SUDAN: Feeling the Economic Impact Before Secession

I wrote a piece on the deteriorating economic situation for IPS

http://www.ips.org/africa/2011/06/sudan-feeling-the-economic-impact-before-secession/

SUDAN: Feeling the Economic Impact Before Secession

By Reem Abbas

KHARTOUM, Jun 23 (IPS) – Amira Amer* becomes very picky the minute she reaches the bus station. One by one she lets the new air-conditioned busses pass her by. She is waiting for a cheaper bus. They are limited in the expensive city of Khartoum and are constantly packed to the point of overflowing.

"When the new air-conditioned buses came out, we were happy and felt that the government was finally genuine about our comfort, but sadly, they are not subsidised. They cost two Sudanese pounds (60 cents), I can’t afford to pay four pounds for a round trip," Amer said in an interview with IPS.

Amer’s job requires her to spend a great amount of time and money traveling to meet the needs of her clients. She buys imported goods and sells them to her clients who expect her to deliver the products to them.

"Many of my clients can’t afford to pay on the spot so I have to travel back and forth to collect the weekly or monthly instalments," she told IPS.

Things weren’t always so bad for Amer. She inherited 60,000 dollars in 2006 when the family’s house was sold. The single mother of three was able to buy a nice house for her small family and even save some money for her children.

At the time, one Sudanese pound was equal to 2.30 dollars and life was considerably cheaper. The Sudanese economy was booming due to high oil prices and increasing foreign investment.

In the years following the signing of the Comprehensive Peace Agreement in 2005, new jobs were created, cafes were bustling with customers and young professionals were able to buy cars in instalments and travel to Cairo or Dubai or Kuala Lumpur for holidays.
"No one is traveling now, people are trying to save their money for worse days. Tickets were much cheaper a few months ago, but now the prices are up 25 percent," said Maha Ali*, an employee at a travel agency in downtown Khartoum.

Ali used to make a lot of money from commissions when she brought customers to the agency. Now it is a struggle to convince people to travel, especially when some airlines only accept dollars and reject the constantly fluctuating Sudanese pound.
The economy changed in November 2010. The North Sudan government claimed that Sudan lacked foreign currency and the Sudanese minister of finance and national economy, Mahmoud Hassanein, was quoted saying that the country’s people consumed more than the country produced and this caused the rise in prices.

In early January 2011, southern Sudanese voted in a referendum in favour of secession from the north and this set in motion the beginnings of an economic crisis in Sudan. Currently North and South Sudan equally share the profits of the oil found in the south. But this will change when South Sudan becomes independent.

But North Sudan began to feel the impact of the secession even before the referendum. Prices skyrocketed as a result of inflation and salaries remained the same or even decreased.

"My salary has actually decreased, I used to get a lot of benefits and commissions on projects, but they were taken away or cut in half. Life is getting more expensive and I make less money, " said a staff member at the University of Khartoum.
Prices are going up at an alarming rate. Sesame oil, a regularly consumed product jumped from 110 to 126 Sudanese pounds and the bread price increased by 25 percent. In supermarkets people buy what they consider to be basics, such as sugar, milk, and flour. Luxury products are neatly stacked in rows gathering dust.

"I usually shop for my household on a weekly basis. I used to spend 250 Sudanese pounds on groceries, fruits, veggies and meat. Now I pay 350 Sudanese pounds," a University of Khartoum professor told IPS.
Ahmed*, who sometimes works as a currency dealer on the black market thinks that the problem lies in the value of the Sudanese pound.

"For the longest time in 2010, the government maintained that the dollar equals 2.50 Sudanese pounds. The value of the Sudanese pound kept plummeting and as much as the government heavily invested in trying to stop the black market, people felt ripped off," Ahmed said.

He added that restrictions on the amount of dollars you can take when you are traveling abroad pushed many to the black market. "You were able to exchange the equivalent of 1,000 dollars only at the airport. You can get up to 1,500 Euros now, but it is still not enough," he told IPS.

Najm El Deen Ibrahim, a senior official from the Central Bank of Sudan, the bank responsible for managing the country’s accounting and setting an exchange rate for the Sudanese pound, believes that the national currency is not going to depreciate further.

"We have injected foreign currency into the market to major importers, exchange bureaus and commercial banks. The bank will make sure that the currency is stable and will act immediately to stop any massive fluctuations,"
He added that there is no direct link between prices and exchange rates. The increase in prices is due to an increase in the prices of commodities all over the world.

*Names have been changed