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Al Taghyeer
16 hours ago
- Business
- Al Taghyeer
War Economy in Sudan
War Economy in Sudan A Reading of the World Bank Report (May 2025)and the Post-War Challenges By Omer Sidahmed Sudan on the Brink: Economy in the Grip of War and the Long Road to Recovery Introduction: A War That Destroyed Everything Two years after war broke out in April 2023, Sudan stands at the edge of an unprecedented humanitarian and economic catastrophe. Over 61,000 people killed in Khartoum alone, and 12.9 million displaced — the worst displacement crisis globally. The war hasn't only displaced people — it has displaced the state itself: services halted, institutions collapsed, and the economy disintegrated. The new World Bank report paints a bleak picture — but also proposes a roadmap to recovery, provided the war ends and a national reform project begins. This article reviews the key findings of the report and offers a critical reading based on Sudan's complex political-economic reality. Economic Collapse in Numbers Sudan's GDP shrank sharply by 29.4% in 2023, followed by another 13.5% contraction in 2024, reflecting the massive destruction of infrastructure, production, and services. Inflation surged to 170%, and unemployment hit 47%. Most alarming: extreme poverty jumped to 71% of the population — up from 33% pre-war — based on the $2.15/day poverty line. The Sudanese pound collapsed, with black-market exchange rates exceeding 2,600 pounds per dollar, far beyond the official rate. Government revenues dropped to below 5% of GDP, leaving the state unable to pay salaries or fund public services. Agriculture: A Battered Sector with Lingering Hope Agriculture accounts for 35% of GDP and over 50% of jobs, yet it was devastated by war: farmers displaced, equipment looted, roads destroyed, and supplies disrupted. Grain output fell 46% in 2023 compared to the previous year, with sorghum and millet yields 50% below average. Yet the report identifies agriculture as a key pillar of recovery. Due to its geographical spread outside conflict zones, it remained relatively intact and became a refuge for families fleeing urban warzones. With proper investment, infrastructure, and institutional support, the sector could double its contribution to growth, the report argues. Path to Recovery: Reform or Reconstruction? The World Bank outlines a three-pronged approach for urgent recovery: Economic Policies Resume the Heavily Indebted Poor Countries (HIPC) debt relief initiative. End commodity subsidies and reform electricity tariffs to favor the poor. Unify exchange rates and restore trust in the financial system. Structural Reforms Launch major investments in agriculture and infrastructure. Reopen trade routes and reduce customs tariffs. Limit military control of the economy and dismantle the shadow war economy. Social Justice and Peacebuilding National reconciliation, truth commissions, reintegration of the displaced. Reform education and health systems, and expand social safety nets. Demine war zones and create safe environments for people and economic activity. Critique: A Technocratic Vision Detached from War Economics Isolated Indicators While the report details GDP contraction, inflation, unemployment, and currency collapse, it treats them as though they result from a natural disaster or external shock — ignoring war-related financing mechanisms and the actors driving the conflict. The informal war economy — the real foundation of Sudan's current economy — is entirely absent. So too are illicit financial flows that fund militias, gold smuggling, and parallel foreign exchange networks. There's no analysis of how state institutions were captured by military elites and militias, transforming public assets into fuel for war. Total Omission of Foreign Trade In a country heavily reliant on imports and exports, the report ignores foreign trade dynamics. There's no discussion of border control, where gold exports go, or how neighboring countries like the UAE, Egypt, Libya, and Chad facilitate or enable smuggling networks. Arms trade and informal finance channels that sustain the war economy are not addressed. Banking System: The Elephant in the Room It's puzzling that the report completely omits the banking sector, which effectively collapsed. Most commercial banks ceased operations within the first month of war in Khartoum — the hub for over 70% of bank branches. The system is now fragmented, distrusted, and isolated from global financial networks. Without functioning financial institutions, no monetary reform is possible, despite the report's recommendations. From 'Development Critique' to 'War Critique' A Chatham House report (March 2025) found that gold has become direct fuel for the war, with 70–80% of production smuggled, primarily to the UAE, and used to purchase arms and pay fighters. The state is absent, and its most valuable resource is financing conflict, not development. Repackaged Neoliberal Failure The World Bank's proposed reforms recycle previous neoliberal prescriptions — privatization, subsidy cuts, price liberalization — which have failed before. These policies did not deliver social justice; they deepened inequality and dependence. Even after the December Revolution, these policies persisted under the grip of the former regime's security apparatus. Social support systems were dismantled with no viable alternatives, while security forces monopolized national resources. Justice and Reconciliation: Beyond Cosmetic Fixes Justice can't be legislated; it requires dismantling impunity and marginalization systems. Reconciliation isn't slogans — it's accountability, militia disarmament, and reintegration. Displaced communities won't return without guarantees, compensation, land restitution, and restored services. Lessons from South Africa and Rwanda In South Africa, reconciliation wasn't free — it was tied to truth-telling and confession of crimes. In Rwanda, Gacaca community courts combined justice with reconciliation. The lesson: no peace without genuine transitional justice that honors victims and confronts atrocities. No Recovery Without Ending the War All recommendations in the report are moot unless the war ends immediately. There can be no economic reform, return of displaced people, or reconstruction amid continued bombing and militia rule. Ending the war is not optional — it is the first and absolute priority. Conclusion: From Ruin to Hope Sudan's recovery is impossible without immediate cessation of hostilities and a new political path toward civil governance and inclusive justice. Continued war renders even the most rational reforms empty illusions. Once the guns fall silent, a short-term emergency plan must begin — centered on agriculture as a practical base for food security and social stability. This plan should prioritize rebuilding essential agricultural infrastructure destroyed by war and decades of neglect, including: Irrigation channels and medium-sized dams (Gezira, Rahad, Halfa, Suki). Farm roads linking production to markets. Research and extension centers. Crop storage and aggregation hubs. Water wells and livestock drinking sources. Natural rangelands damaged by drought and displacement. Inland fisheries that ceased in regions like Upper Nile and northern dams. This infrastructure must be restored urgently and progressively, alongside provision of fuel, seeds, fertilizers, equipment, and direct technical support for farmers, herders, and fishers. Such a plan can open a recovery window and restore local communities' trust in a functioning state. Agriculture can be the cornerstone — but not the foundation alone. True recovery requires comprehensive political, institutional, and economic reform to move Sudan from extraction to production, from looting to justice, and from exclusion to inclusive governance. June 2025
