Developlemt economics in sudan by: Ashley tan

WEEK 1

Overview of Sudan

In 2010, Sudan was considered as the 17th –fastest –growing economy in the world given the rapid development of the country -largely from oil profits, despite international sanctions. However, the secession of the South in 2011, had gravely affected the economy as more than 80% of Sudan’s oil fields existed in the southern part of the country. Historically, agriculture remained as the main source of income and employment in Sudan, hiring over 80% of Sudanese and making up a third of the economic sector. Despite this strong agricultural orientation, oil production drove most of Sudan’s post-2000 growth. Real GDP growth is estimated at 2.8 % in 2011 compared to 11.5 %. As a result of the oil loss, the growth of both industrial and service sectors fell in to the negative 2012 while only agriculture sector witnessed positive growth in both years.

Economic Growth in Sudan

The overall economic growth in Sudan has not been translated into equivalent human development improvements and poverty reduction realities. Significant disparities between urban and rural areas are apparent, contributing to an increasingly urban informal sector which accounts for more than 60% of Sudan’s GDP.

Prevalence of child malnutrition is high, at 31.8% in 2010 with a 2015 target of 15 percent and the proportion of population below the minimum level of dietary energy consumption of 28 percent in 2010 with a target of 14 percent in 2015. The under-five mortality rate per 1000 live births declined from 130 in 1990 to 78 per 1000 in 2010, maternal mortality rate was estimated at 216 per 100.000 live births in 2010. According to the 2010 MDGs Report, delivery by trained personnel increased from 57% of deliveries in 2006 to 72% of deliveries in 2010 with a target of 90 percent by 2015.

Gender equality is one of the priority issues for development in Sudan. Women are given a quota of at least 25 percent representation in national or state parliaments in the 2008 Electoral Law, which is also reflected in the real political representation of women in the National Assembly. According to the 2010 MDGs Report, women occupy 28% of the seats in the newly elected parliament in 2010.

WEEK 2

Comparing Levels of Development

The graph above shows the comparison between the life expectancy and literacy rate of males in two countries: Sudan (less developed) and Italy (more developed). The points on the graph reveal that both countries experienced an improvement in both indicators over the last 50 years, however, Sudan grew at a much slower rate with both it's current life expectancy and literacy rate still at a lower figure than that of Italy's in 1981.
WEEK 3

Domestic Factors and Economic Development

Education

Education in Sudan is free and compulsory for children aged 6 to 13 years. Primary education consists of eight years, followed by three years of secondary education. The primary language at all levels is Arabic. Schools are concentrated in urban areas; many in the South and West have been damaged or destroyed by years of civil war. In 2001 the World Bank estimated that primary enrolment was 46 percent of eligible pupils and 21 percent of secondary students. Enrolment varies widely, falling below 20 percent in some provinces. Sudan has 19 universities; instruction is primarily in Arabic. Education at the secondary and university levels has been seriously hampered by the requirement that most males perform military service before completing their education. The literacy rate is 70.2% of total population, male: 79.6%, female: 60.8%.

The free and compulsory education system established aided economic growth as the literacy rate has improved over the last 50 years. However, this growth was limited to an extent as majority of the students only learn in Arabic and most males' further education is delayed due to the required military services. As a result, opportunities beyond Arabic-speaking countries are hindered and the rate of students entering the work force to aid economic growth is slowed down, thus contributing to Sudan's poor economic growth.

Property Rights

The Sudan Property Rights Program (SPRP), September 2008 – March 2011, assisted the Government of Southern Sudan (GOSS) to develop a draft land policy based on extensive public consultation and research, as well as provided support to build the capacity of the Southern Sudan Land Commission (SSLC). A follow-on project, the Sudan Rural Land Governance Project (SRLG, 2011 – 2013) will help harmonise the land policy with the 2009 Land Act and support selected State and local governments for more effective land administration and planning.

Use of Appropriate Technology

Appropriate technologies are those that respond to the local environment, resources and economic needs. The development of new materials and technologies needs to take into account the fact that the majority of the population is poor with very limited investment capacity.

Education Development Center, Inc. EDC has worked in South Sudan since 2003, helping to build the basic education system through the South Sudan Interactive Radio Instruction (SSIRI) project and to establish the Sudan Radio Service (SRS), which has kept the general population informed about the CPA and provided daily updates on the progress to independence in July 2011. In both SSIRI and SRS, technology has fulfilled a role in the social and political development of the nation that probably could not have been done as efficiently or effectively any other way. Technology has played an important role in educating and informing this development and in maintaining stability.

Access to Credit

Sudan has incorporated micro-finance lending into its poverty reduction plan. Over 480,000 people, including small business owners, have access to credit at market rates

Multi Donor Trust Fund National (MDTF-N) Sudan Microfinance Project encourages the government and private sector to develop affordable financial services such as credit and savings programs for poor entrepreneurs in war-affected areas of Sudan. The project serves Sudanese in marginalised parts of western, eastern and northern Sudan, as well as the urban working poor. Limited access to credit and the absence of affordable credit are the primary reasons small companies don’t get off the ground in Sudan. In 2013, Sudan was ranks 167 out of 185 countries by the World Bank’s Doing Business Report (2010) based on the ease of getting credit.

