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Sudan Overview

    Context

    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. The current conflict in South Sudan continues to strain and put pressure on Sudan, with more than 120,000 South Sudanese refugees having entered Sudan since December 2013 as well as a drastic reduction in cross-border oil flows. In addition, longstanding disputes in Darfur, South Kordofan and areas bordering South Sudan (such as Abyei) remain.

    Drivers of Fragility and Conflict

    The near absence of inclusive public institutions that can adequately mediate demands for power and wealth sharing between the center and the periphery has been an underlying source of fragility and conflict in Sudan. The unequal allocation of public resources and access to natural resources are main drivers of conflict, feeding into a potent mix of ideology, ethnicity and socio-economic marginalization that threatens to pull the country further apart.

    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, much reduced economic growth, and double-digit consumer price inflation which, together with increased fuel prices, triggered violent protests in September 2013.

    Sudan did not use the oil windfalls to invest in human development, diversify its economy, or promote private sector growth. Political instability, corruption and economic uncertainty compromise the enabling environment for business development, growth, and employment (2010 Investment Climate Assessment). Other constraints include inadequate infrastructure services (e.g., transport and electricity), access to finance and taxation policies.

    Agriculture and livestock are essential to Sudan’s economic diversification (away from oil) and could contribute to medium-term macroeconomic stability. While these sectors presently contributes approximately 35 percent of gross domestic product (GDP), they could contribute significantly more with greater investment and better governance. Sudan now recognizes the need for greater attention to agriculture and livestock, as reflected in its Interim Poverty Reduction Strategy Paper (I-PRSP) and the Five-year Program for Economic Reforms approved by its parliament in December 2014.

    However, Sudan remains a highly indebted country that has accumulated sizeable external arrears and has been in non-accrual status with the World Bank Group (WBG) since 1994. At the end of 2013, Sudan’s external debt stock stood at $45.1 billion in nominal terms, about 85% of which was in arrears. While the country is eligible for debt relief under the Highly-Indebted Poor Countries Initiative, it must come to an amicable understanding with its main creditors in partnership with South Sudan.

    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. But within this the disparities are striking; poverty incidence numbers mask significant regional disparities. Poverty in urban areas (especially Khartoum) is significantly lower than rural areas, which account for 60% of the country’s population and 80% of its poor. Poverty incidence in North Darfur is approximately three times that of Khartoum and more than twice that of River Nile State. Also of note are the disparities between settled and nomadic populations who constitute 9% of Sudan’s population and 14% of its poor.

    Gender-based disparities are also substantial with Sudan scoring very low in global measures of gender gaps and female empowerment. Severe gender gaps exist across a range of sectors, with rural areas faring worse than urban. In education, for example, nearly two-thirds of Sudanese women have less than primary education, compared to just over half of their male counterparts.  

    Human development indicators remain low and Sudan ranks at 166 out of 187 countries in the 2014 UNDP Human Development Index. Prospects for Sudan meeting the MDGs by 2015 are also bleak as is its progress compared to the achievements of some of its neighbors (most with lower per-capita incomes) as well as the Sub-Saharan average. For example, access to basic health services remains low, covering 40 to 50% 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, rural-urban disparities, and gender; 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 longstanding grievances driving fresh conflict
    • a dependence on oil which has resulted in the neglect of agriculture and livestock sectors as well as alternative sources of energy
    • the unequal distribution of fiscal resources and access to natural resources, especially between the center and the periphery, and
    • governance failures as reflected in poor policy credibility and implementation as well as inadequate incentives for private sector investment and participation. 

    Last Updated: Mar 05, 2015

    LENDING
    Sudan: Commitments by Fiscal Year (in millions of dollars)*
    *Amounts include IBRD and IDA commitments
    Strategy

    The overarching goal of the World Bank Group (WBG) is to support extreme poverty reduction and enhance shared prosperity in Sudan. The WBG 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 as well as the increasingly dynamic dialogue around the development of its full 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 WBG strategic engagement under the FY14-15 Interim Strategy Note (ISN).

    Improved governance and efforts to strengthen the management and allocation of public and natural resources are essential for political stability, social cohesion and better quality economic growth. At the same time, the country must find ways to move beyond 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 WBG strategy has been structured around two pillars: managing the economic transition; and addressing the socio-economic roots of conflict, with a cross-cutting focus on governance and gender which contribute directly to the objectives of reducing extreme poverty and increasing shared prosperity in Sudan.

    The World Bank Group’s evolving portfolio of over $120 million is a result of its efforts to mobilize third-party financial resources for development in Sudan (largely through Bank-managed Multi-Donor Trust Funds).  Focusing on the poor and vulnerable, it lays the groundwork for a future strategy that will effectively target poverty reduction and enhanced prosperity in a sustainable manner once Sudan clears its arrears, reduces its debt burden to sustainable levels, and gains access to International Development Association (IDA) funding and other concessional development financing. While the short time frame of the ISN would not allow monitoring poverty outcomes over its life span, the WBG together with the African Development Bank (AfDB), will support the production of a new round of poverty data in 2014 and 2015 as well as related analytical products to inform the development of the full PRSP.

    The selectivity of WBG 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 a path towards inclusive and shared growth. Therefore, WBG engagement will have a strong emphasis on knowledge across the program, with particular attention to dissemination activities with government and non-government stakeholders in (and, as appropriate, outside of) Sudan. Given the current lack of access to IDA funding, the WBG program will continue to be resourced through trust funds, partnerships and Bank Budget.

