The economic and humanitarian crisis in Sudan after #SudanCoup
Summary
With 56% of Sudan’s population are below the poverty line - up from 43% in 2009 - this report covers Sudan’s worsening post-coup economic and humanitarian situation. After briefly summarising the economic developments of 2022, the report provides analysis that explores nine issues: five for Sudan’s gloomy humanitarian outlook, four ways that the policies of the coup regime are exacerbating humanitarian suffering. The report concludes with five proposed policy solutions to resolve the economic and humanitarian crises.
1. Developments
After the 25 October 2021 military coup led to the suspension of $700 million in international development aid, Sudan’s economic losses are accentuated by a steep decline in exports. Amid continually soaring inflation, the coup regime appears to have no plan for alleviating Sudan’s economic free fall beyond adding to public suffering by raising taxes on a population already struggling with steep price increases. To compound matters, it is projected that almost half of Sudan’s population will be pushed to the brink of starvation in 2022, with a third – 15 million – already facing acute food insecurity.
2. The first analysis section of the report covers seven key issues in Sudan’s worsening humanitarian situation:
1. Food prices are becoming unaffordable due to factors, including;
2. Russia’s invasion of Ukraine disrupting global wheat supply, and;
3. Environmental factors impeding agricultural production.
4. Wheat is being left to rot as the coup regime failed to fulfil its promise to buy from farmers
5. As a result, despite the hunger crisis, farmers have little incentive to cultivate wheat in the absence of buyers or storage facilities.
6. These factors, alongside soaring inflation, mean that hunger is spreading to Sudan’s urban areas.
7. In addition, a drinking water crisis is occurring from the west to the east of Sudan.
3. The second analysis section of the reports offers four arguments that suggest that the coup regime’s economic policies are worsening the situation:
1. Increasing taxes as budget balancing method is argued to be both immoral and impractical.
2. The coup regime has responded to international development aid being diverted towards humanitarian organisations in Sudan by intimidating and extracting profits from them.
3. Hunger is argued to be a political tool for a coup regime unwilling to conduct the necessary economic reforms to resolve the humanitarian situation.
4. Such economic reforms would include challenging the “curse” of the rentier economy that lines the pockets of the security sector at the expense of the masses, and is the root cause of Sudan’s security, economic and humanitarian crises.
4. Finally, the report summarises five proposed solutions to alleviate the humanitarian and economic crisis:
1) improving access to drinking water, 2) preventing the coup regime from extracting profits from humanitarian organisations, 3) industrialisation as an alternative to the rentier economy, 4) building a resilient wheat and agrifood system and 5) combating the food insecurity confronting 34% of Sudan’s population.
Key facts
For a grasp on the extent of Sudan’s worsening humanitarian situation, Reuters (1 April) provided some statistics:
Sudan’s inflation rate of 250% is one of the highest in the world.
Aid groups estimate that 14.3 million, a third of Sudan’s population, will need humanitarian aid, reflecting an increase of increase of more than 50% in two years.
With 15 million already food insecure in Sudan, the UN World Food Programme says that about 18 million will face acute levels of food insecurity by September 2022, double last year, due to high prices, a reduced harvest, and conflict in some regions.
According to UN estimates, over 3 million are displaced across Sudan, about 2.5 million of them in Darfur.
Aid groups warn that violent incidents, usually in the form of militia attacks are increasing in Darfur, causing over 400,000 to flee, with many already in displacement camps.
Sudan is also home to 1.1 million refugees, including many from South Sudan Ethiopia and Eritrea.
To compound matters, Alex De Waal, a famine expert and executive director of the World Peace Foundation argues that the coup regime has no plan to resolve the economic meltdown and subsequent humanitarian crisis that has intensified due to the military coup of 25 October 2021 which triggered the suspension of international assistance (Responsible Statecraft, 4 May).
Developments
Following the suspension of international development assistance after the military coup, Sudan’s economy is in free fall. With economic deterioration compounded by exports sharply declining, the coup regime has resorted to raising taxes to mitigate economic losses. As a result, the coup regime is, literally, making Sudanese citizens pay the price of their coup, subsequently adding to their economic suffering amid projections that almost half of Sudan’s population will be pushed to the brink of starvation in 2022.
Sudan’s economic losses
Sudan’s economy is in free fall as the regime aims to compensate for money lost due to declining economic productivity and the suspension of aid due to the coup. Sudan was also expecting $700 million in the 2022 budget in foreign loans and aid to ease the burden of austerity measures, including the currency flotation and slashing of subsidies for bread and fuel (AP, 5 April). To further complicate matters, Sudan exported only $43.5 million worth of goods in January 2022, down sharply from $293 million in December 2021, despite this being the peak agricultural export season (Reuters, 2 March).