Most of the poor Sudanese in urban settings cannot afford the fees banks charge for loans. Consequently, they borrow from other business owners, or traders, who are willing to be repaid in cash or in kind. In Sudan, small-scale industries account for 93% of the manufacturing industry, and small entrepreneurs provide two-thirds of household needs for the majority of Sudanese households, according to the World Bank. The formal financial sector only serves a tiny proportion of these entrepreneurs, thus pointing to the existence of a huge untapped market, which is one of the reasons hindering Sudan's economic growth.

WEEK 4

International Trade and Economic Development

Over-specialisation and Price Volatility

Sudan’s economy contracted severely following the secession of South Sudan in 2011 and the loss of 75% of its oil revenues. It 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

Another crucial barrier Sudan experiences is high and volatile inflation, a long overvalued exchange rate, low productivity in agriculture, among others.

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.

WEEK 5

Growth and Development Strategies Aimed at Increasing Trade

Export Promotion

Export Promotion is Sudan was believed to be achieved by means of policy packages designed to provide the incentives seen to be crucial in promoting the production of exports. The policy instruments of the ECRP and NESP comprised exchange rate reform, trade liberalisation measures (especially the removal of export taxes), elimination of costs and price distortions, a re-orientation of production on the irrigated areas towards Sudan's most competitive crops and reform of the production relations in the state-managed agricultural schemes.

Some structural and institutional reforms also appear to be extremely important if devaluation and other price policies are to be effective. As long as some significant constraints and distortions in the economy continue, the elimination of others will not necessarily result in a gain in efficiency. Although the removal of the remaining distortions may be difficult, their elimination would be crucial to the success of any export promotion programme.

Trade Liberalization

Applying marker economy and trade liberalization policies will not help, more feasibly it will worsen food security and employment rates. The declining trend in international trade taxes resulting from trade liberalization typically would have a serious negative impact on the government budget in general, and on expenditure on education, health and transfers to the poorer segments of the society. This is likely to contribute to the aggravation of absolute poverty.

The experience of trade liberalization in African countries underscores the need for proper tax policy responses and macroeconomic stability to contain the negative fiscal effects of trade liberalization. When the market structure of agricultural exports is oligopolistic, as in most African countries, trade monopolies, not the producers are the main beneficiaries of any increase in the price of exports resulting from trade liberalization.

The Role of the WTO

The World Trade Organization (WTO) represents the international forum for establishing and policing the rules of the game for international trade. As a result of the ‘Single Undertaking’, obtaining membership requires signing all the WTO agreements that cover trade in goods, both agricultural and non-agricultural, and services, such as banking, transport, tourism and telecommunications. It also includes an agreement on trade-related intellectual property rights that will be of interest for South Sudan. Recent experience suggests that it can take up to 10 years to complete the accession process from the point of obtaining observer status.

Accession to the WTO will result in a variety of benefits for South Sudan. Most countries in the world are members of the WTO and trade between members makes up 95% of world trade in total. However, it will open doors beyond the WTO itself. Therefore, following to their accession to the East African Community in April 2016, applying for WTO membership is a logical next step in South Sudan’s process of engaging with the international community. By acceding to the WTO, South Sudan can benefit from most favoured nation treatment; it will signal its commitment to applying pro-growth policies, which may have positive effects on the growth of national income; it can facilitate South Sudan’s development of trade policy through the adoption of internationally accepted best practices;and it will provide a forum where South Sudan can settle its trade disputes with other countries. Overall, South Sudan will become more visible on the international stage and its policy makers will be able to actively engage and therefore both learn and contribute to international trade policy

Bilateral and Regional Preferential Trade Agreements

Sudan maintains diplomatic relations with Arab and African states. It has bilateral conventions and agreements in economic, trade, cultural and security areas. Sudan has very much benefited from its Arab and African ties. They have together confronted many challenges and played indispensable role internationally in defense of Sudan.

Sudan did not settle for typical relations oriented towards the West, but instead opened its doors to the entire world. It fostered close and solid ties based on common interests with China, Korea, Russia, India, Malaysia, Indonesia and other Asian nations and benefited much from these relations. This is precisely why Sudan has been able to withstand the age-old aggression of and attempts at isolation by the West.

Diversification

While positive, Sudan’s growth was rather volatile and its rate of expansion below the average for SSA, despite the positive effects of the oil economy. The variability of GDP growth in Sudan during the past decade (caused by the advent of oil and the secession of South Sudan) was quite high and is the highest compared to a selection of comparator economies and SSA. Despite the extensive exploitation of natural resources, the average GDP growth rate during the past decade was in the lower half of its comparator countries. The level of GDP per capita in Sudan is also lower than the average for SSA, urging the need for economic restructuring and diversifying production structure and increase in productivity.

Fiscal decentralization and devolution of basic service delivery Sudan has undertaken political decentralization reforms since the early 1990s with the aim to transition the responsibility for basic service delivery to the subnational, state level. Sudan’s government administration has three tiers: federal, state, and local, with elected legislatures at each level and elected state governors. At the sub-national level there are now 18 states each with several localities. Sudan’s decentralization is governed by a plethora of laws and agreements.

WEEK 6

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