Economy

Sudan's primary resources are agricultural, but oil production and export have taken on greater importance since October 2000. Although the country is trying to diversify its cash crops, cotton and gum Arabic remain its major agricultural exports. Grain sorghum (dura) is the principal food crop, and wheat is grown for domestic consumption. Sesame seeds and peanuts are cultivated for domestic consumption and increasingly for export. Livestock production has vast potential, and many animals, particularly camels and sheep, are exported to Egypt, Saudi Arabia and other Arab countries. However, Sudan remains a net importer of food. Problems of irrigation and transportation remain the greatest constraints to a more dynamic agricultural economy.

Agriculture production remains Sudan's most important sector, employing 80% of the work force and contributing 39% of GDP, but most farms remain rain-fed and susceptible to drought. Chronic instability - including the long-standing civil war between the Muslim north and the Christian/animist south, adverse weather, and weak world agricultural prices - ensure that much of the population will remain at or below the poverty line for years.

The Merowe High Dam, also known as Merowe Multi-Purpose Hydro Project or Hamdab Dam, is a large construction project in northern Sudan, about 350 km north of the capital Khartoum. It is situated on the river Nile, close to the 4th Cataract where the river divides into multiple smaller branches with large islands in between. Merowe is a city about 40 km downstream from the construction site at Hamdab. The main purpose of the dam will be the generation of electricity. Its dimensions make it the largest contemporary hydro power project in Africa. The construction of the dam is due to be finished by mid 2008, supplying more than 90% of the population with electricity. Other gas powered electricity station are under construction in Khartoum state, these are also due to be completed by 2008.

In Depth

The economy of Sudan grew 46% in the 60s reaching a peak growth of 170% in the 70s. However, this proved unsustainable and growth consequently scaled back to 34% in the 80s. Finally, it shrank by 26% in the 90s.

Transport

The country's transport facilities consist of one 4,800-kilometer (2,748-mi.), single-track railroad with a feeder line, supplemented by limited river steamers, Sudan airways, and about 1,900 km. (1,200 mi.) of paved and gravel road - primarily in greater Khartoum, Port Sudan and the north. Some north-south roads that serve the oil fields of central/south Sudan have been built; and a 1,400 km. (840 mi.) oil pipeline runs from the oil fields via the Nuba Mountains and Khartoum to the oil export terminal in Port Sudan on the Red Sea.

Industrial Development

Sudan's limited industrial development consists of agricultural processing and various light industries located in Khartoum North. In recent years, the GIAD industrial complex introduced the assembly of small autos and trucks, and some heavy military equipment such as armoured personnel carriers and the proposed "Bashir" main battle tank.

Mineral Resources

Although Sudan is reputed to have great mineral resources, exploration has been quite limited, and the country's real potential is unknown. Small quantities of asbestos, chromium and mica are exploited commercially.

Energy

Extensive petroleum exploration began in the mid-1970s and might produce all of Sudan's needs. Significant finds were made in the Upper Nile region and commercial quantities of oil began to be exported in October 2000, reducing Sudan's outflow of foreign exchange for imported petroleum products. There are indications of significant potential reserves of oil and natural gas in southern Sudan, the Kordofan region and the Red Sea province.

On November 3, 1997, the U.S. government imposed a trade embargo against Sudan and a total asset freeze against the Government of Sudan under Executive Order 13067. The US believed the Government of Sudan gave support to international terrorism, destabilized neighbouring governments, and permitted human rights violations. A consequence of the embargo is that US corporations cannot invest in the Sudan oil industry, so companies in China, Malaysia and India have become the major investors.

Sudan is seeking to expand its installed capacity of electrical generation of around 300,000 megawatts - of which 180 MW is hydroelectric and the rest, thermal. European investors, considering the continuing US economic, trade, and financial sanctions regime, are the most likely providers of technology for this purpose. More than 70% of Sudan's hydropower comes from the Roseires Dam on the Blue Nile grid. Various projects are proposed to expand hydropower, thermal generation, and other sources of energy, but so far the government has had difficulty arranging sufficient financing.

Agricultural Sector

Until the early 1970s Sudan's agricultural output was mostly dedicated to internal consumption. In 1972 the Sudanese government became more pro-Western, and made plans to export food and cash crops. However, commodity prices declined throughout the 1970s causing economic problems for Sudan. At the same time, debt servicing costs, from the money spent mechanising agriculture, rose. In 1978 the International Monetary Fund (IMF) negotiated a Structural Adjustment Program with the government. This further promoted the mechanised export agriculture sector, causing great economic problems for the pastoralists of Sudan.

Foreign Assistance

Historically, the US, the Netherlands, Italy, Germany, Saudi Arabia, Kuwait and other Organisation of Petroleum Exporting Countries (OPEC) national traditionally have supplied most of Sudan's economic assistance. Sudan's role as an economic link between Arab and African countries is reflected by the presence in Khartoum of the Arab Bank for African development. The World Bank had been the largest source of development loans.

Sudan will require extraordinary levels of program assistance and debt relief to manage a foreign debt which exceeds US $17 billion, more than the country's entire annual GDP, and one of the world's largest foreign debts. During the late 1970s and 1980s, the IMF, World Bank, and key donors worked closely to promote reforms to counter the effect of inefficient economic policies and practices. By 1984, a combination of factors, including drought, inflation, and confused application of Islamic law, reduced donor disbursements and capital flight led to a serious foreign-exchange crisis and increased shortages of imported inputs and commodities. More significantly, the 1989 revolution caused many donors in Europe, the US, and Canada to suspend official development assistance, but not humanitarian aid.

However, as Sudan became the world's largest debtor to the World Bank and International Monetary Fund by 1993, its relationship with the international financial institutions soured in the mid-1990s and has yet to be fully rehabilitated. The government fell out of compliance with an IMF standby program and accumulated substantial arrearages on repurchase obligations. A 4-year economic reform plan was announced in 1988 but was not pursued. An economic reform plan was announced in 1989 and began implementing a 3-year economic restructuring program designed to reduce the public sector deficit, end subsidies, privatise state enterprises and encourage new foreign and domestic investment. In 1993, the IMF suspended Sudan's voting rights and the World Bank suspended Sudan's right to make withdrawals under effective and fully disbursed loans and credits. Lomé Funds and EU agricultural credits, totalling more than one billion Euros, also were suspended.