Sudan is situated in northern Africa, with a coastline bordering the Red Sea. It sits at the crossroads of sub-Saharan Africa and the Middle East, with fertile lands, abundant livestock, and manufacturing. However, the country has been beset by conflict for most of its independent history and, under the terms of the 2005 Comprehensive Peace Agreement, the southern states seceded to form the Republic of South Sudan in July 2011. While this removed the key conflict in Sudan – disputes in Darfur, South Kardofan and areas bordering South Sudan such as Abyei are still ongoing.
Drivers of Fragility and Conflict A lack of inclusive institutions to mediate demand for power and wealth-sharing, especially between the center and the periphery, has been the underlying source of fragility and conflict in Sudan. Inequalities in allocation of public resources and in access to natural resources are the main drivers of conflict, feeding into a potent mix of ideology, ethnicity and socio-economic marginalization that threatens to pull the country further apart. Denial of or lack of access to public funds or services is no longer perceived as simply a result of poor governance, bureaucracy or lack of efficiency, but as marginalization by central authorities against ethnically different peripheral communities
Economic Developments The secession of South Sudan induced multiple economic shocks. The most important and immediate was the loss of the oil revenue which accounted for over half of government revenues and 95% of exports. This has left huge macro-economic and fiscal challenges with economic growth rates plummeting, rising consumer price inflation together with increased fuel prices which triggered country wide protests in September 2013.
Sudan did not succeed in use the oil windfalls to broadly diversify its economy or promote its private sector which perceives political instability, corruption and economic uncertainty as the main reasons for holding back investment and business development (2010 Investment Climate Assessment). Other constraints include inadequate infrastructure services (e.g. transport and electricity), access to finance and taxation policies.
Agriculture and livestock play important roles in food security and employment opportunities and it is estimated that the sector contributes 35-40% of gross domestic product (GDP). Under the Interim Poverty Reduction Strategy Papers (I-PRSP) and the emergency economic recovery program, the government has identified the agriculture and livestock sector as a priority and has committed to spending 20% of public expenditure on agriculture and livestock infrastructure and technical innovations.
However, Sudan remains a highly indebted country that has accumulated sizeable external arrears and has been in non-accrual status with the World Bank since 1994. At the end of 2012, Sudan’s external debt stock stood at US$41.7 billion in nominal terms, about 85% of which was in arrears. However, the country is eligible for debt relief under the Highly Indebted Poor Countries Initiative but it must come to an amicable understanding with South Sudan and its main creditors.
Poverty and Social Developments
Sudan has wide and deep swaths of poverty and stark inequality between regions. Poverty estimates set the average rate of poverty incidence at 46.5% (2009 National Baseline Household Survey), indicating that some 15 million people are poor. Human development indicators remain low and Sudan ranks at 171 out of 187 countries in the 2013 UNDP Human Development Index. Prospects for Sudan meeting MDGs by 2015 are also bleak and its progress compared to that achieved by its neighbors and Sub-Saharan Africa average lags behind on many fronts.
For example, access to basic health services remains low, covering 40 to 50 percent of the population and regional disparities are particularly acute as health facilities are unevenly distributed. The child mortality rate (deaths per 1,000 births) is highest in Darfur (170), and lowest in Gezira state (63), while the national average is 111. Other services mirror this disparity. For example, access to safe drinking water remains low (44% in urban areas, 41% in rural areas), with many Sudanese relying on rivers, lakes, ponds, and wells due to the absence of piped drinking water.
Net primary school attendance rate is only 67% with huge disparities across states and gender. The 2012 Education Status Report notes the compounding negative impact of poverty, rurality, and gender, highlighting in particular that poor girls living in rural areas are among the least likely to access educational opportunities. Indicators for nomadic and displaced populations are also poor.
The main determinants of poverty in Sudan include:
sustained and multiple conflicts, which undermine opportunities for economic and social development, which in turn feeds back into grievance driving fresh conflict
a lack of economic diversification as reflected in the over-dependence on oil which has resulted in a neglect of agriculture and livestock sectors
unequal distribution of fiscal resources and unequal access to natural resources, especially between the center and the periphery, and
governance failures as reflected in an inadequate policy framework and incentives for private sector investment.
Last updated December 2013
The overarching goal of the Bank is to support extreme poverty reduction and enhance shared prosperity in Sudan. The Bank’s strategy responds to Sudan's poverty profile, barriers to poverty reduction, and is aligned with the government's own strategy as expressed in the I-PRSP. Recognizing that widespread conflict and the social and economic crises has deepened poverty in Sudan, addressing the key underlying stresses that have contributed to widespread conflict and the current social and economic crisis will shape the Bank's strategic engagement under the FY14-15 Interim Strategy Note (ISN).
Among the key issues underpinning Sudan's fragility is the lack of inclusive institutions allowing transparent and equitable allocation and management of fiscal and natural resources. As such, effective governance and efforts for better management and allocation of public and natural resources represent an essential requirement for political stability, social cohesion and equitable economic growth. At the same time, the country needs to weather the economic shock generated by the secession of the South, and put the economy on a sustainable path of inclusive growth.
In this context, the Bank strategy has been structured around two pillars; manage the economic transition, and address socio-economic roots of conflict, with a cross-cutting focus on governance and gender contributes directly to the objectives of reducing extreme poverty and increasing shared prosperity in Sudan.