The suspended international aid has also halted the Family Support Programme that aimed to provide cash transfers to 80% of Sudan, leaving food, fuel and electricity unaffordable (New Humanitarian, 15 April).
Increased taxes
To mitigate the shortfall, the military-led coup regime is raising prices and taxes by aiming for a 145% and 140% increases in tax revenues commodities and services sales respectively (Reuters, 2 March). According to economist Mohammed al-Nayer taxes now constitute 58% of the budget (AFP, 20 March).
Inflation
Inflation continues to rise in Sudan following currency flotation. In an attempt to alleviate Sudan’s steeply deteriorating economic conditions, the Central Bank of Sudan – in which scores of Islamists have been reinstated since the coup (Reuters, 22 April) – decided to float Sudan’s currency in a move that was likely to cause a swift increase in prices of commodities and services in response to a drop in the value of the Sudanese pound (AP, 7 March). After the coup, Sudan’s currency has already lost more than a third of its value since the coup, rapidly driving up prices for fuel, food, and other goods, and fell even further on the parallel market (Reuters, 24 March). As a result, the inflation rate rose to nearly 260% (AP, 17 March), with economist Mohammed al-Nayer forecasting that inflation may rise at 500% from 258% (AFP, 20 March).
Food shortages
The WFP warned that almost half of Sudan’s population will face hunger in 2022. About 20 million people will likely be classed as suffering from “emergency” or “crisis” levels of “acute food insecurity,” double 2021’s figure, according to the WFP (Bloomberg, 15 March).
The WFP subsequently reported that a third of Sudan’s population, at least 15 million people, are facing acute food insecurity, according to its Comprehensive Food Security and Vulnerability Assessment for Sudan in the first quarter of 2022. With Sudan only producing enough cereal last year to cover the needs of less than two-thirds of the population, Babagana Ahmadu, the UN’s Food and Agricultural Organisation (FAO) representitve in Sudan, warned that food insecurity may rise to unprecedented levels and lead to more conflict and displacement in the absence of agricultural inputs and livestock services to robustly support the agricultural season (Multiple sources, 16 June).
Analysis: Seven humanitarian issues
Sudan is experiencing its highest humanitarian caseload in a decade (New Humanitarian, 15 April), with the UN Office for the Coordination of Humanitarian Affairs saying over $1.9 billion is needed in 2022 to protect 14.3 million people in Sudan amid dramatic price increases for bread, fuel, electricity, medicine, health care and public transportation in Sudan (AP, 5 April).The first analysis section of this report examines seven issues reflecting or contributing to Sudan’s bleak humanitarian outlook.
1. Food prices are steeply rising in Sudan, particularly bread, reflecting a bleak food supply outlook for the 56% of Sudan’s population below the poverty line - up from 43% in 2009 (Reuters, 1 April).
2. The report then covers factors behind Sudan’s wheat supply shortages, starting with the disruption caused by the Russia’s invasion of Ukraine – with both countries ranging from 35% to 87% of Sudan’s wheat supply.
3. In addition, rainfall that is either too scarce or too heavy culminates in a drastic reduction in Sudan’s grain production, adding to the obstacles to farming caused by inflation.
4. To compound Sudan’s pre-existing food crisis, wheat is being left to rot in the absence of buyers.
5. As a result, farmers have little incentive to cultivate despite the growing hunger crisis.
6. In combination, these factors culminate in hunger spreading to urban areas for the first time in Sudan’s post-independence history.
7. Furthermore, a drinking water crisis is erupting throughout Sudan.
1. Increasing food prices
The WFP said that the national average retail price of food in Sudan has significantly increased, making “nutritious food unaffordable for many families”. The WFP stated that “the average cost of the WFP domestic food basket rose sharply by nearly 20% compared to the previous month”, with sorghum, wheat flour and peanuts rising by 20%, 14% and 14% in comparison to the previous month (Radio Dabanga, 21 April).
The cost of small bread loaves rose from 2 SDG in 2020 to around 50 SDG at the time of Reuters’ article being published (1 April), with AFP (20 March) reporting that a man who provides for a family of six saying that bread now costs 27,000 pounds a month which is 90% of his salary, and he is unsure of whether he can afford to send his children to school. A spokesman for the association of bakery owners attributed the price increases to unaffordable operational costs, with electricity tariffs increasing by 500%.