    Last Updated: Mar 05, 2015

    LENDING
    Sudan: Commitments by Fiscal Year (in millions of dollars)*
    *Amounts include IBRD and IDA commitments
    Results

    The World Bank Group’s (WBG) engagement with Sudan, mainly through the $590 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

    • Education: The MDTF-N has been instrumental in boosting school enrolment for nearly 0.5 million pupils (49% girls) following the construction or rehabilitation of over 514 schools, three teacher training institutes, and the training of more than 11,000 teachers. In addition, the MDTF-funded Education Status Report (ESR) informed the Government’s Education Sector Strategy (2012-2016) and, in so doing, helped leverage --- in close collaboration with other development partners (e.g., UNICEF and DFID) --- the government’s access to resources from the Global Partnership for Education (GPE) fund. As a result, Sudan was awarded a $76.5 million grant for a project approved in April 2013. This project covers ten states, including three in Darfur.
    • Health: In four states targeted by MDTF-N activities, health facility data shows that between 2009 and the end of 2012: annual per-person outpatient consultations increased from 0.16 to 0.30; the share of pregnant women attending at least one antenatal care consultancy increased from 48 to 69%; and the proportion of total births attended by skilled health staff (including trained village midwives) increased from 19 to 51%. Access to, and use of, health facilities have improved noticeably following the construction or rehabilitation of 127 health facilities, the training of 2,703 health professionals, and the provision of medical supplies. The MDTF-funded a Health Status Report informed the government’s Health Sector Strategy (2012-2016). 

    Livelihoods

    • Improving Gum Arabic production and marketing: Sudan is the world’s largest exporter of raw Gum Arabic, a food stabilizer used in soft drinks. It is a key sector for employment generation and poverty alleviation in Sudan’s rural areas contributing about 15 to 25% of household incomes. The Revitalizing the Gum Arabic Production and Marketing Project has supported some 130 Gum Arabic Producers’ Associations (almost ten percent of the total number of GAPAs) and provided seed funds for production and marketing activities. Policy changes undertaken through the project led to the removal of market barriers in the sector, including abolishing 13 of 18 taxes, and removing the monopoly concessions entrusted to the Gum Arabic Council on trading and export of raw gum. These measures have led to noticeable efficiency improvements in marketing and higher prices for producers.
    • Livestock: This is an ongoing project supporting a series of pilot activities that address the priorities of pastoral communities in livestock production and marketing. As an example, six livestock markets and 28 watering points have been constructed/rehabilitated which has contributed to an increase of animal heads sold annually. In addition, 286 kilometers of livestock routes have been rehabilitated and demarcated enabling pastoralists to safely move their livestock to and from markets. In addition to contributing to higher household incomes, these activities have also helped reduce conflicts between pastoralists and settled farmers, thereby facilitating the concrete realization of the Comprehensive Peace Agreement’s (CPA’s) promised peace dividend. In addition, more than 160,000 citizens across five target states were provided access to veterinary services, better water points, and other essential services.
    • Microfinance: The MDTF’s Microfinance Development Facility Project has contributed to the creation of the microfinance industry in Sudan. The project assisted the Central Bank in drafting Sudan’s microfinance policy, regulatory framework, and supervision guidelines. Moreover, the project supported 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. This contributes to diversifying sources of growth, as well as generating private incomes and new employment opportunities.

    Improving governance and institutional capacity

    • Public sector capacity building.  MDTF-NS activities also focused on increasing transparency and public sector accountability and addressing capacity gaps in key economic governance functions. Key outputs have been: 3,905 government officers trained on fiduciary, planning and related management issues; 327 senior government officers trained on intergovernmental fiscal relations, procurement, public finance, project management, monitoring and evaluation; and 156 administrative buildings were rehabilitated. A new public procurement regime is now in place, with Standard Bidding Documents (SBDs) for goods, works and consultants as well as Public Procurement manuals now online. International standards are being adopted with 35 procurement officers at the state and federal levels receiving training to use the new SBDs. The MDTF supported the development of audit manuals requested by the Auditor General to strengthen and enhance the quality of audit systems. The MDTF also piloted a risk-based internal audit initiative with the Ministry of Finance and National Economy and provided sustained support and capacity building over several years.
    • Community-Driven Development:  Under the CDF, local communities in four targeted states have strengthened their systems for, as well as expanded, the delivery of basic services. This included 567 schools, 99 primary health care facilities, 163 water points, 26 community centers, as well as the construction/rehabilitation of 97 solar power installations benefitting more than 2 million people. In addition, some 616 Community Development Committees were formed with their members trained on issues ranging from fund management to project planning and bookkeeping. These interventions have not only significantly increased access to basic services but also increased community participation and ownership, key elements to building and sustaining peace. Moving forward, there will be greater scope to further strengthen bottom-up accountability and ensure project sustainability.

     

    Last Updated: Mar 05, 2015

    LENDING
    Sudan: Commitments by Fiscal Year (in millions of dollars)*
    *Amounts include IBRD and IDA commitments
    Partners

    Despite the December 2013 closure of the $590 million Multi Donor Trust Fund – North  (MDTF-N)—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 over $120 million financed through three main trust fund windows, including Global Partnership for Education (GPE), Global Environment (GEF) Facility and the State and Peacebuilding Fund Strategic Initiative (SPF –SI).

    In addition, to replace the MDTF-N, the Bank’s Board of Executive Directors approved a new Sudan Multi-Partner Fund (SMPF) on April 10, 2014 which is now operational with initial donor commitments of over $11 million along with approximately $15 million in parallel government financing. 

    Last Updated: Mar 05, 2015

Country Office Contacts
Main Office Contact
+249-156-553-000

Xavier Furtado
Representative
+249-156-553-002

Khartoum 2, street 39, Plot 39
P.O. Box 229,
Khartoum, Sudan

xfurtado@worldbank.org
WASHINGTON
Preeti Arora

Country Program Coordinator
+1-202-458-4097

1818 H Street, NW
Washington, DC 20433

parora@worldbank.org