World Bank report: Sudan needs economic diversification
In its newest Country Economic Memorandum (CEM) for Sudan on Sunday, the World Bank urges Sudan to accelerate its economic diversification.
The country’s economy contracted severely following the secession of South Sudan in 2011 and the loss of 75 per cent of its oil revenues, the World Bank said in a statement.
The country has since achieved some recovery driven by exploiting other export possibilities, notably gold and livestock. But to reach a more diversified, non-natural resource economy, it is essential that Sudan undertakes a combination of institutional, macroeconomic, and sectoral reforms to reach a more stable growth path, the CEM says.
“Economic diversification is high on the Government of Sudan’s agenda”, said Michael Geiger, Lead Author of the Report. “While the authorities have succeeded in reducing inflation and slightly recovering from the negative growth rates of 2011 and 2012, more must be done to ensure a more stable medium-term outlook.”
The report, entitled Realizing the Potential for Diversified Development, identifies a number of barriers that have been preventing Sudan from effective economic diversification. These include high and volatile inflation, a long overvalued exchange rate, low productivity in agriculture, among others.
“We hope our report will help Sudan embark upon the necessary reforms.”
To address these challenges, the report proposes a series of interlinked recommendations that address sector-specific concerns as well as broader challenges facing Sudan’s macro economy. These include removal of exchange restrictions to unify the official and black market rates, increasing agricultural productivity through key policy changes, improving the management of natural resources rents, addressing broader business environment constraints and building human capital to support structural change.
“The World Bank’s CEM argues that a combination of direct and indirect approaches will help Sudan embark on the structural transformation necessary to accelerate inclusive economic growth leading to sustained poverty reduction” said Carolyn Turk, World Bank Country Director for Ethiopia, Sudan, and South Sudan. “We hope our report will help Sudan embark upon the necessary reforms,”
“It is essential that Sudan undertakes a broad set of reforms so as to successfully diversify its economy,” said Xavier Furtado, World Bank Country Representative in Sudan. “In order to help support the authorities in some of these areas, the World Bank plans to launch several new initiatives in the coming months, including support for public-private partnerships and greater financial inclusion in the agriculture sector.”
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