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Friday, 20 October 2017

Women Economist Group Conference on Economic Reforms (2)

The Sudanese Women Economist have organized two workshops and one forum in preparation

for a Conference to come out with recommendations for a structural reforms to address the grave challenges facing the Sudanese economy since Independence in 1956. These activities were organized in cooperation with the German Friedrich Ebert Foundation.  Very important papers were presented by reputable experts followed by very constructive discussions by the participants.

The first paper of six was presented by Prof. Atta El-Battahani (Economic and Social Doctrines and Doctrines and Regimes: Sudan Model). Already in the first part of this part the writer has defined the three types of recognized economic systems in the world that Sudan has exterminated with. Then posed a critical question: Why all these experiments have failed to bear fruits and the country is facing the present economic crises? We continue our journey with the paper in search with the author for an answer.

Colonial Era

Many factors contributed to the British Colonial Administration not to implement a comprehensive economic transformation program which the Gezira Agricultural Scheme model could have been built on. This was linked with the keenness to avoid wide ranging socio-economic development (radical) that may affect the political-social balance in the country. This lead them to preserve the economic-social privileges of the traditional forces that were anti to any change that may endanger their interest, But despite this fact when the British Administration left in 1956 there was a reasonably strong economic situation with a public sector contributing to 40 percent to GDP and taxation representing 60 percent of the public budget revenues compared to 90 percent in most African countries at that time.
The economic, agricultural and urban expansion during this period have led to the creation of a pro-capitalist classes producing for the expanding local markets in the cities and growing urban centres assisted by modern transport and railways systems  as well as the growth of industries to meet increasing local demands. Same time these developments created a balanced economy without sharp classes divides.
A middle class emerged from these developments which included doctors, lawyers, teachers and technicians which in turn led to the formation and development of professional union. With the support of the farmers and workers unions these movement adapted a social justice attitude that stressed on the state role in development and citizens rights to free basic services such as health  ,education, in  addition to balanced development and recognition of the country  ethnic and cultural diversities.


Many consider General Abboud military regime era (1958-1964) the golden era of the post independence Sudan economy after adapting the first ten years plan (1960-1970) for social and economic development and positive neutralism foreign policy. Many agricultural projects were implemented during this period which led to the increase of agricultural produce like cotton and oil seeds. And despite that industries were to a certain extent traditional had gained some exports markets. There was also rapid increase in the GDP, a balanced budget, rate of exchange, expansion of agricultural irrigated schemes, building  of Roseiris Dam, mechanized agricultural schemes expansions, and local industries that depended on local produce like oilseeds, in addition to new cities and improvements in the communications systems across the country.
This does not mean that there was no poverty or social disparities in the country because in reality disparities between rural and urban areas have started since during the British colonial rule. There was clear social divides between central Sudan and the rest of the country in the east, west and south Sudan. Also, there was during this period a degree of documented corruption but not at a level to negatively impact the social political structure. The most negative impact came from the south civil war.
at the same time, while the public sector have created a base of competent technicians and administrators, its unjustified expansion and mushrooming have created interest groups with political connections that after the 1964 October Revolution increased dramatically the levels of corruption and unjustified wealth.
Also, political divides and confrontations escalated after the October Revolution during which the traditional conservative and tribal forces raised the banners of the Islamic Constitution in defense of the preservations of their inherited privileges and rejected any demands to be equalized with the rest of the Sudanese citizens.
The situation aggravated with 25 May 1869 Military Coup and the 19 July,1971 and despite that the situation stabilized in favor of the May regime thre was a change in the balance of powers in favour of the traditional and sectoral forces supported this time by the state bureaucracy which have strengthened its position with the nationalizations measures and the interference of the state in economic activities. Also, the state adapted the free market capitalist macroeconomic policies and retreated from the socialist slogans it raised in 1969.  

Unbalanced Development

The seventh decade of the last century witnessed the start of change from a relatively balanced development to an unbalanced structural development and the declaration of the “World Food Basket” programs and witnessed the entrance of the Islamic banks and the growing influence of the IMF and World Bank over the economy. 
These developments have lead gradually to the loss of the balance in the economy and the growth of the non-productive sectors of the economy. This in turn had a very negative impact in the public social policies and very negative impacts on the middle class and the poor and marginalized segments of the population.
For example expenditure on social services decreased from 30.4 percent in 1961-62 to 14.3 percent in 1972-73 and same time expenditure on development decreased 35 percent in 1955-56 to 18 percent in 1972-73. While at the same time there was repaid increase on expenditure on defense and security as well as on public administration.
 In the end, this leads to the revolt of the effected social segments and the fall in the end of the May regime.

