig

est,

vario

us is

sues

.



nex T

able

2.1

1: L

ong-

Term

and

Sho

rt-Te

rm D

ebt O

utst

nadi

ng a

t Yea

r End

Rep

orte

d by

Wor

ld B

ank

and

Arre

ars

on D

ebt S

ervic

e Pa

ymen

ts D

ue

1980

1990

1995

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Arre

ars

on lo

ng-te

rm d

ebt

Pr

inci

pal d

ue

Offic

ial d

ebt

107

3

,892

5

,282

5

,114

5

,130

5

,374

5

,680

5

,859

5

,666

5

,916

6

,044

5

,856

5

,923

5

,892

6

,002

6

,337

6

,646

Priva

te d

ebt

443

1

,810

2

,355

2

,176

1

,729

1

,969

2

,137

2

,281

2

,087

2

,200

2

,333

2

,390

2

,449

2

,728

3

,743

4

,331

4

,785

Sub-

tota

l 5

50

5,7

02

7,6

37

7,2

90

6,8

59

7,3

43

7,8

17

8,1

40

7,7

53

8,1

16

8,3

77

8,2

46

8,3

72

8,6

20

9,7

45

10,

668

11,

431

-

In

tere

st d

ue

Offic

ial d

ebt

33

3,2

44

4,7

48

3,0

76

3,1

44

3,3

73

3,8

18

4,0

08

3,8

07

4,0

18

4,2

25

4,2

18

4,3

89

4,4

46

4,5

31

4,7

42

4,7

93

Priva

te d

ebt

30

461

9

89

1,3

98

1,1

08

1,3

39

1,5

00

1,6

39

1,5

70

1,6

90

1,8

32

1,9

79

2,1

34

2,3

25

360

3

48

354

Sub-

tota

l 6

3 3

,705

5

,737

4

,474

4

,252

4

,712

5

,318

5

,647

5

,377

5

,708

6

,057

6

,197

6

,523

6

,771

4

,891

5

,090

5

,147

-

To

tal a

rrear

s

Offic

ial d

ebt

140

7

,136

1

0,03

0 8

,190

8

,274

8

,747

9

,498

9

,867

9

,473

9

,934

1

0,26

9 1

0,07

4 1

0,31

2 1

0,33

8 1

0,53

3 1

1,07

9 1

1,43

9 -

Priva

te d

ebt

473

2

,271

3

,344

3

,574

2

,837

3

,308

3

,637

3

,920

3

,657

3

,890

4

,165

4

,369

4

,583

5

,053

4

,103

4

,679

5

,139

-

T

otal

613

9

,407

1

3,37

4 1

1,76

4 1

1,11

1 1

2,05

5 1

3,13

5 1

3,78

7 1

3,13

0 1

3,82

4 1

4,43

4 1

4,44

3 1

4,89

5 1

5,39

1 1

4,63

6 1

5,75

8 1

6,57

8 -

Tota

l deb

t out

stan

ding

Lo

ng-te

rm p

ublic

& p

rivat

e 4

,147

9

,651

1

0,27

5 1

0,64

7 1

0,34

9 1

0,66

1 1

1,19

6 1

1,66

5 1

1,23

2 1

1,92

2 1

2,73

8 1

3,12

0 1

3,70

7 1

4,44

1 1

5,09

3 1

5,69

7 1

6,39

5

Sh

ort-t

erm

pub

lic &

priv

ate

599

4

,155

6

,368

4

,745

4

,394

4

,849

5

,451

6

,049

5

,788

6

,044

6

,331

6

,673

6

,740

7

,126

5

,402

5

,452

5

,382

To

tal

4,7

46

13,

806

16,

643

15,

392

14,

743

15,

510

16,

647

17,

714

17,

020

17,

966

19,

069

19,

793

20,

447

21,

567

20,

495

21,

149

21,

777

-

Sour

ce: W

orld

Ban

k de

velo

pmen

t ind

icat

ors

data

base

.


Anne

x Tab

le 3

.1: M

oder

ate

Grow

th S

cena

rio fo

r Sud

an E

cono

my

Indi

cato

rAc

tual

/est

imat

ePr

ojec

tion

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Natio

nal i

ncom

e ac

coun

ts (S

DG m

illion

s at

201

2 co

nsta

nt p

rices

)

Agric

ultu

re, f

ores

try, fi

sher

ies

80,

675

83,

902

87,

426

91,

010

94,

742

98,

626

102,

670

106,

879

111,

261

115,

934

120,

803

125,

877

131,

164

136,

673

142,

550

148,

680

155,

073

161,

741

168,

696

Oil p

rodu

ctio

n 8

,095

1

0,30

6 1

0,53

4 1

0,87

6 1

1,28

6 1

1,78

8 1

2,38

0 1

3,04

2 1

3,75

9 1

4,51

6 1

5,31

4 1

6,15

6 1

7,04

5 1

7,98

2 1

8,97

1 2

0,01

5 2

1,11

5 2

2,27

7 2

3,50

2

Indu

stry

(exc

l. oi

l pro

duct

ion)

M

inin

g 4

,752

6

,226

6

,849

7

,396

7

,988

8

,547

9

,146

9

,786

1

0,47

1 1

1,20

4 1

1,98

8 1

2,82

7 1

3,72

5 1

4,68

6 1

5,71

4 1

6,81

4 1

7,99

1 1

9,25

0 2

0,59

8

M

anuf

actu

res

21,

677

21,

288

22,

991

24,

830

26,

817

28,

962

31,

279

33,

781

36,

484

39,

767

43,

347

47,

248

51,

500

56,

135

61,

187

66,

694

72,

696

79,

239

86,

371

Ut

ilitie

s 2

,181

2

,204

2

,303

2

,430

2

,588

2

,769

2

,963

3

,170

3

,424

3

,698

3

,993

4

,313

4

,658

5

,031

5

,433

5

,868

6

,337

6

,844

7

,392

Co

nstru

ctio

n 1

1,52

5 1

1,54

7 1

1,89

3 1

2,48

8 1

3,36

2 1

4,43

1 1

5,58

6 1

6,98

8 1

8,68

7 2

0,55

6 2

2,61

2 2

4,87

3 2

7,23

6 2

9,68

7 3

2,35

9 3

5,27

1 3

8,44

5 4

1,90

5 4

5,67

7

Su

b-to

tal

40,

135

40,

542

44,

036

47,

145

50,

755

54,

710

58,

973

63,

726

69,

066

75,

225

81,

940

89,

261

97,

119

105,

539

114,

693

124,

647

135,

470

147,

239

160,

037

Serv

ices

Tr

ansp

ort &

com

mun

icat

ions

32,

511

33,

409

Fi

nanc

e 1

8,91

1 1

9,39

6

Go

vern

men

t ser

vices

15,

248

15,

681

Ot

her

43,

115

44,

230

Su

b-to

tal

109,

785

112,

716

115,

051

118

,465

12

2,15

8 12

6,36

3 13

1,20

2 13

6,29

6 14

1,91

9 14

7,84

4 15

4,56

6 16

2,18

0 17

0,54

3 17

9,34

7 18

8,76

6 19

8,55

1 20

9,17

6 22

0,22

2 23

2,22

1

GDP

at fa

ctor

cos

t 23

8,69

0 24

7,56

5 25

7,04

7 2

67,4

96

278,

941

291,

486

305,

225

319,

943

336,

005

353,

519

372,

623

393,

475

415,

870

439,

541

464,

980

491,

892

520,

834

551,

479

584,

456

Subs

idie

s &

taxe

s 4

,723

4

,760

4

,852

4

,945

5

,040

5

,137

5

,236

5

,336

5

,439

5

,543

5

,650

5

,759

5

,869

5

,982

6

,097

6

,214

6

,334

6

,456

6

,580

GDP

at m

arke

t pric

es 24

3,41

3 25

2,32

6 26

1,89

8 2

72,4

41

283,

981

296,

623

310,

461

325,

279

341,

444

359,

062

378,

273

399,

233

421,

740

445,

523

471,

078

498,

107

527,

168

557,

934

591,

036

Mem

o ite

ms:

Nono

il GD

P at

fact

or c

ost (

SDG

milli

on)

230,

595

237,

259

246,

513

256

,620

26

7,65

4 27

9,69

9 29

2,84

5 30

6,90

1 32

2,24

6 33

9,00

3 35

7,30

9 37

7,31

8 39

8,82

6 42

1,55

9 44

6,00

9 47

1,87

8 49

9,71

8 52

9,20

2 56

0,95

4

Nono

il GD

P at

fact

or c

ost (

US$

milli

on)

64,

538

66,

403

68,

993

71,

822

74,

910

78,

281

81,

960

85,

895

90,

189

94,

879

100,

003

105,

603

111,

622

117,

984

124,

828

132,

068

139,

860

148,

111

156,

998

GDP

at 2

012

cons

tant

pric

es

(US$

mill)

68,

126

70,

620

73,

299

76,

250

79,

480

83,

018

86,

891

91,

038

95,

562

100,

493

105,

870

111,

736

118,

035

124,

692

131,

844

139,

409

147,

542

156,

153

165,

417

Exch

ange

rate

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

Grow

th ra

tes

for n

atio

nal

inco

me

acco

unts

(% p

.a.)

Ann

ex 3

: M

acro

eco

nom

ic P

roje

ctio

ns


PRIVATE SECTOR-LED ECONOMIC DIVERSIFICATION AND DEVELOPMENT IN SUDANAg

ricul

ture

, for

estry

, fish

erie

s 5

.7

4.0

4

.2

4.1

4

.1

4.1

4

.1

4.1

4

.1

4.2

4

.2

4.2

4

.2

4.2

4

.3

4.3

4

.3

4.3

4

.3

Oil p

rodu

ctio

n (6

7.4)

27.

3 2

.2

3.2

3

.8

4.4

5

.0

5.3

5

.5

5.5

5

.5

5.5

5

.5

5.5

5

.5

5.5

5

.5

5.5

5

.5

Indu

stry

(exc

l. oi

l pro

duct

ion)

M

inin

g 2

15.7

3

1.0

10.

0 8

.0

8.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

M

anuf

actu

res

18.

1 (1

.8)

8.0

8

.0

8.0

8

.0

8.0

8

.0

8.0

9

.0

9.0

9

.0

9.0

9

.0

9.0

9

.0

9.0

9

.0

9.0

Ut

ilitie

s 3

.2

1.0

4

.5

5.5

6

.5

7.0

7

.0

7.0

8

.0

8.0

8

.0

8.0

8

.0

8.0

8

.0

8.0

8

.0

8.0

8

.0

Co

nstru

ctio

n 5

.8

0.2

3

.0

5.0

7

.0

8.0

8

.0

9.0

1

0.0

10.

0 1

0.0

10.

0 9

.5

9.0

9

.0

9.0

9

.0

9.0

9

.0

Su

b-to

tal

-

-

8.6

7

.1

7.7

7

.8

7.8

8

.1

8.4

8

.9

8.9

8

.9

8.8

8

.7

8.7

8

.7

8.7

8

.7

8.7

Serv

ices

Tr

ansp

ort &

com

mun

icat

ions

Fi

nanc

e

Go

vern

men

t ser

vices

Ot

her

Su

b-to

tal

3.2

2

.7

2.1

3

.0

3.1

3

.4

3.8

3

.9

4.1

4

.2

4.5

4

.9

5.2

5

.2

5.3

5

.2

5.4

5

.3

5.4

GDP

at fa

ctor

cos

t 0

.3

3.7

3

.8

4.1

4

.3

4.5

4

.7

4.8

5

.0

5.2

5

.4

5.6

5

.7

5.7

5

.8

5.8

5

.9

5.9

6

.0

GDP

at m

arke

t pric

es 0

.3

3.7

3

.8

4.0

4

.2

4.5

4

.7

4.8

5

.0

5.2

5

.4

5.5

5

.6

5.6

5

.7

5.7

5

.8

5.8

5

.9

Mem

o ite

ms:

Non-

oil G

DP g

row

th (%

p.a

.) 0

.3

3.7

3

.9

4.1

4

.3

4.5

4

.7

4.8

5

.0

5.2

5

.4

5.6

5

.7

5.7

5

.8

5.8

5

.9

5.9

6

.0

Sect

or s

hare

of G

DP a

t fac

tor

cost

Agric

ultu

re, f

ores

try, fi

sher

ies

33.

8 3

3.9

34.

0 3

4.0

34.

0 3

3.8

33.

6 3

3.4

33.

1 3

2.8

32.

4 3

2.0

31.

5 3

1.1

30.

7 3

0.2

29.

8 2

9.3

28.

9

Oil p

rodu

ctio

n 3

.4

4.2

4

.1

4.1

4

.0

4.0

4

.1

4.1

4

.1

4.1

4

.1

4.1

4

.1

4.1

4

.1

4.1

4

.1

4.0

4

.0

Indu

stry

(exc

l. oi

l pro

duct

ion)

16.

8 1

6.4

17.

1 1

7.6

18.

2 1

8.8

19.

3 1

9.9

20.

6 2

1.3

22.

0 2

2.7

23.

4 2

4.0

24.

7 2

5.3

26.

0 2

6.7

27.

4

Serv

ices

46.

0 4

5.5

44.

7 4

4.2

43.

8 4

3.3

42.

9 4

2.6

42.

2 4

1.8

41.

4 4

1.2

41.

0 4

0.8

40.

6 4

0.3

40.

1 3

9.9

39.

7

GDP

at fa

ctor

cos

t 1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

Sour

ce: D

ata

for 2

012,

201

3, a

nd 2

014

from

Ann

ex Ta

ble

2.2

thro

ugh

2.8.

Dat

a fo

r 201

5-20

30 a

nd s

ome

data

for 2

014

are

estim

ates

by

auth

ors.


Anne

x Tab

le 3

.2: I

nves

tmen

t Req

uire

men

ts fo

r Mod

erat

e Gr

owth

Sce

nario

(In S

DG m

illion

at 2

012

cons

tant

pric

es)

Indi

cato

rAc

tual

/est

imat

esPr

ojec

tion

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Gros

s in

vest

men

t

Inve

stm

ent (

SGD

milli

ons)

Gros

s in

vest

men

t 5

1,49

3 4

9,70

8 5

0,80

8 5

3,39

8 5

5,66

0 5

8,43

5 6

3,02

3 6

7,33

3 7

1,70

3 7

8,99

4 8

7,00

3 9

3,82

0 10

1,21

8 10

9,15

3 11

7,76

9 12

4,52

7 13

1,79

2 13

9,48

4 14

7,75

9

Inve

ntor

ies

5,3

55

4,7

94

4,9

76

4,9

04

5,1

12

5,3

39

5,5

88

6,7

33

7,1

70

7,8

99

8,7

00

9,3

82

10,

122

10,

915

11,

777

12,

453

13,

179

13,

948

14,

776

Fixe

d in

vest

men

t

Pr

ivate

40,

650

45,

948

40,

070

42,

228

44,

017

45,

977

48,

432

50,

744

54,

290

60,

322

67,

333

72,

660

79,

287

85,

986

93,

273

98,

625

104,

906

111,

029

117,

616

Pu

blic

5,4

88

4,7

94

5,7

62

6,2

66

6,5

32

7,1

19

9,0

03

9,8

56

10,

243

10,

772

10,

970

11,

777

11,

809

12,

252

12,

719

13,

449

13,

706

14,

506

15,

367

To

tal

46,

138

50,

742

45,

832

48,

494

50,

549

53,

096

57,

435

60,

599

64,

533

71,

094

78,

303

84,

438

91,

096

98,

238

105,

992

112,

074

118,

613

125,

535

132,

983

Gros

s na

tiona

l sav

ings

41,

513

42,

941

44,

261

45,

225

45,

721

46,

570

50,

605

54,

322

58,

045

64,

631

71,

872

77,

850

84,

348

91,

332

98,

926

104,

602

110,

705

117,

166

124,

118

Fore

ign

savin

gs 9

,980

5

,299

6

,547

8

,173

9

,939

1

1,86

5 1

2,41

8 1

3,01

1 1

3,65

8 1

4,36

2 1

5,13

1 1

5,96

9 1

6,87

0 1

7,82

1 1

8,84

3 1

9,92

4 2

1,08

7 2

2,31

7 2

3,64

1

FD

I 8

,811

9

,463

1

0,21

4 1

0,08

0 9

,939

1

0,38

2 1

0,86

6 1

1,38

5 1

1,95

1 1

2,56

7 1

3,24

0 1

3,97

3 1

4,76

1 1

5,59

3 1

6,48

8 1

7,43

4 1

8,45

1 1

9,52

8 2

0,68

6

Ot

her

1,1

69

(4,1

64)

(3,6

67)

(1,9

07)

-

1,4

83

1,5

52

1,6

26

1,7

07

1,7

95

1,8

91

1,9

96

2,1

09

2,2

28

2,3

55

2,4

91

2,6

36

2,7

90

2,9

55

Inve

stm

ent a

s %

GDP

Gros

s in

vest

men

t 2

1.2

19.

7 1

9.4

19.

6 1

9.6

19.

7 2

0.3

20.

7 2

1.0

22.

0 2

3.0

23.

5 2

4.0

24.

5 2

5.0

25.

0 2

5.0

25.

0 2

5.0

Chan

ge in

inve

ntor

ies

2.2

1

.9

1.9

1

.8

1.8

1

.8

1.8

1

.8

1.7

1

.7

1.7

1

.7

1.6

1

.6

1.6

1

.6

1.5

1

.5

1.5

Fixe

d in

vest

men

t

Pr

ivate

16.

7 1

5.9

15.

3 1

5.5

15.

5 1

5.5

15.

6 1

5.6

15.

9 1

6.8

17.

8 1

8.2

18.

8 1

9.3

19.

8 1

9.8

19.

9 1

9.9

19.

9

Pu

blic

2.3

1

.9

2.2

2

.3

2.3

2

.4

2.9

3

.3

3.4

3

.5

3.5

3

.6

3.6

3

.6

3.6

3

.6

3.6

3

.6

3.6

To

tal

19.

0 1

7.8

17.

5 1

7.8

17.

8 1

7.9

18.

5 1

8.9

19.

3 2

0.3

21.

3 2

1.8

22.

4 2

2.9

23.

4 2

3.4

23.

5 2

3.5

23.

5

Gros

s na

tiona

l sav

ings

17.

1 1

7.6

16.

9 1

6.6

16.

1 1

5.7

16.

3 1

6.7

17.

0 1

8.0

19.

0 1

9.5

20.

0 2

0.5

21.

0 2

1.0

21.

0 2

1.0

21.

0

Fore

ign

savin

gs 4

.1

2.1

2

.5

3.0

3

.5

4.0

4

.0

4.0

4

.0

4.0

4

.0

4.0

4

.0

4.0

4

.0

4.0

4

.0

4.0

4

.0

FD

I 3

.6

3.7

3

.9

3.7

3

.5

3.5

3

.5

3.5

3

.5

3.5

3

.5

3.5

3

.5

3.5

3

.5

3.5

3

.5

3.5

3

.5

Ot

her

0.5

(1

.6)

(1.4

) (0

.7)

-

0.5

0

.5

0.5

0

.5

0.5

0

.5

0.5

0

.5

0.5

0

.5

0.5

0

.5

0.5

0

.5

ICOR

5.7

4

.8

4.6

4

.4

4.2

4

.2

4.1

4

.0

4.0

4

.1

4.0

4

.0

4.1

4

.1

4.1

4

.1

4.1

4

.0

Sect

oral

sha

res

of fi

xed

inve

stm

ent (

US$

milli

on)

Agric

ultu

re, f

ores

try, fi

sher

ies

1,4

20

1,7

16

2,1

70

2,5

08

2,8

20

3,1

53

3,7

35

4,2

41

4,6

60

4,9

70

5,1

79

5,3

96

5,6

23

5,8

59

6,2

50

6,5

19

6,7

99

7,0

92

7,3

97

Oil p

rodu

ctio

n 2

,850

2

,550

2

,500

2

,550

2

,600

2

,625

2

,650

2

,675

2

,700

2

,800

2

,950

3

,100

3

,300

3

,500

3

,700

3

,900

4

,100

4

,300

4

,500

Indu

stry

(exc

l. oi

l) 2

,029

9

49

2,4

04

2,7

84

3,3

34

3,8

74

4,1

76

4,6

56

5,2

31

6,5

50

7,1

41

7,7

86

8,3

57

8,9

55

9,7

36

10,

586

11,

511

12,

517

13,

611

Infra

stru

ctur

e 1

,500

1

,800

2

,000

2

,237

2

,630

2

,800

3

,050

3

,150

3

,250

3

,250

3

,250

3

,250

3

,250

3

,250

3

,250

3

,250

3

,100

3

,000

3

,000

Serv

ices

5

,114

7

,187

3

,753

3

,493

2

,763

2

,409

2

,464

2

,239

2

,220

2

,327

3

,395

4

,100

4

,965

5

,931

6

,728

7

,112

7

,687

8

,226

8

,711

Tota

l fixe

d in

vest

men

t 1

2,91

3 1

4,20

2 1

2,82

7 1

3,57

2 1

4,14

7 1

4,86

0 1

6,07

5 1

6,96

0 1

8,06

1 1

9,89

8 2

1,91

5 2

3,63

2 2

5,49

6 2

7,49

4 2

9,66

5 3

1,36

7 3

3,19

7 3

5,13

4 3

7,21

9

Sour

ce: D

ata

for 2

012,

201

3, a

nd 2

014

from

Ann

ex Ta

ble

2.2

thro

ugh

2.8.

Dat

a fo

r 201

5-20

30 a

nd s

ome

data

for 2

014

are

estim

ates

by

auth

ors.



nex T

able

3.3

: Pro

ject

ed G

row

th in

Agr

icul

ture

Val

ue A

dded

by

Sub-

Sect

or(In

SDG

milli

on a

t 201

2 co

nsta

nt p

rices

)

Sub-

sect

or in

dica

tors

Actu

al/e

stim

ate

Proj

ectio

n

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Valu

e ad

ded

(SDG

milli

on)

Cr

ops

38,

885

40,

052

41,

454

42,

905

44,

535

46,

406

48,

587

51,

113

53,

924

56,

890

60,

019

63,

320

66,

803

70,

477

74,

353

78,

443

82,

757

87,

309

92,

111

Li

vest

ock

39,

773

41,

799

43,

875

45,

957

48,

000

49,

950

51,

744

53,

357

54,

856

56,

489

58,

152

59,

846

61,

569

63,

320

65,

234

67,

186

69,

173

71,

195

73,

251

Fo

rest

ry 8

07

819

8

37

857

8

79

904

9

31

959

9

88

1,0

17

1,0

48

1,0

79

1,1

12

1,1

45

1,1

80

1,2

15

1,2

51

1,2

89

1,3

28

Fi

sher

ies

1,2

10

1,2

32

1,2

60

1,2

92

1,3

27

1,3

67

1,4

08

1,4

50

1,4

93

1,5

38

1,5

84

1,6

32

1,6

81

1,7

31

1,7

83

1,8

36

1,8

92

1,9

48

2,0

07

To

tal

80,

675

83,

902

87,

426

91,

010

94,

742

98,

626

102,

670

106,

879

111,

261

115,

934

120,

803

125,

877

131,

164

136,

673

142,

550

148,

680

155,

073

161,

741

168,

696

Shar

e of

tota

l sec

tor v

alue

ad

ded

(%)

Cr

ops

48.

2 4

7.7

47.

4 4

7.1

47.

0 4

7.1

47.

3 4

7.8

48.

5 4

9.1

49.

7 5

0.3

50.

9 5

1.6

52.

2 5

2.8

53.

4 5

4.0

54.

6

Li

vest

ock

49.

3 4

9.8

50.

2 5

0.5

50.

7 5

0.6

50.

4 4

9.9

49.

3 4

8.7

48.

1 4

7.5

46.

9 4

6.3

45.

8 4

5.2

44.

6 4

4.0

43.

4

Fo

rest

ry 1

.0

1.0

1

.0

0.9

0

.9

0.9

0

.9

0.9

0

.9

0.9

0

.9

0.9

0

.8

0.8

0

.8

0.8

0

.8

0.8

0

.8

Fi

sher

ies

1.5

1

.5

1.4

1

.4

1.4

1

.4

1.4

1

.4

1.3

1

.3

1.3

1

.3

1.3

1

.3

1.3

1

.2

1.2

1

.2

1.2

To

tal

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

100

.0

Grow

th in

val

ue a

dded

(% p

.a.)

Cr

ops

3.0

3

.5

3.5

3

.8

4.2

4

.7

5.2

5

.5

5.5

5

.5

5.5

5

.5

5.5

5

.5

5.5

5

.5

5.5

5

.5

Li

vest

ock

5.1

5

.0

4.7

4

.4

4.1

3

.6

3.1

2

.8

3.0

2

.9

2.9

2

.9

2.8

3

.0

3.0

3

.0

2.9

2

.9

Fo

rest

ry 1

.5

2.2

2

.4

2.6

2

.8

3.0

3

.0

3.0

3

.0

3.0

3

.0

3.0

3

.0

3.0

3

.0

3.0

3

.0

3.0

Fi

sher

ies

1.8

2

.3

2.5

2

.7

3.0

3

.0

3.0

3

.0

3.0

3

.0

3.0

3

.0

3.0

3

.0

3.0

3

.0

3.0

3

.0

To

tal

5.7

4

.0

4.2

4

.1

4.1

4

.1

4.1

4

.1

4.1

4

.2

4.2

4

.2

4.2

4

.2

4.3

4

.3

4.3

4

.3

4.3

Mem

o ite

ms:

Agric

ultu

re v

alue

add

ed a

s %

no

n-oi

l GDP

33.

8 3

3.9

34.

0 3

4.0

34.

0 3

3.8

33.

6 3

3.4

33.

1 3

2.8

32.

4 3

2.0

31.

5 3

1.1

30.

7 3

0.2

29.

8 2

9.3

28.

9

Rura

l pop

ulat

ion

('000

) 2

4,77

9 2

5,23

8 2

5,71

6 2

6,22

0 2

6,73

9 2

7,26

8 2

7,80

8 2

8,35

9 2

8,92

4 2

9,41

3 2

9,91

0 3

0,41

5 3

0,92

9 3

1,45

6 3

1,89

0 3

2,33

0 3

2,77

6 3

3,22

9 3

3,68

5

Valu

e ad

ded

per p

erso

n (U

S$)

911

9

30

951

9

71

992

1

,012

1

,033

1

,055

1

,077

1

,103

1

,130

1

,158

1

,187

1

,216

1

,251

1

,287

1

,324

1

,362

1

,402

Sour

ce: A

nnex

Tabl

es 1

.1 a

md

2.2

and

estim

ates

by

auth

ors.


Anne

x Tab

le 3

.4: P

roje

cted

Gro

wth

in A

gric

ultu

re V

alue

Add

ed a

nd In

vest

men

t(V

alue

s at

201

2 co

nsta

nt p

rices

and

exc

hang

e ra

te)

Indi

cato

rAc

tual

/est

imat

ePr

ojec

tion

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Agric

ultu

re v

alue

add

ed

SD

G m

illion

80,

675

83,

902

87,

426

91,

010

94,

742

98,

626

102,

670

106,

879

111,

261

115,

934

120,

803

125,

877

131,

164

136,

673

142,

550

148,

680

155,

073

161,

741

168,

696

US

$ m

illion

22,

579

23,

482

24,

468

25,

472

26,

516

27,

603

28,

735

29,

913

31,

139

32,

447

33,

810

35,

230

36,

710

38,

252

39,

896

41,

612

43,

401

45,

268

47,

214

Gr

owth

rate

(% p

.a.)

