Middle East Research and Information Project: Critical Coverage of the Middle East Since 1971

Ten years ago, Sudan was described in a Food and Agriculture Organization report as a potential “breadbasket of the world.” Hopes for the development of Sudan’s economy were running high at the time: the investment of Arab oil-generated revenues in Sudan’s agricultural sector seemed to hold immense promise. Vast quantities of hitherto unused arable land could be brought under cultivation. This would transform the Arab world from an area of food deficit into one of food surplus, laying the basis also for the development of extensive processing industries in Sudan.

By the beginning of 1985, these high hopes had turned into an economic nightmare. Agricultural and industrial production had declined (in per capita terms) over the past 7 years; external debt had risen above $9 billion; even interest on the debt could only be paid by raising new loans; imports were three times the level of exports; massive food aid was needed to save large parts of the population from starvation—the 1984 grain harvest of 1.47 million tons fell some 1.9 million tons short of the country’s needs; some of the major projects aimed at transforming the economy had been terminated and many existing industries had ceased production; and the value of the Sudanese pound against the US dollar had sunk to less than 10 percent of its 1978 value. [1]

The disintegration of the economy lies at the root of the political disintegration of the Numairi regime. It was a factor in the armed conflict that re-emerged in the southern Sudan, putting into question the country’s long-term viability and coherence. And the regional implications of a politically unstable Sudan are, without doubt, considerable. As Africa’s largest country, with a stretch of coastline on the Red Sea and borders with Ethiopia, Egypt, Libya, Chad, the Central African Republic, Zaire, Uganda and Kenya, Sudan’s future is critical to the overall political balance of northeast Africa.

Recent attention has focused on the confluence of severe drought and a growing influx of refugees. By April 1985, Sudan was host to about one million refugees: some 650,000 from Ethiopia, some 250,000 from Uganda, and some 116,000 from Chad. For a country of 19 million, this is an immense burden. The drought, moreover, has seriously affected—in some cases totally eliminated—the livelihood of some 4.5 million Sudanese. Large areas of Darfur, Kordofan, and the Red Sea hills, where rain-fed agriculture and pastoralism previously supported a scattered population, have now become desolate. [2]

But Sudan’s economic disintegration is not the product of drought. Industrial and agricultural production were in decline long before the drought started.

Programs and Dreams

After the May 1969 coup in Sudan, which brought the regime of Ja‘far Numairi to power, the Sudanese government adopted the 1970-71/1974-75 Five Year Development Plan. [3] As the government did not expect (in view of its professed socialism) to attract large-scale investment from abroad, the scope of the development envisaged was necessarily limited. The proposed projects tended to be small in size; most investments were by and for the state sector; and much of the projected increased production was to come from improvements in productivity.

In the early 1970s, economic policy took a new direction. Two factors brought this about. First, the break with the Communist Party of Sudan and the deterioration in Sudanese-Soviet relations following the July 1971 Hashim al-Atta attempted coup caused the regime to lay greater emphasis on developing an economic relationship with the West. A less suspicious attitude was taken towards private investment generally and a law was enacted protecting foreign investment. Second, the increasing scale of revenues accruing to oil-producing states on the Arabian Peninsula appeared to open up new sources of finance for Sudanese development. If Sudan could attract funds from that quarter, a much more ambitious development program could be implemented than had been envisaged in the Five Year Plan.

A new framework for economic policy developed in the early and mid-1970s, based on the following perceptions. Sudan could play a key role in a new Arab economic order. The Arab oil-producing states, and their bourgeoisie, were in search of productive investments for their accumulating revenues. A most important target was food production within the Arab world, as this would alleviate the Arab world’s critical dependence on the outside world for food. Of Sudan’s 200 million feddans of cultivable land, only 20 million feddans were actually under cultivation. The investment of Arab oil revenues in Sudan’s land resources, making use of the substantial Sudanese labor force and the adequate supply of water from the Nile (in addition to rainfed supplies), could therefore achieve a developmental breakthrough. The effort would involve a three-cornered cooperation: Sudan’s material and human resources cooperating with Arab finance and with Western technology. The cooperation would bring benefit to all three partners: Arab revenues would be productively and usefully invested; the Western economies would earn recycled petrodollars through the sale of technology and know-how; and Sudan would undergo immense economic development.