Shock Therapy

After 30 June, 1989 Sudan took a drastic move towards the free market economy reflected by the Economic Salvation Program (1990-1993) which was based on this new economic philosophy and concepts. Thes policies was nicknamed “Shock Therapy”.
The program aimed at: activate the stagnated Sudanese economy and move towards production, mobilize all productive resources and amendment of economic, financial, and institutional frameworks to achieve the program objective, achieve social balance between the different segments of the society, so that reforms will not be at the expense of the poor segments of the population.
The program document pointed out that this economic activation will depend on agricultural development, free exports from restrictive regulations and mobilizes real financial resources internally and externally. The measures also included the removal of all administrative, economic and legal barriers that hinder the participation of the private sector in the development of the national economy. Also, it included fundamental reforms in the regulations and bases of financing, free exports prices and gradual liberalization of basic social services tariffs and imported commodities with the obligation of supporting basic commodities.
Experts agree that this period was characterized by the use of ‘Shock Therapy” but that despite it have taken some key measures to boost productivity , combat the black market and despite some positive results in the end it didn’t achieve the major objective of addressing the structural imbalances in the economy. But must note that there was a notable increase In agricultural, industrial and commercial output during this period and a notable growth in the GDP.
Some of the negative aspects were the dismissal of large numbers of skilled officials, the control of the banking sector by the Bank of Sudan. Also, the privatization of the public sector institution was not conducted in a very transparent manner.
Objectivity demand that external  factors should be taken into account in any objective valuation as this period have witnessed many global economic and financial crises which although originated in the west have naturally  effected all the world economies.
Prof. Atta concluded that there must be an open discussion on who will pay the cost of the needed financial and economic reforms this time.

The Real Economy

The second paper on the “Real Economy” was presented by Dr. Sadiqa Kabello who stressed on that  the chronic economic crises and challenges  in the national economy springs from the challenges of the transforming  the colonial economy inherited from the British to an independent economy.
The national regimes after 1956 have failed to change the structure of the economy and had a narrow limited vision of the needed structural reforms needed. For example, it believed that the challenges in the agricultural sector is financial can be solved by banks instead of addressing the major constraints in the production relations and that industrial development can be performed by the private sector alone regardless of its apparent financial, technical and administrative defects. This requires that there should be for some time strong efficient public sector. Also, pointed to that the conflicting policies in the mechanized and non-mechanized rain fed agricultural sector have very negatively effected the development and modernizations of these two essential components of the national economy.
The dismantling of Sudan Railways the paper pointed have reduced the competitiveness of Sudanese exports by increasing transport costs of Sudanese produce when taking into account that most of them are in areas far away from the Port Sudan Sea Port. Also , this increased the cost of basic consumers goods which had a negative effect in the welfare of the majority of citizens.
The paper recommended that a genuine economic reforms roundtable that safeguard the interest of all stakeholders and that is  transparent ,participatory and  that exclude no one to reach national consensus on a roadmap.

Realties and Challenges

The realties and challenges facing the Sudanese economy was the focus of the paper presented by Dr. Bakitta Mohamed Osman. On the onset, it pointed that Sudan despite its enormous economic and natural resources have been in constant economic crises and difficulties since Independence in 1956.
One manifestation is that the services sector with 48.4 percent of GDP in 2015 almost equal the joint participation of the agricultural sector (31.4 percent) and the industrial sector (20.2 percent). Same time this was accompanied by an increase in import and reduction in exports both in volume and value. In addition to that political instability hinders the influx of major national and international investments. Low productivity of the agricultural and industrial sector is also a major constraint. Same time the impact of environmental degradation due to the effects of global climate change which has affected in particular the agriculture and livestock sectors.
The paper stressed on the need to draw a road-map for reforming the Sudanese economy that determines the objectives, priorities, and monitoring and evaluation mechanisms of outcomes.
Such a roadmap must focus on Sudan agricultural and livestock resources in the first place by adding value vide agro-industries. This will require the modernization of these sectors vide a joint effort between the state , the public and private  sectors because the challenges is tremendous and cannot be addressed by one single sector alone.
Also, any realistic reforms will require the reform of the public sector laws and structures to meet the challenges of the Twenty First Century and same time must understand very clearly the public education and health services are not a luxury and a state generosity and that beside been a human and citizens right is essential for economic and social development. The successful economic models during the last five decades in South Asia and elsewhere prove this point beyond doubt. And in the context of Sudan there is a strong need to expand technical and vocational training which will provide development with competent workforce and same time reduce youth unemployment.
The paper last recommendation was that funding of scientific research and innovations  must not neglected as other countries experiences have proven it can play a crucial  role in social and economic development.

Financial Reforms

It is universally agreed upon that any economic reforms policy or strategy must have a financial and fiscal reforms component.  The paper on “Economic policies and Financial/fiscal reforms” by Dr. Nawal Mohamdeen address this aspect of reforms.
The role of the state in directing the national economic including the financial and fiscal aspects is not a matter of dispute. The main targets of public budgets is determine public expenditure on the government priority areas and sectors while keeping inflation down and accelerating full employment. The revenues to finance public expenditure come from direct and indirect taxations as well as customs tariffs and tariffs on certain public services. The rates is usually determined by the overall government economic policy and objectives and sometimes affected by bilateral, international and regional agreements.
In this respect, the Monetary Policy determines the foreign currencies, rate of exchange, the volume of liquidity, direct financing towards the investment activities that best promote the overall economic development policies and same time stabilize prices and control inflation. Also, the monetary policy can promote foreign trade and in particular exports by some types of incentives to exporters.
Internationally there have been many economic and Monterey reforms policies, the most famous two of them those recommended and enforced sometimes by the IMF (International Monterey Fund )  and WB (World  Bank); the Economic Stabilization policies and the Structural Adjustment policies).
But the IMF and WB policies have meet worldwide criticism as anti-power and hinder economic and social development in the developing countries and favour the wealthy western countries. Some even went as far as to that the Austerity measures in these policiesare in violation of people human rights. This make that national interest should be put at the top of the agenda in the formulation of any Monterey policies.