October 30, 2011

Analysis - Sudan's new economy

Sudan's government is desperately seeking revenue, since the most of the oil funds it has depended on for the last ten years now accrue to the benefit of South Sudan. President Bashir must reinvent the economic engine for north Sudan.

The development needs of the country remain immense. While a number of high-profile construction projects have been launched in Khartoum, they haven't served the needs of the country, except to provide good quality housing and office space in the capital. Many projects have been built with foreign funds, primarily Chinese.

Attempts have been made to charge exhorbitant transit fees for the oil that the south wants to sell - up to half the value of a barrel of oil. Negotiations continue.

Alternate income generating ideas include selling land to the Egyptians and Suadi Arabians so they can grow crops. Agricultural exports need to increase, so greater planting efforts will be made on farms around the country. The vagaries of climate make that a hit and miss strategy. There's not much of an industrial base, so north Sudan has few manufactured goods to sell on the international market.

What's left to get development funds?

One: Resources in the ground. Water, iron, oil and gold. Two: Asking for help

We note the successful construction of the Meroe dam. Electricity capacity has doubled in the country, but is still inadequate for large scale industrial purposes. Irrigation has enabled the development of farming downstream.

How long will the Meroe dam be useful? No estimate has been released. Sediment will settle into the lake behind it, eventually reducing the holding capacity of the dam.

There is an iron mine in north east Sudan, and exports to China were announced on October 27, 2011. About 4,000 tons were shipped, and over the next few years, there are expectations that 40,000 tons of iron ore will be shipped to the far east.

North Sudan has released large blocks of land for oil exploration. Some companies have taken options at an 85/15 [company/Sudan] split and begun work to search for oil. One drilling effort has been off the coast in the Red Sea in the Tokar region, beginning in February 2010. Only time [and foreign investment and expertise] will tell how much oil is in the ground.

The news comes out today that north Sudan has signed 50 contracts allowing mining companies to search for gold in various states across the country.

The Minister of Minerals announced that three Jordanian, Chinese and Turkish companies have started gold production, thus increasing the number of gold producing firms to seven. He further said that the construction of a gold refinery would begin in 2012.

26 kilometer road at the Sudan Eritrea border, built with Qatari money

A $9 million dollar 2 lane road was built and paved with funds from Qatar. It runs from Kassala to the Eritrean border and beyond. The road was officially opened on October 26, 2011.

On October 24, 2011, AllAfrica reported that The Sudanese First Vice President Ali Osman Taha paid a one-day visit to Kuwait for talks focused on ways the Arab Gulf state can bolster its investments to aid the beleaguered economy.

In December 2010, a short conference was held in Kuwait, and donor agencies and countries pledged 3.5 Billion dollars in gifts, grants and investments to help develop the east of Sudan. Many posts here.

Tractor picture at top from the US Sudan embassy website. Presumably assembled in Sudan.

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