5.7

4

.0

4.2

4

.1

4.1

4

.1

4.1

4

.1

4.1

4

.2

4.2

4

.2

4.2

4

.2

4.3

4

.3

4.3

4

.3

4.3

Inve

stm

ent i

n ag

ricul

ture

(US$

m

illion

)

Pu

blic

345

4

32

517

5

75

674

7

83

820

8

59

902

9

49

1,0

00

1,0

56

1,1

16

1,1

80

1,2

48

1,3

21

1,3

99

1,4

81

1,5

70

Pr

ivate

1,0

75

1,2

84

1,6

52

1,9

33

2,1

46

2,3

70

2,9

15

3,3

82

3,7

59

4,0

21

4,1

79

4,3

40

4,5

07

4,6

79

5,0

02

5,1

98

5,4

01

5,6

11

5,8

27

To

tal

1,4

20

1,7

16

2,1

70

2,5

08

2,8

20

3,1

53

3,7

35

4,2

41

4,6

60

4,9

70

5,1

79

5,3

96

5,6

23

5,8

59

6,2

50

6,5

19

6,7

99

7,0

92

7,3

97

Agric

ultu

re in

vest

men

t as

%

non-

oil G

DP

Pu

blic

0.5

0

.7

0.8

0

.8

0.9

1

.0

1.0

1

.0

1.0

1

.0

1.0

1

.0

1.0

1

.0

1.0

1

.0

1.0

1

.0

1.0

Pr

ivate

1.7

1

.9

2.2

2

.2

2.2

3

.0

2.2

3

.9

4.2

4

.2

4.2

4

.1

4.0

4

.0

4.0

3

.9

3.9

3

.8

3.7

To

tal

2.3

2

.6

2.9

3

.0

3.1

4

.0

3.2

4

.9

5.2

5

.2

5.2

5

.1

5.0

5

.0

5.0

4

.9

4.9

4

.8

4.7

Mem

o ite

ms:

ICOR

1.9

1

.9

2.2

2

.5

2.7

2

.9

3.3

3

.6

3.8

3

.8

3.8

3

.8

3.8

3

.8

3.8

3

.8

3.8

3

.8

3.8

Non-

oil G

DP (S

DG m

ill at

201

2 pr

ices

) 23

0,59

5 23

7,25

9 24

6,51

3 25

6,62

0 26

7,65

4 27

9,69

9 29

2,84

5 30

6,90

1 32

2,24

6 33

9,00

3 35

7,30

9 37

7,31

8 39

8,82

6 42

1,55

9 44

6,00

9 47

1,87

8 49

9,71

8 52

9,20

2 56

0,95

4

Non-

oil G

DP (U

S$ m

ill at

201

2 pr

ices

) 6

4,53

8 6

6,40

3 6

8,99

3 7

1,82

2 7

4,91

0 7

8,28

1 8

1,96

0 8

5,89

5 9

0,18

9 9

4,87

9 10

0,00

3 10

5,60

3 11

1,62

2 11

7,98

4 12

4,82

8 13

2,06

8 13

9,86

0 14

8,11

1 15

6,99

8

Non-

oil G

DP g

row

th ra

te (%

p.a

.) 5

.7

4.0

4

.2

4.1

4

.1

4.1

4

.1

4.1

4

.1

4.2

4

.2

4.2

4

.2

4.2

4

.3

4.3

4

.3

4.3

4

.3

Exch

ange

rate

3.57

33.

573

3.57

33.

573

3.57

33.

573

3.57

33.

573

3.57

33.

573

3.57

33.

573

3.57

33.

573

3.57

33.

573

3.57

33.

573

3.57

3

Sour

ce: A

nnex

Tabl

es 2

.3, 3

.1, 3

.2, 3

.5 a

nd e

stim

ates

by

auth

ors.



nex

Tabl

e 3.

5: P

roje

cted

Gro

wth

in In

dust

rial S

ecto

rs U

nder

Bas

e Ca

se S

cena

rio

Sect

orAc

tual

/est

imat

ePr

ojec

tion

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Valu

e ad

ded

(SDG

mill

ions

at 2

012

cons

tant

pric

es)

Min

ing

(exc

l. oi

l) 4

,752

6

,226

6

,849

7

,396

7

,988

8

,547

9

,146

9

,786

1

0,47

1 1

1,20

4 1

1,98

8 1

2,82

7 1

3,72

5 1

4,68

6 1

5,71

4 1

6,81

4 1

7,99

1 1

9,25

0 2

0,59

8

Man

ufac

ture

s 2

1,67

7 2

1,28

8 2

2,99

1 2

4,83

0 2

6,81

7 2

8,96

2 3

1,27

9 3

3,78

1 3

6,48

4 3

9,76

7 4

3,34

7 4

7,24

8 5

1,50

0 5

6,13

5 6

1,18

7 6

6,69

4 7

2,69

6 7

9,23

9 8

6,37

1

Cons

truct

ion

11,

525

11,

547

11,

893

12,

488

13,

362

14,

431

15,

586

16,

988

18,

687

20,

556

22,

612

24,

873

27,

236

29,

687

32,

359

35,

271

38,

445

41,

905

45,

677

Utili

ties

2,1

81

2,2

04

2,3

03

2,4

30

2,5

88

2,7

69

2,9

63

3,1

70

3,4

24

3,6

98

3,9

93

4,3

13

4,6

58

5,0

31

5,4

33

5,8

68

6,3

37

6,8

44

7,3

92

Tota

l 4

0,13

5 4

1,26

5 4

4,03

6 4

7,14

5 5

0,75

5 5

4,71

0 5

8,97

3 6

3,72

6 6

9,06

6 7

5,22

5 8

1,94

0 8

9,26

1 9

7,11

9 10

5,53

9 11

4,69

3 12

4,64

7 13

5,47

0 14

7,23

9 16

0,03

7

Annu

al g

row

th ra

te (%

p.a

.)

Min

ing

(exc

l. oi

l) 2

15.7

3

6.0

10.

0 8

.0

8.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

Man

ufac

ture

s 1

8.1

1.5

8

.0

8.0

8

.0

8.0

8

.0

8.0

8

.0

9.0

9

.0

9.0

9

.0

9.0

9

.0

9.0

9

.0

9.0

9

.0

Cons

truct

ion

5.8

2

.0

3.0

5

.0

7.0

8

.0

8.0

9

.0

10.

0 1

0.0

10.

0 1

0.0

9.5

9

.0

9.0

9

.0

9.0

9

.0

9.0

Utili

ties

3.2

3

.0

4.5

5

.5

6.5

7

.0

7.0

7

.0

8.0

8

.0

8.0

8

.0

8.0

8

.0

8.0

8

.0

8.0

8

.0

8.0

Tota

l 1

5.9

2.8

6

.7

7.1

7

.7

7.8

7

.8

8.1

8

.4

8.9

8

.9

8.9

8

.8

8.7

8

.7

8.7

8

.7

8.7

8

.7

Com

posi

tion

(%)

Min

ing

(exc

l. oi

l) 1

1.8

15.

1 1

5.6

15.

7 1

5.7

15.

6 1

5.5

15.

4 1

5.2

14.

9 1

4.6

14.

4 1

4.1

13.

9 1

3.7

13.

5 1

3.3

13.

1 1

2.9

Man

ufac

ture

s 5

4.0

51.

6 5

2.2

52.

7 5

2.8

52.

9 5

3.0

53.

0 5

2.8

52.

9 5

2.9

52.

9 5

3.0

53.

2 5

3.3

53.

5 5

3.7

53.

8 5

4.0

Cons

truct

ion

28.

7 2

8.0

27.

0 2

6.5

26.

3 2

6.4

26.

4 2

6.7

27.

1 2

7.3

27.

6 2

7.9

28.

0 2

8.1

28.

2 2

8.3

28.

4 2

8.5

28.

5

Utili

ties

5.4

5

.3

5.2

5

.2

5.1

5

.1

5.0

5

.0

5.0

4

.9

4.9

4

.8

4.8

4

.8

4.7

4

.7

4.7

4

.6

4.6

Tota

l 1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

1

00.0

Tota

l fixe

d in

vest

men

t

ICOR

3.0

3

.1

3.2

3

.3

3.5

3

.5

3.5

3

.5

3.8

3

.8

3.8

3

.8

3.8

3

.8

3.8

3

.8

3.8

3

.8

Inve

stm

ent (

SDG

mill

) 7

,250

3

,390

8

,591

9

,947

1

1,91

4 1

3,84

1 1

4,92

3 1

6,63

4 1

8,69

0 2

3,40

5 2

5,51

6 2

7,82

0 2

9,86

1 3

1,99

5 3

4,78

7 3

7,82

4 4

1,12

8 4

4,72

3 4

8,63

3

Inve

stm

ent (

US$

mill

) 2

,029

9

49

2,4

04

2,7

84

3,3

34

3,8

74

4,1

76

4,6

56

5,2

31

6,5

50

7,1

41

7,7

86

8,3

57

8,9

55

9,7

36

10,

586

11,

511

12,

517

13,

611

Inve

stm

ent a

s %

GDP

3.0

1

.3

3.3

3

.7

4.2

4

.7

4.8

5

.1

5.5

6

.5

6.7

7

.0

7.1

7

.2

7.4

7

.6

7.8

8

.0

8.2

GDP

(US$

mill

at 2

012

pric

es)

68,

126

70,

620

73,

299

76,

250

79,

480

83,

018

86,

891

91,

038

95,

562

100,

493

105,

870

111,

736

118,

035

124,

692

131,

844

139,

409

147,

542

156,

153

165,

417

Exch

ange

rate

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

3.5

73

Sour

ce:A

nnex

Tabl

e 3.

1 fo

r 201

2, 2

013

and

2014

dat

a, a

nd p

roje

ctio

ns b

y au

thor

s.




As Chapter 4 indicates, Sudan faces major challeng-es in promoting the role of the private sector in the economic diversification of the country. For a deeper understanding of these challenges, the authors of this Sudan Report found that the Global Competitiveness Reports of the World Economic Forum, and the Do-ing Business Surveys for individual African countries published regularly by the World Bank, both provided valuable insights into the successful initiatives taken by some African countries to successfully promote the role of the private sector.

Annex 4: Programmes for Private Sector Development


5.1 Overview of the Agricultural Revival Programme

The Strategy for Agricultural revival

The very disappointing performance of the agriculture sector from the early stages of the oil boom, along with lack of progress in improving the living standards for the majority of the population that depended on agriculture for their livelihood, led to action by the government in the latter part of the 2000s to reverse this decline and pro-mote a broad-based programme for agricultural recovery. The revival of agriculture was expected to increase overall economic growth and expand exports, reduce poverty and sustain food security, particularly in rural areas. In ad-dition, increased agricultural production was seen as the key foundation for expansion of the agro-industrial sector.

The Strategic Framework. In July 2006, the President of the Sudan decreed a sector-wide policy document entitled the “Agricultural Revival Programme” (ARP), which set out development strategies for agriculture, livestock, fisheries, food security and rural development in Sudan.151 The ARP was a policy and investment pro-gramme that provides a strategic framework for plan-ning and prioritisation of development and investments in agriculture.152 The ARP set out a four-year road map for agricultural development during the 2008-2011 pe-riod. It identified priority areas for investment and pro-vided estimates of the financing needs to be provided by Sudan’s government and its development partners, and the private sector. The overall strategic objectives of the ARP were as follows:

• Increase agricultural production and productivity and improve the efficiency at the production and processing stages.

• Promote crops and livestock exports with a view to safeguarding against the risks of collapse of the whole economy as a result of the distortions ema-

151 See a detailed outline of the proposed programme, see Republic of Sudan (2008), Ex-ecutive Programme for Agricultural Revival. Report by General Secretariat of Council of Ministers, Khartoum, April 2008.

152 The ARP is consistent with the 1996 World Food Summit Plan of Action and the African Heads of State NEPAD Initiative on Financing Agriculture (FAO-NMTPF, 2007).

nating from over-dependence on oil revenues.• Realise food security and reduce the incidence

of poverty to 50 percent by 2015 (the MDG goal) as well as generate new job opportunities and in-crease per capita income.

• Achieve balanced growth in all regions of the coun-try with the view to encouraging settlement in the rural areas.

• Develop and protect natural resources to ensure their renewal and sustainability.

Key indicators were proposed for the ARP (2008) to ensure its success in promoting a broad-based recov-ery in agriculture and related agro-industrial activities. These indicators aim at creating an appropriate envi-ronment for a sustainable development of agricultural production through: (i) an integral process of capaci-ty building of both producers and institutions; and (ii) addressing the genuine issues of agricultural land and tenure structures. In addition, the ARP proposed to expand and modernise agricultural systems in Sudan through: (i) developing adequate support services to

Annex Table 5.1: Proposed ARP Development 2008-11(In SDG millions)

Proposed program Funding

Amount Share (%)

Infrastructure

Water harvesting 486.0 10.1

Irrigation projects 1,484.6 30.7

Feeder roads, ferries, livestock routes 241.5 5.0

Sub-total 2,212.1 45.8

Capacity building

Capacity building, general 14.0 0.3

Information institutions & informatics 49.0 1.0

Sub-total 63.0 1.3

Food security, poverty, rural development 1,417.2 29.3

Supporting services 411.3 8.5

Marketing and export promotion 330.2 6.8

Development & modernization of agricultural systems

30.5 0.6

Development & protection of natural resources 348.8 7.2

Commodity development councils 16.0 0.3

Total 4,829.1 100.0

Source: ARP, 2008.

Annex 5: Development Programmes for Agriculture



agriculture; (ii) protecting and developing natural re-sources; (iii) promoting agricultural industrialisation and the firm implementation of quality control and safety measures (GHPs, HAACP and ISO); and (iv) establish-ment of international partnerships in all domains of ag-riculture.

The development of a skilled and well trained human re-source base was seen by the ARP as central to the suc-cess of the programme. The ARP advocated a labour in-tensive strategy and projects in order to mobilise the un-derutilised and unproductive rural labour as a key driver of growth, rather than capital-intensive approaches. The programme envisaged high levels of training and tech-nology adoption in order to boost agricultural productivity without drawing heavily on the country’s scarce capital resources. Good farm prices were seen as incentives for farmers to promote production. Other drivers of the ARP included the following: (i) Improve agricultural extension services; (ii) promote better use of land and water re-sources; (iii) enhance access to financial services; (iv) improve access to domestic and export markets; and (v) provide rural infrastructure. Additional thrusts in line with the above included: (i) Market-based agricul-tural development; (ii) increased private sector invest-ment; (iii) specialised support services for differentiated

agro-ecological zones; (iv) improved rural-urban link-ages; and (v) special efforts to support pastoral devel-opment. These objectives were to be underpinned by investments to improve rural infrastructure, enhance access to financial services, promote irrigation devel-opment, ensure land tenure security and improve the performance of agricultural markets.

Institutional Arrangements for the ARP. The ARP was to work in an institutional system comprised of federal, state, and locality levels of activity in the sector (Figure 5.1). However, experience with the ARP showed that there was weak administrative and implementation ca-pacity at various levels. In the case of the federal govern-ment, planning was centralised, especially with respect to the large budgets of the ARP. It has been observed that the ARP structure and the related institutions hindered the realisation of its full objectives. The experience that came out of the first ARP (2008-11) led to proposals for structural change in the organisational and institu-tional set-up of the agriculture-related line ministries and for increased attention to capacities within these agencies.153

153 Some of the major shortcomings in the state civil service in Sudan are loss of em-ployees to the private sector; lack of training at all levels; poor performance appraisal; promotion on basis of seniority rather than competence; low salaries and poor em-ployment conditions (especially in rural areas); lack of control over an informal pay system used to supplement official salary rates; too much centralisation in recruitment;

Figure 5.1: Organisation for Supervision and Monitoring of the ARP Programme


The proposed ARP I for 2008-2011

The ARP I proposed that the National Government fi-nance agriculture-related infrastructure, along with sup-port for research, extension and technology transfer, early warning and pests control, diseases and epidem-ics at national level. It also proposed that private sector players participate in service provision and financing of agricultural operations. The ARP also called for a sub-stantial scaling up of credit by the banking system for agriculture, with guarantees to be provided by the Na-tional Bank of Sudan (NBS). Savings banks were urged to scale up micro-credit programmes to finance agri-cultural production, earmark an increasing share of at least 20 percent from Agricultural Bank of Sudan (ABS) sources to finance livestock and fisheries development projects and provide medium-term finance for poultry production and long-term finance for dairy, meat and inputs for production and processing. The ARP policy framework adopted the village centre as an instrument to promote the “mobile credit” and direct internal soft loans to the specialised banks and give priority in fi-nance to producers organised in production and mar-keting organisations. The programme also proposed short-term finance to vegetable growers, medium-term loans to fruit growers and livestock owners, and long-term finance for storage and refrigerated transport for horticultural, dairy and meat producers.

The total cost of the ARP programme was put at SDG 10.1 billion for 2008-11 (equivalent to about US$4.8 billion at the 2008 exchange rate) with expenditures in the range of SDG 2.5 billion each year. On an an-nualised basis, this level of spending was equivalent to about 3.1 percent of non-oil GDP in 2008, with the public sector component equal to 1.5 percent of non-oil GDP and the private sector investment equal to about 1.6 percent. These proposed levels of spending on agricultural development were substantially higher than the levels prior to the ARP proposal. A summary of the key components of ARP I is set out in Annex Table 5.1 that shows the key areas of proposed invest-ments that total SDG 4.83 billion (about US$2.3 billion), representing the government’s counterpart of about 48 percent of the proposed total expenditures for the pro-gramme. About 46 percent of the government’s expen-ditures were allocated for infrastructure as water har-vesting, irrigation projects and feeder roads, ferries and

and lack of merit as a basis for recruitment, promotion and salary level (DJAM 2012).

livestock routes, while food security, poverty reduction and rural development accounted for 29 percent. The programme included about SDG 4.4 billion from the domestic banking industry with the balance of fund-ing coming in the form of self-financing by programme participants and agricultural subsidies. The proposed annual disbursements by source of funding are set out in Figure 5.2.

5.2 Crop Competitiveness

This annex reviews findings about the competitiveness of crops and industries in Sudan on the basis of com-putations about the Revealed Comparative Advantag-es Index, first introduced by Bella Balassa (1965), the Domestic Resources Cost, Value Chain Analysis and comparative value added analysis. The following sec-tions discuss some other macro pillars for competitive-ness, and reports the results based on the domestic resources costs, revealed comparative advantages, value chain analysis and labour and total factors pro-ductivity analysis.

A study by Maxwell Stamp Plc. prepared for Sudan Ministry of Foreign Trade and the European Commis-sion on “the Assessment of Sudan’s Export Diversifica-tion Potential in Agricultural Products” (2009) reported measurements of the competitiveness of agricultural

Figure 5.2: Proposed ARP I Budget Flows for 2008-11 (SDGs

‘000)



crops on the basis of the Revealed Comparative Ad-vantage and the Domestic Resource Cost. It also used the supply chain concept to identify the conditions un-der which Sudanese agricultural exports can increase their competitiveness.

The Revealed Comparative Advantage (RCA) is an in-dex used to calculate the relative advantage or disad-vantage of a country in a certain product on the basis of the current trade flows. The concept is based on the Heckscher-Ohlin theory, which explains comparative advantages by cost differences arising from variations in factor prices across countries. RCA Index is defined as “the ratio of a commodity’s value share in the coun-try’s total exports in relation to that commodity’s share in total world trade”154. When the share of a commodity to Sudan’s total exports relative to other commodities and that share is larger than the global share of the same commodity in total world trade, the RCA ratio would be greater than unity. In that case, Sudan would have a comparative advantage in that commodity and is competitive in world markets in that commodity.

Annex Table 5.1, which gives the results of Maxwell Stamp Plc. Study (p.59-60) shows that Sudan has a comparative advantage (RCA greater than unity) in all the commodities that it exports in large volumes. This is the case for gum Arabic, live animals (essentially sheep), oil seeds, especially sesame, cotton, hides and skins, sugar and possibly meat. On the other hand, there are some others for which the calculated RCA indices are well below unity. RCA ratios calculated at a disaggre-gated level and over a longer period also reflect the same picture. Results show the presence of high RCA indices for all exports except for sugar and chilled meat during the 1970-1989 period, although the latter also improved over the years 1990-2000. The competitive-ness of sesame and sesame cake is evident from the high RCA index for all periods. In contrast, the drastic drop in RCA for groundnuts confirms the substantial decline in the competitiveness of the commodity in world markets.

154 = /, where X represents the commodity j exported by Sudan, s, to the trading partners, n.

Annex Table 5.1: Revealed Comparative Advantage of

Sudanese Crops

Commodity Code

Description of products Average 2001-03

Average 2004-06

13 Lac, gums, resins, vegetables saps and extracts

34.6 46.1

01 Live animals 24.7 21.212 Oil seed, oleagic fruits, grain,

fruit, etc 16.6 12.2

52 Cotton 5.7 4.241 Raw hides and skins (other

than fur skins) and leather 3.6 2.1

17 Sugars and sugar confectionary

3.2 1.9

99 Commodities not elsewhere specified

2.5 0.0

02 Meat and edible meat offal 1.4 0.615 Animals, vegetables fats and

oils, cleavage products etc 0.7 0.0

14 Vegetables plaiting materials, vegetable products nes

0.4 0.3

23 Residues, wastes of food industry, animal fodder

0.4 0.0

05 Products of animal origin nes 0.3 0.110 Cereals 0.2 0.108 Edible fruit, nuts, peel of

citrus fruit, melons 0.2 0.1

Sources: Maxwell Stamp Plc. (2009). Assessment of Sudan’s Export Diversification Potential in Agricultural Products.

Annex Table 5.2: Estimated RCA Indices for Individual

Products

Crop 1971-1977 1978-1984 1985-1989 1990-2000

Sorghum 2.5 14 21 13.7Cotton lint 11 13.5 15.9 10.4Sesame 99.0 93.3 104.3 135.5Groundnuts 39 25,7 8.5 1.6Sugar 0 0.1 0.3 4.6Chilled meat 0.3 0.0 0.0 4.6Hides and skins

1.1 1.0 0.3 0.7

Cotton seed cake

14 5.3 6.2 2.9

Sesame seed cake

103.5 18.4 72.1 61.6

Sources: Maxwell Stamp Plc. (2009). Assessment of Sudan’s Export Diversification Potential in Agricultural Products.

The Domestic Resource Cost: (DRC) is a “measure that compares the opportunity costs of domestic resources (primary non-traded factors of production such as land, labour) committed to production of final goods with prices at which these goods can be imported”. The measure can help in projects selection and in export activities. It is explained by the study as, “the value of domestic resources per unit of foreign exchange saved for not importing competing goods, or the value of do-


mestic resources per unit of foreign exchange earned by exporting the commodity produced. It can be com-pared to the accounting price of foreign exchange”.

When the DRC is below one, it means that it is worth undertaking productive activity as it yields more than the cost of domestic factors used. If DRC is found to be more than one then it does not pay to produce that commodity.

Annex Table 5.3: The Domestic Resource Costs of Some

Agricultural Commodities in Sudan

Crops 1991/92-1994/95

1995/96 – 1999/00

2000/01 – 2005/06

Groundnuts Gezira 0.75 0.23 0.95Groundnuts New Halfa 0.09 0.12 0.37Groundnuts El Obeid 0.04 0.65 1.04Sorghum Gezira 1.19 1.16 1.17Sorghum Gadarif 1.33 0.21 1.63Sorghum El Obeid 0.5 14.79 5.7Sesame Gadarif 0.49 0.45 0.9Sesame Damazine 0.69 0.51 1.05Sesame El Obeid 0.3 0.92 2.46Cotton Gezira Barakat 0.43 0.42 0.21Cotton Gezira Acala 0.5 0.33 0.28Cotton Halfa Acala 0.2 0.4 0.36Cotton Rahad 0.5 0.18 0.3Onions 0.31Mangos 0.15Lime 0.195

Sources: Maxwell Place Plc. (2009). Assessment of Sudan’s Export Diversification Potential in Agricultural Products. (P 61)

5.3: Value Chain Analysis

Value chain refers to the physical transformation and value addition of a product from the farm gate to the

end market. This transformation involves all economic activities, including production, assembling, process-ing, handling, marketing, transporting and delivering a product that meets demands at destination. The trans-formation is carried out by several economic agents.

Value chain focuses on the domestic costs at various level of activity. The Study defines the cumulative value of a product at any given stage in the value chain as “equal to the sum of all costs involved in producing, assembling, processing and transporting one unit of output up to that stage, including also legitimate lo-cal business expenses and mark-ups, official customs duties and taxes, as well as unofficial payments that sometimes have to be made to facilitate a particular operation”.

Using the value chain analysis, the Study calculated the Export Competitiveness Ratio (ECR) by “dividing the SV (the shipment value) – which is cumulative value—at the border by the export parity price at the border, while the ICR is calculated by dividing SV (shipment value) at the main domestic consumption point by the import parity price of the same domestic consumption point”.

The interpretation of the ECR is similar to that of the DRC. When it is less than unity, it means the country is competitive in producing the commodity, and when it is above unity, it indicates that the commodity is not com-petitive. In addition to showing the competitiveness of the country in commodities, the value chain analysis helps to identify where the cost can be reduced in the value chain.

In consistency with other sectors, the section provides

Annex Table 5.4: Value Chain Analysis for Selected Agricultural Commodities

Farm gate AssemblyValue at farm

Logistics at Assembly Port

Shipment Value at Port exit

Export parity port

Logistics to World Prices

WorldReference price

Export Competitiveness Ratio

Sesame El Obeid 840.3 95.8 108.7 1044.8 1763.2 264.1 2027.3 0.7Gadarid 1303.6 41.6 109.3 1454.5 1763.2 209.6 1972.8 0.94

Groundnuts El Obeid 686.2 139.1 210.6 1035.9 1441.3 321.9 1763.2 0.93Geziira 1514.7 163.8 101.4 1779.8 1441.3 328.8 1770.0 1.6

Gum Arabic El Obeid 3851.7 220.2 282.4 4354.3 9775.0 174.0 9949.0 1.45Gadarid

Sheep El Obeid 170.0 3.1 3.6 177.0 213.0 13.0 226.0 0.89Gadarid 160.0 5.3 0.0 165.2 164.2 0.0 164.2 1.01

Meat Khartoum 10200 840.8 26.7 11076.4 12320.6 17.8 12338.4 0.90

Sources: Maxwell Stamp Plc. (2009). “Assessment of Sudan’s Export Diversification Potential in Agricultural Products”



efficient, workable and bankable agribusiness and agro-industries, which are seemingly profitable and competitive, and also that ensure value-addition to ag-riculture with an ultimate aim to increase private sector investment flows going into the agriculture and agro-in-dustry sectors. The local abbreviation (PSI=Private sec-tor investment) and numbering (OP=option: No) do not bear any priority at this stage unless consolidated by a consultation workshop.

Private Sector Investments (PSIs) along the cereals (sorghum and millet) value chains:

OP1: PSI in breeder seeds to facilitate access to breed-er’s seed requires: a) establishment of a specialised agency; b) development of a supportive regulatory en-vironment for private seed producers vis-a-vis ARC. See Fig. 4.1: Fig.4.3).

OP2: PSI in bulk grain transport and storage by estab-lishing private sector companies in production regions (Gedaref, Damazin, Sinnar and Kosti).

OP3: PSI in sorghum/millet grain processing and pack-aging by establishing private sector companies in pro-duction regions (Gedaref, Damazin, Sinnar and Kosti).

These last two options (PSIs) are assumed to encour-age cross-border trade in cereals (with Ethiopia, Eritrea and South Sudan).

Private Sector Investments (PSIs) along the horticultur-al vegetables and fruits value chains:

OP1: Private sector auxiliary service providers (graders, inspectors, transport and packaging companies).

OP2: PSI in vegetables/fruits varietal releases/private seed production.

OP3: PSI in cold storage of vegetables/fruits for sus-tained production.

