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Sudan is situated in northern Africa, with a coastline bordering the Red Sea. It sits at the crossroads of sub-Saharan Africa and the Middle East, with fertile lands, abundant livestock, and manufacturing. However, the country has been beset by conflict for most of its independent history and, under the terms of the 2005 Comprehensive Peace Agreement, the southern states seceded to form the Republic of South Sudan in July 2011. The current conflict in South Sudan continues to strain and put pressure on Sudan, with more than 189,000 South Sudanese refugees having entered Sudan since December 2013 as well as a drastic reduction in cross-border oil flows. In addition, longstanding disputes in Darfur, South Kordofan and areas bordering South Sudan (such as Abyei) remain.
The near absence of inclusive public institutions that can adequately mediate demands for power and wealth sharing between the center and the periphery has been an underlying source of fragility and conflict in Sudan. The unequal allocation of public resources and access to natural resources are main drivers of conflict, feeding into a potent mix of ideology, ethnicity and socio-economic marginalization that threatens to pull the country further apart.
The secession of South Sudan induced multiple economic shocks. The most important and immediate was the loss of the oil revenue which accounted for over half of government revenues and 95% of exports. This has left huge macro-economic and fiscal challenges, much reduced economic growth, and double-digit consumer price inflation which, together with increased fuel prices, triggered violent protests in September 2013.
Sudan did not use the oil windfalls to invest in human development, diversify its economy, or promote private sector growth. Political instability, corruption and economic uncertainty compromise the enabling environment for business development, growth, and employment (2010 Investment Climate Assessment). Other constraints include inadequate infrastructure services (e.g., transport and electricity), access to finance and taxation policies.
Agriculture and livestock are essential to Sudan’s economic diversification (away from oil) and could contribute to medium-term macroeconomic stability. While these sectors presently contribute approximately 35 to 40 percent of gross domestic product (GDP), they could contribute significantly more with greater investment and better governance. Sudan now recognizes the need for greater attention to agriculture and livestock, as reflected in its Interim Poverty Reduction Strategy Paper (I-PRSP) and the Five-year Program for Economic Reforms approved by its parliament in December 2014.
However, Sudan remains a highly indebted country that has accumulated sizeable external arrears and has been in non-accrual status with the World Bank Group (WBG) since 1994. At the end of 2013, Sudan’s external debt stock stood at $45.1 billion in nominal terms, about 85% of which was in arrears. While the country is eligible for debt relief under the Highly-Indebted Poor Countries Initiative, it must come to an amicable understanding with its main creditors in partnership with South Sudan.
Poverty and Social Developments Sudan has wide and deep swaths of poverty and stark inequality between regions. Poverty estimates set the average rate of poverty incidence at 46.5% (2009 National Baseline Household Survey), indicating that some 15 million people are poor. But the poverty incidence numbers mask significant regional disparities. Poverty in urban areas (especially Khartoum) is significantly lower than rural areas, which account for 60% of the country’s population and 80% of its poor. Poverty incidence in North Darfur is approximately three times that of Khartoum and more than twice that of River Nile State. Also of note are the disparities between settled and nomadic populations who constitute 9% of Sudan’s population and 14% of its poor.
Gender-based disparities are also substantial with Sudan scoring very low in global measures of gender gaps and female empowerment. Severe gender gaps exist across a range of sectors, with rural areas faring worse than urban. In education, for example, nearly two-thirds of Sudanese women have less than primary education, compared to just over half of their male counterparts.
Human development indicators remain low and Sudan ranks at 166 out of 187 countries in the 2014 UNDP Human Development Index. Net primary school attendance rate is only 67% with huge disparities across states and gender. The 2012 Education Status Report, as well as UNICEF’s 2014 Sudan Country Report on Out-Of-School Children, note the compounding negative impact of poverty, rural-urban disparities, and gender; poor girls living in rural areas are among the least likely to access educational opportunities. Indicators for nomadic and displaced populations are also poor.
The main determinants of poverty in Sudan include,sustained and multiple conflicts, which undermine opportunities for economic and social development, which in turn feed longstanding grievances driving fresh conflict, a dependence on oil which has resulted in the neglect of agriculture and livestock sectors as well as alternative sources of energy, the unequal distribution of fiscal resources and access to natural resources, especially between the center and the periphery, and governance failures as reflected in poor policy credibility and implementation as well as inadequate incentives for private sector investment and participation.
Source: World Bank Updated: October 2015
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