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Al Taghyeer
6 days ago
- Business
- Al Taghyeer
The Sudanese Banking System: Structural Imbalances and Prospects for Comprehensive Reform
The Sudanese Banking System: Structural Imbalances and Prospects for Comprehensive Reform By: Omer Sidahmed Freelance Banking and Financial Expert Introduction The banking system plays a pivotal role in any economy, serving as the central mechanism for mobilizing savings and directing them toward investment and production. It also plays a critical part in formulating monetary policy and regulating capital circulation. In Sudan, however, this role has been systematically eroded over the past decades due to a series of enabling and experimental policies initiated in the 1980s. This deterioration worsened with the Islamization of the financial system, and then further deteriorated following the coup of October 25, 2021, reaching its nadir with the outbreak of war in April 2023. The war led to the destruction of banking infrastructure and pushed the Sudanese economy into a state of severe contraction, loss of confidence, and liquidity chaos. This paper aims to provide a comprehensive analysis of the current state of Sudan's banking system by examining institutional, legal, and regulatory imbalances, followed by a full reform vision grounded in transparency, efficiency, and independence, while drawing on successful international experiences. The Post-War Banking Reality: Unprecedented Collapse Infrastructure Destruction and Asset Losses Dozens of branches looted or destroyed, especially in the capital and conflict-affected states. Loss of archives, client data, and collateral records. Near-complete breakdown of electronic systems (including clearing and payments). Over 6 foreign banks exited the Sudanese market. Loss of Confidence and Liquidity Mass withdrawal of deposits triggered liquidity pressures. Suspension or freezing of most transactions. Inability of banks to meet obligations; loan defaults increased. The parallel market became the real hub for cash and foreign currency. Monetary Policy Paralysis The Central Bank of Sudan (CBOS) lost control over core functions like inflation targeting, liquidity management, and exchange rate stabilization due to: Abandonment of traditional monetary tools (interest rate, reserve requirements, discount rate). Excessive focus on Islamic tools like Shahama certificates, used to fund budget deficits rather than control liquidity. CBOS mandated that banks hold at least 30% of their assets in these non-liquid instruments. Weak interbank liquidity fund, forcing banks to borrow directly from CBOS under complex Islamic structures, creating conflicts of interest. With no reserves and plummeting confidence, the exchange rate collapsed to nearly SDG 3,000 per USD. Structural and Systemic Weaknesses in the Banking System Regional Comparison Sudan lags behind regional peers (Kenya, Egypt, Ethiopia, Rwanda) in capital adequacy, banking assets, and financial inclusion. Bank assets: ≈$12 billion (only 20% of GDP) vs. Egypt's $470 billion (70%). Financial inclusion: Only 7% of adults have bank accounts, vs. 83% in Kenya and 64% in Egypt. Capital Inadequacy and Weak Governance Most banks fail to meet Basel II, let alone Basel III. Use of fictitious instruments to simulate capital. Politically connected board members misused loans. Focus on short-term consumption, not productive sectors. Banks prefer risk-free Shahama investments over supporting industry/agriculture. Financial Exclusion Only 15% of Sudanese citizens have active accounts. Most branches are in Khartoum; rural areas are largely excluded. No tailored products for informal workers or rural populations. Encourages cash-based informal economy, tax evasion, and money laundering. A Bloated and Politicized Central Bank 17 general departments, 37 sub-departments, 18 regional branches. Appointments based on loyalty, not merit. Conflicting mandates, bureaucratic inertia, and disguised unemployment. Deep state networks embedded in decision-making. Monopolization of Islamic Banking Absence of conventional windows discouraged foreign investors. Legal ambiguity and conflicts between Sharia and financial oversight. Undermined discipline and innovation in banking services. Corruption and Political Capture Systematic privatization of public banks without transparency. Political elites and security agencies acquired stakes. Banks used to fund militias and election campaigns. Internal audits and compliance units weakened or neutralized. 70%+ of major bank defaults linked to politically connected figures. III. Reforming the Banking System – A Comprehensive Roadmap Reforming the Central Bank Repeal 2002 CBOS Law and adopt a modern version ensuring independence. Appoint the board via elected legislature. Abolish subsidiaries and integrate roles. Restore interest rate tools, open market operations, reserve requirements. Reforming Commercial Banks Increase minimum capital to meet Basel standards. Merge small/dysfunctional banks. Reclaim state stakes where privatization was illegal. Re-establish sector-specific development banks. Divest from stocks/real estate, focus on lending. Legislative and Regulatory Reform Consolidate laws (CBOS, AML, banking, e-transactions) into one act. Replace annual circulars with 5-year manuals. Enact explicit deposit protection law. Establish independent financial oversight authority. Digital Transformation and Financial Inclusion Expand digital payment platforms via independent tech