Sudan's economy: Useless wealth and gold fueling conflict
Sudan is the world's largest producer of gum arabic, accounting for 80% of global production. Gum arabic is used in the food, pharmaceutical, cosmetics, and ink industries. However, due to the war, more than 85% of producers have ceased production. Sudan is also the third largest gold producer in Africa, with reserves of 1,550 tons, but 80% of its production is now smuggled due to conflict and the financing of the war. Furthermore, Sudan boasts the sixth largest livestock population in the world, exceeding 140 million head, but the war has decimated this sector, with the meat industry suffering a 95% decline. Oil reserves were estimated at approximately five billion barrels before South Sudan's secession in 2011. Today, after the war, Sudan's oil production barely reaches 60,000 barrels per day. The Sudanese pound, which was valued at 570 pounds to the dollar before the war, plummeted to 2,750 pounds on the black market in September 2024. All of this is just a small part of the heavy price the Sudanese economy is paying as a result of the war and successive crises. So, what are the losses to the Sudanese economy due to the war?
According to some government statements, the losses to the Sudanese economy in the first year of the war may reach approximately two hundred billion dollars as a result of the damage to the productive and service sectors. The industrial sector, which contributed 17% to the GDP and employed 250,000 workers before the war, suffered 90% damage and losses amounting to $20 billion by May 2024. With the increased demand for imported goods due to the shutdown of most Sudanese factories, pressure on the local currency intensified, causing its value to erode by approximately 79.3%. Prices of goods and services rose unprecedentedly, and inflation rates soared from 63.3% in February 2023 to 193.94% in July 2024. Similarly, the agricultural sector, which contributed 32% to the GDP and employed 80% of the Sudanese workforce, saw its production decline to less than half and lost approximately $20 billion in the first year of the war. Likewise, the service sector, which contributed 51% to the GDP before the war, experienced losses of 50%, with the health sector alone estimated to have suffered $13 billion in losses in the first year. A year of war. By June 2024, 121 bank branches and exchange bureaus in Khartoum had been completely looted, exacerbating the liquidity crisis. As a result of the collapse across most sectors, Sudan lost 25% of its GDP in the first year of the war, revenues plummeted by more than 80%, and exports fell by about 60%, with Khartoum airport closed and most ports ceasing operations. The Sudanese people were not spared the economic effects of the war. Fifty percent of the workforce lost their jobs in the first year, and the government was unable to pay 50% of salaries, pushing poverty rates to 65%. Twenty-five million six hundred thousand people, representing more than half of Sudan's population, suffered from acute hunger, with 755,000 of them on the brink of famine. Given these catastrophic conditions, experts believe that if the war ends, Sudan will need to implement a comprehensive recovery plan focused on reforming the affected sectors and securing international support to rebuild the economy. However, if the war continues, it will destroy what remains of the economy. Is there a way out of the Sudanese crisis?
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