OP4: PSI in landscaping and gardening design and im-plementation.

Private Sector Investments (PSIs) along the flowers, herbs and medicinal plants value chains:

OP1: Private sector Investment in green housing equip-ment and machinery for flowers, herbs and spices pro-duction and distribution companies.

OP2: PSI in cut flowers, vegetables, nuts, herbs and spices.

Private Sector Investments (PSIs) along the livestock value chains:

OP1: PSI in Private Veterinary Service (through mobile or stationed centres).

OP2: PSI in animal feed processing.

OP3: PSI in meat processing.

OP4: PSI in poultry production.

OP5: PSI in diary production.

OP6: PSI in wildlife production (game farming as deer, crocodiles, lizards, birds, etc.). This type of investment is linked to tourism, particularly agro-tourism through private national parks (Dinder, Mardoom, etc.

Private Sector Investments (PSIs) along the forestry and their products value chains:

OP1: PSI in forestry nursing and fencing.

OP2: PSI in forest timber development (eucalyptus mi-croceca, azachrata indica (neam), Mahogeny, Jogan, etc.) for furniture making.

OP3: PSI in development and processing of forest products (fruits as aradeb, gonglius, gudaeim, includ-ing gum arabic.

Private Sector Investments (PSIs) along the fisheries value chains:

OP1: PSI in Development of marine capture fisheries at the Red Sea (Port Sudan and Agieg harbours).

OP2: PSI in Development of inland capture fisheries (production and processing).

OP3: PSI in Development of aquaculture (Zurmbak sea


cucumbers, mushroom, production and processing).

OP4: PSI in Promotion of fish safety, quality assurance, value addition and marketing.

Private Sector Investments (PSIs) along the useful in-sects and birds value chains:

OP1: PSI in Development of honey bees and bee-wax production and processing.

OP2: PSI in Development of rare birds and jungle fowls production and marketing.

5.4: Agricultural Marketing and Promotion of Value Chains

Overview of Agricultural Markets and Marketing in Sudan

The role of agricultural markets in Sudan is to help ef-ficient marketing of produce by sending price signals to producers, indicating the direction of allocating re-sources, and to consumers showing possibilities of al-locating household budgets. On the producers’ side, this implies specialisation and/or diversification as per-mitted by comparative advantage or economies of size and scale (FAO 2004-b). Although an efficient agricul-tural marketing system is the one that develops effi-cient distribution and marketing systems of agricultural products (in product markets) and also in input services (in resource or factor markets), in Sudan these systems are not well developed and can be judged as modest.

Characteristics and salient feature of agricultural markets in Sudan

The salient feature of agricultural marketing (crop and livestock) in Sudan is almost similar to those of devel-oping African countries. It is largely affected by the situ-ation of agriculture and agricultural markets. The gen-eral common features range from poor infrastructure, technological, institutional, and macroeconomic poli-cy impediments, to sector-specific constraints (Ismail 2004-b). The general feature of agricultural markets in Sudan is characterised by:

• Wide geographical dispersion and spatially sep-arated within areas that impede supply of inputs, product output and distribution of processed prod-ucts i.e. market access for inputs and products is largely affected by the poor road infrastructure, leading to isolation of markets and hindering mar-ket integration, especially during the rainy season.

• Seasonality of supply, and market periodicity i.e. market held on daily, weekly or seasonally after harvest. Seasonality and inter-annual variations in production output, low productivity, lack of finance and other marketing bottlenecks also characterise the agricultural sector in Sudan.

• Variability in quality of agricultural produce at mar-kets together with low quality measures that re-strict exportation of produce for international, re-gional and also domestic markets.

• A high level of perishability of produce/products since vegetable markets lack proper handling tools, grading systems and cold stores to extend the shelf life of fruits and vegetables.

• Generally, crop markets have no standardisation measures (no scaling by weights and units, except for few cash crops).

Annex Table 5.5 Opportunities to Guide Investors in Crop Production in the Different Regions of Sudan

Sector/Area Main Suitable Crops Secondary Crops Others

Central and Eastern Sorghum, sesame Sunflower, cotton, gum Arabic Guar, safflower

Sudan under rainfall

Western Sudan under Millet, sesame, groundnut, Sorghum, rosette, melon seeds Maize, guar

rainfall gum arabic

Northern Sudan under Wheat, pulses, vegetables, spices Citruses and mango Forage crops, maize, sugar beet

irrigation

Central Sudan under Cotton, groundnut Sorghum, wheat, sugar cane, Sunflower, maize

irrigation forage crops

Source: MoAF cited by NEPAD CAADP (2005) Vol.V, p.6.



In brief, the current situation of agricultural markets and marketing systems means that much is required to sensitise the private sector to invest in marketing facilitating services, such as marketing information and research, advisory and extension, and training for management and personnel, besides the convention-al investment opportunities in marketing facilities, e.g., storage, transport infrastructure and many others.

Previous government experiences have failed to sup-port viable private sector companies in the domain of agribusiness and agro-processing, including storage of agricultural crops that can promote exports and do-mestic agricultural markets (input and output markets). However, the development of new infrastructure and feeder roads and construction of market centres by the private sector is often not achievable under the given limited resources in the local private sector. Such re-sources are essential for agricultural markets, and the only possible way to find financing to them is through foreign direct investments (FDIs) with international pri-vate sector companies.

Another important feature of agricultural markets in Su-dan is the Market Information System (MIS). SIFSIA N has recently developed (2007-2012) MIS, even though still of limited coverage (in terms of both range of crops and geographical area) and scope. The system pro-vides limited information on prices of cereals, livestock and few cash crops in selected markets, but other in-formation like present and prospective supplies and stocks remain outside the system coverage. Some in-formation, such as marketing costs and margins; insti-tutional arrangements (legal system, grades, weights, and measures); the infrastructures (roads, warehous-es, processing plants, vehicles etc); organisations and institutions (government parastatal entities, privates firms, trade unions, municipals, councils etc); and en-trepreneurial activities (financial resources, stockholding and risk bearing, etc.) are collected through separate studies that require frequent updating (Ibid 2004-b).

Types and patterns of agricultural marketing institutions

Various types of markets and marketing systems exist in Sudan for different crops, such as food-grain mar-kets (sorghum, millet and wheat), oil seed markets (sesame, ground-nuts, and sunflowers) and other cash

crops markets (as karkadey, watermelon seeds, guar, and gum Arabic). Most crop markets adopt direct sell system, except for sesame and gum arabic, which are sold on auction (Ismail 2012-b). Livestock markets, on the other hand, have their own peculiar periodicity and selling patterns, of which auction system is unusual (Is-mail, 2012-a). The elements of market structure, con-duct and performance (SCP) are variable, and are usu-ally governed by many factors (i.e. spatial dispersion, seasonality, etc.).

The main and well-known agricultural crop markets fall in the dry farming areas; Gedaref (Gedaref state), Damazin (Blue Nile state), Nyala (South Darfur) and El Obeid crop markets (North Kordofan). These markets, though the most renowned markets in the country, are characterised by relatively poor information systems, lack of adequate records, and poor data collection and analysis (Ismail 2004-b, 2012-a, and 2012-b). Almost same thing can be said of the livestock. Despite the lack of information and other drawbacks, the agricultur-al markets can be said to be fairly competitive via spon-taneous momentum (buyers and sellers, and traders are relatively large with an informal organisational set up (Ismail 2003). Competition conducts range between oligopoly and perfect market competition, where large number of producers and limited number of buyers ex-ist. Further analysis of markets types and patterns shall be uncovered when dealing with the value chains and market channels in the up-coming sections.

Oligopoly, on the other hand, exists for some cash crops like oil seeds and gum arabic (Ibid 2004-b, 2012-a, and 2012-b). Markets frequency, periodicity, marketing costs, prices, and margins are important pa-rameters that affect improvement of markets efficiency (Ismail 2004-b, 2010). Interesting to note is that most fruit and vegetables markets sales and purchases are by volume (heaps, sacks, dozen and tins) rather than per unit weight. This disadvantages information gather-ing and dissemination. Along with this is that all cereal markest sell in sacks (90 kg sack), except for sesame and gum Arabic, which are sold in kantars (one kan-tar=45kg=100 lb). The quality standardisation mea-sures are only used for exports, as there are neither efficient entities at locality/municipality level to plan nor financial capabilities to trace executions (Ibid 2004-b, 2010).


Farmers’ and Traders’ Organisations: Role, Structure and Performance

The Farmers’, shepherds’ and Traders’ Unions and Associations play an important role in agriculture by strengthening and supporting the development of pro-ducer, commodity, location, and industry associations to mitigate production and market risks and maximise business opportunities as well (Giovannucci 2001). Such associations have valuable roles in supporting joint action, networking among members, facilitating linkages with other enterprises and organisations, and enhancing participation in policy and planning. Other roles often performed by Trade Unions, particularly pro-ducer organisations, include strengthening farmers’ ca-pacities to understand and meet market requirements, and also assist small producers to achieve economies of scale by buying inputs and marketing their prod-ucts155. Commodity and industry associations, on the other hand, are particularly important for improving sector coordination and for representing private sector interests in policy dialogue.

In practice, these organisations are mostly unable to perform their role effectively for many reasons that will be mentioned elsewhere. Their overall performance can be considered modest. Of the reasons, some trade unions are not fully democratic, and are self-centred, and opportunistic. Even though, they tend to provide support to producer, commodity and industry asso-ciations to improve their effectiveness and competi-tiveness in providing services to their members and enhance their viability and sustainability. Ismail (2004-b) showed that private institutions as trade unions, chambers of commerce are often organised in small commodity groups that serve its members at a limited geographical location. The scope and function of such organisation is by far very limited.

One of the challenges facing Sudanese farmers/pro-ducers’ trade unions is how to integrate the smallhold-ers/ large-scale producers into an effective agriculture/agribusiness associations, mainly because of lack of information on members, improper networking among and across associations and delicate solidarity with members of unions from other sub-sectors due to con-

155 As agribusiness and agro-industries develop, there inevitably are impacts on traditional farming and marketing systems. Indeed, an important element of the rationale for agribusiness development is to enhance market opportunities and increase services for farmers. Nevertheless, rapid agro-industries development can pose risks to smaller scale farmers, traders, processors, wholesale markets and retailers.

flict of interests (Ismail 2004-b). The inability of these unions to organise farmers/producers into efficient as-sociations or groupings and oblige them to produce consistently good quality products for local markets as well as export markets abroad impedes their capacity to integrate and enrol into larger operations that meet international demand sustainably156. Important to note is that, farmers’ decisions on enterprises to be grown are usually self-decided and not based on collec-tive decisions through their unions or otherwise. This self-centred production decision/behaviour is not fa-voured by international procurers, who need stable and sufficient production to supply to the ever-demanding food industry and other agro-processors. In all, there is a need to strengthen the farmers’ organisations and trade unions to tackle new technological advancement and dissemination of information technology.

Value Chain Analysis of Key Agricultural Commodities

In this part of the study, the concept of value chain shall be introduced to entrepreneurs/investors to fa-cilitate understanding the various players involved in agricultural business and also help in designing an appropriate frame for prioritising agricultural commod-ities/enterprises for investment. For a layman, a value chain is simply ‘the full range of activities that are re-quired to bring a product or service from conception through the different phases of production (involving a combination of physical transformation and the input of various producer services), delivery to final customers, and final disposal after use (Jon and Madelon 2006 & GTZ 2008). The chain actors who actually transact a particular product as it moves through the value chain include input (e.g. seed) suppliers, farmers, traders, processors, transporters, wholesalers, retailers and fi-nal consumers (Ibid 2006 & 2008).

As the study focuses on enhancing economic growth, poverty reduction, and food security (Fig.1.4-a&b) in-creasing market access would eventually add to mar-ket success for all along the value chain actors. For this purpose, much focus will be on product markets that rely on Value Chain157 Promotion development per-

156 For an overall improvement of the sector’s performance; Giovannucci’s suggestion to organize farmers’ associations into multi-purpose unions (2001) is found more suitable to our farmers than the sectoral “status quo” currently prevailing.

157 GTZ views a value chain as an economic system that can be described as

i) a sequence of related business activities (functions) from the provision of specific



spective, rather than (with less emphasis) on service markets and resource markets, which focus on BDS158 development, microfinance and land management (GTZ 2008). In this endeavour, it is worth to note that analysing the value chain often brings out relevant fac-tors of location that need to be addressed to enhance its competitiveness through sustainable economic util-isation of factor resources (Ibid 2008). The analysis will also keep an eye on creating an enabling business en-vironment and investment climate for developing the private sector enrolment by improving the regulatory and institutional framework that create better devel-opment opportunities for the private sector in a value chain promotion context.

To help investors choose among the various alterna-tives and options, criteria and selection process of the given sub-sector/enterprises/products/commodities is first discussed and agreed on. Information from both desk reviews and field visits are collected and will be verified in consultation and consolidation workshops in order to set priorities (sectors/enterprises/ commodi-ties) of market potential. In the forthcoming sections, examples of selected supply chains, from desk review are given and new empirical data for selected supply chains/value chain shall be spotlighted based on field data, yet to come. The challenges, constraints and op-portunities along the value chains shall be discussed to create an enabling environment for trading agricultural products.

Criteria and Process for Selecting Products/Commodities

There is a multitude of factors and criteria for enterpris-es selection that need first to be identified and analysed so as to propose the most potentially and financially ac-ceptable agro-based private sector investments. In this

inputs for a particular product to primary production, transformation and marketing, up to the final sale of the particular product to the consumer;

ii) The set of enterprises (operators) that perform these functions, i.e. the producers, processors, traders and distributors of a particular product. Enterprises are linked by a series of business transactions in which the product is passed on from primary producers to end consumers;

iii) a business model for a particular commercial product. This business model allows defined customers to be reached using a particular technology and a particular way of coordinating production and marketing between several enterprises.

158 The objective of interventions in Business Development Services (BDS) is to create a functioning market with a diverse array of high-quality services that meet the needs and are affordable to small and medium enterprises (SME). Business Development Services are nonfinancial services critical to the market entry, survival, productivity and growth of SME. Typical generic BDS include business training and advice, marketing assistance and information (GTZ 2008).

study, the value chain approach is thought as a helpful framework to analyse the private sector opportunities and constraints for Banks’ interventions, particularly, and most likely those that have an economic impact and are simultaneously be bankable, operational and financially feasible and sustainable. For instance, inves-tors can focus either on one or more sub-sector(s) or value chains or alternatively focus on a broader model that assists any growth-potential in agribusiness enter-prises, regardless of the sub-sector it belongs to. In this case, the choice of the enterprise model depends largely on the “maturity” of the respective value chains and local market conditions as assessed against the parameters outlined in the table below (Annex Table 5.6).

Annex Table 5.6: Assessing the potential for value addition What is the scope for high growth value addition in this value chain?

Production Status Is there sufficient primary production of adequate quality to facilitate value addition?

Entrepreneurial Capacity Do a sufficient number of growth-oriented entrepreneurs exist within the value chain or entrepreneurs who could be “recruited” from other value chains?

Availability of Funding What funding is available for product development, commercialization, and business expansion?

Clear, Ready Stakeholders Are there strong stakeholders who are ready and able to affect change in the value chain?

Markets Can markets be identified and are they accessible, feasible, and viable?

Seasonality Is there marked seasonality in supply and demand of raw materials that can impact negatively on the value-addition opportunity?

Industry Leverage Are there existing initiatives that can be leveraged that support the industry and that are likely to affect entry into and exit from the industry and hence have value addition potential?

Infrastructure &Regulatory Constraints

Is there sufficient infrastructure available and does the regulatory environment provide incentives for entrepreneurs to take advantage of the value addition opportunity?

Source: World Bank. 2012

Answers to aforementioned queries would assist any private sector investor on what enterprise to choose, which way to go, why and how.

The process of enterprise/commodity/product assess-ment starts by narrowing down the scope from the vast agricultural sector into subsets/sub-sectors that could be analysed in some detail. The desk review from avail-


able literature showed some good suggestions that can be discussed later and verified with vast consul-tation and participation of private sector stakeholders, government authorities, and privates’ banks in order to identify and focus on the agricultural sub-sectors (and also commodities) that are felt to have the most poten-tial for investment.

Priority Settings (Sectors/Enterprises/Commodities) of Market Potential

This part of the study assignment presents the most important output/findings in relation to utmost sector(s) and/or subsector(s), enterprise(s) or commodity(ies) that warrant to be listed as potentially utmost top pri-ority for investment. The outlined items are, of course, preliminary based on criteria already mentioned since further studies on comparative advantage, feasibility, economics, and viability of the enterprise(s) shall be conducted. GTZ (2008) identified two ways of ap-proaching the selection of any value chain159:

• A formal procedure using decision matrices or sim-ilar tools, where a decision is made by assessing each alternative according to a fixed set of criteria (Annex Table 5.6 & 5.7)

• An opportunity-driven approach, where the selec-tion of a value chain relies on the investment pro-posals of private enterprises and own initiatives of chain supporters, public agencies and donors.

159 Additional indicators/criteria have also been outlined by GTZ (2008) for a priority as-sessment of the proposed actions and include:

Criteria regarding the significance of actions:

Relevance: Does the proposed action actually contribute to the vision and to the ob-jectives of inventors? And does it constitute a necessary improvement to the busi-ness?

Effectiveness: Is the investment action likely to produce results? This includes check-ing whether actions address intermediate objectives or aspire to realize the vision as a whole? And how long into the future do investors usually look?

Feasibility: Is the business in line with available resources and with the current capa-bility of enterprises and agencies? Determine the feasibility of a chain development project according to market and upgrading potential!

Criteria regarding the correlation of actions:

Comprehensiveness and consistency: In value chain development we are often faced with inter-related issues (e.g. cutting cost plus marketing or quality management along the chain). In this case, is the combination of activities sufficiently complete to reach the objective? Are the proposed actions complementary, do they support each other?

Correct sequencing: Do the actions build on each other in a process of incremental improvements? Does the action provide momentum in the current stage of the pro-cess?

These criteria, combined together with the ones out-lined in Annex Table 5.6, will constitute the basis for selection of the identified enterprises/commodities/sectors embedded in Annex Table 5.7. The final deci-sion for selection shall be based on these preliminary findings read together with the final consultation work-shops.

Annex Table 5.7: Sub-sectors and value chains selected for analysisSubsector/farming system

Initial Score /rank

Commodity/crop/enterprise

Initial Score /rank

Market (export or domestic)

? ?Irrigated ? Cotton,

vegetables? Export/

domesticSemi-mechanized rain-fed

? Sorghum, sesame, sunflowers

? Export/domestic

Traditional rain-fed

? Sorghum, millet, sesame, karkadey, gum arabic, pulses, sena meca,

? Export/domestic

Livestock ? Sheep, cattle and goats (live + meat), diary, poultry,

? Export/domestic

Fisheries ? Fisheries (fresh, and processed)

? Export/domestic

Forestry ? Gum arabic, wood, fruits,

? Export/domestic

Agro-industry ? Food: processing of fruits vegetables, meat, crops

? Export/domestic

? Non-food: leather and hides, textiles& spinning, packaging material,

? Export/domestic

Sources: Own information based on experience cross-checked with information from AfDB, FAO and ARP II

Examples of selected supply and value chains

The information already discussed in preceding sec-tions shows that selection of an enterprise for invest-ment by private sector entrepreneurs is not an easy task and should not be an ad hoc process. Rather, it is a laborious work that requires patience and knowhow. In addition, we emphasise on sequence of the value chain process, which is of extreme importance to un-derstand the various activities involved in it in order to choose a successful enterprise. Otherwise, investment failure is certain.

Therefore, the first step in value chain promotion is the



identification of the value chain (enterprise) to promote, followed by value chain analysis, to come up with for-mulation of a chain (enterprise) upgrading strategy. This requires particular skills and knowhow to guarantee success of implementation of the value chain (enter-prise) promotion, including enterprise business link-ages, services and the business environment as well (Ibid 2008). To do so, some background information is provided with respect to cereal enterprises (sorghum, millet and wheat). Although maize value chain is part of cereal food-grain, it has not been depicted because it is grown in small amounts and is also similar to wheat, since both are largely irrigated enterprises.

Value chain of sorghum enterprise

Sorghum is the most popular food grain in Sudan (4.5 million Mt produced in 2012/2013 compared to 3.2 million tons average of last seven years), and has been used as food and feed, as well as in the starch indus-try (Fig. 4.1). Other uses of sorghum include making traditional food and beverage products (Taylor, 2009), such as ‘White Abrai’,‘Hilumur’ and Nasha (Graham et al 1986). However, the sorghum market is expanding with new uses, including the production of ethanol as bio-fuels, and starch based biodegradable products like packaging materials and wallboard in housing in-dustry. Industrially, sorghum enters in starch-based al-cohol and information, which relates to 2005, showed a production figure of about 100,000 tons of starch and glucose per annum. Currently, millet and maize are not major competitors of sorghum in terms of quantities used or consumed, but both crops may become main industrial competitors of sorghum in the future, particu-larly in bio-fuels and feed (Annex Fig. 5.1).

During the post-colonial pre-oil era, agricultural growth was weak and volatile, resulting from horizontal factors accumulation through:

• Further expansion in large public sector irrigated schemes in central Sudan producing cotton, sug-ar, oil seeds and cereals.

• Expansion by small holders in traditional rain-fed farms producing food for subsistence, cash crops and animals products for local and foreign markets.

• Investment by the private sector in pump irrigated schemes producing cotton and other food and ex-port crops.

• Expansion by the private sector in rain-fed mecha-nized farms producing cereals and oil seeds.

• Import substitution industrialization led by the pri-vate sector with focus on basic consumer goods and agro-processing.

• Increase in non-tradable services, and such as in construction, finance, real estates and government services.

The utilisation of sorghum in dairy production and the poultry industry in Sudan appears to be more dynamic than its use in starch and other industrial applications. However, the demand for sorghum in poultry feed is largely dependent on the price of other alternatives, including maize imports, which is the energy source preferred by poultry producers (Annex Fig. 5.1). For sorghum grain to enter in cereals industry as feed or food, as for instance the composite flour developed by Food Research centre (FRC) in mid-eighties, its price must be competitive to the other alternatives. The crop is mainly produced in traditional and semi-mechanised rain fed farming at variable quantities, depending main-ly on the rainy season and other factors. Despite its importance to the livelihoods and economy, levels of sorghum productivity are very low (circa 100Kg/ha) and the infinite pledge of the crop to feed the nation has scarcely been tapped (Fig. 2.2-a).

The value chain starts by supplying agricultural inputs as fuel gasoline and seeds that are considerably poor, resulting in very low yields that reproduces the cycli-cal misery of poor incomes, poverty, and food inse-curity. The marketing chain of sorghum starts at farm gate level where rural traders (sometimes lorry drivers as brokers or wholesale agents) procure the crop to rural or periodic village markets (Ismail 2004). Well-off farmers make on-farm storage (underground pits or on farm warehouse) until price improves (Annex Fig. 5.1). In the early season the produce is moved to either cen-tral/urban markets or goes for storage when prices are below production costs. NGOs usually buy significant amounts for relief to war affected areas as Darfur and South Kordofan. Competent export companies buy from central markets and then clean the harvest from impurities at silos at either Gedaref or Port Sudan to meet international standards. Considerable amount of sorghum goes for starch & glucose industry in Greater Khartoum Area. Livestock enterprises e.g. poultry, milk and stock fattening agribusiness regularly purchase


significant amounts when prices are low (Annex Fig. 5.1).

Sorghum markets operate on supply and demand ba-sis with minimum government interventions to safe-guard farmers against market risks through buffer stock reserves, even though some quantities are stored on-farm. While sorghum grown in rain-fed farming is sole-ly biotic (organic farming), however, few fertilizers are used in irrigated sector sorghum, which accounts for less than 25% of total sorghum grown in the country. Sorghum is mostly transported and stored in sacks form, while bulk storage is only economic when bulk transportation is available, efficient and feasible. The private’s sector keeps efficient bulk trucking (rail and road) only for wheat as WHEATA & SAYGA private sec-

tor trucks.

Unlike in some African countries (Kenya and Tanzania), there are no marketing boards for cereal trade. The Higher Grain Council (HGC), which was established in 1986 (by MoAF) with a mandate covering policy on production, marketing, pricing, storage and consump-tion of food grains, has never come into effect since then (Ismail, 2004, Ismail 2010). Sorghum is exported only when there are surpluses, mainly to Arab counties as animal feed (Annex Fig. 5.1). Behaviour and con-duct in food grain markets is governed by pure com-petition among traders, export companies, authorised NGOs agents for relief stocks, and few local traders in form of marketing rings; a kind of alliance of some farmers-traders on family and/or tribal basis to control

Annex Figure 5.1: Sorghum surpluses and value chain, FAO 2004-b, updated 2013

Small farmers

On-farm storage

Mechanized farming Traditional farming Irrigated farming

Rural traders On farm storage

Lorry drivers as traders

Transport to market or modern storage

On farm storage

Rural traders

Traders

Rural consumers

Urban consumers

Traders

Silos storage for more cleaning

Companies for export

NGO’s

Relief and subsidy

Retailers

Sorghum starch & glucose industry

Livestock enterprises (poultry, milk and fattening agribusiness enterprises)

Bank salaams

Agric. Inputs as seeds, fertilizers, pesticides

Annex Figure 5.1: Sorghum surpluses and value chain, FAO 2004-b, updated 2013



market prices (Ismail, 1996).

Value chain of millet enterprise

Millet is largely produced in traditional rain-fed agricul-ture, mostly in western states of Sudan. It is mainly lo-cally consumed. Millet is part of the cropping mix that includes other essential crops that increase farmers’ returns like gum arabic, Hibiscus sp. (Roselle) “Kark-adey” and other home garden (Bildat) crops for rural household consumption. Average production rang-es between 0.677 million tons to 1.1 million tons in 2012/2013 at an average yield below 53 kg / ha (see Fig. 2.2.-a). Though low in yield, farmers hardly use any type of fertilizers or pesticides in their cropping. It is left purely organic. There is no much difference be-tween the millet and sorghum value chains except that

millet is generally not exported as feed. Noteworthy is that millet fetches a higher price compared to sorghum (Annex Fig. 5.2). A typical route of the crop goes from producers to rural markets where wholesale and retail traders purchase from farmers in small quantities and sell to consumers in urban markets and/or rural mar-kets (Annex Fig. 5.2). However, most farmers keep their household needs at the farm-village granary bins. The behaviour of participants in millet markets is fairly com-petitive, since the demand on crop meets the supply at reasonable intervals.

Value chain of wheat enterprise

Wheat is mainly grown in irrigated farming at an aver-age production of 0.47 million metric tons and at an average yield of (0.335) ton/ha, less than any of Egypt

Annex Figure 5.2: Millet Value chain in traditional rain-fed farming, FAO 2004-b, updated 2013

Small farmers (BILDAT) cultivation) Traditional millet farming


Traders (wholesalers) NGOs’ (Relief/ Aids


Assemblers ‘traders Assemblers’ traders

Traders (Retailers)

Consumers

Rural & Central markets in the area

Traders (retailers)

Agric. Inputs as seeds,

Annex Figure 5.2: Millet value chain in traditional rain-fed farming, FAO 2004-b, updated 2013)


(5.4 tons/ha: ICARDA 1995) and Ethiopia (1.1 ton/ha: FAC 2006). In irrigated sector, farmers use fertilizer and chemical pesticides to increase yields, but still remain below minimum research levels. Worth to note is that local wheat varieties have little manoeuvrability to com-pete in domestic and world markets against imported types under the prevailing agronomic and economic conditions, unless significant improvement in the cul-tivars is introduced. Production of high quality domes-tic wheat, buying from other countries or doing some creative blending, are alternative options for avoiding genetically modified cereal grains. Private sector busi-nesses can invest in these enterprises provided that a favourable environment exists.