The Guardian (25 March) reported that the prices of sugar and bread almost doubled in two weeks, with a litre of gasoline increasing from 320 SDG in November 2021 to 672 SDG this March 2022. Nonetheless, food eventually got cheaper as hyperinflation subsided, but this is not necessarily a positive sign according to famine expert Alex de Waal, who told the Washington Post (7 May) that the situation in Sudan is so bad, that hyperinflation subsided “because no one has any money” culminating in a situation whereby food got cheaper, but because nobody could afford it. Sudan is also especially vulnerable to food shortages in the wake of Russia's invasion of Ukraine (AFP, 20 March).
2. Food shortages caused by Russia’s invasion of Ukraine
While Russia and Ukraine are, in combination, the major sources of Sudan’s wheat imports, different media outlets provide different figures on how much Sudan is reliant on the eastern European states. Bloomberg (15 March) state that 35% of Sudanese wheat imports come from Russia and Ukraine, whereas the Guardian (25 March) state that 50% comes from Russia alone, with Reuters (1 April) and the Washington Post (7 May) putting the figure of Sudan’s combined wheat import percentage from Russia and Ukraine at 87% and 81% respectively.
With disruption caused by Russian’s Ukraine invasion increasing wheat prices by 180% to $550 a tonne (Guardian, 25 March), rocketing global wheat prices and Sudan’s dependence on grain from Ukraine and Russia is complicating the food import needs (The New Humanitarian, 15 April), leaving Sudan needing to look for an alternative and pay higher prices, (Bloomberg, 15 March). Moreover, Kholood Khair of Insight Strategy Partners think-tank, said that the wheat supply from Russia and Ukraine is an immediate concern, warning that it will run out within two to three months (Washington Post, 7 May). Thus, the 56% of Sudan’s population below the poverty line - up from 43% in 2009 - are strongly exposed to the food supply impacts of Russia-Ukraine war, alongside agricultural drought (Reuters, 1 April).
3. Wheat supply shortages caused by environment factors
With inflation already makes seeds, fertilisers and fuel unaffordable for farmers, Sudan’s agricultural food production is also hampered by environmental issues (Reuters, 1 April). Prolonged dry spells and pest and disease outbreaks have reduced harvests reduced cereal production by 35% (The New Humanitarian, 15 April), while rising unrest in farming regions, alongside rainfall that is either too scarce or heavy has led UN agencies project that millet, wheat and sorghum yields will be 30% lower than they were over the past five years, with Sudan facing its first sorghum deficit since “ravaging” droughts of the 1980s (Reuters, 1 April).
Consequently, the UN Food and Agriculture Organisation (FAO) said 5.6 million people are affected by agricultural dryness. Indeed, a farmer in North Kordofan, which is experiencing an influx of internally displaced persons, said he lost all his sorghum plants this season because the rains did not come, leaving locals to reduce their daily meals (Guardian, 25 March). In addition, violence in Darfur and Kordofan damaging farms and leaving many jobless (AP, 5 April).
To compound Sudan’s pre-existing wheat shortages, cultivated grains are being left to rot in the absence of buyers, leaving farmers with little incentive to grow wheat.
4. Unsold wheat is being left to rot
Despite Sudan’s acute food insecurity, Sudanese farmers are both unable to fund the cultivation of crops (Reuters, 9 June) and fear that their wheat harvests will rot (AFP, 19 June), after the government failed to buy wheat under promised terms.
Thousands of farmers cultivated wheat as part of Sudan’s Al-Gezira agricultural scheme after the government promised to buy it at $75 per sack, with a farmer telling AFP (19 June) that they did not need adequate storage places because the government bought their entire harvest. However, Sudan’s agricultural bank – which buys the harvests - has been unable to receive money from the finance ministry or central bank owing to a worsening economic crisis after the October military coup.
Speaking to farmers who cultivated in Al-Gezira, Reuters (9 June) reported that one, Nazar Abdallah, fears that he will go to jail due to unpaid debts. Abdallah took out loans assuming the government would buy his wheat at the agreed price. However, his wheat, which should have been sold in March 2022, is stored under a leaky roof and could be spoiled should it rain, leaving him with no pay to back his debts. Indeed, agricultural expert Abdulkarim Omar noting that wheat can rot within three months if stored inadequately (AFP, 19 June).
5. Farmers have little incentive to grow wheat
Although traders have offered to buy the unsold wheat, their prices barely cover production costs, leaving farmers with little incentive to cultivate the wheat, notes Omar Marzouk, the governor of the Al-Gezira scheme (AFP, 19 June), with Reuters (9 June) noting that Russia's invasion of Ukraine driving prices for inputs such as fertilizer and fuel to new highs. Consequently, an anonymous farmer told Reuters (9 June) that: “the government is impoverishing us,” citing high fertilizer and fuel costs in the absence of a market for their harvest.
