RAYMOND, Maine — On June 21, 2022, Sudan announced its new partnership with the United Arab Emirates (UAE). Together, the two nations are building a new port on the Red Sea. With Sudan’s new port and other development projects, immediate deposits to the Sudan Central Bank and new international partnerships this partnership promises to bring renewed economic prosperity to Sudan and its citizens living in extreme poverty.
Many people know Sudan for being one of the poorest nations in the world. In Sudan, 46.5% of the population lives below the poverty line and more than 95% of Sudanese citizens live on less than $10 daily. Sudan’s poverty conditions have been terrible for decades but worsened in 2011 when South Sudan seceded from Sudan to form a new country. When South Sudan formed, Sudan lost 75% of its valuable oil production.
South Sudan’s formation left Sudan struggling to revive its economy and manifest the best plan to move away from the extreme poverty the nation faced. Sudan brought economic prosperity back, primarily by re-focusing its economy on agriculture and working as diligently as possible to pay off its international debt balances.
Sudan’s current economic strife is due to its new military-backed government, which assumed power via a coup d’etat in October and November 2021. The new government has hiked prices substantially and made daily expenses painful, which has only worsened the poverty rates and everyday living conditions. After the new government took power in 2021, Sudan’s exports dropped by 85%, according to Reuters. The export failures helped Sudan convince its international alliances to allow for the suspension of Sudan’s debt payments, which had been overwhelming Sudan.
As debt discussions were in the works, so were talks for Sudan’s new port, which will prove invaluable to re-boosting and re-shaping Sudan’s economy.
Debt can present itself as inflation, restrictive fiscal policies and overall lower wages, all of which have long been present in Sudanese daily life. Sudan has a long history of navigating debt and payment plans with organizations, including the International Monetary Fund (IMF) and the World Bank.
One of the steppingstones that showed Sudan’s potential economic prosperity in pre-October 2021 was Sudan’s paying off its debt to the World Bank. That debt relief allowed Sudan potentially to have access to nearly $2 billion in grants from the Bank through its Bank’s International Development Association. Those funds would support Sudanese citizens who felt the weight of the previous debt that left them without financial support from their government while living in poverty.
The latest blow to Sudan’s debt management was the Paris Club’s decision to suspend debt relief due to the new Sudanese government’s coup and rise to power. The Paris Club, a body of officials from major crediting countries, planned Sudan’s debt relief under the Enhanced Initiative for Heavily Indebted Poor Countries (HIPC). The Club cleared Sudan for debt relief in May 2021, months before the coup. Unfortunately, due to an inability to support the new government, the Club suspended these plans, leaving Sudan with a debt that taxes its already impoverished citizens.
Many major creditors are following suit with the decision from the Paris Club. Sudan’s inability to pay off its debt left the country without trusting allies, which is why Sudan’s new port is a tool the country is not taking for granted.
Sudan’s new port can generate income for Sudan that was previously inconceivable and far from the country’s reach. DAL Group, a Sudanese private company with ties to many Sudanese business sectors, announced the plans for Sudan’s new port. The plans include a $300 million direct deposit to Sudan’s Central Bank and a partnership with the United Arab Emirates (UAE) that will help to stabilize Sudan’s economy.
The president of the DAL Group, Osama Daoud, stated that “The UAE wants a stable Sudan so that they [we]can make more and more of these investments, but we are not waiting for everything to be fine. We and our partners in the UAE have already invested in a bank, a hotel, and the mining sector.” Daoud has hinted at potential business expansions with the help of the UAE. The business expansions can create many jobs, not only through Sudan’s new port but in other business sectors too.
The expansions can generate trust with Sudan’s new government. Renewed confidence in Sudan can lead to renewed plans for economic development with groups like the Paris Club or the World Bank.
Sudan’s new port and this new partnership with the UAE could help Sudan find proper economic footing once more and, in the long term, stabilize the economy. A stabilized economy can help Sudan find relief with new international partners and developments to lift Sudan’s poorest citizens out of poverty and make more than $10 per day.
– Clara Mulvihill
Photo: Flickr
Comments are closed.
Type above and press Enter to search. Press Esc to cancel.