Hamdok may have struck the right chords, but Sudan uprising is yet to bear fruit

Sunday December 15 2019

Sudan Prime Minister Abdalla Hamdok. His efforts are yet to realise the hopes of economic stability and afford the impatient man on the street a better life. PHOTO | AFP


In just four months, Sudan Prime Minister Abdalla Hamdok has rode the wave of international relief that the protests that led to the ouster of Omar al-Bashir ended up in a broad-based transition government despite the military bid to usurp the people’s will.

In various fora, he has struck the right chords winning support in his bid to have Sudan removed from the US state sponsors of terrorism blacklist. After the two countries resumed from diplomatic ties earlier this month, it is now a question of when the sanction will be removed enabling Khartoum to negotiate debt relief as well as new financing from multilateral institutions.

At home, Mr Hamdok has moved quickly to annul laws that emasculated citizens especially women and started negotiations with rebel groups for lasting peace in restive regions like Darfur. He is also on the verge of agreeing on common borders with South Sudan, a further fillip for security and trade. But these efforts are yet to realise the hopes of economic stability and afford the impatient man on the street a better life.

"There is a retreat from the promises that were made to address the deteriorating living situation. Prices are very high. There is a dearth of medicines and if they are available they are expensive,” said Abbas who did not want to give his full name.


Food prices have risen by between 10 per cent and 20 per cent above the prices before the protests while shortage of petroleum has raised transportation costs across the board. Annual inflation rose to 60.67 per cent in November from 57.7 per cent in October, according to the Central Bureau of Statistics. In November 2018, the annual inflation stood at 24.76 per cent, indicating a deterioration in the cost of living by more than a half. The average inflation for the year was 63 per cent, among the world’s highest.


The bureau put absolute poverty in Sudan at 36.1 per cent; affecting about 14.5 million of the country’s 40 million people. The United Nations estimates that nine million people in Sudan will need humanitarian aid in the coming year as a result of the economic hardship.

Luckily for Mr Hamdok, there is an element of realism within the populace in the likes of Ibrahim who cautioned Abbas: "We must be patient and help the new government so that it can pull out of this inherited crisis." Unconvinced Abbas accused the government of “lack of clarity and ambiguity” in tackling the economic meltdown.

When he was sworn in last August, Hamdok boldly declared that the transition government was “capable of overcoming the economic crisis.” In office, the task has proven easier said than done as shackles placed by the US sanctions, the loss of oil revenues to the seceding South Sudan in 2011 and privately appropriated mineral resources have left Sudan short on foreign exchange.

Even with injection of funds from its Arab allies — Egypt, the United Arab Emirates and Saudi Arabia — Hamdok estimates that the country needs $10 billion to stabilise matters.

His one-year plan to address the crisis rested on improving the supply of commodities like sugar, flour and petroleum, stabilising the exchange rate, restore confidence in the banking sector and a sound business environment.

On the first count supply has been enhanced through imports from friendly countries including Russia but the latter three have proven problematic. The official exchange rate to the dollar has retreated from about 30 pounds to 45 pounds; about half of the 90 pounds obtaining in the parallel market.

“The difference between the official and parallel markets is about 100 per cent. This is a major distortion in the economy which has negatively affected the prices of goods and services,” said D. Mohammed Al-Nayer, a professor of economics at the University of Expatriates.

The pound is projected to weaken to 92 to the dollar ahead of Christmas and 105 in January as end year demand from the corporate sector weighs. Sudan’s current account deficit was also amplified by loss of earnings from its two main forex sources —livestock and oil seeds.


Khartoum suspended the export of livestock because of foot and mouth disease and that of oil seeds in order to protect local supplies. Sudan lost 80 per cent of foreign exchange revenue after it was left with a quarter of oil wells when it split with South Sudan. An estimated 50 per cent of its public revenue base was also eroded.

Without al-Bashir’s complaisant policies, the country would perhaps have fared better. He offered substantial subsidies on wheat and fuel by printing money. Petrol is about 10 US cents, one of the lowest in the world. A vast shadow economy in the security and energy sector also depresses revenue collection.

For the little exchange that is coming through, currency dealers said exporters were preferring trading it in the parallel market rather than banks, which the government designated as market makers during al Bashir’s reign. Currency traders said banks were also dabbling in the parallel market, causing a steady weakening of the pound.

A currency trader on condition of anonymity said the policy of allowing banks to buy currency on their own behalf as market makers was counterproductive during times of shortages. The government has slowed down its clampdown on the black market after realising it would aggravate the weakening of the pound.

Sudanese economic analyst Abu Al-Qasim Ibrahim said the government should act swiftly to resume livestock and oil seed exports to increase the supply of foreign exchange and work on a rational budget. Oil seeds alone earn Sudan $400 million, and cotton $108 million, in foreign exchange annually.

“The budget for 2020 has a big deficit and government institutions are unable to meet their needs, particularly in terms of goods and services. The Hamdok government plan will not succeed if it is not able to remove Sudan from the state sponsors of terrorism list," Dr Al Qasim said.

Mr Hamdok has said that Sudan needs $8 billion for economic recovery in two years and another $2 billion in foreign exchange support. The country also has a debt of $50 billion. The lifting of subsidies in 2018 sparked the December 2018 revolution following a surge in the price of bread. As prices continue rising, the uprising is yet to bear fruit for the man on the street.