With rotting unsold wheat leaving farmers with little incentive to cultivate grains, Sudan’s food insecurity situation is now so bad that – for the first time in Sudan’s post-independence history – hunger is spreading to urban areas, when it was previously limited to the neglected peripheries.
6. Hunger spreading to urban areas
Researcher Edward Thomas and famine expert Alex de Waal, noted how previous Sudanese regimes neglected rural food availability at the expense of the wellbeing of urban centres, but the economic deterioration under Omar al-Bashir’s regime contributed to hunger spreading to urban areas – “a big change with unknowable implications” (World Peace Foundation, 26 April). Since 2019, for the first time since its presence in Sudan, the UN’s WFP has expanded to the urban centres of Sudan, with deputy country director Marianne Ward attributing this to “structural issues such as inflation (and) availability of foreign currency” (Reuters, 1 April).
Percentage of food insecure across UN WFP. The yellow around Khartoum reflects the spread of hunger to urban areas.
7. Drinking water crisis
To add to the misery of the food crisis, Sudan is also facing a nationwide water crisis, with Radio Dabanga (18 April) reporting on drinking water crises from the west to the east of Sudan - in Darfur, Kassala and the Red Sea states. In Kassala, the price of water barrels range between 1,000-1,500 SDG. The crisis is attributed to the government neglecting to remove sand and silt, which hinders groundwater recharge. In the Red Sea State, the prices of jerrycans of water range from 500-1,000 SDG. Mayor Mohamed Abdelkader attributed the crisis to the spread of water basins around neighbourhoods that impede water access to neighbourhoods. He accused local officials of mismanagement, citing “illegal approvals of the main water line”. Meanwhile, severe drinking water crises are occurring in camps for internally displaced persons (IDP) in Kalma in South Darfur and Zamzam in North Darfur, with IDP groups lamenting the lack of effective interventions and calling on the government to dig new wells and maintain pumps.
Residents of al-Shigla, across the White Nile from Khartoum, said water supply has been dry despite the Nile river being just a kilometre away, with Reuters (22 June) describing the neighbourhood’s road as “dotted with stagnant, green pools of water and uncollected rubbish.” Furthermore, officials at Khartoum's water authority blame a lack of government funding to maintain water stations or pipes for a growing population, with frequent power outages disabling water pumps.
Analysis: 4 issues with the coup regime’s economic policies
The coup regime appears to have no plan to alleviate the economic and humanitarian crisis beyond balancing the budget by raising taxes – which both increases public suffering, and is tough to implement.
Meanwhile, the coup regime has responded to international donor pivoting development assistance to humanitarian organisations in Sudan by viewing them as a lucrative source of income, thus intimidating and extract profits from them.
Indeed, analysts suggest that the coup regime uses hunger is a political tool, as it encourages submission to a ruling security apparatus unwilling to end its kleptocratic stranglehold on Sudan’s economy in order to resolve the worsening humanitarian situation.
The security apparatus’ economic dominance is reflected in the “curse” of Sudan’s rentier economy that is viewed as the structural root cause of Sudan’s economic issues and instability, as it enables the military to generate revenues through mass oppression, at the expense of national development.
Challenges of raising taxes to balance the budget
With Sudan’s humanitarian situation already bleak, the increase of “adds to the people’s suffering” after the suspension of aid following the coup, economic researcher Sabna Inam told AP (AP, 5 April). Nonetheless, even the tax increases come with challenges. Aims for a five-fold increase on business license fees will be “hard to impose” as per a local banker as businesses are accustomed to not paying taxes (Reuters, 2 March).
2. Intimidation of humanitarian aid organisations
The freezing of international development aid in response to the coup has sparked another issue for Sudan’s humanitarian situation. As donors have begun to pivot funding to humanitarian organisations, they have become lucrative sources of revenue for the coup authorities, reports journalist Mat Nashed in Devex (15 April).
Since the military coup, Sudanese state ministers and officials have resorted to practices used by the former regime of dictator Omar al-Bashir, such as piling on bureaucratic procedures to extract profit and attempting to interfere in NGO procurements. NGO leaders fear being kicked out of Sudan and contracting companies linked to the security apparatus if they do not heed requests from Sudan’s Humanitarian Aid Commission (HAC), staffed by security officers under al-Bashir’s regime.