The value chain for wheat is shown in the figure below (Annex Fig. 5.3), which gathers the domestic and inter-

national chains together to reflect the inter-linkages and interactions in this trade area. The marketing chain for imports starts at international markets (USA, Argentina, Australia, etc) for both grain and wheat flour. Private Miller companies, as shall be seen, process further the wheat grains locally. Wheat, whether from domestic production or privates’ sector imports, passes through a processing and milling phase that adds to it value and form utilities (Annex Fig 5.3). Wholesalers (or even mill-ing processors) can sell to groceries, confectioneries and biscuits factories for further processing. Wholesale traders distribute also to retailers who sell directly to consumers (Annex Fig 5.3).

In early 90’s wheat gained an increasing importance as an import-substitute crop within a massive production strategy under the slogans of food sufficiency. Cur-

Annex Figure 5.3: Wheat Value chain for domestic and import trade, FAO 2004-b, updated 2013

Domestic production Private sector imports

Rural traders Household consumption

Traders (wholesalers)

Milling companies

Merchants (imports)

Assembling traders

Processing

Traders (Retailers)

Retailers




rently, this strategy is fading away paving the way for a semi-privatised free market economy/programme in both the wheat production and the processing sub-sectors leading to a full-fledged free marketing of wheat and wheat-flour imports with some sort of subsi-dies and exemptions of import tariff which also current-ly demolished under the recent subsidy abolishment programme. Wheat imports are of oligopoly nature -by few companies- and imports now exceed domestic production by almost four folds. The increasing pref-erence of the newly emerging urban concentrations in the National Capital -Khartoum- to wheat bread over

sorghum and other domestic cereals (which cannot go unmentioned) must be taken into consideration in any future private sector investment or policy design.

Cotton value chains

Sudan, which was once the leading in Africa’s cot-ton160, has now deteriorated to an average produc-tion of about 177,000 tons during the last seven years at an average yield of 261 kg/ha. Yield gaps between

160 According to the Food and Agricultural Organisation in 2012, Africa’s main producer of cotton; Mali, Burkina Faso, Egypt and Tanzania. Tanzania grew 1.4 million ha and produced circa 354,000 tons.

Annex Figure 5.4: Cotton Value Chain from producers to End-users, FAO 2004-5, updated 2013


research and farmers’ yields illustrate the possibilities of attaining approximately more than double the cur-rent yields for cotton and sorghum and of raising those of groundnuts by two-thirds (WORLD BANK 2008-b). Almost 10-15% of the produced cotton is usually ori-ented for the domestic spinning and textile industry dominated by the private sector while the Sudanese Cotton Corporation (SCC) ships the remaining quantity for markets abroad161. The current cotton marketing is based on a monopolistic policy that permits the Suda-

161 The commercial cotton sector was created to supply the British textile industry. Egypt now buys the bulk of Sudan’s cotton, reprocess it and resell it in the world market (Ibid 2008).

nese Cotton Corporation (SCC) to market the produce on behalf of tenant producers, against a certain mar-keting commission rather than on an open tender sys-tem basis (Annex Figure 5.4). This policy excludes the private sector (under the privatisation slogans!) from competing with the SCC in export cotton markets (Fig-ure 4.4). Whether the export monopoly policy is right or wrong remains a general policy issue, but we must emphasize on that, cotton marketing should be justi-fied on a more purely competitive basis that optimises all partners’ profits.

Annex Figure 5.5: The Marketing Chain of Gum Arabic from Production to End-users updated 2013



Historically, cotton has been the dominant export com-modity of the country during the colonial era. During the 1960s, cotton was the top export commodity until it was replaced by sesame seeds and oilseeds, which were the second most important export in the late 1990s (WORLD BANK 2008-b). The marketing chains for cotton vary with the type of cotton (short, medium or long staple varieties), the farming system (irrigated/rain fed), and the length of the technological process-es involved in marketing the cotton commodity (Annex Fig. 5.4). Cotton, Sudan’s largest export, faced a duty of 10 percent. Worth to note is the need for Sudan to reduce trade-distorting agricultural subsidies provided by WTO members, notably U.S. subsidies for cotton, which undermine income received by Sudanese cotton growers.

Value chains of gum arabic

Sudan is the lead among gum arabic producers, mainly from Acacia spp, besides other trees of family Legumi-

naisae. Two varieties, namely Acacia senegal (Hashab or Kordofan type) and Acacia seyal (Talih) gum arabic are famous in the market of gum arabic. African coun-tries like Nigeria, Uganda, Tanzania, Kenya, and Niger, Ethiopia and Chad produce minor amounts (20%) as compared to the Sudan (80%) (Karam, 1996). Yield of gum Arabic, estimated as 36.8 kg/ha, can be im-proved by adopting an integrated ecosystem approach of mixed farming (WORLD BANK 2011).

Gum arabic trade was far in history during the Turk-ish regime (1820) and continued thereafter. The Gum Arabic Corporation (GAC) was established in 1969 to organise the gum export trade. This corporation has been recently dismantled in favour of liberalisation and non-monopoly policy. No inputs are used in gum arabic production except growing the Acacia trees. Harvest picking is 4-6 times in a period of 6-8 weeks after.

The chain process starts by tapping, picking, drying, cleaning, grading and marketing. The crop is usually

Annex Figure 5.6: The Value Chain in the Sugar system in Sudan, 2003 (Ismail, 2003, updated 2013)

50% 50%

Annex Fig. 5.6: The Value Chains in the Sugar System in Sudan, 2003(Ismail, 2003, updated 2013)

localities

For Export

Kenana Sugar Company

KSC

Private importers policy

Sudanese Sugar Corporation

SSC

Commercial quotas

For sugar traders

Free quotas for expatriates via main ports in $

State quotas

(Province & localities)

Industry quotas

cooperative

Sweets Privates’

consumption

For industry sold on

Commercial basis

Direct consumption

wholsalers

Retailers Direct consumption

Soft drinks


Direct flows

Coordination


stored on trees until collection period begins in coin-cidence with market demand. The value chain passes from producers through a number of intermediaries, including producers, assemblers to dealers and users, usually in products such as confectioneries, soft drinks and medical drugs (Annex Fig. 5.5). Throughout this process, cleaning and grading is made to add value to the product. Smuggling trade is active with neighbour-ing markets, which greatly affects the domestic pro-duction, marketing and consumption relations.

Value chain of sugar system

Sugarcane plant uses intensive inputs (water, fertilizers, pesticides, etc) for the relatively long period it takes to produce cane sugar. Both private and public sector companies are in business. The government authority via the Sudanese Sugar Corporation (SSC) controls the sugar distribution and marketing within the country, be-sides responsibility for the management and adminis-tration of all sugar factories in the public sector. Kenana

and White Nile Sugar Companies are private sector en-terprises. Both produce about 0.7 million tons of sugar with an average sugarcane yield of 10.7 ton/ha. The sugarcane value chain is relatively long, as it passes to different users, among them is the food industry, con-fectionaries, soft drinks, sweets manufacture as well as to consumers (Annex Fig. 5.6).

However, sugar market is privatised since imports are allowed, but local production of Kenana and the SCC is distributed under government supervision to avoid smuggling to neighbouring countries as Chad, south-ern sudan and Ethiopia.

Value chain of oil seeds (groundnuts and sesame enterprises)

Groundnut is an oil seed crop grown both in irrigated and rain-fed agriculture, whereas sesame is confined mainly to both traditional and mechanised rain-fed farming. The value chains for oil seeds (sesame and

Annex Figure 5.8: Illustration of fruits and vegetables value chain, FAO 2004-b, updated 2013

Fresh for local markets

Specialized companies (e.g. AOAD) Small scale Farmers

Commission agents for local industry

Dealers in EU, Arab countries

wholsalers

Commission brokers

Cooperative farmers

Agents for export companies Grading for Export

Processing for Export

Local consumers

Supermarkets & retailers

Consumers

Retailers & supermarkets

Grading & processing for Export

Local industry for processing

Tertiary markets retailing in courts Street retailers

Restaurants, hotels etc

Agric. Inputs as seeds, fertilizer and pesticides

Annex Fig. 5.8: Ilustration of fruits and vegetables value chain, FAO 2004-b, updated 2013



groundnuts) do not differ greatly from each other, since both are sold in auction markets. After purchases are completed, the produce goes for more refinement and purification in silos and modern storage facilities where available (Annex Fig. 5.7). Passing this phase, the ses-ame/groundnuts is taken for processing (as cooking oil), seedcake or exported to the world market. Local processors (Asarat), conventional or modern types are available for sesame crop in different regions. Value

chains of oil seeds start at farm or village level where traders or informal moneylenders collect small amounts to be sold at auction markets as intermediate markets or large auction markets in urban cities.

The chain flow channels for each crop is expected to differ slightly due to variation in production processes and areas of production, as well as destination of sales. From markets, the crop either goes for local procces-

Annex Figure 5.9: General scheme of livestockvalue chains (Adapted from Ismail, 2003) updated 2013

Annex Figure 5.9: General scheme of livestock value chains, (Adapted from Ismail, 2003) updated 2013

Private & public companies

Slaughterhouses

Middlemen & brokers

Guarantee persons

Intermediate markets (with medical care)

Trucking and trekking

Ceremonies & festivals

Small-scale producers

Central markets (with medical care)

Merchants and companies

Large-scale producer farmers

Exporter companies

Quarantine and medical care

Exports Slaughter

Houses

Live exports

Hady

Festivals

Retailers and supermarkets

Consumers

Veterinary inputs

Processing industry


ing, exported as raw through company agents, or sold to domestic traders to store until prices improve. After processing, the cooking oil is sold either to wholesalers and/or retailers, whereas the bye-products are used in making animal feeds (Annex Figure 5.7). Processed sesame oil is used as a medicament for many stomach and back-ache troubles

Value chain of fruits and vegetables enterprises

Fruits and vegetables are originally grown along the River Nile, Atbara, and the seasonal tributaries (Ra-had and Dinder rivers), Abu Jebaiha as well as in Jabal Mara area. The value chains of Fruits and vegetables (Annex Fig 5.8) is more or less organised, compared to other agricultural crops, due to the high perishability of produce and the continuity in production for most of the year round (Annex Fig. 5.8) .

Much of the produce is sold locally. Some are exported to European and Arab countries as some of the chain end users. Improvements in fruits and vegetables value chain can be through the upgrading of market facili-ties, among them cold storage, grading and packaging technologies. Worth to note is that fruits and vegeta-bles in the South Kordofan and Jabal Mara are not ef-ficiently utilised for lack of physical infrastructure. Still, these remain as potential opportunities for private sec-tor investment.

Livestock value chains

The value chains in livestock starts by supply of vetrinary inputs and medicines, including vaccinations against epidemics. Vaccination is obligatory and almost exclu-sively to all livestock keepers, usually provided regularly by the MoARF on cost basis, but performed by official staff (Annex Fig. 5.8). Both formal and informal mar-kets exist in the livestock trade. Informal markets exist in remote and rural areas, where exchange process is only done arbitrarily, and statistics concerning trade and marketing activities are not available. In contrast, formal markets are relatively well defined where author-ities and medical care and check-ups are supposed to exist. A typical example of livestock marketing chains is given somewhere below (Annex Figure 5.8 adapted from Ismail, 2003).

For the different types and livestock species, the sell-ing procedure and process is almost the same. There are no auction markets, neither are there standardised units of measurement. Middlemen, brokers, and ‘guar-antee clients’ are key persons in the transaction pro-cess for a fixed and agreed upon commission per head. Local authorities manage the markets, and they charge fees. Livestock market records, management and service arrangements are generally poor (Ismail, 2003). Livestock is usually transported by trucking (300-400 sheep/truck) with a (2-4%) loss on the way to Port Sudan. Trecking is the other mode of transport and the voyage usually takes a month from Nyala to Omdurman, where the animals are sold in Al Moelih market – a famous market to the west of Omudrman.

However, the forward and backward linkages of the livestock industry (tannery, slaughter-housing, forage baling and natural dung are few examples) is a typical example of diversification of private sector investments. Further disaggregation of the value chain to trace skin leather to shoes manufacuring is also possible, but it is not shown in the Annex Fig 5.9.

On the other hand, Sudan’s export trade (Annex Fig. 5.9) in livestock and meat is to Egypt and the Middle East markets, such as Jordan and Lebanon, and the Gulf market in Saudi Arabia, United Arab Emirates and Oman. However, Sudan sometimes loses the Saudi market to strong competitors like Argentina and Aus-tralia, which have more sophisticated production and marketing infrastructure, especially as far as welfare, hygiene, and disease control regulations are concerned (UNEP 2012). It has been observed that cross-border trade with Libya, Chad, and Central Africa Republic has long been a feature of Darfur’s livestock trade. Howev-er, much of it is informal (Ibid 2012). Egypt is officially Sudan’s most important market for the export of cam-els.

Empirical examples of selected supply chains

Most of the value chains shown in Annex Fig 5.1 to Annex Fig.5.8 are modestly meeting national, region-al and international demands. These value chains are producing a range of consumer products desired, or minimising market price volatility through effective stor-age and processing operations. Sudan, taking advan-



tage of their geographic proximity, can export livestock and meat products to Saudi Arabia, Gulf area and Mid-dle East countries.

The following examples illustrate the breakdown of typical gum arabic value chain to inform investors on the depth of information required to make a success-ful business decisions. The first empirical value chain to illustrate is for gum arabic (hashab) marketing from Nyala to Port Sudan in season 2009/2010 (Annex Ta-ble 5.8) while the second illustrate Sheep (Annex Table 5.9). Both tables are self-explanatory and focus is to

be given to market participants and costs involved for each transaction in order to mitigate an improvement along the value chain.

Annex Table 5.8: Value Chain for Gum Arabic (Hashab) Marketing from Nyala to Port Sudan (Season 2009/2010) (Borrowed from

WORLD BANK 2011)

Item Costs Hashab

Costs SDG/Kantar Costs SDG/ton Percent of Total MarketingCosts

Market price in Nyala (SDG/kantar) 100 2,220.0

Taxes and Fees Zakat (10 % of gross) 10 22.2 17.30

Wounded soldiers (1% of gross) 0 0.0 0

Forest National Corp (5% of gross) 5 111.0 8.65

Central Govt. fee (VAT =15% of gross) 15 333.0 25.95

State duties (damga) 6 133.3 10.38

Business profit taxes 0.3 6.7 0.52

Transport Loading and unloading 2 44.4 3.46

Rail freight costs (Nyala to Port Sudan) (6) (144) (10.38)

Truck freight costs (Nyala to Port Sudan) 7.5 166.65 12.98

Charges at Port Sudan

SSMO Inspection 1 22 1.73

Handling charges 1 22 1.73

Customs (1% of fob) 2 44 3.45

fob charges 8 178 13.84

Total Marketing Costs to Port Sudan (rail) 44.3 3,303

Total Marketing Costs to Port Sudan (truck) 45.8 3,237

Total Marketing Costs including Port Costs (truck) 57.8 3,503 100

Producer Farm Gate Price (SDG/kantar)* 90

f.o.b Price = $1,850/ton (SDG/kantar) 208

Producer/f.o.b. Price Ratio (percent) 43

*Assumed to be 10% less than Nyala market price and exchange rate of SDG2.5=US$1.00 1 kantar of raw gum arabic = 100 lbs = 45 kg or 22.22 kantars per ton. Source: Based on information from Gum Arabic Producers’ Association in Nyala, Survey by Department of Agricultural Economics and Marketing,

Ministry of Agriculture and Forests, and mission estimates


Annex Table 5.9: Summary of the Structure of Some Major Sheep Marketing Value Chains and Costs from Nyala to Omdurman

and Sawakin (W B 2011)

Transport Routes and Modes

Item (in broad chronological sequence)

Nyala toOmdurmanby stockroute

Nyala toOmdurmanby truck

El Obeid toPort Sudanby truck

Nyala toPort Sudanby rail

Omdurman to Sawakin by Truck (excl. water and feeding costs during Govt. inspection and vaccination)

Omdurman to Sawakin byTruck (incl. water and feeding costs during Govt. inspection and vaccination)

(percent of total marketing costs)

Secondary Sale Yard 24.48 16.59 2.91 13.78 12.21 8.87

Veterinary Fees 10.22 6.93 13,47 5.75 27.80 47.52

Taxes and fees a / 20.98 14.22 9.12 11.81 0 0

Transport 44.31 62.26 49.01 58.72 35.31 25.67

Port Costs b/ 0 0 25.49 9.95 24.68 17.94

Total 100 100 100 100 100 100

Terminal Price (SDG per sheep) 190 190 245 245 245 245

Mktg. Costs/ Terminal Price %) 21.8 32.3 19.6 24.3 14.9 14.9

Producer Price/ Terminal Price (%)

64.5 64.5 57.5 50.0 Na na

Source: Ahmed Abaker Mohammed Mina and Jack W. van Holst Pellekaan, draft, (August 2010) – being revised.a/ Taxes and fees are zero for the journeys from Omdurman to Sawakin because either they are already included in secondary sale yard costs or not applicable (e.g. Zakat) because they have already been paid in the primary market. b/ Port costs are at Sawakin



The key elements of programmes for further industrial-isation in Sudan are included in the value chain analy-sis set out in Annex 5.

Annex Table 6.1: Comparisons of the Number and (%) of Food Establishments to Total Number of Manufacturing Establishments Categorized by Size of Labour Employment Borrowed from Ismail 2010

Size of labour employment (persons)

Totals 09-Jan 24-Oct 25-49 50-99 >100

Total number of establishments 24,114 22,460 916 332 139 267

Total number of food establishments* 16974 16453 252 119 57 93

The % number of food establishments to total number of manufacturing by size

(%) 70% 73% 28% 36% 41% 35%

* Focus was on production rather than food distribution services. Areas not addressed include smaller retail formats, cafes, specialty food vendors, markets, full service restaurants, street vendors, caterers, domestic wholesalers, commission agents, and providers of logistic and maritime services. Source: based on data from CIS, 2003.

Annex Table 6.2. Number of Establishments by Different Food Enterprises (Ibid 2010)

Number of Establishments

Employees Workers

ISIC Total manufacturing 24114 162682 131506

1531 Grain mill products industry 10707 21670 11666

1532 Starches and starch products 4 268 257

1533 Animal feeds 4 172 172

1541 Bakery industry 4240 22357 17344

1544 Cookies & Snack Cakes, other wheat products, macaroni, and spaghetti

27 521 455

1549 Other food products 23 2367 2317

Source: CIS, 2003.

Annex Table 6.3: Number of Establishments of Grain, Starch, Bakery & Grain Mill Products (Ibid 2010)

Total Manufacturing (1) Total establishments Labour size as small, medium and large

09-Jan 24-Oct 25-49 50-99 >100

24,114 22,460 916 332 139 267

Grain mill products 10,707 10,674 11 11 6 5

Annex 6: Programmes for Industrial Development


Annex Tables 7.1 through 7.4 provide statistical details for the petroleum sector of Sudan.

• Annex Table 7.1 includes a summary of the supply and utilisation of crude oil and petroleum products for the 1990-2014 period. The database of the In-ternational Energy Agency is the source for infor-mation for 1990-2010. The data for 2011 through 2014 is derived from various published sources, in-cluding the International Monetary Fund (IMF) and various publications of the Central Bank of Sudan, and also includes estimates by the authors.

• Annex Table 7.2 includes historical data for 2010-2014 from Annex Table 7.1 and projections pre-pared by the authors for the 2015-2030 period. For the 2015-2019 period, the projections for oil production and exports draw heavily from the re-cent forecasts prepared by the IMF.162 For 2020-2030, the projections are estimates by the authors.

• Annex Table 7.3 sets out the price projections for crude oil that have been used in this Report. The most recent price projections Brent crude released by the World Bank on January 22, 2015 for 2015-2025 have been used. Projections for 2026-2030 have been prepared by the authors. Sudan oil sells in international markets at a discount to the price of Brent crude (about 91 percent of the Brent crude

162 See International Monetary Fund (2014.c), “Sudan: 2014 Article IV Consultation and Second Review Under Staff-Monitored Programme.” IMF Country Report No. 14/364, December 2014.

price). The actual discount that applied during the 2010-2013 period has been applied to the World Bank projection for Brent crude.

• Annex Table 7.4 includes a projection of the value added by the petroleum sector during the 2015-2030 period. The IMF projections for the annual growth in production increase from about 3.3 per-cent in 2015 to 5.3 percent by 2019. For the pur-poses of this Report, it is assumed that production of crude oil will increase by about 6 percent a year during the 2020-2030 period. The projection as-sumes that value added in petroleum sector for the period ranging 2015-2030 grows at the same rate as the projected levels of production.

• Annex Table 7.4 also includes projections of the current value of exports and imports of crude oil and petroleum products for 2015-2030. These projections are derived from the projected current price of crude oil as reported in Annex Table 7.3, along with assumptions about the relationship be-tween the price of crude oil and the average price of petroleum products.

A key point that emerges from these projections is that the export surplus declines steadily in the decade ahead, and that by the mid-2020s, Sudan will be a net importer of petroleum products.

Annex 7: Basic Data and Projections for the Oil Sector



nex T

able

7.1

: Sup

ply

and

Utiliz

atio

n of

Cru

de O

il an

d Pe

trole

um P

rodu

cts

in S

udan

, 199

0-20

14(In

'000

met

ric to

ns)

Indi

cato

r19

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

02

Crud

e oi

l

Supp

ly

Pr

oduc

tion

-

-

102

2

54

508

3

,450

8

,857

1

0,39

4 1

2,03

5

Im

ports

837

1

,013

7

50

327

6

41

761

7

12

630

2

58

Su

b-to

tal

837

1

,013

7

50

327

6

41

761

8

14

884

7

66

3,4

50

8,8

57

10,

394

12,

035

Utiliz

atio

n

Re

finer

y us

e 8

18

962

7

31

320

6

22

712

7

26

972

5

87

452

1

,943

2

,603

2

,842

Ex

ports

-

-

1,6

72

6,6

22

7,6

97

8,9

46

Di

scre

panc

y 1

9 5

1 1

9 7

1

9 4

9 8

8 (8

8) 1

79

1,3

26

292

9

4 2

47

Su

b-to

tal

837

1

,013

7

50

327

6

41

761

8

14

884

7

66

3,4

50

8,8

57

10,

394

12,

035

Petro

leum

pro

duct

s

Supp

ly

Pr

oduc

tion

805

9

52

720

3

10

608

7

06

685

8

91

577

4

28

1,8

40

2,4

65

2,6

91

Im

ports

945

5

98

764

7

15

922

7

13

650

7

71

960

1

,163

4

95

350

3

16

St

ock

chan

ges

(27)

1

(30)

10

(19)

7

28

9

(9)

121

9

0 (1

53)

45

Su

b-to

tal

1,7

23

1,5

51

1,4

54

1,0

35

1,5

11

1,4

26

1,3

63

1,6

71

1,5

28

1,7

12

2,4

25

2,6

62

3,0

52

Utiliz

atio

n

Do

mes

tic c

onsu

mpt

ion

1,6

86

1,5

13

1,4

15

996

1

,474

1

,382

1

,318

1

,625

1

,483

1

,597

1

,725

1

,863

2

,270

En

ergy

indu

stry

ow

n us

e 2

2 3

7 3

3 8

0

Ex

ports

-

-

523

6

39

570

Bu

nker

use

37

38

38

36

40

41

42

42

41

101

1

13

127

1

32

Di

scre

panc

y -

1

3

(3

) 3

3

4

4

(8

) 2

7

Su

b-to

tal

1,7

23

1,5

51

1,4

54

1,0

35

1,5

11

1,4

26

1,3

63

1,6

71

1,5

28

1,7

12

2,4

25

2,6

62

3,0

52

Sour

ce: I

nter

natio

nal E

nerg

y Age

ncy

data

base

for s

uppl

y an

d ut

ilizat

ion

data

for 1

990-

2012

and

Cen

tral B

ank

of S

udan

Ann

ual R

epor

ts, v

ario

us is

sues

. Exp

orts

and

impo

rts fo

r 201

4 fro

m C

BoS

with

est

imat

es b

y au

thor

s fo

r oth

er 2

014

data

.