Asharq Al-Awsat
11-02-2025
- Business
- Asharq Al-Awsat
Somalia Finance Minister to Asharq Al-Awsat: We Settled $4.5 Bln in Debt with Saudi Support
Somalia's Minister of Finance Bihi Iman Egeh announced that the country has successfully settled around $4.5 billion in debt under the Heavily Indebted Poor Countries (HIPC) Initiative led by the International Monetary Fund (IMF). He attributed this milestone to major institutional and financial reforms, as well as increased domestic revenue mobilization. In an interview with Asharq Al-Awsat, Egeh emphasized that Mogadishu views Riyadh as a key strategic partner in fostering economic growth and enhancing security and stability. He also praised Saudi Arabia's pivotal role in facilitating Somalia's debt relief efforts. Egeh outlined Somalia's priorities for the next phase, with a strong focus on attracting investments, particularly from Saudi Arabia, in key sectors such as livestock, renewable energy, the blue economy, and natural resources, including gold and minerals. He said that in December 2023, Somalia reached the completion point of the HIPC Initiative—a process nearly a decade in the making. This achievement followed a series of reforms aimed at rebuilding state institutions, improving public financial management, and implementing broad economic policies. As a result, Somalia successfully restructured its debts, particularly those owed to members of the Paris Club and other international creditors. Saudi Arabia's role Egeh confirmed that Arab financial institutions were part of the Paris Club negotiations and that Somalia had settled its obligations, including debts owed to the Saudi Fund for Development. He acknowledged Saudi Arabia's critical role in facilitating and supporting the restructuring of Somalia's debt. The minister underscored the strong and ongoing coordination between Mogadishu and Riyadh, particularly in security matters. He revealed that a Somali delegation, including security officials, was currently in Saudi Arabia discussing strategies for combating terrorist groups. Additionally, Somalia's National Intelligence and Security Agency (NISA) has a mission in Jeddah to strengthen bilateral cooperation beyond financial matters, extending into military and intelligence coordination. Egeh stressed his country's commitment to expanding this partnership to effectively respond to security threats, noting that terrorist groups operate across borders, posing a shared threat to regional and global stability. Boosting investment and economic growth Following its debt relief success, Somalia is now focused on economic development and attracting foreign investments. The government is preparing to sign a new program with the IMF to build on the progress made through debt relief and solidify economic reforms. Egeh stated that Mogadishu has taken significant steps to improve the investment climate and regulatory framework, offering incentives to investors. He emphasized Saudi Arabia's importance as a historical and geographical partner in the Red Sea region, positioning it as a priority market for Somali investments. Key investment sectors Somalia, home to Africa's longest mainland coastline, offers vast opportunities in the blue economy, fisheries, and untapped natural resources. Egeh pointed to agriculture and livestock as particularly promising sectors for investment. Saudi Arabia is Somalia's largest trade partner, importing between three and five million livestock annually. The minister highlighted opportunities to modernize and expand this trade by upgrading the agricultural and livestock sectors. He also pointed to significant potential in renewable energy, which could have a transformative impact on industries such as livestock farming and cold-chain logistics within the blue economy. Additionally, Somalia's vast mineral wealth—including gold and other valuable minerals—positions the country as an attractive destination for investors. General view of the Somali capital, Mogadishu. (Reuters) Security concerns Egeh noted Somalia's history of security challenges, but stressed that over the past 15 to 20 years, the country has been on a steady path toward rebuilding its economy and strengthening security. The Somali government has launched an aggressive military campaign against the extremist Al-Shabaab group, liberating more than 80 villages. Egeh stated that these security gains create a significant opportunity to attract investments and revitalize the economy. According to the minister, Somalia has adopted a three-pronged strategy to combat Al-Shabaab and other extremist groups. The first involves countering their ideological influence by educating communities about the false narratives promoted by these organizations. The second targets their financial networks by cutting off funding sources. The third focuses on direct military engagement to dismantle their operational capabilities. Egeh noted that his country has made significant progress in disrupting terrorist financing, shutting down thousands of suspicious accounts on electronic money platforms and in traditional banks. These measures have severely weakened Al-Shabaab's ability to generate revenue through extortion and illegal taxation. He pointed out that before the current Somali government took office, Al-Shabaab had access to substantial financial resources, posing a regional threat across Africa and the Middle East. However, recent countermeasures have significantly diminished the group's ability to fund operations, both within Somalia and beyond. Somalia is also engaged in a campaign against ISIS militants operating in the country, particularly in the northeastern regions. Egeh revealed that government forces have reclaimed significant territory and destroyed ISIS strongholds. Potential Al-Shabaab links with Houthis When asked about possible ties between Al-Shabaab and Yemen's Iran-backed Houthi militias, Egeh said that while no direct connections have been confirmed, Somalia remains vigilant against any emerging alliances between terrorist groups. He reiterated that his country's primary goal is the complete eradication of both Al-Shabaab and ISIS to prevent them from destabilizing the broader region.