firms. Mobile banking modeled on Kenya's M-Pesa. Integrate civil and business registries for data access. Reforming Microfinance and Consumer Lending Merge all microfinance firms under one national entity. End mandatory micro-lending by commercial banks. Focus lending on productive sectors. Post-War Reform – Priorities and Urgencies Phase out Shahama and similar instruments. Settle CBOS obligations to commercial banks. Recover looted funds inside/outside Sudan. Convene national financial reform conference before any economic summit. Detailed Structural Reform Measures Central Bank Reform Downsize to 5–7 departments. Merge parallel firms (e.g. Sudan Financial Services). Train staff (CIB, Basel, AML, Sharia audits). Link currency to real reserves (gold, FX). Ensure reporting to Parliament, not Executive. Commercial Bank Reform Raise capital threshold to USD 50 million. Consolidate banks to 10–12. Enforce Basel III (8–10% capital adequacy). Allocate 60%+ of loans to productive sectors. Ban insider lending and speculative portfolios. Legal and Regulatory Framework Merge all banking laws into one. Establish a National Banking Observatory. Introduce Islamic + conventional windows for inclusivity. Microfinance and Cooperatives Merge 46 firms into one national institution. Create 'People's Finance Bank' offering mobile services. Link financing to local production units. Create independent guarantee arm for non-traditional lending. Digital Banking and Fintech Digitize payments, integrate digital ID. License digital banks for rural and diaspora markets. Promote fintech partnerships. Protect customer data and e-signatures. Conclusion: Economic Sovereignty Begins with Banking Reform Sudan cannot rebuild from war and economic collapse without a transparent, independent, and development-oriented banking system. Global history confirms that national recovery begins with reforming the central bank. The failure of money and loss of trust in banking are signs of state failure. The proposed reforms are not optional—they are prerequisites for survival and recovery. Therefore, banking sector restructuring must be a central priority for any transitional or future government in Sudan.
Straits Times
23-07-2025
- Business
- Straits Times
Poland's Tusk unveils new cabinet in bid to reverse decline in polls
Find out what's new on ST website and app. WARSAW - Polish Prime Minister Donald Tusk announced a cabinet reshuffle on Wednesday in a bid to regain momentum amid falling approval ratings and potential clashes with the new, opposition-backed nationalist president. Since Karol Nawrocki's victory over Tusk's liberal ally Rafal Trzaskowski in June's presidential election, dissension within the ruling pro-European coalition has grown, raising doubt about its future under a veto-wielding head of state. Under the reshuffle, Foreign Minister Radoslaw Sikorski was promoted to deputy prime minister while keeping his current post. "We as a government need a very strong political figure in international relations," Tusk told reporters. To consolidate oversight of economic affairs, Tusk announced a new superministry combining finance and the economy to be headed by current Finance Minister Andrzej Domanski. "The most important structural undertaking is building a viable financial and economic centre. There will be a single centre operating transparently and implementing a comprehensive economic policy," Tusk said. Milosz Motyka from junior coalition party PSL will head a newly created energy ministry. A judge, Waldemar Zurek, was named to run the justice ministry as it seeks to shore up rule of law standards that critics say deteriorated under the previous nationalist government. Tusk's coalition has steadily declined in opinion polls since mid-2024. This month, the share of government opponents has risen to 48% while the government's support has held steady at 32%, the latest CBOS poll showed. Polls have traced the government's drop in popularity to public disenchantment with a lack of concrete achievements, with the opposition landing effective blows over a failure to stem undocumented migration into Poland. The reshuffle drew criticism from the main opposition Law and Justice party, which lost power in the 2023 election. "Reconstruction means nothing other than the further destruction of Poland. Some incompetents were replaced by others," the party's vice president, Mariusz Blaszczak, said in a post on X. Nawrocki, who will be sworn in as president on August 6, has questioned the coalition's pro-European, liberal agenda but said he is willing to accept moves to increase the tax-free pay threshold and deregulate parts of the economy. "All laws that will be good for Poles will meet with my approval," Nawrocki said in the televised interview on Monday. Tusk, in his remarks announcing the reshuffle, called on supporters not to despair after Nawrocki's presidential victory. "No defeat, including the presidential election, justifies this mood or despair, this slackness, these thoughts of surrender ... The time of post-election trauma definitely ends today," the former European Council president said. REUTERS
Yahoo
11-06-2025
- Politics
- Yahoo
Donald Tusk wins vote of confidence after Polish presidential election blow