Anne

x Tab

le 7

.1: S

uppl

y an

d Ut

ilizat

ion

of C

rude

Oil

and

Petro

leum

Pro

duct

s in

Sud

an, 1

990-

2014

(In '0

00 m

etric

tons

)

Indi

cato

r20

0320

0420

0520

0620

0720

0820

0920

1020

1120

1220

1320

14

Estim

ate

Crud

e oi

l

Supp

ly

Pr

oduc

tion

13,

250

15,

050

15,

250

17,

250

23,

800

23,

098

23,

738

23,

104

14,

238

5,0

19

6,0

65

6,2

00

Im

ports

-

-

-

-

-

-

-

-

-

-

Su

b-to

tal

13,

250

15,

050

15,

250

17,

250

23,

800

23,

098

23,

738

23,

104

14,

238

5,0

19

6,0

65

6,2

00

Utiliz

atio

n

Re

finer

y us

e 2

,939

3

,307

3

,464

4

,566

4

,990

4

,624

5

,111

5

,546

2

,496

2

,523

3

,945

4

,711

Ex

ports

10,

311

11,

743

11,

786

12,

570

18,

702

18,

391

18,

535

17,

558

11,

742

2,4

96

2,1

20

1,4

89

Di

scre

panc

y -

1

14

108

8

3 9

2 -

-

-

-

-

Su

b-to

tal

13,

250

15,

050

15,

250

17,

250

23,

800

23,

098

23,

738

23,

104

14,

238

5,0

19

6,0

65

6,2

00

Petro

leum

pro

duct

s

Supp

ly

Pr

oduc

tion

2,7

83

3,1

32

3,1

90

4,1

18

4,4

08

4,1

16

4,5

50

4,4

42

2,2

21

2,2

45

3,5

11

4,1

93

Im

ports

335

3

65

623

5

56

482

9

73

450

5

22

750

8

65

1,2

94

1,4

68

St

ock

chan

ges

(10)

(12)

-

-

-

-

-

-

-

-

-

-

Su

b-to

tal

3,1

08

3,4

85

3,8

13

4,6

74

4,8

90

5,0

89

5,0

00

4,9

64

2,9

72

3,1

10

4,8

06

5,6

61

Utiliz

atio

n

Do

mes

tic c

onsu

mpt

ion

2,3

23

2,5

42

2,9

23

3,6

03

3,7

62

4,1

93

3,9

99

4,0

55

2,2

74

2,5

30

4,3

34

5,1

76

En

ergy

indu

stry

ow

n us

e 8

8 1

00

101

1

14

157

1

52

156

1

52

78

79

124

1

25

Ex

ports

502

5

85

468

6

80

729

4

80

571

4

73

292

2

63

108

1

10

Bu

nker

use

195

2

58

321

2

77

242

2

64

274

2

85

328

2

38

240

2

50

Di

scre

panc

y -

-

-

-

-

-

-

-

-

Su

b-to

tal

3,1

08

3,4

85

3,8

13

4,6

74

4,8

90

5,0

89

5,0

00

4,9

64

2,9

72

3,1

10

4,8

06

5,6

61

Sour

ce: I

nter

natio

nal E

nerg

y Age

ncy

data

base

for s

uppl

y an

d ut

ilizat

ion

data

for 1

990-

2012

and

Cen

tral B

ank

of S

udan

Ann

ual R

epor

ts, v

ario

us is

sues

. Exp

orts

and

impo

rts fo

r 201

4 fro

m C

BoS

with

est

imat

es b

y au

thor

s fo

r oth

er 2

014

data

.



nex T

able

7.2

: Pro

ject

ed S

uppl

y an

d Ut

ilizat

ion

of C

rude

Oil

and

Petro

leum

Pro

duct

s in

Sud

an, 2

015-

2030

(In '0

00 m

etric

tons

)

Indi

cato

rAc

tual

Estim

ate

Proj

ectio

n

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Crud

e oi

l

Supp

ly

Pr

oduc

tion

23,1

04

14,2

38

5,0

19

6,0

65

6,2

00

6,4

01

6,6

42

6,9

37

7,2

86

7,6

75

8,0

98

8,5

43

9,0

13

9,5

09

10,0

32

10,5

83

11,1

65

11,7

79

12,4

27

13,1

11

13,

832

Im

ports

- -

- -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Su

b-to

tal

23,1

04

14,2

38

5,0

19

6,0

65

6,2

00

6,4

01

6,6

42

6,9

37

7,2

86

7,6

75

8,0

98

8,5

43

9,0

13

9,5

09

10,0

32

10,5

83

11,1

65

11,7

79

12,4

27

13,1

11

13,

832

Utiliz

atio

n

Re

finer

y us

e 5

,546

2

,496

2

,523

3

,945

4

,711

4

,868

5

,063

5

,311

5

,611

5

,950

6

,320

6

,721

7

,145

7

,594

8

,070

8

,572

9

,114

9

,687

10

,293

10

,934

1

1,61

2

Ex

ports

17,5

58

11,7

42

2,4

96

2,1

20

1,4

89

1,5

33

1,5

79

1,6

27

1,6

75

1,7

26

1,7

77

1,8

22

1,8

67

1,9

14

1,9

62

2,0

11

2,0

51

2,0

92

2,1

34

2,1

77

2,2

20

Di

scre

panc

y -

-

-

-

-

Su

b-to

tal

23,1

04

14,2

38

5,0

19

6,0

65

6,2

00

6,4

01

6,6

42

6,9

37

7,2

86

7,6

75

8,0

98

8,5

43

9,0

13

9,5

09

10,0

32

10,5

83

11,1

65

11,7

79

12,4

27

13,1

11

13,

832

Petro

leum

pro

duct

s

Supp

ly

Pr

oduc

tion

(89%

of r

efine

ry

use)

4,4

42

2,2

21

2,2

45

3,5

11

4,1

93

4,3

32

4,5

06

4,7

27

4,9

94

5,2

95

5,6

25

5,9

82

6,3

59

6,7

59

7,1

82

7,6

29

8,1

12

8,6

22

9,1

61

9,7

31

10,

334

Im

ports

522

7

50

865

1

,294

1

,468

1

,720

1

,903

2

,094

2

,269

2

,468

2

,674

2

,890

3

,125

3

,381

3

,658

3

,959

4

,278

4

,624

5

,000

5

,409

5

,853

St

ock

chan

ges

-

-

-

-

-

Su

b-to

tal

4,9

64

2,9

72

3,1

10

4,8

06

5,6

61

6,0

52

6,4

09

6,8

20

7,2

63

7,7

64

8,2

99

8,8

72

9,4

85

10,1

40

10,8

40

11,5

89

12,3

90

13,2

46

14,1

61

15,1

40

16,

187

Utiliz

atio

n

Do

mes

tic c

onsu

mpt

ion

4,0

55

2,2

74

2,5

30

4,3

34

5,1

76

5,5

38

5,9

26

6,3

41

6,7

84

7,2

59

7,7

67

8,3

11

8,8

93

9,5

15

10,1

82

10,8

94

11,6

57

12,4

73

13,3

46

14,2

80

15,

280

En

ergy

indu

stry

ow

n us

e 1

52

78

79

124

1

25

152

1

58

165

1

75

185

1

97

209

2

23

237

2

51

267

2

84

302

3

21

341

3

62

Ex

ports

473

2

92

263

1

08

110

1

00

50

25

Bu

nker

use

(at 5

% p

.a.)

285

3

28

238

2

40

250

2

63

276

2

89

304

3

19

335

3

52

369

3

88

407

4

28

449

4

71

495

5

20

546

Di

scre

panc

y -

-

-

-

-

Su

b-to

tal

4,9

64

2,9

72

3,1

10

4,8

06

5,6

61

6,0

52

6,4

09

6,8

20

7,2

63

7,7

64

8,2

99

8,8

72

9,4

85

10,1

40

10,8

40

11,5

89

12,3

90

13,2

46

14,1

61

15,1

40

16,

187

Mem

o ite

ms:

Grow

th in

cru

de p

rodu

ctio

n (%

p.a

.) (2

.7)

(38.

4) (6

4.8)

20.

9 2

.2

3.3

3

.8

4.4

5

.0

5.3

5

.5

5.5

5

.5

5.5

5

.5

5.5

5

.5

5.5

5

.5

5.5

5

.5

Grow

th in

refin

ery

use

(% p

.a.)

8.5

(5

5.0)

1.1

5

6.4

19.

4 3

.3

4.0

4

.9

5.7

6

.0

6.2

6

.3

6.3

6

.3

6.3

6

.2

6.3

6

.3

6.3

6

.2

6.2

Grow

th in

tota

l pro

duct

ion

(%

p.a.

) (2

.6)

(40.

2) (5

5.9)

31.

8 8

.5

3.3

3

.9

4.6

5

.3

5.6

5

.8

5.8

5

.8

5.8

5

.8

5.8

5

.8

5.8

5

.8

5.8

5

.8

Expo

rts o

f cru

de

Cr

ude

(bar

rel m

ill))

130

.8

87.

5 1

8.6

15.

8 1

1.1

11.

4 1

1.8

12.

1 1

2.5

12.

9 1

3.2

13.

6 1

3.9

14.

3 1

4.6

15.

0 1

5.3

15.

6 1

5.9

16.

2 1

6.5

Gr

owth

in e

xpor

ts (%

p.a

.) (5

.3)

(33.

1) (7

8.7)

(15.

1) (2

9.8)

3.0

3

.0

3.0

3

.0

3.0

3

.0

2.5

2

.5

2.5

2

.5

2.5

2

.0

2.0

2

.0

2.0

2

.0


Petro

leum

pro

duct

s

Gr

owth

in c

onsu

mpt

ion

(%

p.a.

) 1

.4

(43.

9) 1

1.2

71.

3 1

9.4

7.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

7

.0

7.0

7

.0

En

ergy

ow

n us

e (%

of

prod

uctio

n) 3

.4

3.5

3

.5

3.5

3

.5

3.5

3

.5

3.5

3

.5

3.5

3

.5

3.5

3

.5

3.5

3

.5

3.5

3

.5

3.5

3

.5

3.5

3

.5

Sour

ce: A

nnex

Tabl

e 7.

1 fo

r 201

0-20

14. D

ata

for 2

014

are

estim

ates

by

auth

ors

base

d on

Cen

tral B

ank

of S

udan

trad

e da

ta fo

r firs

t hal

f of 2

014.

Pro

ject

ions

are

est

imat

es b

y au

thor

s.

Anne

x Tab

le 7

.3: A

ssum

ptio

ns fo

r the

Pro

ject

ed P

rice

of O

il, 20

15-2

030

Indi

cato

rAc

tual

Estim

ate

Proj

ectio

n

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Wor

ld B

ank

fore

cast

of 2

014

for

Bren

t cru

de p

rice

per b

arre

l

Pric

e of

Bre

nt c

rude

in U

S$ a

t cu

rrent

pric

es 7

9.0

104

.0

105

.0

104

.1

96.

2 5

3.2

56.

9 6

0.8

65.

0 6

9.4

74.

1 7

9.2

84.

6 9

0.4

96.

7 1

03.4

1

05.5

1

07.6

1

09.7

1

11.9

1

14.2

Pric

e of

Bre

nt c

rude

in U

S$ a

t 20

10 c

onst

ant p

rices

79.

0 1

01.5

1

00.0

9

8.1

90.

9 5

0.3

52.

9 5

5.6

58.

4 6

1.4

64.

6 6

7.9

71.

4 7

5.0

78.

9 8

2.9

85.

4 8

7.9

90.

6 9

3.3

96.

1

Pric

e in

dex

(bas

e ye

ar

2010

=10

0.0)

100

.0

102

.5

105

.0

106

.1

105

.8

105

.8

107

.6

109

.4

111

.3

113

.0

114

.7

116

.6

118

.5

120

.5

122

.6

124

.7

123

.6

122

.3

121

.1

119

.9

118

.8

Pric

e in

dex

(bas

e ye

ar

2012

=10

0.0)

95.

2 9

7.6

100

.0

101

.1

100

.8

100

.7

102

.4

104

.1

106

.0

107

.6

109

.2

111

.1

112

.8

114

.8

116

.7

118

.8

117

.7

116

.5

115

.3

114

.2

113

.2

Pric

e of

Bre

nt c

rude

in U

S$ a

t 20

12 c

onst

ant p

rices

83.

0 1

06.6

1

05.0

1

03.0

9

5.4

52.

8 5

5.5

58.

4 6

1.3

64.

5 6

7.8

71.

3 7

5.0

78.

8 8

2.8

87.

0 8

9.7

92.

3 9

5.1

98.

0 1

00.9

Proj

ecte

d av

erag

e pr

ice

per

barre

l for

Sud

an c

rude

Suda

n cr

ude

aver

age

pric

e (U

S$

at c

urre

nt p

rices

) 7

1.9

95.

8 9

4.6

94.

6 8

7.5

48.

4 5

1.8

55.

3 5

9.2

63.

2 6

7.4

72.

1 7

7.0

82.

3 8

8.0

94.

1 9

6.0

97.

9 9

9.8

101

.8

103

.9

Suda

n cr

ude

aver

age

pric

e (U

S$

at 2

012

pric

es)

75.

5 9

8.2

94.

6 9

3.6

86.

9 4

8.1

50.

5 5

3.1

55.

8 5

8.7

61.

7 6

4.9

68.

2 7

1.7

75.

4 7

9.2

81.

6 8

4.0

86.

6 8

9.2

91.

8

Pric

e di

scou

nt fo

r Sud

an (%

of

Bren

t cru

de p

rice)

) 9

1.0

92.

1 9

0.1

90.

9 9

1.0

91.

0 9

1.0

91.

0 9

1.0

91.

0 9

1.0

91.

0 9

1.0

91.

0 9

1.0

91.

0 9

1.0

91.

0 9

1.0

91.

0 9

1.0

Sour

ce: W

orld

Ban

k da

taba

se fo

r com

mod

ity p

rice

fore

cast

s fo

r 201

5-20

25 re

leas

ed J

anua

ry 2

2, 2

015.

For

ecas

ts b

y au

thor

s fo

r 202

6-20

30.



nex T

able

7.4

: Pro

ject

ed V

alue

of P

etro

leum

Pro

duct

ion

and

Valu

e of

Inte

rnat

iona

l Tra

de in

Cru

de a

nd P

etro

leum

Pro

duct

s, 2

015-

2030

Indi

cato

rAc

tual

Estim

ate

Proj

ectio

n

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Valu

e of

pro

duct

ion

and

valu

e ad

ded

Prod

uctio

n of

cru

de ('

000

met

ric to

ns)

23,1

04

14,2

38

5,0

19

6,0

65

6,2

00

6,40

1 6

,642

6

,937

7

,286

7

,675

8

,098

8

,543

9

,013

9

,509

10

,032

10

,583

11

,165

11

,779

12

,427

13

,111

13

,832

Valu

e of

pro

duct

ion

(US$

at

2012

con

stan

t pric

es)

12,9

96

10,4

16

3,5

38

4,2

31

4,0

13

2,29

3 2

,502

2

,746

3

,030

3

,356

3

,725

4

,130

4

,582

5

,078

5

,636

6

,247

6

,788

7

,377

8

,016

8

,710

9

,465

Petro

leum

sec

tor v

alue

add

ed

(US$

mill

at 2

012

pric

es)

8,3

07

6,9

55

2,2

66

2,8

84

2,9

48

3,04

4 3

,159

3

,299

3

,465

3

,650

3

,851

4

,063

4

,286

4

,522

4

,770

5

,033

5

,310

5

,602

5

,910

6

,235

6

,578

Petro

leum

sec

tor v

alue

add

ed

(SDG

mill

at 2

012

pric

es)

29,6

82

24,8

49

8,0

95

10,3

06

10,

534

10,

876

11,2

86

11,7

88

12,3

80

13,0

42

13,7

59

14,5

16

15,3

14

16,1

56

17,0

45

17,9

82

18,9

71

20,0

15

21,1

15

22,2

77

23,5

02

Grow

th in

cru

de p

rodu

ctio

n (%

p.a

) (2

.7)

(38.

4) (6

4.8)

20.

9 2

.2

3.3

3

.8

4.4

5

.0

5.3

5

.5

5.5

5

.5

5.5

5

.5

5.5

5

.5

5.5

5

.5

5.5

5

.5

Trad

e in

cru

de a

nd p

etro

leum

pr

oduc

ts

Expo

rt of

cru

de a

nd p

etro

leum

pr

oduc

ts

Ex

ports

of c

rude

(bar

rels

milli

on)

130

.8

87.

5 1

8.6

15.

8 1

1.1

11.

4 1

1.8

12.

1 1

2.5

12.

9 1

3.2

13.

6 1

3.9

14.

3 1

4.6

15.

0 1

5.3

15.

6 1

5.9

16.

2 1

6.5

Ex

port

valu

e of

cru

de

(cur

rent

US$

mill)

9,4

06

8,3

78

1,7

55

1,6

17

1,0

91

553

6

09

671

7

38

812

8

93

978

1

,071

1

,173

1

,287

1

,410

1

,467

1

,527

1

,588

1

,652

1

,719

Ex

port

of p

rodu

cts

('000

m

ts)

473

2

92

263

1

08

110

1

00

50

25

-

-

-

-

-

-

-

-

-

-

-

-

-

Un

it va

lue

of e

xpor

ts (U

S$

per m

t) 6

05

1,0

32

977

9

48

1,4

84

484

5

18

553

5

92

632

6

74

721

7

70

823

8

80

941

9

60

979

9

98

1,0

18

1,0

39

Va

lue

of p

etro

leum

pro

duct

ex

ports

(cur

rent

US$

mill)

286

3

01

257

1

02

163

4

8 2

6 1

4 -

-

-

-

-

-

-

-

-

-

-

-

-

Impo

rts o

f pet

role

um p

rodu

cts

Va

lue

of im

ports

(US$

mill)

428

7

35

1,0

52

1,4

60

1,5

24

957

1

,133

1

,332

1

,544

1

,793

2

,074

2

,396

2

,767

3

,198

3

,702

4

,284

4

,723

5

,207

5

,741

6

,334

6

,995

Un

it va

lue

of im

ports

(US$

pe

r mt)

818

9

80

1,2

17

1,1

28

1,0

38

557

5

95

636

6

80

726

7

75

829

8

85

946

1

,012

1

,082

1

,104

1

,126

1

,148

1

,171

1

,195

Tota

l tra

de (U

S$ m

illion

at

curre

nt p

rices

)

Ex

ports

of c

rude

and

pr

oduc

ts 9

,692

8

,679

2

,012

1

,719

1

,254

6

02

635

6

84

738

8

12

893

9

78

1,0

71

1,1

73

1,2

87

1,4

10

1,4

67

1,5

27

1,5

88

1,6

52

1,7

19

Im

ports

of p

etro

leum

pr

oduc

ts 4

28

735

1

,052

1

,460

1

,524

9

57

1,1

33

1,3

32

1,5

44

1,7

93

2,0

74

2,3

96

2,7

67

3,1

98

3,7

02

4,2

84

4,7

23

5,2

07

5,7

41

6,3

34

6,9

95

Ne

t exp

ort e

arni

ngs

9,2

65

7,9

44

960

2

59

(270

) (3

56)

(498

) (6

48)

(805

) (9

81)

(1,1

81)

(1,4

17)

(1,6

96)

(2,0

25)

(2,4

15)

(2,8

74)

(3,2

56)

(3,6

81)

(4,1

53)

(4,6

82)

(5,2

75)

Sour

ce: A

nnex

Tabl

es 7

.2 a

nd 7

.3 a

nd e

stim

ates

by

auth

ors.


Annex Table 8.1: Priority National Road Projects for Construction During 2015-2019

No. Description Length (km) Cost Estimate US$ Million Remarks

1 Omdurman -Bara 341 289.9 Bidding documentation available

2 En Nahoud- Ed Daein-Nyala 436 370.6 Bidding documents available

3 Singa –Ed Dinder-Gedarif 169 143.7 Bidding documents complete

4 Khartoum-Medani 187 140.3 Road requires widening. Bidding documents available

5 Gaili-Shendi-Atbara 269 201.8 Road requires widening. Bidding documents available

6 Jebel Awliya- Ed Dueim-Rabak 267 200.3 Needs design and construction

7 Kosti-Tendelti 116 29.2 Road requires rehabilitation

8 El Fashir-El Oiynat-El Kufra 990 845 Road to provide link with Libya. Needs detailed engineering design study

9 Dongola-Oiynat 620 529.2 Link with Libya. Needs detailed engineering design study

10 El Damazin-Kormok 148 91.7 Road link with Ethiopia. 95km completed, remaining section to be constructed

11 Kadogli-Talodi-Tonga 291 247.4 Documentation completed

12 Ed Daein-Raga 210 147 Needs detailed engineering design study

13 Nyala-Ed Alforsan-Um Dafouk 273 109.2 First 148km under construction; remaining 128km needs detailed engineering design and construction

14 Technical Assistance and Training - 0.3 Includes assorted items

TOTAL 4,317 3,197.60

Source: National Highways Authority

Annex 8: Basic Data for Infrastructure



Annex Table 8.2: Roads for Economic Feasibility and Engineering Design Studies

No. Description Length (km) Cost Estimates

(US$ Million)

Feasibility & Engineering Design

Construction Cost[1] Total Cost Estimate

1 Kassala-New Halfa-Khartoum North Road 416 2.912 249.6 252.512

2 El Fasher-Kabkabiya Road, North Darfur 170 1.19 102 103.19

3 El Fasher-Mellit Road, North Darfur 65 0.455 39 39.455

4 Nertiti-Geldo-Golo-Rokero Road, Central Darfur 99 0.693 59.4 60.093

5 El Damazin-Geisan Road 170 1.19 102 103.19

6 Khashm-El Girba Sugar Factory-Sabaat Road 46 0.322 27.6 27.922

7 Sinnar-El Suki-El Dindir Road 78 0.546 46.8 47.346

8 Garsila- Foro-Boranga 75 0.525 45 45.525

9 Karkoj_El Rosseris-Yarda 247 1.729 148.2 149.929

10 El Damazin-El Sirayo 110 0.77 66 66.77

11 Singa-Dali Mamoum-Grabeen-Wad El Nayel Road 222 1.554 133.2 134.754

12 Kutum-El Tina, North Darfur 255 1.785 153 154.785

13 Rehad El Berdi-Um Dofouk, South Darfur 123 0.861 73.8 74.661

14 Nyala-Graida-Buram-El Radom, South Darfur 258 1.806 154.8 156.606

15 Buram-Tulus-Kateela-Ed El Fursan 125 0.875 75 75.875

16 Nyala- Abu Ajura-Tulus -Dumso 135 0.945 81 81.945

17 Rahad El Berdi-Kubum 52 0.364 31.2 31.564

18 Ed El Fursan-Kubum 65 0.455 39 39.455

19 Ed Daein-Kubum 125 0.875 75 75.875

TOTAL 2,836 19.852 1,701.60 1,721.45

Source: National Roads Authority and estimates by authors.

Annex Table 8.3: Ongoing Railway Investment Projects

No. Project Title Name of Contractor Target Finish Date Contract Value US$ million

Current

Status

1 Rehabilitation of SRC Locomotives CSR Ziyang Co. Ltd 2011 7.4 Ongoing

2 Supply of rails (100km) China Machine Building International Co. Ltd 2011 13.5 Ongoing

3 Supply of Locomotives (3 heavy, 2 light) Beijing Railway Transportation Equipment Co. Ltd 2013 6.63 Ongoing

4 Supply of 400 Bogies Jinan Railway Vehicles Equipment Co. Ltd 2013 5 Ongoing

5 Supply of 5 Rail Motor Trolleys China Railways International Co. Ltd 2013 1.7 Ongoing

TOTAL 34.23

Source: Sudan Railways Corporation


Annex Table 8.4: Summary of Investment Needs in the Rail Sub-Sector

Item Medium Term Long Term Total Cost

2015-2020 2021-2030 Estimate

US$ million (US$ Million) (US$ Million)

Rehabilitation of Existing Lines

Port Sudan –Khartoum (787km) 350 - 350

Khartoum-Medani (174km) 91 - 91

Medani – Sennar (96km) 50.2 - 50.2

Sennar - Kosti (105) 54.9 - 54.9

Haya – Kassala (349km) - 322.5 322.5

Kassala - Sennar - 411.2 411.2

Sub-Total 546.1 733.7 1,279.80

Reconstruction of Lines to 100kph

Khartoum – Kosti (375km) - 192.3 192.3

Kosti - En Rahad (250km) - 134.6 134.6

En Rahad – Babanusa (363km) - 195.5 195.5

Bananusa – Ed Daein (185km) - 104.4 104.4

Ed Daein – Nyala (150km) - 93.3 93.3

Sub-Total 0 720.1 720.1

New Rail Constructions

New Standard Gauge Line, Port Sudan –Khartoum (787km) 1,200.00 - 1,200.00

Rail spurs in Port Sudan (50km) 28 - 28

Rail Spurs in Kosti port (10Km) 5.9 - 5.9

Khartoum Bypass line with jelly to Soba (120km) - 138 138

Port Sudan Station 12 - 12

Sub-Total 1,245.90 138 1,383.90

Re-equipping Workshops 30 - 30

Locomotives and other rolling stock

Signaling Systems 115 105 220

Studies for extension of the network to link with neighboring States 6 - 6

Capacity Building 2 1.5 3.5

TOTAL 1,945.00 1,698.30 3,643.30

Source: Sudan Railways Corporation, NTMP and authors estimates.

Annex Table 8.5: Summary of Priority Investments in the Maritime Sector (US$ Million)

No Project Title Description Medium Term Long Term TOTAL

2015-2020 2021-2030

1 Construction and Operation of Livestock and Fisheries Terminal near Sawakin port

The facility would be 600 meters long and 12 meters deep, to include water systems, a butchery unit, veterinary unit, refrigeration and access roads.

100 400 500

2 New Passenger Terminal at Sawakin Port Facility to hold up to 3,000 passengers 42 - 42

3 Iron ore terminal at Osief Port The project entails constructing a new berth to handle iron ore and other metal exports. Facility is to be 320 meters long, 16/20 meters deep and capable of handling vessels of 70,000 to 100,000 DWT

30 - 30

4 Saloom Inland Container Depot (ICD) Deport to be located 8km from Port Sudan, covers an area of 12,000 square meters; capable of holding 75,000 TEUs. Project cost includes land preparation and purchase of handling equipment

200 200 400

5 Rehabilitation of Digna Port Works entail construction of two berths for container handling 30 - 30

6 Capacity Building Establishment of Marine Transportation Institute and staff training 3.5 3.5 7

Implementation of a single window system and other port corridor transit facilitation instruments

4 4 8

Technical Assistance to implement asset management system - 3 3

TOTAL 407.5 610.5 1,018.00

Source: Sea Ports Corporation and authors estimates



Annex Table 8.6: Passenger Traffic Forecasts at Major airports

Airport\Yr Capacity (Annual ) 2007 2011 2016 2021 2026 2031

Khartoum 1,987,143 1,825,549 2,342,137 3,652,713 6,067,227 9,177,800 12,959,030

Port Sudan 546,000 156,120 217,148 368,488 587,248 842,252 1,130,851

Nyala 122,893 110,968 145,621 233,805 403,516 685,149 1,103,439

El Fasher 18,214 95,158 119,709 173,342 266,755 407,847 573,108

El Geneina n.a 46,977 53,971 61,302 77,977 116,184 163,262

Dongola 323,714 9,645 11,724 14,963 19,096 24,372 31,106

Damazine 32,857 8,168 8,246 5,261 1,597 1,237 1,735

El Obeid 85,714 29,675 34,171 34,626 29,288 21,634 16,740

Kadugli n.a 58,143 58,950 38,103 12,254 9,049 11,549

Kassala 80,143 656 738 779 888 1,163 1,484

Total

Source: Sudan National Transport Master Plan Study, 2010

Annex Table 8.7: Cargo Forecasts at Major Airports(Metric tons)

Airport 2007 2011 2016 2021 2026 2031

Khartoum 79,400 79,047 100,291 143,322 190,281 256,023

Port Sudan 380 573 1,040 1,851 3,131 5,020

Nyala 5,770 5,287 4,546 3,969 4,359 5,151

El Fasher 6,079 5,401 4,256 3,198 3,365 3,761

El Geneina 1,528 1,687 1,704 1,854 2,171 2,601

Damazine 70 72 52 29 32 40

El Obeid 7,090 5,550 3,302 1,286 1,024 1,024

Kadugli 223 227 151 56 43 51

Kassala 64 73 88 109 133 156

Source: Sudan National Transport Master Plan (2010)


Annex Table 8.8: Expected Quantitative Measurements of the Sudan Air Company Objectives and Projections

Year 2015 2016 2017 2018 2019

Items 20% 20% 20% 20%

Available Seat Capacity 789.03 946.836 1.104.645 1.262.451 1.420.257

Available Cargo Capacity 31.68 38.016 44.352 50.688 57.024

Seat Factors Rate 78% 79.50% 81.10% 82.70% 84.40%

Rate of Carried Cargo 45% 47% 49% 52% 54%

Employee Productivity Rate 78% 79.50% 81.10% 82.70% 84.40%

Rate Of daily Used Plane / Total Flights 4 4.2 4.4 4.6 4.8

Traffic Rights Available / Scheduled Flights 25% 28% 32% 35% 39%

SD Market Share / Total Market 50% 51% 51% 51% 51%

Departure Flight On Time 85% 87% 88% 88% 90%

Available Energy/KlM 14.500.000 15.225.000 15.986.250 16.785.625 17.624.406

Total Employees Increased 10% 1.5 1.65 1.85 1.99 1.843

Total Flights Domestic 46% 1600 1920 2240 2560 2880

Intentional 54% 1900 2280 2660 3040 3420

Total 100% 3.5 4200 4900 5600 6300

Total Passengers Transport Domestic 27% 170000 204000 238000 272000 306000

Intentional 63% 448002 537602 627202 716802 806402

Total 100% 618002 741602 865202 988802 1112402

Total Cargo Transport/ Tons 13.132 15758 18384 21010 23636

Total Fleet Owned 8 10 10 12 12

Leaser 3 3 4 4 4

Total 11 13 14 16 16

Total Stations Domestic 6 8 10 10 12

Intentional 9 10 11 13 15

Total 15 18 21 23 27

Source: Sudan Air Company



Annex Table 8.9: Investment Plan for Civil Aviation (US$)

Item Immediate Term Short Term Medium Term Long Term Total

2010-2016 2017-2021 2021-2026 2026-2030

A Airport Infrastructure

1 Khartoum 41,465,525 23,304,500 32,004,000 102,422,960 199,196,985

2 Port Sudan 1,110,996 571,500 3,429,000 4,953,000 10,064,496

3 Nyala 10,288,258 2,475,000 3,960,000 7,366,735 24,089,993

4 El Fasher 3,292,859 1,782,000 1,980,000 3,762,000 10,816,859

5 El Geneina 5,485,498 643,500 396,000 2,218,496 8,743,495

6 El Obeid 0 0 0 0 0

7 Damazin 670,884 12,068,721 0 1,524,000 14,263,605

8 Dongola 2,363,558 0 0 1,524,000 3,887,558

Sub-Total 64,677,578 40,845,221 41,769,000 123,771,191 271,062,991

B Air Navigation System

Country Wide 16,000,000 10,000,000 10,000,000 10,000,000 46,000,000

C Other Airport Developments

New Khartoum Airport[1]

New airports at Zalingei and Ed Daein[2] 61,966,000 24,760,000 8,760,000 95,486,000

D Capacity Building

1 Training

Human Resources Plan 600,000 300,000 300,000 300,000 1,500,000

Training Institute 2,500,000 2,000,000 2,000,000 2,000,000 8,500,000

Overseas & Other Training 3,200,000 2,000,000 2,000,000 2,000,000 9,200,000

2 Updating Civil Aviation Master Plan 1,100,000 500,000 750,000 500,000 2,850,000

3 Institutional Strengthening

Business Plan 600,000 - - - 600,000

Information Management 2,000,000 500,000 500,000 500,000 3,500,000

Technical Assistance 4,000,000 2,500,000 2,500,000 2,500,000 11,500,000

Sub-Total Capacity Bldg 14,000,000 7,800,000 8,050,000 7,800,000 37,650,000

GRAND TOTAL 94,677,578 120,641,221 84,579,000 150,331,191 450,198,991

Source: National Transport Master Plan and Sudan Civil Aviation Authority

Note 1: The cost of this project was not ascertained in the NTMP. The initial estimate was US$1.2 billion, but this wasunder review at the time of NTMP preparation. An update is required. 2: Information obtained from CAA.


