Economic Diversification and Credible Policy Reforms Critical if Sudan is to Achieve Economic Stability and Reduce Poverty

June 18, 2015

KHARTOUM, Sudan, June 18, 2015 – Over 300 government representatives, university academics, and World Bank officials met over a two-day conference to discuss the need for structural reform and economic transformation in post-secession Sudan, and draw lessons from global experience.

Key officials from the Sudanese Government, University of Khartoum and World Bank were present, including H.E. Mr. Hasabou Abdelrhaman, the Vice President of Sudan; Professor Ahmed Suleiman, Vice Chancellor of the University of Khartoum, Mr. John Panzer, Director, and Mr. Albert Zeufack, Manager, both from the World Bank’s Macroeconomics and Fiscal Management Global Practice, and Mr. Xavier Furtado, the World Bank’s Country Representative in Sudan.

The secession of South Sudan resulted in several major macroeconomic challenges, including high inflation, a large fiscal gap, and looming unemployment.

Since South Sudan seceded in 2011, we have experienced a loss of 50 percent of our national budget and around 90 percent of our total exports. This has led to a fiscal gap, and inflationary pressures,” said H.E. Dr. Abdel-Rahman Dirar, State Minister of Finance and National Economy in his opening remarks at the conference Fourth Annual Conference held on June 16 and 17 at the Sudan Banks Union Hall. He added that the plunge in oil prices has also adversely affected the economy, along with the diminishing demand for exports due to the European financial crisis. Going forward, he noted the importance of ensuring that the benefits of growth are felt by all of Sudan’s citizens. 

Despite adopting a “Three Year Emergency Program” in which the government tried to maintain fiscal and external stability, increase the growth rate, and create jobs, key challenges remain on how to promote economic diversification and improve incentives for private sector-led growth, particularly in agriculture.

During the conference, World Bank officials stressed the need for structural change in the economy, shifting away from the former oil based economy to other sectors such as agriculture, and improving its productivity. Bank officials also urged the authorities to establish a more competitive real exchange rate in order to help support export and output growth. Analysis shows that a 10 percent lower real exchange rate could raise economic growth by 0.9 percentage points in Sudan.

In addition, market reforms are critical to help boost private sector growth, and create an enabling environment for businesses. The 2014 Doing Business (DB) report ranks Sudan 160 out of 189 economies, which is lower than some its regional neighbors (Kenya 136, Uganda, 150, and Ethiopia at 132). The recent Sudan Diagnostic Trade Integration Study also highlighted the need for the government to implement a package of reforms aimed at lowering the barriers to trade through reduced trade taxes, streamlined border and regulatory policies, and improved transport and logistics.

The Government’s 5 year Economic Program, which was approved last year, puts a strong focus on economic diversification and promoting private sector led growth. In addition, our current dialogue on the national poverty reduction strategy is helping to set the framework for achieving a more stable and diversified economy, an objective where the World Bank Group stands ready to provide advice and assistance,” said Xavier Furtado, the World Bank Group’s Country Representative in Sudan.

The World Bank is presently helping the government manage the economic transition, and has a growing portfolio of non-lending technical assistance of approximately $140 million. This includes support in areas like basic education, peacebuilding, climate change, natural resource management, statistical capacity building, and developing public financial management systems. The Bank is also strengthening its engagement at the sub-national level and with the private sector. Over the past year, Sudan’s authorities have also taken steps to re-engage the World Bank in strategic policy areas that are essential to returning the country to a path of stable economic growth, according to Furtado.

The conference was jointly organized by the World Bank, the Faculty of Economic and Social Studies, University of Khartoum, and Ministry of Finance and National Economy. The purpose of the event is to provide a platform for public debate and help set the stage for the next phase of structural reforms in Sudan. 

Media Contacts
In Khartoum
Mosllem Alamir
Tel : + 249 91 239 8479
In Washington
Lillian Foo
Tel : +1 202 458-7726