Sudan: After two months of war, the economy is collapsing

With its charred buildings, factories and warehouses turned into heaps of molten iron, the main industrial district of Bahri, north of Khartoum, has become a battlefield

Sudan: After two months of war, the economy is collapsing

With its charred buildings, factories and warehouses turned into heaps of molten iron, the main industrial district of Bahri, north of Khartoum, has become a battlefield. Across Sudan's capital, major industries have been targeted by aerial bombardment and repeated looting since the war broke out on April 15 between General Abdel Fattah Al-Bourhane's Sudanese Armed Forces (SAF) and the Rapid Support Forces (RSF) of General Mohammed Hamdane Dagalo, known as "Hemetti". A conflict that has killed more than 1,800 people and is suffocating the country's economy.

“Our premises in Bahri have been ransacked, safes broken into and vehicles stolen. And again we were lucky, ”says Mouna Mirghani, human resources director of the Haggar group, founded in 1904 and omnipresent in agriculture, energy and technology. In the industrial zone, the neighboring facilities of Coca-Cola as well as the firm Samil Foods, partner of the French group Nutriset, which produced thousands of tons of peanut paste to fight against infant undernutrition, or even the warehouses of Sayga, the largest flour factory in Sudan, went up in smoke.

Like the Haggar company, which announced on May 29 to suspend all its activities and investments, dozens of flagships of the Sudanese economy have closed shop, destroying tens of thousands of jobs across the country. Neither the private sector nor the public administrations no longer remunerate their employees. Financial transactions are frozen following the looting of banks and damage to electricity networks and telecommunications. “Everything is centralized in Khartoum. The economy is totally out of order,” laments Mouna Mirghani.

"Militarization of all sectors of the economy"

With its outlet on the Red Sea, at the eastern end of the Sahel, its millions of hectares of fertile land along the Nile, Sudan, the third largest country on the continent, is located at a strategic crossroads. But the important natural resources that form the backbone of its economy (gold, gum arabic, sesame, cattle or oil) are now at the mercy of a war that is bogged down. Exports are on hold. Air traffic is suspended, the main arteries are impassable for the transport of goods. And although spared by the fighting, Port Sudan's infrastructure, through which nearly 80% of national trade passes, is paralyzed.

"We are paying the price today more than ever for the extreme concentration of the economy in the capital and the lack of development of the peripheries, caused by decades of military power," laments Hassan Bachir, professor of economics at the Al-Nilein University, which estimates the amount of losses to date at more than 3.4 billion dollars. "It will take years to rebuild," adds Mouna Mirghani.

The burden of the war seems all the heavier to bear for the Sudanese economy as it was already in turmoil after years of sanctions and isolation inherited from the regime of Omar Al-Bashir. When the latter fell in 2019, the civilian government, briefly in business, had tried in vain to redress the bar before being overthrown by the generals.

As the economy collapses, the army and the FSRs remain the main employers in the country. To pay the salaries of their hundreds of thousands of men, they have significant financial assets in all areas, from the extraction of gold and oil resources to agriculture, construction and telecommunications.

In 2020, Prime Minister Abdallah Hamdok lamented that nearly 80% of resources were controlled by the military and their cronies, beyond the control of his cabinet. "That's the root of the problem. The militarization of all sectors of the economy risks prolonging the conflict”, analyzes Selma El-Obeid, independent researcher.

Under US sanctions

According to many experts, one of the only ways to put the belligerents under pressure and reduce the fighting would be to cut their funding networks. The United States was the first to take the plunge on Thursday, June 1, when it announced sanctions targeting four key companies controlled by the two armies, following the suspension of the Jeddah talks over flagrant and repeated ceasefire violations. -fire announced.

Targeting the regular army, Washington blacklisted the parent company of the Defense Industry Corporation, which has hundreds of subsidiaries manufacturing ammunition, small arms and military vehicles, as well as the Sudan Master Technology group, more known as "Giad", which produces weapons for the FAS.

To reach the paramilitaries, the US Treasury targeted the Al-Junaid company, headed by Abderahim Dagalo, General "Hemetti's" brother. A company considered the cornerstone of the mining empire of the Dagalo clan, whose revenues are estimated at 400 million dollars annually, mainly from gold exports to Dubai. The sanctions also target the Emirates-based firm Tradive General Trading, headed by Al-Goney Dagalo, "Hemetti's" younger brother, which serves as a financial front for FSR activities.

A super-militarized state

“These holdings are at the heart of the nebula. The sanctions will be effective in the medium term. Both armies now depend on their stocks. This will allow tomorrow to dry up their sources of supply, ”wants to believe the economist Hafiz Ismail.

Still, many Sudanese are skeptical. The sanctions imposed by the White House in 1997 against the regime of Omar Al-Bashir, maintained for twenty years, mainly affected the population without really weakening power. "It's not a magic weapon. Everyone had found a way to get around them,” recognizes Mouna Mirghani. Trained in international embargo avoidance strategies, the generals could resort to more illegal transactions and contraband.

"If the conflict continues, we will see the emergence of an economy of resource predation, based on control of gold mines, looting, cattle rustling, like in South Sudan “, analyzes Magdi El-Gizouli, researcher at the Rift Valley Institute, who predicts greater dependence of the population on armed actors in an over-militarized state.

The two rival armies had bet on a quick victory. As the conflict escalates, the generals seem to have overlooked in the midst of military calculations the sinews of war: economy. “Whoever wins, he will rule over a heap of ruins,” asserts Professor Hassan Bashir, convinced that Sudan will take years to recover.