Annex Table 8.10: Energy Access Rates in Select Countries in Eastern & Sub-Saharan Africa

Country Electrification rate (%) Population without electricity (millions)

Select Eastern Africa Countries

South Sudan 1 9.3

Uganda 9 28.1

DR Congo 11.1 58.7

Tanzania 13.9 37.7

Kenya 16.1 33.4

Ethiopia 17 68.7

Madagascar 19 15.9

Eritrea 32 3.4

Select Sub-Saharan Africa Countries

Malawi 9 12.7

Burkina Faso 14.6 12.6

Lesotho 16 1.7

Zambia 18.8 10.5

Benin 24.8 6.7

Angola 26.2 13.7

Namibia 34 1.4

Sudan 35.9[1] 27.1

Gabon 36.7 0.9

Congo 37.1 2.3

Zimbabwe 41.5 7.3

Senegal 42 7.3

Botswana 45.4 1.1

Cote d'Ivoire 47.3 11.1

Cameroon 48.7 10

Nigeria 50.6 76.4

Ghana 60.5 9.4

Mauritius 99.4 0

Sub-Sahara Avg. 30.5 585.2

Source: WEO, 2011.

Annex Table 8.11: Present and Potential Generation Resources of EAPP/EAC Countries

Country Existing Capacity2012 (MW)

Additional 2013-2030 (MW) Total 2030 (MW)

Forecast Peak Demand 2030 (MW)

Potential Surplus 2030 (MW)

Burundi 49 422 470 385 86

Djibouti 123 187 310 198 112

East DRC 74 1,117 1,191 179 1,012

Egypt 25,879 46,570 72,449 69,909 2,540

Ethiopia 2,179 13,617 15,796 8,464 7,332

Kenya 2,051 6,288 8,339 7,795 544

Rwanda 103 411 514 484 30

Sudan[1] 3,951 11,310 15,261 11,054 4,207

Tanzania 1,205 4,881 6,086 3,770 2,316

Uganda 822 2,531 3,353 1,898 1,455

Total with Egypt 36,436 87,334 123,769 104,136 19,633

Total minus Egypt 10,557 40,764 51,320 34,227 17,093

Source: EAPP/EAC Regional Power System Master Plan StudyNote 1. Disaggregated data for South Sudan and (north) Sudan are not available



Annex Table 8.12: Power Transmission Projects Requiring Funding (2015-2031)

No. Project Name Project Components Cost Estimate (US$ Mln)

2015-2020 2021-2031

(US$ Mln) (US$ Mln)

1 Khartoum ring reinforcement Projects Details to be provided by SETCO 214.7 114.7 100

2 Adila-Ed Daein-Nyala-El Fasher (480km) 220KV, 4 new substations and 1 extension sub-station 184 92 92

3 Blue Nile transmission projects Details to be provided by SETCO 286 143 143

4 Atbara-Kabashi (292km) 220KV Line, 2 new substations 170 85 85

5 West of Omdurman (300km) 220KV line, 4 new substations, 2 extension substations 145 100 45

6 Babanusa-Al Mujlad-Nama-Abyei-Heglig (215km) 220KV line, 1 extension substation and 4 new substations

163 83 80

7 El Obeid-Barah-Sawdiri-Hamarat Al Sheikh; Barah- Umm Dam- Kamrat Al Wazz (470km)

220KV line, 4 substations and 1 extension 224 100 124

8 Al Fula-En Nahud (110km) 220KV line, 1 substation, 1 extension 63 63 -

9 Gebaish-Um Kadada-El Fasher (110km) 220KV line, 1 new station, 1 extension 181.8 100 81.8

10 Nyala-Sheriya; Nyala-Eid Forsan-Rahad El Berdi-Um Dafouk; Nyala-Graida-Buram-Hofrat El Nahas; Graida-Tulus-Entakayna-Um Dafouk

220 KV transmission lines totaling 765km,with 8 substations

383.6 133.6 250

11 Mnagel-Marigan Transmission Line (65km) 220KV line with 1 new substation 39.4 39.4 -

12 Port Sudan-Sawakin Transmission (91km) 220KV line with 3 substations 96.84 96.84 -

13 Sawakin-Sinkat-Haya-Garora Transmission Line (360km)

220KV line with 4 substations 186.4 100 86.4

14 Arkeyi- Port Sudan 2 Transmission Line (30km) 220KV line with 1 substation 32.2 32.2 -

15 Aroma-Durudeb-Haya Line (295km) 220KV ilne, 4 substations 120.8 120.8 -

16 Rosaries Transmission Lines: Rosaries-Kamkam-Kurmuk; Rosaries-Um Darfa; Kamkam-Bau; Kamkam-Geisan

220KV transmission lines, totaling 540km with 6 substations

279.6 - 279.6

17 El Fasher-Mellit-Kutum; Mellit-Al Malha; El Fasher-Tawila-Kabkabiya

110KV lines totaling 483km with 5 substations 340.9 - 340.9

18 Geneina-Kolbus-Al Tina; 220KV line Geneina – Al Tina and 110KV line Zalingei- Garsila + 3 substations

125.4 - 125.4

Zalingei-Garsila

19 Mashkur-Managil Line (100km) 220 KV line with 1 new substation and 1 extension 61 61 -

20 Khartoum State (60km) 500KV line with 1 new substation and 2 extension 67 67 -

21 Arkeyi-Atbara (500km) 500KV line with 1 new substation and 1 extension 275 - 275

22 Khartoum-Rabak-Nyala (1,200km) 500KV line, with 2 new substations and 1 extension 635 - 635

TOTAL 4,274.64 1,531.54 2,743.10

Source: Sudan Electricity Transmission Company


Annex Table 8.13: Potential for Electricity Production from Solar Energy

State Average radiation KWh/M²/day

Area Km2 Daily producible energy Maximum available energy Annual producible energy

(GWh/day) GWh GWh

Northern 6.675 348,697 2,327,553 13,948 27,930,630

North Darfur 6.1 290,000 1,769,000 11,600 21,228,000

Red Sea 5.75 212,800 1,223,600 8,512 14,683,200

North Kordofan 5.8 185,302 1,074,752 7,412 12,897,019

River Nile 6.025 121,000 729,025 4,480 8,748,300

South Darfur[1] 4.79 127,300 609,767 5,092 7,317,204

West Darfur[2] 5.2 79,460 413,192 3,178 4,958,304

Gaderif 5.7 71,626 408,268 2,865 4,899,218

South Kordofan 5.04 79,470 400,529 3,179 4,806,346

Kassala 6.008 42,282 254,030 1,691 3,048,363

Sinnar 6.1 40,680 248,148 1,627 2,977,776

Blue Nile 5.5 26,708 146,894 1,068 1,762,728

Gezira 6.36 23,373 148,652 935 1,783,827

Khartoum 6.37 22,736 144,828 909 1,737,940

White Nile 5.78 16,000 92,480 640 1,109,760

Sudan 5.813 1,882,000 10,940,442 75,280 131,285,309

Source: Sudan Electricity Distribution Company. Note 1, includes East; 2. includes Central.

Annex Table 8.14: Planned Distribution of SHS Units by State

STATE YEAR TOTAL

2013 2014 2015 2016 2nd FYP 3rd FYP 4th FYP

Gedarif 500 1,450 5,850 7,200 7,500 9,000 12,000 43,500

Kassala 500 1,450 5,850 7,200 7,500 9,000 12,000 43,500

Red Sea 100 290 1,170 1,440 2,500 3,000 4,000 12,500

Gezira 25 73 293 360 250 300 400 1,701

Sinnar 50 145 585 720 4,500 5,400 7,200 18,600

Blue Nile 250 725 2,925 3,600 10,000 12,000 16,000 45,500

Northern 50 145 585 720 2,500 3,000 4,000 11,000

River Nile 350 1,015 4,095 5,040 10,000 12,000 16,000 48,500

Khartoum 25 72 292 360 250 300 400 1,699

White Nile 100 290 1,170 1,440 5,000 6,000 8,000 22,000

N. Kordofan 500 1,450 5,850 7,200 25,000 30,000 40,000 110,000

S. Kordofan 150 435 1,755 2,160 25,000 30,000 40,000 99,500

W. Kordofan 250 725 2,925 3,600 25,000 30,000 40,000 102,500

N. Darfur 350 1,015 4,095 5,040 25,000 30,000 40,000 105,500

S. Darfur 500 1,450 5,850 7,200 25,000 30,000 40,000 110,000

W. Darfur 500 1,450 5,850 7,200 25,000 30,000 40,000 110,000

E. Darfur 300 870 3,510 4,320 25,000 30,000 40,000 104,000

C. Darfur 500 1,450 5,850 7,200 25,000 30,000 40,000 110,000

TOTAL 5,000 14,500 58,500 72,000 250,000 300,000 400,000 1,100,000

Source: Sudan Electricity Distribution Company



Annex Table 8.15: Planned Water Access Targets by State (2016)

State Total Rural Urban Population Access Average Rural Urban

Population Population (%) LCD LCD LCD

Blue Nile 1,021,789 228,224 793,565 100% 43.2 35.5 70

Gaderif 1,655,734 1,155,509 500,225 100% 60.3 39 109.4

Northern 832,003 459,833 372,169 100% 67.4 50 89

Red Sea 1,714,344 912,152 802,192 100% 50.3 17.9 87.4

River Nile 1,365,149 933,978 431,170 100% 71.9 64 87

Sennar 1,558,882 1,268,625 290,257 100% 58.1 45 114

North Kordofan 3,643,133 2,987,122 656,011 100% 52.6 45.9 83.1

South Kordofan 2,925,890 2,469,061 456,829 100% 41.2 35.1 73.8

White Nile 2,125,068 1,241,155 883,913 100% 62.3 33.9 102.3

Gezira 4,255,173 3,442,320 812,853 100% 54.9 41 116

Kassala 2,197,783 1,455,950 741,834 100% 46.9 36.2 68

North Darfur 2,936,232 2,526,098 410,134 100% 38.8 30.9 87.2

South Darfur 5,026,709 3,820,051 1,206,658 100% 30.2 23.3 52

West Darfur 1,606,440 1,280,608 325,832 100% 24 20 40

TOTAL 32,864,329 24,180,686 8,683,642 100% 47.5 36.72 77.41

Source: State Water Corporation and WES Project 2010

Annex Table 8.16: Improved Sanitation Coverage Targets 2016 per State

State Population Households HH with access Estimated access (%)

Blue Nile 1,021,789 170,298 95,415 56%

Gaderef 1,655,734 275,957 195,681 71%

Northern 832,003 139,086 112,518 80.90%

Red Sea 1,714,344 285,725 15,349 68%

River Nile 1,365,149 227,525 186,586 82%

Sennar 1,558,882 259,814 179,145 69%

North Kordofan 3,643,133 607,189 280,016 46%

South Kordofan 2,925,890 487,648 230,522 47%

White Nile 2,125,068 346,959 198,785 57%

Gezira 4,255,173 708,647 508,267 72%

Kassala 2,197,783 366,299 297,291 81%

North Darfur 2,936,232 489,372 213,348 44%

South Darfur 5,026,709 837,786 447,333 53%

West Darfur 1,606,440 267,741 147,532 55%

TOTAL 32,864,329 5,470,046 3,107,788 57%

Source: Ministry of Health, WES Project 2010


Annex Table 8.17: 2012-2016 Water, Sanitation and Hygiene Sector Estimates per State (US Dollars)Table 3.24: 2012-2016 Water, Sanitation and Hygiene Sector Estimates per State (US Dollars)[1]

State Rural Water Services Urban Water Services Sanitation & Hygiene Emergency Preparedness & Response

Institutional Development and Capacity Building

TOTAL

Blue Nile 29,670,000.00 2,237,142.86 13,810,000.00 599,885.71 579,142.86 46,896,171.43

Gaderif 49,988,285.71 77,960,285.71 36,341,142.86 599,885.71 1,297,428.57 166,187,028.57

Northern 33,625,142.86 75,101,714.29 45,683,142.86 1,413,714.29 1,413,142.86 157,236,857.14

Red Sea 96,396,285.71 45,660,000.00 67,017,714.29 599,885.71 579,142.86 210,253,028.57

River Nile 136,706,857.14 71,672,285.71 161,373,714.29 1,668,920.57 992,285.71 372,414,063.43

Sennar 104,279,428.57 35,631,142.86 44,340,000.00 1,668,920.57 1,305,142.86 187,224,634.86

North Kordofan 295,622,571.43 32,992,285.71 67,422,285.71 599,885.71 579,142.86 397,216,171.43

South Kordofan 212,434,000.00 60,808,857.14 62,712,571.43 1,199,771.43 579,142.86 337,734,342.86

White Nile 117,770,285.71 77,360,857.14 47,306,857.14 599,885.71 579,142.86 243,617,028.57

Gezira 168,474,571.43 53,705,714.29 194,436,000.00 1,668,920.57 794,285.71 419,079,492.00

Kassala 53,105,142.86 24,799,142.86 63,778,000.00 599,885.71 579,142.86 142,861,314.29

North Darfur 195,924,571.43 6,408,285.71 29,858,571.43 16,415,028.57 1,297,428.57 249,903,885.71

South Darfur 203,827,685.71 48,218,000.00 97,647,857.14 26,115,771.43 2,018,571.43 377,827,885.71

West Darfur 47,920,285.71 20,295,142.86 44,822,571.43 16,252,457.14 1,297,428.57 130,587,885.71

TOTAL 1,745,745,114.29 632,850,857.14 976,550,428..27 70,002,816.00 13,890,571.43 3,439,039,787.43

Source: Computed from A3-8: Water, Sanitation and Hygiene National Strategic Plan (2012-2016)

[1] Khartoum State not included in the Strategic Plan. Moreover, East Darfur and Central Darfur had not been created at the time the Strategic Plan was prepared. It can, however, be assumed that South Darfur includes the new South Darfur and East Darfur States; and West Darfur includes the new West Darfur and Central Darfur States.

Annex Table 8.18: Mobile Cellular Telephone Subscriptions per 100 Inhabitants: Sudan & Comparators

Country 2007 2008 2009 2010 2011 2012 2013

Ethiopia 1.5 2.37 4.78 7.87 15.8 22.37 27.25

Ghana 33.76 50.07 63.77 71.87 85.27 100.99 108.19

Kenya 30.06 42.05 48.62 61.03 66.81 71.17 70.59

Nigeria 27.45 41.66 47.96 54.66 57.96 66.8 73.29

Rwanda 6.4 12.94 23.07 32.75 39.9 49.67 56.8

Sudan 20.36 28.95 36.11 41.54 68.78 74.36 72.85

Tanzania 20.07 30.71 40.03 46.66 55.37 56.96 55.72

Uganda 13.65 26.92 28.55 37.74 47.5 45 44.09

Zambia 21.79 28.41 34.36 41.21 59.88 74.78 71.5

Zimbabwe 9..62 12.94 30.96 58.88 68.87 91.91 96.35

Ivory Coast 41.61 57.22 70.88 82.2 89.45 91.23 95.45

Source: International Telecommunications Union



Annex Table 8.19: Fixed Broad-Band Subscriptions per 100 Inhabitants (Sudan and Comparators)

Country 2007 2008 2009 2010 2011 2012 2013

Ethiopia 0 0 0 0 0.01 0.01 0.25

Ghana 0.07 0.1 0.12 0.21 0.25 0.26 0.27

Kenya 0.05 0.01 0.02 0.01 0.1 0.1 0.13

Nigeria 0.04 0.04 0.05 0.06 n.a 0.01 0.01

Rwanda 0.03 0.01 0.02 0.02 0.04 0.02 0.02

Sudan 0.11 0.11 N.A 0.03 0.05 0.07 0.12

Tanzania 0.01 0.01 0.01 0.01 0.06 0.08 0.11

Uganda 0.01 0.02 0.02 0.04 0.1 0.11 0.11

Zambia 0.03 0.05 0.08 0.08 0.12 0.11 0.07

Zimbabwe 0.12 0.14 0.23 0.25 0.25 0.52 0.73

Ivory Coast 0.06 0.05 0.05 n.a. n.a. 0.23 0.28

Source: International Telecommunications Union

Annex Table 8.20: Connections of Variance Units and Location by Telephone

Location Number

Federal ministries 35 - fiber

HQ of State 17 - fiber

Locality 21 - fiber

Schools 920 (3G modem with internet service)

Hospital 50 - fiber

Universities All Sudanese universities and their branches (fiber and other connectivity technology)

State ministries 17 - fiber

National Government units 49 – fiber

Civil records (8 – fiber) ,(9 – WiMax)

Judiciary 8 - fiber

Source: National Information Centre

Annex Table 8.21: Funding of the Merowi Power Plant

No Funding Source Amount in

EURs Million

1 China Import/Export Bank €240 million 240

2 Arab Fund for Economic and Social Development €130 million 130

3 Saudi Fund for Development 130

4 Oman Fund for Development 130

5 Abu Dhabi Fund for Development 85

6 Kuwait Fund for Arab Economic Development 85

7 Government of Sudan 400

Source: Ministry of Water Resources and Electricity


9.1 Definitions of Main Islamic Financial Instruments

Islamic financial instruments fall into three broad cate-gories: (i) Profit-and-loss-sharing instruments; (ii) debt instruments; and (iii) quasi-debt instruments.

I. Profit-and-Loss-Sharing Instruments

Musharaka (Partnership)Under Musharaka the investment is necessarily be im-plemented between two or more parties, each of them contribute a share of the total capital. It works accord-ing to the following conditions:• The capital of Musharaka is generally paid in liquid

money. However, payment in kind is also accept-able. In this case, the value of that property (not the property of per se) is considered for determin-ing the percentage of his contribution to the capital and his obligations toward any liability.

• A partner ought to enjoy full legal capacity to act on his own and on behalf of others (partners) with respect to the different dealings of Musharaka.

• The means by which profits and losses are distrib-uted among partners must be stated.

• It is acceptable for a partner who contributes more effort than others and/or who enjoys more experi-ence to take a percentage in profit in lieu of his ex-tra labour and expertise, but losses are always in-curred in direct proportion to the respective shares in capital.

MudharabaMudharaba is a special type of Musharaka. In a Mud-haraba contract, one partner contributes the capital and the other partner provides labour and expertise. Common conditions for this mode of Islamic finance include:• Capital of Al-Mudharaba must be identified, known

to the parties, and delivered to the investor (entre-preneur). It should, under no circumstances, be a debt resting with the investor (entrepreneur).

• The duty of the investor (entrepreneur) is to exert

his best effort for investing the capital, and at the same time to take all precautionary measures to protect the assets of the project under the Mud-haraba financing.

• The investor (entrepreneur) is a trustee. He is, therefore, under no obligation to guarantee any damage or loss incurred in the due process of in-vestment. In this case, the damage and loss are borne by the investor (entrepreneur). However, the investor (entrepreneur) is bounded to pay any damages and bear losses if he transgresses the limits as a trustee, through will-full acts, negligence and breach of contract.

• The distribution of the profit must be explicitly agreed to and in such a way as to ensure its dis-tribution between the parties i.e. in percentage. However, losses are borne by the owner of capital.

Muzara’aMuzara’a is a type of sharecropping agricultural part-nership. Traditionally, the landowner provides the land and inputs, while the farmer provides labour. The yield is distributable among the partners in accordance with their predetermined contract. The increasing cost of in-puts and production often lead to changing the formu-la. Some new forms may be illustrated as follows: The contract of Muzara’a may be undertaken by:• The landowner, the expert farmer and the owner of

irrigation scheme;• The landowner, who also undertakes to administer

the farm and the bank that provides the inputs.

II. Debt Instruments

MurabahaThe steps to be followed for the formation of this sale contract may be summarised as follows:• The intending buyer asks the would-be seller

creditor (Islamic bank) to buy a commodity, the in-tending buyer promises to buy that commodity for mark-up price (margins) that is determined by the monetary authorities.

• If the creditor (Islamic bank) agrees to enter into

Annex 9: Basic Data for Services Sectors



that transaction, he/she has to buy the demanded commodity from the original owner according to the guidelines of the commodity under financing.

• Having that commodity, the creditor (Islamic bank) has to make a fresh offer, depending of course on the previous negotiations and promise to the buyer.

• According to the preponderant Shariah point of view and despite the previous promise, the buyer has the right to accept or reject that offer, and in case of acceptance, a valid contract of sale is con-cluded between the two parties.

• If the offer is rejected, the ownership of the com-modity rests with creditor (Islamic bank).

Istisna’aIstisna’a is a sale contract whereby the buyer asks the seller to manufacture and sell a commodity as spec-ified. Alternatively, the commodity might be specified without the seller necessarily manufacturing it, e.g. forming a contract with a factory for agricultural capital goods and other inputs to be delivered by specification within a definite period of time. The dominant point of view among jurists is to the effect that the contract of Istisna’a is not obligatory on the two parties, i.e., any one of them has the right to withdraw without a prior notice. However, among leading Hanafi’s jurists, there is an opinion that Istisna’a is as binding on its parties as any other pecuniary contract. This view is the more acceptable one for dealings in Sudan.

SalamSalam is a special type of sale contract. It is valid for both agricultural and industrial products. It is exactly the reverse of the deferred sale. In this contract, the price has to be paid immediately, whereas, the deliv-ery of the commodity agreed on with specifications has to take place at a specific future period. The following terms must be satisfied for the validity of the contract of Salam:• The price (known as capital of Al-Salam) must be

identified and known.• The price should be paid immediately after the

constitution of the contract. Nevertheless, a delay for short period is condensable according to the Maliki School.

• The sold commodity must be known by specifica-tions in order to provide the seller with wide room to get the commodity from wherever it is available.

• Its delivery should be postponed to a specific time

in the future. Therefore, the availability of the com-modity in the market is usually the main determin-ing factor for fixing a time in the contract.

• To avoid uncertainty, the place of delivery has to be stated in the contract.

• The seller ought not to have stipulated that he would honour his obligation from a specific source, such as his farm or farms in specific area. There-fore, if the seller is unable to secure the commodity due to its unavailability in the markets, the buyer has two options: either to wait for its availability or to resign the contract and recover the paid up price.

Qard al-HasanQard al-Hasan is an interest-free loan contract that is usually collateralised.

III. Quasi-Debt Instruments

IjarahIjarah refers to a leasing contract in which some speci-fied assets (e.g. tractor) are leased for use by a farmer/client according to an agreed price and for a specific period of time. The main features of this contract are as follows: (i) The owner of the asset (the bank) bears all the risks associated with ownership; (ii) the asset can be sold at a negotiated market price, effectively result-ing in the sale of the Ijara contract; (iii) the contract can be structured as a lease-purchase contract where each lease payment includes a portion of the agreed asset price; and (iv) the contract can be made for a term cov-ering the asset’s expected life.

9.2 Key Policy Issues for the TVET Programme

There are several key policy issues for the TVET Pro-gramme. First is a need to add vocational training to the academic curriculum. The high youth unemploy-ment rate has heightened interest in this question. On the positive side, many agree that: (1) Vocational knowledge with broad application (such as comput-er knowledge) is useful; (2) vocationalisation may be considered in low-cost programmes that are not gen-der-specific, such as agriculture and business studies;


and (3) teaching of so-called entrepreneurship may be useful (i.e., knowledge and skills that will enable a graduate to plan, start, and run a business). But in general, many find problems with the argument for vo-cationalising general education. First, studies find no labour market advantage in terms of actual access to work after students leave school or any strong effect on access to relevant further technical training. Second, vocationalisation is costly in facilities and equipment. Third, enrolment in some of the courses is often strong-ly gender biased. Fourth, it is hard to implement well, requiring administratively complicated coordination of inputs. Fifth, time spent on vocational skills training can distract from the teaching of basic academic skills.

The second issue is the role of government in TVET. Not surprisingly, deciding on the role of government has become difficult and contentious in TVET policy-making. Possible roles of government, which seem sensible for a country like Sudan, include: (1) Providing labour market information to trainers; (2) helping to re-move skills bottlenecks to private sector development; (3) increasing access to skills of the poor and economi-cally disadvantaged; (4) supporting association of train-ers to set standards and enforcing them; (5) supporting development of training markets, especially via efficient financial assistance; e.g., there may be a case for gov-ernment subsidies for smaller enterprises, which may tend to underestimate the economic benefits of financ-ing training (perhaps because they do not directly reap much of the benefits when they finance the training); (6) general oversight, especially with regards to stan-dards and openness of access; and (7) ensuring an appropriate legal framework (relating to licensing, right to self-regulate, and standards).

On the whole, there seems to be a fair consensus that government can be proactive in: • Developing policies, setting standards, investing in

training materials and instructors, improving public information about the training system, and carrying out evaluations of training;

• Financing training to meet equity objectives and to fill strategic skill gaps; and

• Providing skills training in priority areas where non-government providers are reluctant to invest (but exercising caution to avoid crowding out of non-government providers).

The third important policy question is the role of the formal non-government sector. In this context, it is important to note that in the formal sector, there are for-profit and non-profit organisations that are trainers. In probably the majority of African countries, for-profit providers of training services are typically located in ur-ban centres and focus on a narrow range of skills— for example, IT, commerce, and sewing and tailoring. The non-profit training organisations serve a wider array of social objectives in reaching the disadvantaged, but they tend to be less well connected with markets and employers. Constraints on non-government trainers in-clude inadequate start-up capital and limited capacity of their trainees to pay tuition. Another important ele-ment of training in the formal sector is enterprise-based training, which can indeed be very efficient and effec-tive and hence should be encouraged by policy mak-ers. Enterprise-based training tends to be demand-de-termined, self-regulatory and self-financing.163

The fourth of the five specific policy areas that have become the focus of discussions of TVET in the African context is skills development for the informal economy. For, as long as there is an informal sector, there will always be some training. Traditional apprenticeship is, in a sense, the informal sector counterpart to enter-prise-based training. But it is possible for substantial training for the informal sector to take place within the formal sector—in formal training schools. That would remove the major disadvantage of the training within the informal sector, namely, perpetuation of outdated technologies and lack of standards and quality assur-ance.

Many have seen this as a strong case in favour of fi-nance initiatives to ensure that direct financing for train-ing comes from the demand side (the trainees), even if subsidies are necessary. Trainers in the formal sector could then respond and design training for the infor-mal sector. Informal sector associations can also help in raising awareness among their members of skills re-quirements and shortages in the sector. Indeed, such associations should be motivated to do so, by govern-ment and civil society, which may involve educating as-sociation leaders in this area.