The Polish prime minister, Donald Tusk, has comfortably won a vote of confidence in parliament that was called to shore up his fragile coalition government after a bruising setback in the presidential election earlier this month. The vote of confidence on Wednesday was passed by 243 votes in favour to 210 against. The vote was requested by Tusk after an unexpected defeat for his government's preferred candidate in the presidential election, which prompted questions about the future of the coalition and fierce personal criticism of the prime minister. Tusk leads an ideologically diverse and politically fragile alliance of pro-European parties, from the agrarian right to the social democratic left, which has promised to reverse the erosion of democratic checks and balances that had marked the eight-year rule of the Law and Justice party (PiS) between 2015 and 2023. He had long hoped that a presidential win would make it easier for the government to adopt more progressive reforms, including on contentious issues such as abortion rights and same-sex relationships. Since coming to power, Tusk's government has faced fierce criticism from the incumbent president, Andrzej Duda, a former PiS European lawmaker, with fears Duda could use his robust veto powers to block some measures. But the unexpected win of Karol Nawrocki, a Donald Trump-backed, previously little-known historian linked with the PiS, over the pro-European centrist mayor of Warsaw, Rafał Trzaskowski, put a question mark over the government's ability to deliver on its program. Analysts partly blamed the result on the government's track record and Tusk's personal unpopularity, with voters reportedly unwilling to give too much power to one political camp. A recent CBOS poll showed that 44% of voters were critical of the government, 32% supportive and 20% neutral. Tusk himself was even more unpopular, with 53% having a negative view of him and just 35% positive. During a bruising seven-hour debate in parliament, more than 260 MPs took to the podium. Tusk strongly defended his government's track record and lamented its inability to communicate its successes to the electorate. 'If we told our story even half as well as we actually governed, we would be winning election after election,' he said. Acknowledging the significance of Nawrocki's win, Tusk said: 'This is not an earthquake, but let's call things for what they are: we are facing two and a half years of very hard … work in [political] conditions that are not going to improve.' But he insisted the government still had a clear political majority to pursue its measures, despite 'impatience, sometimes disappointment or anger' among its voters. 'I know the taste of victory, I know the bitterness of defeat, but I don't know the word surrender,' he quipped. Opposition lawmakers lined up to criticise the government for showing little ambition and slow progress on its key promises, with too much focus on blaming the previous administration for all problems. Speaking to reporters after the vote, Tusk said he had 'needed that vote for obvious reasons' as he had faced 'a lot of noise' about his and the government's future. He said he intended to 'cut off all speculation' and move the narrative on as his ministers had 'two years to make amends' and win over the public before the 2027 parliamentary elections. Under Tusk's plans to reassert control, the government will now appoint a 'heavyweight' spokesperson next week to overhaul its communications strategy, and will follow through with a ministerial reshuffle in July to get in shape before Nawrocki takes office in August.
Euronews
30-05-2025
- Politics
- Euronews
Poland's ties with US a key issue in Sunday's presidential runoff
New data from the Polish research agency the Centre for Public Opinion Research (CBOS) shows that Poles hold the most negative view of their relationship with the United States since the fall of communism. However, despite the negativity, there is no doubt that the US is fundamental to both Polish and European security. Some, including the Law and Justice (PiS) backed presidential candidate Karol Nawrocki, argue that Poland "needs the certainty that a future president will care about Polish-American relations". Likewise, Rafał Trzaskowski, the Civic Platform (PO) candidate, said that Poland should "strive for the closest possible cooperation between the United States, the European Union and Poland, because together we are a power." But can the relationship with Washington have a tangible impact on the election results? Relations with the United States have become one of the key themes of the presidential campaign. With the ongoing war in Ukraine and security issues along the border with Belarus, the two remaining candidates in the race ran their campaigns on the premise that they would be the ones to ensure the closest possible transatlantic cooperation. During a parade to mark the anniversary of the Polish Constitution, conservative presidential candidate Karol Nawrocki met with the Polish community in Chicago to celebrate the holiday and express his support for maintaining close ties between the two countries. The previous day, Nawrocki was received in the Oval Office by US President Donald Trump, after attending an event to mark the National Day of Prayer. In an interview with Republic TV, Nawrocki said that Trump apparently told him, "you will win". "You can see... it is clear from this conversation that this relationship is important for President Trump," he added. Several senior Law and Justice officials, including party president Jaroslaw Kaczynski, expressed their support for Nawrocki and hailed his meeting with Trump as a success. "Karol Nawrocki is the only candidate who can guarantee Poland's security and maintain strong alliances in difficult times, especially