Only Civilian Government Can Fix Sudan’s Broken Economy

Sudan’s political crisis was sparked by an economic crisis that continues today. A military administration will not be able to take the steps needed to fix Sudan’s economy.
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Amid the hope and terror of Sudan’s political turmoil, it is easy to forget how this extraordinary story began: protests over the price of food and fuel. It was a broken economy that finally broke the regime of President Muhammad Bashir. Whoever wins power in the ongoing political crisis will have to find a way out of Sudan’s economic crisis, and fast. 

Sudan’s economic crisis is multifaceted. First, the Sudanese state is massively in debt, according to the IMF, it is weighed down by debt worth around 178% of GDP. The huge size of this debt, and the fact that most of it is overdue, means that Sudan is practically unable to borrow on the international market. Second, inflation is crippling. The IMF believes that consumer price inflation is running at over 50% per year. This is destroying family savings and ramping up the cost of essential goods. Finally, the productive sectors of the economy: manufacturing, mining and agriculture, have been devastated by decades of US sanctions, multiple civil conflicts and government mismanagement.

At the root of all these problems is the fact that Bashir’s government was addicted to oil and never found a way to live without it.

At the root of all these problems is the fact that Bashir’s government was addicted to oil and never found a way to live without it. During Sudan’s 1997-2011 “oil decade” the country exported up to 380,000 barrels of oil a day by the Sudanese government’s own estimates. The revenue of these exports accrued directly to the government in Khartoum, giving Bashir’s regime huge financial power. 

With this money Bashir was able to buy off the army and prevent it from establishing an independent economic base (as had already happened in Egypt where the military manufactures everything from cement to macaroni). 

Researchers such as Richard Cockett have shown how on a wider scale, the Sudanese state itself was converted into an immense mechanism for the distribution of patronage. Supporters were rewarded with lucrative government jobs, or control over protected industries, such as sugar production. 

Although patronage had been a feature of previous Sudanese governments, this was on a new scale. While at the beginning of the oil decade Sudan sat at 106th place among the World’s most corrupt nations as ranked by Transparency International, by 2011 it had dropped to 177th, becoming one of the world’s most corrupt nations.

When South Sudan seceded in 2011, it took 75% of the oil revenue with it. Bashir’s government was fundamentally destabilized. Bashir’s patronage-based regime could not afford to rein back its distribution of wealth without risking a revolt from within the state. Therefore, Bashir continued to buy off the army even after no longer having access to the revenues he needed to do so. According to research published in 2016 by Atta el-Battahani, a professor at the University of Khartoum, this led to military and security expenditures swallowing 88% of all government revenue post 2011* – an extraordinarily high number. Crippled by the maintenance of patronage, and the neglect of the non-oil economy, Sudan drifted into fiscal crisis.

To keep the system going, Bashir and his government decided to find a replacement for oil: gold.  Sudan has huge gold reserves, but the attempt to use them as a replacement for oil was a disaster. As shown by this study from Egyptian economists Kabbashi Suliman and Ibrahim el-Badawi, the problem with the gold was that rather than being extracted by an easily controlled national oil company, it was extracted by a population of over two million artisanal miners. In order to export the gold, the Sudanese government had to purchase it from the miners, which it did by printing money. It was this massive printing of money that devastated the Sudanese pound and generated the runaway inflation that caused last year’s cost of living crisis which in turn sparked the protests that brought down Bashir.

In order to fix Sudan’s economy, defense and security expenditures need to be radically cut so that the budget can be rebalanced.

In order to fix Sudan’s economy, defense and security expenditures need to be radically cut so that the budget can be rebalanced. The government needs to stop printing money and come to a deal with its international creditors so that it can borrow once more; this will bring down inflation and stabilize the cost of living. Finally, the patronage economy needs to be reined in by cutting subsidies and cracking down on corruption in local government; this will help Sudan to start exporting again and bring in much needed tax revenue.

None of this can be achieved by a military government. A military government in Sudan will not cut defense expenditures, it will raise them, continuing the fiscal crisis. Furthermore, as shown by what happened in Egypt, a military government will increase the level of patronage and corruption in the economy in order to build the independent economic base that Bashir tried to prevent. 

With the military now violently dispersing Khartoum’s sit-ins, and killing scores of civilians in the process, Sudan is at a crossroads. One way leads to military rule and the continuation of the economic collapse that Bashir originally caused. The other way leads to civilian rule, and the eventual end of Sudan’s post-oil crisis.

Stop Killing In Sudan

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* Atta El-Batahani. 2016. “Civil Military Relations in Sudan: Negotiating Political Transition in a Turbulent Economy” in Businessmen in Arms: How the Military and Other Armed Groups Profit in the MENA Region edited by Zeinab Abul-Magd and Elke Grawert. Lanham: Rowman & Littlefield. p.149