The proposed program will also lay the groundwork for a future strategy that will effectively target poverty reduction and enhanced prosperity in a sustainable manner once Sudan gains access to International Development Association (IDA) funding and other concessional financing—when it has cleared its arrears and has a sustainable debt service burden. While the short time frame of the ISN would not allow monitoring poverty outcomes over its life span, the World Bank together with the African Development Bank, will support the government to ensure the production of a new round of poverty data in 2014, which would provide the basis for the full Poverty Reduction Strategy (PRSP).
The selectivity of Bank interventions will be driven by the following three principles:
alignment with the pillars of this strategy
clearly identified areas where political will and implementation capacity exist to build on past successes and respond to new opportunities that may emerge, and
availability of resources through partnership mechanisms
Given the economic and governance transition, knowledge will be key to helping Sudan identify pathways towards inclusive and shared growth. Therefore, Bank engagement will have a strong emphasis on knowledge across the program, with particular attention to dissemination to government and non-government stakeholders in Sudan.
Given the current lack of access to IDA funding, the Bank program over the next two years will be resourced through trust funds, partnerships and Bank Budget.
Despite the December 2013 closure of the $590 million Multi Donor Trust Fund – North Sudan (MDTF-NS)—active since 2005 and the main vehicle for implementing investment, financing up to 15 investment operations –the Bank’s footprint of investment and knowledge activities remains large. On the investment front there are seven new projects (six of which effective in 2013) for a net commitment amount of $135 million financed through three main trust fund windows, including Global Partnership for Education (GPE), Global Environment (GEF) Facility and the State and Building Fund Strategic Initiative (SPF –SI). In addition, the MDTF-NS will be replaced by a new donor pooling mechanism, the Partnership Trust Fund (PTF). The PTF is expected to be operational by mid-February 2014. Initial commitment amount will be approximately $15-30 million, including government contributions, rolled over remaining MDTF-NS funds, and DfID $2 million contribution, to finance 3-4 investment/TA activities.
The Bank’s strong emphasis on knowledge across the program is being supported by Bank budget and a variety of trust funds and Externally Financed Outputs (EFOs) finance by bilaterals such as Department of International Development (DfID). There are 12 Economic and Sector Work and 13 Technical Assistance activities covering key sectors such as governance, poverty monitoring, social protection, health and agriculture.
Last updated December 2013
The World Bank’s engagement with Sudan, mainly through the $533 million Multi-Donor Trust Fund-North (MDTF-N) from 2005-2013, goes well beyond stabilizing a war-torn nation and providing emergency assistance. During the eight years of its existence, the Fund supported 15 projects that helped reconstruct or build basic infrastructure, provide services and revitalize national institutions. The World Bank continues to leverage a $120 million portfolio through trust funds and partnerships with a primary focus on knowledge and technical support for extreme poverty reduction, stability and better economic governance.
Human Development The MDTF-N had a significant impact in the education sector, where nearly half a million pupils (49% females) resumed their education following the construction or rehabilitation of over 519 schools, and the training of more than 11,000 teachers. Supported by key analytics such as the Status of the Education Sector, the government designed an interim Basic Education Strategy (2012-2014) that helped leverage a $76.5 million grant for a Basic Education Recovery project in June 2013. This remains the largest Bank -administered project in Sudan and is active in 10 states, including three conflict-affected states in Darfur.
MDTF-supported health projects, active in four states, show that between 2009 and the end of 2012, the number of outpatient consultations doubled from 0.16 to 0.30 per person per year, partly due to the 127 new or rebuilt health facilities staffed by an additional 3,000 qualified health professionals. Women’s access to skilled birth assistance increased from 19% to 51% and the number of pregnant women receiving antenatal health care increased similarly.
Similarly, the livestock project has helped 160,000 community members across five states access veterinary services and other livestock production initiatives such as better access to water points, or restocking of animals. Six livestock markets and 28 watering points have been constructed or rehabilitated. Importantly, the project helped provide a long-term peace dividend through community discussions to rehabilitate 286 km of livestock routes where agreement was reached on sharing of natural resources often leading to land –based conflict.
Under the Community Development Fund Project, 616 local communities in four targeted states now enjoy better services. At the end of September 2012, a total of 1,102 community subprojects had been approved, 956 of which were completed. Of these, 567 were schools, 99 primary health care facilities, 163 water points, 26 community centers and 97 solar power installations, benefitting more than two million people.
A Microfinance Development Facility project has supported the establishment of the microfinance industry in Sudan. The project assisted the Central Bank in drafting the microfinance policy, regulatory framework, and supervision guidelines as well as the creation of an Apex Institution that provides lines of credit and technical assistance to microfinance institutions in eight states. As a result, more than 214,000 Sudanese have access to finance, 40% of whom are women.
Governance Important policy work over the last eight years has resulted in reforms that increased transparency and public sector accountability and addressed capacity gaps in key economic governance functions. Some 3,524 government officers were trained in financial management and a further 327 senior government officers received training in intergovernmental fiscal relations, procurement, public finance and project management, monitoring and evaluation. A new public procurement regime is now in place, and Standard Bidding Documents for goods, works and consultants as well as a Public Procurement manual with international standards have been adopted.