Although the Five Year Plan remained formally in existence, and was extended to cover two more years, actual economic policy proceeded differently. The Interim Program (1973-74/1975-76) envisaged much higher expenditure than that proposed by the Five Year Plan. [4] The production of sugar, wheat and textiles was given particular encouragement; Sudan was to achieve short-term self-sufficiency in these products and would then develop a long-term export potential.

Actual Experience

Annual development expenditure rose from 278 million Sudanese pounds (£S) in 1972-3 to £S432.9 million in 1973-4, and to £S666.2 million in 1974-5. In 1976-7 it exceeded £S1,000 million. [5] The bulk of expenditures was in the agricultural sector. A number of large irrigated schemes were initiated, most notably at Rahad, Seleit, Damazine and Kenana. The emphasis was on the the production of sugar and wheat, but it was intended also to grow millet, cotton and vegetables. Mechanized dry farming schemes were also initiated, growing wheat sesame, sorghum and millet on land which was out of the reach of irrigation but had just enough rainfall to raise a crop. [6]

Industrial sector investments concentrated on processing local materials and produce. New sugar factories were established at Sennar, Assalaya and Kenana; new spinning and weaving factories were constructed in Shendi, Kosti, el-Dueim, Kadugli, Nyala, Gadda, Haf Abdallah and Port Sudan; a new cement factory was set up in Rabak and the existing cement factory in Atbara was greatly expanded.

Selected infrastructural projects also attracted significant expenditure. Of particular importance here were the construction of the tarmac road between Khartoum and Port Sudan (eventually completed in 1980), and the digging of the Jonglei Canal (initiated in 1979 but never completed). The latter was intended to divert some 20 million cubic meters of water a day away from the marshlands of the Sudd, so that the water could be used to irrigate an extra 3-4 million feddans of land in the central Sudan and a similar area in Egypt.

One other field of development, not originally envisaged even in the Interim Program, was the oil sector. The Chevron Oil Company began prospecting in 1975, followed later by other oil companies. By 1980, it was clear that oil was present in exploitable quantities along the northern fringe of Bahr al-Ghazal province. While the main burden of expenditure in this sector fell on the oil companies, the Sudanese government was responsible for some of the associated infrastructural expenses. Once the decision to exploit the reserves was made, the government also needed to finance the pipeline which would carry the oil nearly 1,000 miles to Port Sudan.

Cycle of Debt

The flurry of investment activity led Sudan into a deepening economic crisis. By the end of the 1970s, a clear pattern was emerging: few of the projects initiated were completed on time; once they had been completed, projects rarely fulfilled the production targets set for them; meanwhile, the output from established agricultural schemes and industries gradually declined. Gross domestic product actually decreased in the years after 1978. Having borrowed vast sums of money in the expectation that loans could be repaid out of increased production, the government found itself burdened with an immense debt and no new revenue with which to repay it. The external debt, standing at $3 billion in 1978, had risen to $5.2 billion at the beginning of 1982. Now it is approaching $10 billion.

With much of the foreign exchange raised through exports now needed to meet interest payments, there was inevitably insufficient foreign exchange to satisfy the requirements of industry and agriculture for imports of fuel and spare parts. This affected output in the agricultural and industrial sectors, which in turn reduced exports and led to further decreases of exchange. Sudan’s international payments became critically unbalanced; inflation rose in the early 1980s to an effective rate of about 60 percent per annum, the Sudanese pound steadily lost its value, and standards of living declined severely.

Two basic causes lay behind the Sudanese government’s failure to realize the ambitious development hopes of the early 1970s. First, planning behind the development program was deficient. Indeed, given the lack of coherence in central planning, the use of the term “program” may itself not be justified. The cost and benefits of each project seem to have been assessed individually, with little attention to the impact which all projects together would have on the economy. The projects, then, were implemented without full consideration being given to the burden which they would collectively impose on the country’s infrastructure (port facilities, roads and railways, electricity and supplies, for instance), labor force and foreign exchange. Some ministries took the initiative of starting projects, financed by external loans which they negotiated themselves, without obtaining the prior approval of the central planning agency. The latter body, in any case, was headed by a cabinet member who was in no position to impose his will on the more senior government ministers. Inevitably critical bottlenecks and shortages soon emerged. These delayed the completion of projects, reduced the effectiveness of such projects that were completed, and undermined the viability of existing industrial and agricultural undertakings.