The fifth and indeed a truly major policy area in skills

163 The research evidence on the formal sector across the continent is (not surprisingly) that: (1) Larger enterprises train more than smaller enterprises and (2) export-oriented and foreign enterprises train more than the others.



development is its financing.164 This involves resource mobilisation and allocation mechanisms. The typical discussion of the resource mobilisation subject stress-es six options, namely:• Payroll levies on employers in conjunction with

grants for training (levy-grant system); • Tuition and other fees paid by enterprises or train-

ees;• Production and sale of goods and services by

training institutions;• Community support and donations; • Government provision, that is, via direct budgetary

assistance, and• Tax concessions via tax credits and inclusion of

training expenses in costs of doing business, where feasible.

Where the government is involved in implementing the programme of resource mobilisation and allocation, the authorities must have the general administrative capac-ity to implement the programme (especially evaluation of proposals and monitoring of results); be able to en-sure compliance and to minimise diversion and misuse of funds; and must have, solidly in place, certain basic elements necessary for use of the system, e.g. enter-prises with regular taxable income on which to base tax concessions.

In general, also, the financing method(s) must not be allowed to compromise the quality of the training. This is a particularly important consideration in the case of production and sale of goods, where there is a risk of more emphasis being placed on production for income than on instruction. In the case of payroll levies, pro-ceeds should be secure, most notably from raiding by the government for other budgetary purposes. Thus, the proceeds should be kept in special accounts.

In charging fees and in receiving benefits, political con-straints and equity considerations also come into play. For instance, issues of cross-subsidisation arise in the case of levy-grant arrangements. Sometimes, for equi-ty reasons, very small companies are exempted from national levy payments, since they often do not capture any benefits, except perhaps when the levy proceeds exclusively finance training centres run by the financing authority.

164 See, Johanson and Adams (2004).

The weight of levies put on the labourers, the employ-ers, and the general taxpayer must also be understood so that they are exactly what is desired by the govern-ment and legitimated by the population. Trends identi-fied in allocation mechanisms for public funds include:• Use of autonomous training funds. Autonomous

training funds pool and manage resources orig-inating from government budgets, training levies, self-generated incomes of the training funds, and donors. Training funds must address major issues of governance, conflicts of interest (as provider, fi-nancier, and overseer of national training systems), and sustainability (ability to ensure sustained and stable funding that is not sometimes diverted or is too dependent on unreliable sources). Employer and worker representation in the governance ar-rangements has been found useful. Training funds in the competitive allocation of funds will some-times use training contracts, and will at other times rely on competitive bidding. Training contracts rely on contracts between the funding body and the training institution. The contracts specify the intended results. Competitive bidding for training funds can provide equal treatment for private and public institutions and avoid the shortcomings of the contract approach.

• Direct allocations based on norms and outputs. Direct allocations by governments to training in-stitutions are made using four criteria. First, is in-put-based financing, using norms or some formula such as trainees enrolled or number of classes. This method is considered to have serious weak-nesses. They include the lack of incentives for effi-ciency or quality assurance, as well as for closing the gap between training and employment needs. Second is output-based funding, which seeks to reward performance and pay for achieved results. Output could include a number of courses com-pleted, and/or pass rates on examinations. The benefit of output-based funding is increased effi-ciency or quality, but some experts say the method does not lead automatically to greater relevance (the matching of training supplies with labour mar-ket demands). The third direct allocation criterion is outcomes-based funding, which stresses the success of the training provider in meeting la-bour market needs, such as job placement. Out-comes-based funding can be subject to distortions by the training provider, such as ‘creaming’ (avoid-


ing not very promising candidates for training and thereby enhancing output). The fourth criterion of direct allocation is the use of a composite formula. This is intended to alleviate the disadvantages of the above approaches. Thus, a formula could be used that takes into account inputs, outputs, job placements, and enrolment of special groups.

• Indirect allocations through student vouchers. In-direct allocations are often made through use of vouchers. Giving vouchers to trainees to buy the services in an open market rather than giving cash payments to the training institutions can help devel-op the demand side of training markets. One major problem with a voucher scheme is that there must be enough training providers to make the system work competitively with real choices for users.

Fiscal incentives for enterprise-based training are also sometimes used. These could include direct wage subsidies, company tax credits, and levy-grant mech-anisms. Direct wage subsidies can work if employers

do not use it as a way to obtain cheap labour, if the supply response is fairly elastic, and if genuine train-ing and skills development for the worker occurs. Tax credits tend to benefit strong and profitable companies with good training capacity. Levies (in the levy-grant systems) are usually set as a percentage of payroll (1-2 percent, for example), in the case of a uniform ap-proach, but sometimes as a percent of sales or turn-over in the case of a so-called sectoral approach. Levy-grant schemes tend to come in three main forms: cost reimbursement, which gives grants to companies for costs of certain forms of training, typically implemented with some form of ceiling (e.g., up to a given percent-age of the levy paid); cost of redistribution, which is an attempt to address the disadvantages to training com-panies of poaching by other companies and involves giving grants to companies that train far in excess of some norm; and levy exemption, which allows compa-nies that adequately meet their training needs to with-draw from the levy-grant system or to reduce their levy assessments.



CP-EU (2010), Nile Perch Exports to the EU are Threat-ened by European Cod. Centre for Tropical Agriculture Agritrade News. Cited by Maurice, Ssebisubi (2011) in: Aquaculture Management Consultants Ltd. In: Analysis of small-scale Fisheries’ Value Chains in Uganda, draft report, April 2011. http://agritrade.cta.int/index.php/en/content/view/full/5141 [Accessed December 18, 2010].

ADB (2008). Preparing the Private Sector and Small and Medium-Sized Enterprise Development Programme. Project Number: 38421 Asian Development Bank (ADB) Technical Assistance Report. Kingdom of Cambodia, January 2008.

AfDB (2000), Agriculture and Rural Development Sector. Bank Group Policy. African Development Bank. African Development Fund, OCOD, January 2000.

AfDB (2010), Agriculture Sector Strategy 2010 – 2014. Agriculture and Agro-Industry Department and Opera-tional Resources and Policies Department, African De-velopment Bank Group January 2010.

AfDB (2012.a), SUDAN: Country Brief – 2012-2014, Af-rican Development Bank Group Regional Department, EAST II (OREB). October, 2012.

AfDB (2012.b), African Economic Outlook: Sudan 2012. African Development Bank http://www.afdb.org/filead-min/uploads/afdb/Documents/Publications/Sudan Full PDF Country Note.pdf thru (www.africaneconomicout-look.org).

AfDB (2013.a), African Economic Outlook 2013. Struc-tural Transformation and Natural Resources. Sponsored by African Development Bank, Development Centre of The Organisation for Economic Co-Operation and De-velopment, United Nations Development Programme, and Economic Commission for Africa, 2013.

African Development Bank (2013.b), South Sudan: An Infrastructure Action Plan – A Programme for Sustained Strong Economic Development. AfDB, Tunis, Tunisia,

2013.

Ali A. Ali (1985), The IMF Stabilisation Policies: Sudan Economy in Disarray: Essays on the IMF Model. Biddles Ltd., London UK.

Ali A. Ali and Ibrahim A. El Badawi (2004), Explaining Sudan’s Economic Growth. The African Economic Re-search Consortium, Nairobi, Kenya, Working Paper No. 9. January 2004.

Anderson, James E., and van Wincoop (2004), “Trade Costs,” Journal of Economic Literature, Vol. 42, (Sep-tember), pp. 691-751.

APO (2004), Strengthening Agricultural Support Ser-vices for Small Farmers. A report of the APO Seminar (Asian Productivity Organisation) held in Japan, 4-11 July 2001 (SEM-28-01). Pp. 137-43.

ARP (2008), Action Plan for Agricultural Revival. Execu-tive Programme for Agricultural Revival. High Committee for Studying the Present Status of Agriculture and Artic-ulate a Future Vision and Republic of Sudan. Council of Ministers General Secretariat, SUDAN (Arabic & en)

Ayub, Muhammad (2007), Understanding Islamic Fi-nance (Chichester, West Sussex: John Wiley & Sons, Ltd).

Ayyagari M., Beck. T and A. Demirgüç-Kunt (2007), “Small and Medium Enterprises Across the Globe”, Small Business Economics Vol. 29, pp 415-434.

Babiker, Elfadil Abdelrahman (undated), Sudan Cot-ton Research and Production Scenarios: Challenges, Achievements and Prospects. Office of National Co-ordinator for Cotton Research Programme, Khartoum, Sudan.

Baldwin, Barbara (2002), Comments on “Changes in Bank Behaviour During Japan’s Financial Crisis,” in Fi-nancial Risks, Stability, and Globalization, edited by

REFERENCES


Omotunde E. G. Johnson (Washington: International Monetary Fund), pp. 420-425.

Bardhan, Pranab (2002), “Decentralisation of Gover-nance and Development,” Journal of Economic Per-spectives, Vol. 16, No. 4, pp. 185-205.

Basant, Rakesh (2008), “Bangalore Cluster: Evolution, Growth, and Challenges,” in Growing Clusters in Asia: Serendipity and Science, edited by Yusuf, Shahid, Kao-ru Nabeshima, and Shoichi Yamashita (Washington: The World Bank), pp. 147-193.

Beck, T., Demirguc-Kunt, A., and Martinez P, M. (2008), Bank Financing for SMEs around the World: Drivers, Obstacles, Business Models, and Lending Practices. World Bank Policy Research Working Paper 4785.

Behnke, R. (2012), The Economics of Pastoral Livestock Production and Its Contribution to the Wider Economy of Sudan. Working Paper. Tufts FIC, Medford, MA and UNEP. June.

Bella Balassa (1965), Trade Liberalisation and Compara-tive Advantages. The Manchester School, UK.

Belloc, Marianna and Michele Di Maio (2012), “Survey of the Literature on Successful Strategies and Practices for Export Promotion by Developing Countries,” in Omo-tunde E. G. Johnson, ed., Economic Challenges and Policy Issues in Early Twenty-First-Century Sierra Leone (London: International Growth Centre), pp. 226-277.

Best, R. and Placide, L. (2006), An Assessment of the Agri-food Distribution. Caribbean Regional Negotiating Machinery. Inter-American development bank and Multi-lateral Investment Fund. Internet source.

Bloch, H. and Tang S. H. K. (2003), “The Role of Finan-cial Development in Economic Growth”. Progress in De-velopment Studies, Vol. 3, No. 3, pp. 243-251.

Bloom, Nicholas, Ben Eifert, Aprajit Mahajan, David McKenzie, and John Roberts (2010), Does Management Matter? Evidence from India. Working Paper, 10/0873 (London: International Growth Centre), December.BMoA (2006), Secretariat for Production and Agro-ener-gy Brazilian Agro-energy plan 2006 – 2011. Ministry of Agriculture, Livestock and Food Supply. Embrapa Pub-

lishing House, Brasília, DF 2006 www.agricultura.gov.br.

Brennan, G. and A. Hamlin (2000), “Nationalism and Federalism: The Political Constitution of Peace,” in Gi-anluigi, G., P. Salmon, and R. Wintrobe (eds.), Compe-tition and Structure, the Political Economy of Collective Decisions: Essays in Honor of Albert Breton, Cambridge University Press, pp. 259-83.

Buchanan-Smith, M. and A. Fadul (2008), Adaptation and Devastation: The Impact of the Conflicts on Trade and Markets in Darfur. The findings of a scope study. Tuft University, May 2008.

Burns, James MacGregor (1978), Leadership. New York: Harper & Row, 1978.

Bushra, el-Saved el- (1972). “Urbanisation in the Sudan,” In el-Bushra, ed., Urbanisation in the Sudan; Proc. 1 7th Annual Conference Philosophical Society. Sudan, Khartoum, 1972.

Bygrave, William D., Michael Hay, and Jos B. Peeters (1999), The Venture Capital Handbook. Pearson Educa-tion Ltd., London, 1999.

CARICOM (2005), A Review of Agricultural Policies: Case Study of St Lucia .THE CARICOM (Caribbean Community) Regional Transformation Programme for Agriculture. The RTP Competitiveness Study: Report prepared for the CARICOM Secretariat. The Department of Agricultural Economics and Extension. The University of the West Indies St. Augustine, Trinidad W.I. Decem-ber 2005.

Chapra, M. U. and Khan, T. (2000), “Regulation and Su-pervision of Islamic Banks”, Occasional Papers No.3, IRTI, Islamic Development Bank. Jeddah, Saudi Arabia. Chatteri et al. (2002), Conflict Management of Water Re-sources. Hampshire, Ashgate Publishing Ltd. 2002.

Central Bureau of Statistics (2009), Sudan National Baseline Household Survey, 2009. Khartoum, Sudan, 2009.

Chenery, Hollis B. and Michael Bruno, (1962), “Alterna-tives in an Open Economy: The Case of Israel”. Eco-nomic Journal. 72, March 1962, pp.79-103.



Central Bank of Sudan (2010), 50th Annual Report, 2010. Khartoum, Sudan, 2010.

Central Bank of Sudan (2013), 53rd Annual Report, 2013. Khartoum, Sudan, 2013.

Chukwuma Agu and Aldo Caliari, (2013), “Economic Diversification and Macroeconomic Policies: Re-Exam-ining the Missing Link in Africa’s Industrialisation Strate-gies”. Unpublished Conference paper. UN University.

Central Intelligence Agency (2013), Country Facts Book. Washington DC, USA, 2013.

Chr Michelsen Institute (2012), Will the Sudanese Par-adox Continue? Insecure Investment Climate and Sub-stantial Foreign D|irect Investment Inflows. Sudan Report by Hassan Ali Gadkarim (2012). A cooperative venture between Chr. Michelsen Institute (CMI), the University of Khartoum and Al Ahfad University for Women under the research programme Peace-building in Sudan: Mi-cro-Macro Issues. Sudan Report SR 2012: 1, October 2012.

Committee on Payment and Settlement Systems (CPSS), 2001, Core Principles for Systemically Import-ant Payment Systems (Basel, Switzerland: Bank for In-ternational Settlements), January, 2001.

Crawford, E., V. Kelly, T. Jayne, and J. Howard (2010), Input use and market development in sub-Saharan Afri-ca: an overview. Food Policy 28 (2003): 277-292. Cited in ECA-SA 2010.

Delmon, Jeffrey (2009), Private Sector Investment in Infrastructure: Project Finance, PPP Projects and Risk. Kluwer Law International, The Netherlands, 2009.

Demirgüç-Kunt, Asli, and Ross Levine, editors (2001), Fi-nancial Structure and Economic Growth: A Cross-Coun-try Comparison of Banks, Markets, and Development (Cambridge, Massachusetts: MIT Press).

___________ (2008), “Finance, Financial Sector Policies, and Long-Run Growth,” Working Paper no. 11, (Wash-ington, World Bank: Commission on Growth and Devel-opment).

Deng, Francis M. (2007), Sudan at the Crossroads. Massachusetts Institute of Technology, Center for Inter-national Studies, March 2007.

Department for International Development (2004), “The Importance of Financial Sector Development for Growth and Poverty Reduction”. Policy Division Working Paper. Ref no. PD 030.

Deutsche Bank (2012), Brazilian banking sector: A view from 30,000 feet. Research Briefing Emerging markets June 15, 2012 by Markus Jaeger (+1 212 250-6971) Deutsche Bank-AG DB [email protected]. Frankfurt am Main Germany www.dbresearch.com.

Dhanasekaran, K. (2007), “Long run relationship be-tween private investment and its determinants in Indian agriculture.” Reader in Economics, Gobi Arts and Sci-ence College. Presentation at Technical Session II of the 43rd Annual Conference of the Indian Econometric So-ciety.

Dinh, Hinh T. and George R. G. Clarke, editors (2012), Performance of Manufacturing Firms in Africa, An Empir-ical Analysis (Washington: The World Bank).

Dinh, Hinh T., Thomas G. Rawski, Ali Zafar, Lihong Wang, and Eleonora Mavroeidi (2013), Tales from the Development Frontier: How China and Other Countries Harness Light Manufacturing to Create Jobs and Pros-perity (Washington: The World Bank).

Dafur Joint Assessment Mission (2007), Concept Note. Initial Capacity Building for Governing Institutions. DJAM Early Recovery Programme, 2007.

DJAM (2012), Darfur Joint Assessment Mission – 2012. Report of thematic working group II - governance and accountability. Prepared by: United Nations Develop-ment Programme United States Agency for International Development and The World Bank, 2012.

DJAM–FAO (2012), Darfur Joint Assessment Mission – 2012. Report of thematic working group VIII – Agricul-ture, livestock and Rural Livelihoods. Prepared by: FAO and WFP of the United Nations, 2012

Economic Commission for Africa (2010), Assessing


Regional Integration in Africa IV: Enlarging Intra-African Trade. United Nations, Addis Ababa, Ethiopia, May 2010.

EAPP/EAC (2011), Regional Power System Master Plan and Grid Code Study. Report prepared by SNC Lavelin International Inc., and Parsons Brinkerhoff. May 2011.

ECA-SA (2010), Agricultural Input Business Develop-ment in Africa: Opportunities, Issues and Challenges. Economic Commission for Africa (ECA) Southern Africa Office (SRO-SA), 2010.

Elamin, G. E. A. and K. K. Ce’sar (1994). African Energy Programme Report: Forestry and Biomass Sector, Vol. 1, African Development Bank (ADB), Abidjan, March.

Elamin, Nasredin A. Hag (1997), “Export Performance in Sudan: Recent Trends and Policy Impact”. Journal of Economic Cooperation Among Islamic Countries.

Elamin, Dirdiri H M and Nasser A El Naam (2000), Pric-ing Policies and Agricultural Exports in Sudan, Lessons from the 1980s through the 1990s. El Obied Research Station (2000).

El-Sayed El Bushir (1971), Development of Industry in Greater Khartoum, Sudan. East African Geography Re-view. No. 10.

El-Shibly M. & Anthony Philip Thirlwall (1981), Dual-Gap Analysis for the Sudan. World Development, 1981, Vol. 9. Issue 2. pp.193-200.

EU-SPCRP (2011.a), The Development of Improved Market Chains and Value Addition for Production Sup-ported By SPCRP in Red Sea State. The Processing & Marketing of Fish & Fish Products, Tomato, Okra, and Mesquite Pods into Fodder: The case of Red Sea State. The EU & Government of Sudan, Ministry of Agriculture Sudan Productive Capacity Recovery Programme Mod-el Projects (August 2011).

EU-SPCRP (2011.b), The Development of Improved Market Chains and Value Addition For Production Sup-ported By SPCRP in Blue Nile State. Conceptual Frame-work for Processing & Marketing Selected Food Prod-ucts: The case of concentrated mango juice, vegetables drying and pumpkin jams processing in Blue Nile State.

EU & Government of Sudan- Ministry of Agriculture Su-dan Productive Capacity Recovery Programme Model Projects (June 2011

FAC (2006), Intensification of Smallholder Agriculture in Ethiopia: Options and Scenarios Paper. Prepared by Samuel Gebreselassie for the Future Agricultures Con-sortium Meeting at the Institute of Development Studies 20-22 March 2006.

FAC-CAADP (2013), Can China and Brazil help Africa feed itself? FAC CAADP Policy Brief 12, Future Agricul-tures Consortium Secretariat at the University of Sussex, Brighton BN1 9RE UK E- [email protected] www.future-agricultures.org.

FAC-CBAA (2013), Narratives of Brazil-Africa Cooper-ation for Agricultural Development: New Paradigms? Working Paper 051 by Lídia Cabral and Alex Shankland This paper was produced as part of the China and Brazil in African Agriculture (CBAA) Project work stream www.future-agricultures.org, March 2013.

FAO (2004.a), Sudan Poverty Reduction & Programmes in Agriculture. A Report prepared for the Food and Ag-riculture Organisation (FAO) in Khartoum by Abdelrazig Elbashir, Fatih Ali Siddig, Abdelatif Ijaimi and Hassan M. Nour, March, 2004.

FAO (2004.b), Agricultural Marketing in the Sudan: Current Situation and Future Prospects. Results and Findings. A report submitted by El Fadil Ahmed Ismail to FAO under TCP/ SUD/2906 (A). “Strengthening the institutional capacity for planning, economic and policy analysis (PEPA) for the agricultural sector in the Sudan”. Khartoum, Sudan, (2004).

FAO (2010), Resource-seeking Foreign Direct Invest-ment in African Agriculture: A Review of country Case Studies. FAO Commodity and Trade Policy Research Working Paper No. 31 by Ann-Christin Gerlach and Pas-cal Liu , September 2010. available athttp://www.fao.org/es/ESC/ .

FAO (2012.a), Seed System Security Assessment Re-port for Darfur Region. An assessment report published by FAO Rome, January 2012.

FAO (2012.b), DRAFT Concept Note, National Consul-



tation on Policy and Programmatic Actions to Address High Food Prices, 11-13 December 2012 Khartoum- Sudan. FAO-CAP (2012), The FAO Component of the Consoli-dated Appeals Process (CAP), SUDAN 2013. Appeal for the Sudan was launched globally on the 14th December 2012. For a complete overview of FAO’s component of the 2013 CAP, please go to www.fao.org/emergencies.

FAO-CPF (2011), Country Programming Framework for the Republic of Sudan-CPF (2012-2016) (Final Draft) Food and Agricultural Organisation of the United Nations (FAO) October 2011 Khartoum, Sudan. FAO-DJAM (2012), Situation Analysis and Results Framework for Agriculture, Livestock and Rural Liveli-hoods in 5 States of Darfur. Donors Appeal Document for Doha Conference 2012. Darfur Joint Assessment Mission, FAO and WFP, December, 2012. FAO-ERCU (2013), Assessment Evaluation of FAO ERCU Emergency Fisheries Interventions in Blue Nile State (period 2006-2012). Food and Agriculture or-ganisation Sudan office 2013. FAO (2013). FAO Sudan Monthly Newsletter. Issue 15 | April 2013 & Issue 17 | Aug/Sept 2013.

FAO-RONE (2011), International Investments in Agricul-ture in the Near East. Evidence from Egypt, Morocco and Sudan. Edited by Ayşen Tanyeri-Abur and Nasredin Hag Elamin. FAO Regional Office for the Near East, Cai-ro, Egypt.

FAO–NMTPF (2007), National Medium Term Priority Framework for Sudan 2008-2012 (FAO 2007).

FAO-SIFSIA N (2012), Quasi Crop and Food Supply Assessment Mission to Sudan, FAO SIFSIA N special report, January 2012 http://www.fao.org/sudanfoodse-curity.

FAO-SIFSIA (2010), Price and Market-structure Analysis for Some Selected Agricultural Commodities in Sudan: Marketing Costs and Margins. Study made for SIFSIA N, FAO, EU and Ministry of Agriculture General Administra-tion of Planning & Agricultural Economics Department of Agricultural Economics, 2010.

FAO/UNIDO (2010), 3ADI African Agribusiness and Agro-Industries Development Initiative: A Programme Framework. United Nations Economic Commission for Africa, African Development Bank, United Nations Indus-trial Development Organisation, Food and Agriculture Organisation of the United Nations, International Fund for Agricultural Development and the African Union. Out-sourced by Food and Agriculture Organisation (FAO), Vi-ale delle Terme di Caracalla, 00153 Rome, Italy.

FARA (2006), Framework for African Agricultural Pro-ductivity (FAAP). Forum for Agricultural Research in Af-rica. Secretariat, PMB CT 173 Cantonments, 2 Gowa Close, Roman Ridge. Accra, Ghana, June 2006 Web site: http://www.fara-africa.org.

Frey, Bruno S. and Reiner Eichenberger (1999), The New Democratic Federalism for Europe: Functional, Overlapping and Competing Jurisdictions (Cheltenham, UK: Edward Elgar). Gardner, John W. 1990, On Leader-ship (New York: The Free Press).

Giuliano, Paola, Prachi Mishra, Antonio Spilimbergo (2013), “Democracy and Reform: Evidence from a New Data Set,” American Economic Journal, Macroeconom-ics, Vol. 5, No. 4 (October), pp179-204.

Goswami, Arti Grover, Aaditya Mattoo and Sebastián Sáez editors (2012), Exporting Services: A Developing Country Perspective. World Bank, Washington, 2012.

Haj Diab M. (1985), “The Income and Price Effects of the Devaluation of the Sudanese Pound”. In Ali. A. Ali, The IMF Stabilisation Policies: Sudan Economy in Disarray: Essays on the IMF Model. Biddles Ltd., London UK. Harris, Richard G. (2002), Social Policy & Productivity Growth: What are the Linkages. Discussion Paper in Si-mon Frazer University, Canada.

Hassan, M. Kabir and Mervyn K. Lewis (editors), 2007, Handbook of Islamic Banking (Cheltenham, UK and Northampton, MA, USA: Edward Elgar).

Hellin, Jon and Madelon Meijer, (2006), Guidelines for value chain analysis. ESA, November 2006.

Howitt, Peter (2007), Innovation, Competition and Growth. Commentary, C.D. Howe Institute.


Hussein, Elwaleed Kamal Eldin (undated), Challenges with Data Acquisition. A Case Study of the Credit Infor-mation and Scoring Agency. CIASA, Khartoum, Sudan.

Giovannucci, D. (2001). National Trade Promotion Or-ganisations: Their Role and Functions. The guide to de-veloping agricultural markets and agro-enterprises. The world Bank Group (internet source 2001).

Graham , G. G., William C. Maclean, Jr., Enrique Mo-rales, Bruce R. Hamaker, Allen W. Kirleis, Edwin T. Mertz Andjohn D. Axtell (1986), Digestibility and Utilisation of Protein and Energy from Nasha, a Traditional Sudanese Fermented Sorghum Weaning Food. Instituto de Investi-gaciÃ³n Nutricional, La Molina (Lima), Peru and ‘Depart-ment of Food Science, Purdue University, West Lafay-ette, IN 47907(Downloaded from jn.nutrition.org by on March 17, 2010) p.977-984.

GTZ (2008), Value-Links Manual. The Methodology of Value Chain Promotion. Reprint of First Revised Edition, January 2008

ICARDA (1995), Economic Returns from Improved Wheat Technology in Upper Egypt, 1995.

IFAD (2009), Republic of The Sudan, Country Pro-gramme Evaluation. Report No. 2060-SD, International Fund for Agricultural Development, September 2009. IFAD (2013), Press Statement by the International Fund for Agricultural Development on rural microfinance ser-vices for one million poor women across the Sudan, edited by Creamer Media Reporter (21/02/2013) 27 No-vember 2013.

IFC (2013), Doing Business, 2014: Understanding Reg-ulations for Small and Medium-Size Enterprises. Inter-national Finance Corporation, Washington DC, October 29, 2013. IMF (1999), “Sudan: Recent Economic Developments”. Washington D.C: International Monetary Fund Staff Country Report.

IMF (2000), Sudan: Staff Report for the 2000 Article IV Consultations. Washington D.C: International Monetary Fund.

IMF (2012.a), Sudan’s Inflation Problem: Some Lessons from the Past Thirty Years. IMF Country Report No. 12/299, September 10, 2012.

IMF (2012.b), Sudan 2012 Article IV Consultation, IMF Country Report No. 12/298, November, 2012.

IMF (2013.a), Sudan: Selected Issues. IMF Country Re-port No. 13/320, IMF, Washington DC, September 5, 2013.

IMF (2013.b), Sudan 2013 Article IV Consultation, IMF Country Report No. 13/317, October, 2013.

IMF (2013.c), Sudan: Interim Poverty Reduction Strat-egy Paper. IMF, Washington DC, Country Report No. 13/318, October 2013.

IMF (2013.d), “Monetary Transmission Mechanism in Sudan.” IMF Country Report No. 13/320 Sudan: Select-ed Issues. October 2013.

IMF (2013.e), Assessing Sudan’s External Competitive-ness. IMF. Sudan Selected Issues. Washington D.C: In-ternational Monetary Fund.