3. Hunger as a political tool
Indeed, Thomas and De Waal argued that the Sudanese coup regime “picked the path of hunger” by staging their coup, as they knew its human costs given their inheritance of ultra-austerity and a pre-existing food crisis without the mitigating international assistance. Thomas and De Waal noted how hunger has been used by previous Sudanese military regimes as a political tool of violent repression – under the “working assumption that when people are sufficiently destitute and famished, enough of them will submit or collaborate the coup regime (World Peace Foundation, 26 April).
Similarly, De Waal argued that the coup regime has no plan for a Sudanese food crisis triggered by an economic meltdown exacerbated by the suspension of international assistance following the coup, with the ruling military junta “well aware that any meaningful economic reform requires the dismantling of the military-owned corporations and their kleptocratic stranglehold over the economy” (Responsible Statecraft, 4 May).
Unwilling to conduct economic reforms, the coup regime has instead tried to make Sudanese citizens pay for the costs of the coup through high tax increases.
4. Structural causes for Sudan’s economic problems
Providing a structural explanation for Sudan’s historic economic issues, Muzan Alneel, co-founder of the ISTiNAD think-tank, attributed the “curse” of Sudan’s rentier economy to Sudan’s instability. Alneel argues that the revenues generated from Sudan’s limited extractive resources require oppression and primarily benefit security forces and militias that dominate them - at the expense of national development. Alneel adds that Sudanese civil society acknowledges the curse as the “root cause” of national issues, but it is not discussed in UN consultations, while the civilian component of the transitional government ignored proposals for alternatives in 2020 (Rosa Luxemburg Stiftung, 25 March).
Solutions
Solutions proposed for improving Sudan’s economic and humanitarian situation include: improving access to drinking water, preventing the coup regime from extracting profits from humanitarian organisations, industrialisation as a form of economic transformation and various policy measures to build a resilient wheat and agrifood system.
How to improve access to drinking water
In Kassala, citizens demand that water supply is linked to nearby dams amid warnings that the large consumption of groundwater as drinking water will affect the horticultural sector. In the Red Sea State, Mayor Mohamed Abdelkader called for the prevention of basins, adding that proposed solutions to provide a desalination plant at sea will not succeed in the presence of the current administration (Radio Dabanga, 18 April).
How to prevent the coup regime from extract profits from aid organisations
To prevent the coup regime from extracting profits from international humanitarian organisations in Sudan, Dorette Besser, who formerly led Conflict Sensitivity Facility in Sudan, called for aid groups to receive adequate core funding and training to develop the institutional strengths to be conflict sensitive and sensitively navigate dynamics and volatile contexts (Devex, 15 April).
People-centred industrialisation
To alleviate the “curse” of the rentier economy that is the root cause of Sudan’s instability, Muzan Alneel suggests that a Sustainable Development Commission proposed by the Resistance Committees implements economic transformation via industrialisation policies that produce the surplus value necessary to establish inclusive health, education, housing and employment systems in Sudan based on a people-centred approach that minimises public harm (Rosa Luxemburg Stiftung, 25 March).
Building a resilient wheat and agrifood system
The International Food Policy Research Institute (6 April) propose policy measures for Sudan to mitigate increased wheat prices triggered by Russian’s invasion of Ukraine, and build a more resilient wheat and agrifood system, including:
Increased investments in roads and other market infrastructure to reduce transaction costs.
Additional research and extension efforts to increase production of alternatives to wheat production, including drought-tolerant sorghum and millet on non-irrigated land.
A cash transfer system targeting the poorest households could be considered to compensate for the removal of bread subsidies.
Addressing food security data gaps, and increasing monitoring and analytical capacity as accurate targeting of either cash or in-kind transfer programs would require up-to-date household data.
Combating food insecurity
The UN World Food Programme’s Comprehensive Food Security and Vulnerability Assessment for Sudan (16 June) offered policy solutions to combat food insecurity confronting 34% of Sudan’s population, including:
Creating sustainable and stable livelihood opportunities, especially for the most vulnerable groups.
Improving agricultural productivity, food availability and employment by supporting financial services and agricultural inputs to farmers.
Reducing food loss and addressing the structural lack of storage capacities by promoting initiatives such as the WFP’s hermetic storage bag, increasing storage capacity and investing in strategic silo system to avoid food shortages.
Investing in productive infrastructure such as the Peace Roads initiative to connect the most food insecure areas such as Darfur, South Kordofan and the Blue Nile which cannot be accessed by the main transport corridors, thereby generating income generating opportunities, trade, and more opportunities for people to meet their basic needs, alongside connecting small farmers to functioning markets.