This “deficient planning” was not simply a matter of incompetent management. Corruption played a major role. The motivation for many of the projects which materialized at this time could be found more in the financial gain which would accrue to individual ministers and officials than in an impartial assessment of their real value to the economy.

The second cause of economic failure was the combined effect of external factors over which the Sudanese government had no control. The multiple consequences of rising oil prices could not realistically have been predicted by the government when the Interim Program was being framed in 1972-3. The most immediate impact was to increase substantially Sudan’s fuel bill. Given the considerable energy requirements of the development program, both for project construction and subsequent operation, the economic projections on which projects were based were seriously skewed. Foreign exchange costs were thus much higher than had been predicted.

Of greater long-term importance were some of the indirect effects. Rising oil prices gave a new impetus to development programs in the Gulf states, which in turn increased the demand there for externally-recruited professionals, skilled workers and manual laborers. The Sudanese labor market was well-placed to respond to this demand. While jobs in the Gulf brought private gain to the many individuals who obtained such employment&mash;and also brought some foreign exchange to Sudan through remittances, albeit in smaller amounts than first anticipated—the overall impact was to limit the Sudanese government’s ability to control the economy. Shortages of skilled and technical labor suddenly arose as workers migrated to higher salaries in the Gulf. To deter skilled, technical and professional elements from leaving, the government found itself forced to raise salaries, thereby adding to inflationary pressures and widening social and economic disparities within the population. Exchange controls had to be loosened and import controls lifted to provide migrants with an incentive to bring their earnings home.

The migrant remittances themselves also increased the stress on the economic system. They were spent mainly to purchase imported cars, consumer durables, houses and land. The increasing numbers of cars and consumer durables entering the country raised demand for fuel and electricity, thereby creating a further drain on foreign exchange. Expenditure on houses and land drove up real estate prices. The rising price of agricultural land forced up the cost of food products, giving yet another twist to the inflation spiral.

While other labor-exporting countries have experienced some of the same negative effects of labor migration as Sudan, the Sudanese case was compounded by the faulty economic planning. The interaction of bad planning, profiteering and rising oil prices accounts for the extent of Sudan’s economic failure.

Political Consequences

The problems faced by the Sudanese economy led directly to political disintegration. Civil conflict has re-emerged, partly as a result of the constrictions stemming from economic failure. The immense foreign debt and the severe imbalances in the economy left the government with little room for maneuver in determining priorities for public expenditure. Such funds as were available had to be spent on making operational and productive those projects already undertaken, and on eliminating the bottlenecks which inhibited their productivity. Most of the projects which had been initiated, and on which the ultimate hopes of being able to pay back Sudan’s debt rested, were located in central Sudan. Effectively, the outlying parts of the country were starved not only of development funding but even of funds for recurrent expenditure. They experienced all of the negative effects of Sudan’s economic position (high inflation, shortages) and none of the positive aspects (investment funds for selected development projects).

These immediate economic policy dilemmas were reinforced by external pressures. The International Monetary Fund and the consortium of Sudan’s creditors created a framework from which there was no escape, short of Sudan’s reneging on its international debts. Both insisted that government expenditure be cut back sharply, that no new projects should be undertaken, and that expenditure be concentrated on existing agricultural and industrial schemes. Gulf investors, enjoying links with senior members of the Sudanese administration, intoned the same refrain.

The Numairi government seems to have been aware of the political dangers inherent in the situation. In 1979-80 it introduced new “decentralization” and “regionalization” policies, intended to shift administration and development concentration away from central Sudan and towards the provinces. There was much to be said in favor of these policies. The reality, however, was that the government simply did not possess the resources to implement them.

Drought Disaster

The limited funds which could be spent on the outlying regions of Sudan provide one explanation for the severity of conditions in drought-stricken eastern and western Sudan today. Having suffered several years of declining living standards and economic disruption, the people in those areas were in no position to face up to a major natural disaster.

This same dynamic had even greater immediate political impact on southern Sudan. Lacking a secure flow of funds for development, and confronted by conditions of considerable economic hardship, the regionally-autonomous government of southern Sudan (established after the 1972 Addis Ababa agreement) fell apart.

A development program that was effective as well as ambitious might well have been able to overcome the ethnic and personal antagonisms of southern Sudanese politics. Without such a focus for popular attention, however, southern Sudan’s political arena became increasingly divisive. The credibility of the existing institutions was further sapped by a prolonged dispute about administrative redivision.