IMF (2014.a). Sudan. IMF, Washington DC, Country Re-port No. 14/203. July 2014.

IMF (2014.b), Sudan: First Review Under Staff-Moni-tored Programme. Washington DC. IMF Country Report No. 14/249, August 2014.

IMF (2014.c), Sudan: 2014 Article IV Consultation and Second Review Under Staff-Monitored Programme. Washington DC, IMF Staff Report No. 14/364, Decem-ber 2014.

Intergovernmental Authority on Development (2013), The Contribution of Livestock to the Sudan Economy. IGAD Centre for Pastoral Areas and Livestock Develop-ment, Policy Brief No. 6/CLE/8/2013.

International Peace Institute (2010), Issue Brief: A Po-litical Storm Over the Nile. New York, December 2010.

IPAR (2012), Rwanda Case Study on Economic Trans-formation. Report for the African Centre for Economic



Transformation (ACET). Institute of Policy Analysis and Research – Rwanda (IPAR). By Dickson Malunda and Serge Musana. Kigali, Rwanda 2012.

Ismail, E. A (1996), Spatial Organisation of Food grain Storage Facilities in Sudan”. Published Ph. D. ISBN 3-86186-135-6. Publisher: Verlag Ulrich E. Grauer Stuttgart, 1996.

Ismail, E. A. (2003), Livestock markets and marketing system in Gedaref state. Published by Khartoum Univer-sity Press. Khartoum Sudan, 2003. (in Arabic).

Ismail, E. A. (2007), Agricultural Finance in the Sudan: An Organisational Approach & Problem Conceptualisation. Volume 91. 2007. In series of: FARMING & RURAL SYS-TEMS ECONOMICS. ISBN 978-3-8236-1514-9 & ISSN 1616-9808 Margraf Publisher, Germany 2007.

Ismail, E. A. (2010.a), The Economics of Small Scale Mixed Farming Enterprises in Equilibrium Gum Arabic Model. Study report submitted to the World Bank. Re-public of the Sudan, Ministry of Agriculture and Forests of South Darfur in collaboration with the World Bank, 2010

Ismail, E. A. (2010.b), The Role of Agribusiness In-vestment Centre in Improving the Performance of the Agribusiness Sector in Sudan: Marketing Strategies, Policies, Procedures, and Action Plans for Establishing the Agribusiness Market Information Systems. An FAO report submitted to The Ministry of Agriculture and For-estry Directorate of International Cooperation and In-vestment Promotion, January 2010

Ismail, E. A. (2010.c), A Conceptual Framework for De-veloping the Small and Medium Enterprises in the Su-dan. Introduction, analysis and policy framework. ISBN 978-3-8236-1603-0. Margraf Publishers, Weikersheim, Germany 2010.

Ismail, E. A. (2012.a), Livestock Markets and their Role in Developing the Livestock Sector: Is there a Need for Livestock Auction Markets in Sudan? African J. of Eco-nomic and Sustainable Development (AJESD) Vol. 1 No.1, 2012) by Inderscience Publishers 2012.

Ismail, E. A. (2012.b), Crop Auction Markets in Sudan: Their Role, Market Mechanisms and Performance. Af-

rican J. of Economic and Sustainable Development (AJESD) Vol. 1 No.4, 2012) by Inderscience Publishers 2012.

Japan International Cooperation Agency (2012), The Data Collection Survey on Trade and Investment in Su-dan, Summary Report, June.

Jefferis, Keith (2012), Macroeconomic Management in a Mineral-Rich Economy. International Growth Centre.

Johanson, Richard K. and Arvil V. Adams (2004), Skills Development in Sub-Saharan Africa (Washington: World Bank).

Johnson, Omotunde E. G. (1972), “Economic Analy-sis, the Legal Framework and Land Tenure Systems,” Journal of Law and Economics, Vol. 15, no. 1 (April), pp. 259-76. Johnson, Omotunde E. G. (1974), “Credit Controls as Instruments of Development Policy in the Light of Eco-nomic Theory,” Journal of Money Credit and Banking, Vol. 6, no.1 (February), pp. 85-99.

Johnson, Omotunde E. G. (1975), “An Economic Anal-ysis of Corrupt Government, with Special Application to Less Developed Countries,” Kyklos, Vol. 28, Fasc. 1, pp. 47-61.

Johnson, Omotunde E. G. (2002), “Compliance with the Core Principles for Systemically Important Payment Sys-tems and the Role of the IMF”, in E-Money and Payment Systems Review, edited by Robert Pringle and Matthew Robinson (London: Central Bank Publications), pp. 203-14.

Johnson, Omotunde E. G. (2004), “How Will Good Eco-nomic Policy Environments Emerge in Africa?” Journal of Policy Reform, Vol. 7, Issue 3 (September), pp. 151-164.

Johnson, Simon, Jonathan D, Ostry and Arvind Subra-manian (2006), Levers of Growth, Policy Lessons from Earlier Bouts of Growth in Developing Countries. Fi-nance and Development. Vol. 43. No 6.

Johnson, Simon, Jonathan D. Ostry and Arvind Subra-manian (2007), The Prospects for Sustained growth in Africa: Benching the Constraints. IMF Working Papers.


________ (2009, “Building an International Financial Centre,” Paper Presented at the 50th Anniversary In-ternational Conference of the Central Bank of Nigeria, Abuja, Nigeria (May). http://www.cenbank.org/cbnat50/papers/session6/Building_an_International_Financial_Center--Omotunde_Johnson.docx

_________ (2012.a), “Economic Management and Governance in the Drive for Economic Transformation in Sierra Leone: Selected Issues,” in Omotunde E. G. Johnson, ed., Economic Challenges and Policy Issues in Early Twenty-First-Century Sierra Leone (London: In-ternational Growth Centre), pp.1-37.

__________ (2012.b), “Financial Sector Reform and De-velopment in Sierra Leone,” in, Omotunde E. G. John-son, ed., Economic Challenges and Policy Issues in Early Twenty-First-Century Sierra Leone (London: Inter-national Growth Centre), pp.73-120.

__________ Richard Abrams, Jean-Marc Destresse, Tonny Lybek, Nicholas Roberts, and Mark Swinburne (1998), Payment Systems, Monetary Policy, and the Role of the Central Bank (Washington: International Monetary Fund).

Kachru, R. P. (2006), Agro-Processing Industries in In-dia—Growth, Status and Prospects. Indian Council of Agricultural Research, New Delhi, 2006.

Karam Allah, A. K (1996), Gum Arabic Characteristics. Gum Arabic Symposium in Sudan. Khartoum October, 1996. Unpublished paper.

Kenney, Martin (2008), “Lessons from the Development of Silicon Valley and its Entrepreneurial Support Network for Japan,” in Growing Clusters in Asia: Serendipity and Science, edited by Yusuf, Shahid, Kaoru Nabeshima, and Shoichi Yamashita, World Bank, Washington DC, pp. 39-66.

Khan, Tariqullah and Habib Ahmed (2001), “Risk Man-agement: An Analysis of Issues in Islamic Financial In-dustry,” Islamic Development Bank, Islamic Research and Training Institute, Occasional Paper, No. 5, 2001.

Kim, Linsu (1997), Imitation to Innovation, The Dynamics of Korea’s Technological Learning, (Boston, Mass. Har-

vard Business School Press).

Kingcombe, Christian (2012), “Lessons for Developing Countries from Experience with Technical and Vocation-al Education and Training,” in Omotunde E. G. Johnson, ed., Economic Challenges and Policy Issues in Early Twenty-First-Century Sierra Leone (London: Internation-al Growth Centre), pp. 278-365.

Kireyev, Alexi (2001), “Financial Reforms in Sudan: Streamlining Bank Intermediation”, IMFGeneva Office, IMF Working Paper WP/01/53, May 2001.

Lambert, I. (2001), URL Problems and Constraints to the Development of the Agro-Processing Sector http://www.uwichill.edu.bb/bnccde/dominica/conference/papers/Lambert.html. © Ian Lambert, 2001. HTML prepared using 1st Page 2000, revised February 5th, 2001.

Lederman, Daniel, Marcelo Olarreaga, and Lucy Payton (2006), “Export Promotion Agencies: What Works and What Doesn’t,” World Bank Policy research Working Pa-per Series, December.

Levine, Ross (1997), “Financial Development and Eco-nomic Growth: Views and Agenda,” Journal of Econom-ic Literature, Vol. 35, no. 2 (June), pp. 688-726.

Levine, R., Loayza N. and Beck, T. (2000), “Financial Intermediation and Economic Growth: Causality and Causes”. Journal of Monetary Economics, Vol.46, pp. 31-77.

Llewellyn, David T. (2002), “Alternative Approaches to Regulation and Corporate Governance in Financial Firms,” in Financial Risks, Stability, and Globalization ed-ited by Omotunde E. G. Johnson (Washington: Interna-tional Monetary Fund), pp. 117-163.

Louis Berger Group with Doshi Borgan and Partners, National Transport Master Plan (January 2010).

Lucas, Robert E. (1988), “On the Mechanics of Eco-nomic Development.” Journal of Monetary Economics 2 (1988), 3-42.

Macey, Jonathan R., and Maureen O’Hara (2003), “The Corporate Governance of Banks,” FRBNY Economic



Policy Review, February, pp. 91-107.

Maxwell Stamp Plc. (2009), “Assessing Sudan’s Diver-sification Potential in Agricultural Production.” Unpub-lished Report prepared by Dr Panos Konandreas on behalf of Maxwell Stamp Plc. For the Ministry of Foreign Trade, Government of Sudan and the European Union.

Mboweni. T. T. (2006), “Deepening Capital Markets: The Case of South Africa”, Speech at the Seminar on “Deepening Financial Sectors in Africa: Experiences and Policy Options,” co-organised and co-sponsored by the IMF/AFR and DFID (Johannesburg), November, http://www.reservebank.co.za/internet/Publication.nsf/LAD-V/590E9E23E07AC8B34225721F003B90DE/$File/IMF-capital+markets-7+nov06a.pdf.

McKenzie, Scott O. (2012), “Egypt’s Choice: From the Nile Basin Treaty to the Cooperative Framework Agree-ment, an International Legal Analysis,” Transnational Law and Contemporary Problems. University of Iowa College of Law, Vol. 21: 571, 2012.

McKinsey Global Institute (2010), How to Compete and Grow: A Sector Guide to Policy. Mckinsey & Company with branches all over the World. See. www.mckinsey.com

Mehdi Shafaeddin (2007), Oil and Challenges of Trade Policy Making in Sudan in A Globalising Arena. Unpub-lished Report.

Meloni (World Bank), Bott (UNDP), Hansohm (UNDP). Microfinance in Sudan. 2007.

Ministry of Industry (2005), The Food Industry Subsector Report: Sectoral Committees of the Ministry of Industry, Republic of the Sudan, July 2005.

Ministry of Industry, Industrial Investment, http://www.industry.gov.sd/ennn/main/invest.htm.

Minniti, Maria, and Moren Lévesque (2008), “Recent Developments in the Economics of Entrepreneurship,” Journal of Business Venturing, Vol. 23, 603-12.

MoAF (1997), Desk Country Economic and Agricultural Sector Profile. Ministry of Agriculture and Forestry, March April 1997.

MoAF (2010), Forage Gaps Report 2009. A joint report between the Department of Forage and Pasture of the Ministry of Agriculture and Forestry and FAO. Produced in January, 2010

MoARF (2011), Blue Nile Start-up Emergency Project (BNSEP). Additional Financing Terms of Reference for Study on Comprehensive Fisheries Development Plan (Fisheries Master Plan) for Blue Nile River, Directorate of Fisheries, 2011 (unpublished).

MoAF (2013), Annual Report. Department of Agricultural economics and policy. Ministry of Agriculture and Forest-ry, 2005/06-2012/13.

Mohamed, Issam A.W (undated), The Sudanese Agri-culture Development, History, Policies and Sustainabil-ity. Electronic copy available at: http://ssrn.com/ab-stract=1829469

Morris, Mike and Glen Robbins (2007), “Government Support and Enabling Environment for Inter-Firm Cluster Cooperation: Policy Lessons from South Africa,” in Oye-laran-Oyeyinka, Banji, and Dorothy McCormick (editors), op. cit., pp. 243-268.

National Bureau of Statistics (2009), National Baseline Household Survey. Khartoum, Sudan.

Nashashibi, K. (1980), A supply framework for Exchange Reform in Developing Countries: the Experience of Su-dan. IMF Staff Papers No 27.

Nasredin A. Hag Elamin (1997), “Export Performance in Sudan: Recent: Trends and Policy Impact”. Journal of Economic Cooperation Among Islamic Countries.18, 4, pp.57-76.

National Population Council and UN Agencies (2010), Sudan: Millennium Development Goals: Progress Re-port. Khartoum. Sudan.

Nedelcovych, M. and D. Shiferaw (2012), Private Sec-tor Perspectives for Strengthening Agribusiness Value Chains in Africa: Case Studies from Ethiopia, Ghana, Kenya, and Mali study sponsored by The Partnership to Cut Hunger and Poverty in Africa, May 2012.


Nelson, R. R. (1993), National Innovation Systems: A Comparative Analysis (Oxford: Oxford University Press).

NEPAD CAADP (2005), Support to NEPAD–CAADP Im-plementation. Bankable Investment Project Profile, Insti-tutional Capacity Building, Government of the Republic of the Sudan TCP/SUD/2909(I) (NEPAD Ref. 05/12 E) Volume V of V, January 2005.

NEPAD-CAADP (not dated), Building South-South link-ages: The Comprehensive Africa Agriculture Develop-ment Programme (CAADP) and Asia. PARTNERSHIPS IN SUPPORT OF CAADP. For more information see www.nepad.org/2005/files/caadp.php.

Ndulu, Benno J. and Stephen A. O’Connell (2004), Pol-icy Plus. Africa’s Growth Performance, 1960-2000. The African Economic Research Consortium. Nairobi, Ken-ya.

Ndulu, Benno (2007), Challenges of African Growth: Op-portunities, Constraints and Strategic Directions. Wash-ington D.C: World Bank.

NHO (2013), Private Sector Development: Cooperation for Mutual Benefit. NAERINGSLIVETS HOVEDORGANI-SASJON Middelthuns gate 27. Postboks 5250 Majorst-uen , NO–0303 Oslo www.nho.no

NMUN – APEC (2011), Food Security National Model United Nations. 10 - 13 March 2011 Washington, DC Honoring the US as the 2011 Host Economy, WASH-INGTON DC 2011 www.nmun.org

O’Connell, Stephen A. and Benno J. Ndulu (2000), “Background Information on African Growth”. Part of research project on “Explaining African Growth” funded by The African Economic Research Consortium. Nairobi, Kenya.

Organisation for Economic Cooperation and Develop-ment (2004), OECD Principles of Corporate Governance (Paris, France: OECD Publications).

OECD/UN (2011), Economic Diversification in Af-rica: A Review of Selected Countries, OECD Pub-lishing. OECD/United Nations (2011) http://dx.doi.org/10.1787/9789264038059-en.

O’Sullivan, K.P.V., and Tom Kennedy (2008), “Supervi-sion of the Irish Banking System: A Critical Perspective,” CESifo DICE Report, 3/2008, pp. 20-26.

Oyelaran-Oyeyinka, Banji, and Dorothy McCormick, ed-itors (2007), Industrial Clusters and Innovation Systems in Africa (Tokyo, New York, Paris: United Nations Univer-sity Press).

OECD/UN (2011), Economic Diversification in Af-rica: A Review of Selected Countries, OECD Pub-lishing. OECD/United Nations (2011) http://dx.doi.org/10.1787/9789264038059-en.

Parker, Simon C. (2009), The Economics of Entrepre-neurship (Cambridge: Cambridge University Press).

Porter, Michael E. (2003), “Building the Micro-founda-tions of Prosperity: Findings from the Micro-founda-tion Competitiveness Index”. Chapter 1.2, In the World Competitiveness Report (2003).

Porter, Michael E. (2009), “The Competitive Advantages of Nations.” Harvard Business Review.

Public-Private Infrastructure Advisory Facility, http://www.ppiaf.org/ppiaf/.

Qian, Y. and B. Weingast (1997), “Federalism as a Com-mitment to Preserving Market Incentives,” Journal of Economic Perspectives, Vol. 11, No. 4, fall, pp. 83-92.

Ranganathan, Rupa, and Cecilia M. Briceño-Garmen-dia (2011), Sudan’s Infrastructure: A Continental Per-spective. World Bank, Washington DC, Policy Research Working Paper 5815, September 2011.

Republic of Sudan (2008), Executive Programme for Ag-ricultural Revival. Report by General Secretariat of Coun-cil of Ministers, Khartoum, April 2008.

Republic of Sudan (2010), Sudan Millennium Develop-ment Goals Progress Report, 2010. Ministry of Welfare and Social Security and National Population council General Secretariat, Khartoum, Sudan, 2010.

Rodden, J. A., G. S. Eskeland, and J. Litvack (2003), Fiscal Decentralisation and the Challenge of Hard Bud-get Constraints. Cambridge, Massachusetts: MIT Press,



2003.

Sachs, Jeffrey and Andrew M. Warner (1997), Natural Resource Abundance and Economic Growth. Centre for International Development and Harvard Institute for In-ternational Development.

Safiat, Ali Saber Ali (2013), Financial Intermediation and Economic Growth in Sudan: An Empirical Investigation, 1970-2011. British Journal of Economics, Management and Trade, 3 (4), pp. 332-358, July 2013.

Salleh, Ismail Muhd and Saha Dhevan Meyananthan (1997), “Malaysia: Growth, Equity, and Structural Trans-formation,” Lessons from East Asia, edited by Danny M. Leipziger (Ann Arbor: University of Michigan Press), pp. 279-335.

Samia Satti O.M. Nour (2011), “Assessment of the Im-pacts of Oil: Opportunities and Challenges for Economic Development in Sudan”. UN University Working Paper Series January 2011 also in The African Review of Eco-nomic and Finance. Vol 2, No. 2 (June 2011).

Siddig A. Salih (1994), Sustainable Ecosystem in Afri-ca: Managing Natural Forest in Sudan. working paper no.117, UNU/WIDER , December 1994.

Securities Industry Association (2007), The Key Building Blocks of World Class Financial Centres, New York, NY and Washington DC. www.ita.doc.gov/td./finance/publications/world_class_financial_center.pdf.

SolAbility (2013), The Global Sustainable Competitive-ness Index, 2013. Ilsan, South Korea, April 2013.

Song, Fenghua, and Anjan V. Thakor (2010), “Financial System Architecture and the Co-Evolution of Banks and Capital Markets,” Economic Journal, Vol. 120 (Septem-ber), pp. 1021-1055.

Staples, Brian Rankin (2002), “Trade Facilitation: Improv-ing the Invisible Infrastructure,” in Bernard Hoekman, Aaditya Mattoo, and Philip English, Development Trade and the WTO: A Handbook (Washington: The World Bank), pp.139-148.

Stewart, Leslie S. and Michael Luger (2003), “Best Prac-

tices in the Implementation of Cluster-Focused Strate-gy,” Office of Economic Development, The Frank Haw-kins Kenan Institute of Private Enterprise, UNC-Chapel Hill, November.

Ssebisubi Maurice (2011), Aquaculture Management Consultants Ltd. In: Analysis of Small-Scale Fisheries’ Value-chains in Uganda, draft report, April 2011. Also see MTTI, 2006a. Diagnostic Trade Integration Study: Volume 1, Kampala, Uganda.

Sundararajan, V., Marston, D., and Shabsigh, G. (1998), “Monetary Operations and Government Debt Man-agement under Islamic Banking,” IMF Working Paper, WP/98/144..Taylor, L. (1990), “A Three-Gap Model” in F.D. McCar-thy (ed.) Problems of Developing Countries in the 1990s. Washington, D.C: World Bank.

Taylor, J R N (2009), Overview: Importance of Sorghum in Africa. Department of Food Science, University of Pre-toria, Pretoria 0002, South Africa, E-mail: [email protected]

Tvedt, Terje (2004), The Nile: An Annotated Bibliography. I.B. Taurus, 2nd edition, January 17, 2004

United Nations (2010), The Millennium Development Goals Report, 2010. New York, 2010.

United Nations and World Bank (2005), Framework for Sustained Peace, Development and Poverty Reduction. Joint Assessment Mission, Volume I, March 18, 2005.

United Nations Conference on Trade and Development (1997), An Overview of Activities in the Area of Inter-Firm Cooperation: A Progress Report, UNCTAD Divisional Paper.

UNDP (1996), Human Development Report. United Na-tions Development Programme. New York. USA.

UNDP (2001), Towards Human Resilience: Sustaining MDGs Progress in an Age of Economic Uncertainty. UNDP Bureau for Development Policy. New York. United Nations Development Programme.

UNDP (2012), Human Development Report. United Na-


tions Development Programme. New York. USA.

UNDP (2013), Human Development Report. United Na-tions Development Programme. New York. USA.

UN ECA (2011), Industrial Policies for Structural Trans-formation of African Economies. Options and Best Prac-tices.

UNEP (2012), On the Hoof: Livestock Trade in Darfur, Feinstein International Center, Tufts University, Septem-ber 2012.

UNEP (2013), Country Programme Evaluation. Re-public of the Sudan. A report for United Nations Envi-ronment Programme byJon Bennett (Team Leader), Abu El Gasim Amir Abu Diek, and Ali Jammaa Abdal-la March 2013.

UNHCR (2015), UNHCR Country Operations Profile – Sudan. at www.unhcr.org/pages/49e483b76.html

UNIDO (2003), Comprehensive Industrial Survey of 2001. United Nations Industrial Development Organisa-tion, Geneva, 2003.

UNIDO (2010), An Industrial Agenda for Poverty Relief and Transition to Sustainable Development. Indepen-dent Evaluation, UNIDO Integrated Programme in Su-dan. UNIDO EVALUATION GROUP. United Nations In-dustrial Development Organisation, Geneva, 2010

UNUMERIT (2011), Assessment of Industrial Perfor-mance and the Relationship Between Skill, Technology and Input‐output Indicators in Sudan, by Sami Satti Osman Mohamed Nour Working Paper series #2011-030 Maastricht Economic and social Research Institute on Innovation and Technology, UNU-MERIT Universi-ty of Maastricht, School of Business and Economics, UNU-MERIT, Maastricht, the Netherlands

U.S Energy Information Administration (2013), Sudan and South Sudan. Country Report, September 2013. www.eia.gov/countries.

USAID (1982) Senegal Project Paper Outlines. Integrat-ed Development Project No. 625-0621 USAID/RBDO. Dakar, Senegal, December 1982 (O.M.V.S./U.S.A.I.D.

USAID (2009). Staple Foods Value Chain Analysis. Coun-try Report – Malawi. Publication produced for review by the United States Agency for International Development and was prepared by Chemonics International Inc., No-vember 2009 USAID (2010). Review of the Existing Sectoral Policies, Strategies and Studies on Agriculture and Agribusiness in Mozambique. DRAFT Strategy Paper for USAID Agri-FUTURO by Joao Z. Carrilho August 4th, 2010.

Waterbury, John (1979), Hydropolitics of the Nile Valley. University of Syracuse Press, 1979

Weber, Barbara and Hans Wilhelm Alfen (2010), Infra-structure as an Asset Class (Chichester, West Sussex, UK: John Wiley and Sons Ltd) Wilson, R (2002), “The Interface between Islamic and Conventional Banking”, in Iqbal, M. and LIewellyn, D. (eds.), Islamic Banking and Finance: New Perspectives on Profit Sharing and Risk, Edward Elgar, Cheltenham, UK.

Woodside, Arch G. and Robert E. Pitts (1996), Creat-ing and Managing International Joint Ventures. Quorum Books, Westport, Connecticut, 1996.

World Bank, Enterprise Surveys—What Businesses Ex-perience, www.enterprisesurveys.org.

World Bank (1995), Supply Prospects for the Agricultural sector. Washington, D.C: World Bank, October 1995.

World Bank (2003), Sudan: Stabilisation and Recon-struction. Country Economic Memorandum. Washing-ton, D.C: World Bank.

World Bank (2003), Country Re-engagement Note for the Republic of Sudan. Washington, D.C: World Bank.

World Bank (2007), Policy Note: Export Marketing of Acacia Gum from Sudan. World Bank, Washington DC, March, 2007.

World Bank (2007), Project Information Document: Su-dan Microfinance Development Facility Project. World Bank, Washington DC, 2007.



World Bank (2008.a), Agriculture for Development. The International Bank for Reconstruction and Development (World Bank) Washington DC Internet: www.worldbank.org

World Bank (2008.b), Sudan Diagnostic Trade Integra-tion Study: Trade in Agricultural Products. Reproduced by Poverty Reduction and Economic Management, Afri-ca Region, World Bank, June 2008

World Bank (2008.c), Revitalising Sudan’s Non-Oil Ex-ports: A Diagnostic Trade Study (DTIS).

World Bank (2009.a), Sudan: Private Investment Survey Climate. Washington DC, December, 2009.

World Bank (2009.b), Sudan: The Road Toward Sustain-able and Broad-Based Growth. World Bank, Washing-ton DC, December 2009.

World Bank (2010.a), Africa’s Infrastructure: A Time for Transformation. The World Bank, Washington DC, 2010.

World Bank (2010.b), Innovation Policy: A Guide for De-veloping Countries. The World Bank, Washington DC, 2010.

World Bank (2011), Gum Arabic Industry, Production Potential, Market Prospects and Processing for Export: Strategies Towards Stimulating Increased Gum Arabic Production in South Darfur.

World Bank (2012), Agribusiness Innovation in Ethiopia: Enabling a Climate Smart, Competitive, and Sustainable Agribusiness Sector ©2012 Information for Develop-ment Programme (infoDev)/ The World Bank. Internet: www.infoDev.org.

World Bank (2013.a), Africa’s Pulse: An analysis of is-sues shaping Africa’s Economic Future. Document pro-duced by the Office of the Chief Economist for the Africa region Volume # 8, The World Bank. October, 2013.

World Bank (2013.b), Doing Business 2014. Economy Profile: Sudan. Washington, D.C: World Bank.

World Bank (2014) Prospects for Commodity Markets, October 2014, http://econ.worldbank.org.

World Economic Forum (1996), The Global Competitive-ness Report, 1996. Geneva, Switzerland, 1996.

World Economic Forum (2009), The Global Competitive-ness Report, 2009. Geneva, Switzerland, 2009.

WFP-FAO (2011), Crop and food security assessment mission to the 15 northern states of Sudan. Special Report, Government of Sudan and FAO/WFP, January 2011.

World Trade Organisation (2008), “Revitalising Sudan’s Non-Oil Exports, a Diagnostic Trade Integration Study (DTIS)”.

Yartey, Charles Amo, and Charles Komla Adjasi (2009), “Stock Market Development in Sub-Saharan Africa: Crit-ical Issues and Challenges” International Monetary Fund Working Paper, WP/07/09, August.

Yoshino, Yutaka (2011), Industrial Clusters and Micro and Small Enterprises in Africa: From Survival to Growth (Washington: The World Bank).

Yusuf, Shahid (2008), “Can Clusters Be Made to Order?” in Growing Clusters in Asia: Serendipity and Science, edited by Yusuf, Shahid, Kaoru Nabeshima, and Shoichi Yamashita (Washington: The World Bank), pp. 1-37.

Zaman, H. (2004), “The Scaling-Up of Microfinance in Bangladesh: Determinants, Impact, and Lessons”. World Bank Policy Research Paper No. 3398, Septem-ber 2004.

ZSPRP (2007), Zanzibar Strategy for Growth and Re-duction of Poverty, the Revolutionary Government of Zanzibar. January 2007.




Date post:	15-Jan-2023
Category:	Documents
Upload:	khangminh22
View:	0 times
Download:	0 times