with the US," wrote Elżbieta Witek, former speaker of parliament, in a post on X. However, not everyone was so supportive of Nawrocki's visit. "The attempt by Trump's team, which is friendly with Putin, to influence the presidential election in Poland shows their colonial attitude towards Poland," wrote MP Roman Giertych on social media. Many conservative politicians in Poland have welcomed Trump's policies, despite the US president's clashes with Ukraine and President Volodymyr Zelenskyy. "Without the Americans, it is difficult to imagine a lasting peace, and yet we all strive for it," Morawiecki said in an interview with Euronews in March. "Without American support we in Europe would not have been able to maintain peace for decades." Current Polish President Andrzej Duda expressed similar sentiments. "Today my conclusion is absolutely unequivocal, there is no one but the United States who can stop Putin," he told Euronews. "That is why I believe that President Donald Trump, through his determination, can end this war," he added. Duda was the first international leader to visit Donald Trump at the White House after his inauguration in January. Most Poles recognise the military might of the US, leading many to appreciate the strategic relationship between the two countries. A survey conducted in March for the Polish weekly magazine Polityka found that 85% of respondents recognised US power as a military presence on a global scale. But at the same time, the percentage of Poles who say the US has a positive impact on the world is falling. In a survey conducted by CBOS in April 2025, only 20% of respondents said the US had a positive influence on international politics, the lowest recorded result since the agency began measuring opinions in 2006. Data from the same survey also shows that only 31% cent of Poles would rate Polish-US relations as "good," another all-time low. Key figures from the Trump administration have praised Poland's policies, including the country's commitment to security spending and a tougher migration policy. In February, US Secretary of Defence Pete Hegseth described Poland as a "model NATO ally" after a meeting with his Polish counterpart Władysław Kosiniak-Kamysz. In turn, Secretary of State Marco Rubio expressed similar sentiments in a statement. "Poland and the United States stand together as partners in building a safer and more prosperous future for our peoples," he wrote. "We look forward to further strengthening our cooperation on energy security." Representatives of Poland's governing coalition, including Prime Minister Donald Tusk and Foreign Minister Radosław Sikorski, have in the past openly criticised the Trump administration. "Europe is ready to face Russia without the support of the US, and Poland is stepping up its efforts for the security of the Baltic Sea," Sikorski said in an interview with the Swedish daily Svenska Dagbladet. In an interview with TVN24, Tusk admitted that Trump is "a much more difficult partner than any US president before." Despite these critical voices, on the campaign trail Trzaskowski expressed the desire to work with the United States as a key partner. He emphasised economic and security cooperation between the two countries, especially in the face of Trump's sweeping tariffs. "Your presence in our country confirms American security guarantees for Poland. The fact that you are investing here, despite the war across our eastern border, is proof that Poland is safe and stable," he said in March during a meeting with entrepreneurs affiliated with the American Chamber of Commerce in Poland (AmCham). "American entrepreneurs were in Poland much earlier than US troops," he added. Regardless of the election result, US defence experts are convinced that Poland will play a key role in keeping the peace in Europe. "Poland is already doing a lot in terms of defence, but I think there will still be a lot of work to be done, and Poland can play a leading role as a key country on the front line where there is the greatest threat to the alliance from the Russian Federation," Rebeccah Heinrichs, a senior analyst at the Hudson Institute and director of the Keystone Defence Initiative, said. Italy and Kazakhstan have signed a set of deals worth €4bn during a visit by Italian Prime Minister Giorgia Meloni to Astana. The agreements were across a variety of sectors, including oil and gas, renewable energy and water management. Meloni said she did not consider her visit "merely a formality, but substantial". "Italy was the first EU nation to have decided to invest in relations with Central Asia and its individual member states, setting up a stable format for the sharing of ideas," Meloni continued. The Italian prime minister added that the EU-Central Asia Summit held in April had elevated relations between the regions. Her Kazakh counterpart Qasym-Jomart Tokayev said his country attached "great importance to the development of trade between our states". "Italy is Kazakhstan's third largest trading partner and the largest within the European Union. The volume of trade has reached 20 billion dollars (€17.6bn)," Tokayev noted. Before heading to Kazakhstan, Meloni visited Uzbekistan for the first leg of a Central Asian trip that began on Wednesday. For the occasion, one of the city of Samarkand's main streets was given the name "via di Roma", Uzbek President Shavkat Mirziyoyev said. At the meeting between Meloni and Mirziyoyev, a joint declaration was signed that paves the way for €3bn in agreements between the countries.