It was in this context that armed civil conflict re-emerged in southern Sudan. Just as economic failure led to political disintegration, so has political disintegration intensified the economic failure. The formation of the Sudanese People’s Liberation Movement (SPLM) in August 1983 gave the resistance forces in the south a formal structure. [7] Guerrilla attacks on personnel employed by the French Compagnie de Construction Internationale (CCI) in December 1983 halted work on the Jonglei Canal project. Similar attacks in February 1984 on Chevron oil workers brought oil exploration to a stop. [8] These developments extinguished any lingering hope that the Sudanese economy could stage a short-term economic recovery.

End and Beginning

Bereft of success in other fields, President Numairi increasingly emphasized Islam as a basis of legitimacy for his regime. Such support which he was able to mobilize in northern Sudan was offset by the added impetus which it gave to opposition in the largely non-Muslim south.

By April 1985, when popular demonstrations finally forced senior army officers to terminate Numairi’s rule, the regime had lost both its economic and its political credibility. Arab oil-producing states had become increasingly unwilling to shore up the regime—not only because Numairi’s seemingly unpredictable behavior discomfited them, but also because falling oil revenues in the Gulf left them with less to disburse. Even continued US support and assistance failed to prevent Numairi’s demise.

The overthrow of Numairi has ushered in a new era in Sudan, but many of the problems created by his regime remain. So far, there is little indication that the Transitional Military Council either understands or is prepared wholeheartedly to confront these problems. Perhaps the heightened level of popular political mobilization engaged by the events of April 1985 will create the dynamics whereby these problems can be solved.

Two factors are likely to be critical in achieving a positive outcome. First, political movements based in the northern Sudan need to establish some understanding with the SPLM. Although it is based in southern Sudan, the SPLM is not a secessionist movement. It proclaims to seek a unitary socialist Sudan. [9] Failure to establish some unity of purpose with northern-based political groupings may lead the SPLM to abandon these wider objectives and turn to secession.

Second, Sudan’s economic reconstruction must stem from a consciousness of past mistakes, and a determination to prevent the social dynamics which set the framework for economic policy in the 1970s from re-asserting themselves. The key role in the mid-1970s was played by a fraction of the Sudanese bourgeoisie linked to Gulf capital. These businessmen and middlemen gave the development vision of the mid-1970s its main impetus. They also drew the main benefit from this pattern of investment. Substantial rewards went to those comprising the conduit through which Gulf capital entered Sudan. The Sudanese economy has much to gain from cooperation with the economies of the Gulf states. The terms and form of that cooperation, however, should not subject Sudan’s real economic needs to these same fractional interests which prevailed before.

 

Editor’s Note: This article is a revised version of one published in the Arab Researcher (London, April 1985).

Endnotes

[1] The figures given here relating to agricultural and industrial production, the external debt, imports and exports, and the exchange rate are taken from the quarterly reports on Sudan published by the Economist Intelligence Unit (London).
[2] A useful account of the drought and refugee situation, from which these statistics are taken, is found in “Sudan buckles under strain of refugees,’ The Guardian, (London), January 28. 1985.
[3] Sudan government, Ministry of Planning, Five Year Plan of Economic and Social Development of the Democratic Republic of Sudan for 1970-71/1974-75 (Khartoum, 1970).
[4] Sudanese Socialist Union, the Interim Programme (Khartoum, 1973). The Interim Programme was sometimes referred to as the Phased Action Programme.
[5] Sudan Government, National Planning Commission, Annual Development Budget for the respective years (Khartoum).
[6] This account of Sudan’s development experience in the 1970s is based on a longer study prepared by the author (Political and Economic Assessment of Sudan), for Oxford Analytica Limited, Oxford, October 1983.
[7] The growth of the resistance movement through 1983 is documented in Africa Confidential, October 19, 1983.
[8] See “Sudan’s Year of Living Dangerously,” The Guardian July 9, 1984.
[9] See “Appeal to the Sudanese people on the founding of the Sudan People’s Liberation Army (SPLA) and Sudan People’s Liberation Movement (SPLM),” a statement by John Garang de Mabior, issued in August 1983.

How to cite this article:

Tim Niblock "Sudan’s Economic Nightmare," Middle East Report 135 (September/ October 1985).
Cancel

Pin It on Pinterest

Share This