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The battle rages on in the capital, the business center of Sudan
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Imports and exports slow to a trickle
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Liquidity crisis as the FX market is distorted
By Khalid Abdelaziz, Sarah El Safty and Nafisa Eltahir
KHARTUM/CAIRO, May 4 (Reuters) – The conflict sweeping Sudan has dealt a crippling blow to the country’s economy in the capital Khartoum, disrupting internal trade routes, threatening imports and sparking a liquidity crisis.
In large parts of the capital, factories, banks, shops and markets were looted or damaged, electricity and water supplies failed, and residents reported sharp price increases and shortages of basic foods.
Even before fighting erupted between military factions on April 15, Sudan’s economy was in deep stagnation following a crisis dating back to the final years of Omar al-Bashir’s rule and the turmoil that followed his ouster in 2019.
Tens of thousands have now fled the violence in Khartoum and its twin cities of Bahri and Omdurman, while millions more have taken refuge at home as shells and airstrikes sweep through neighborhoods.
The movement of goods and people has slowed as troops and sometimes gangs roam the streets. Telecom networks have become unreliable and some say they have begun rationing food and water.
“We are afraid and we suffer from high prices, shortages and lack of wages. This is a war against the citizens,” said Ismail Elhassan, an employee at a company in Khartoum.
Already a major exporter of gum arabic, sesame, peanuts and livestock, Sudan has the potential to become a major agricultural and livestock exporter and logistics hub.
But the economy has been slowed by decades of sanctions and international isolation, as well as deep corruption. Most Sudanese have been struggling with years of rampant inflation, sharp currency devaluations and declining living standards. About a third of the 46 million inhabitants depend on humanitarian aid.
NO DRIVERS
The conflict has hampered trade flows in and out of the East African nation as banking and customs procedures are centralized in Khartoum. While the country’s main Red Sea port is operational, at least one major shipping company, Maersk, says it is not taking bookings until further notice.
Imports of wheat, key to Sudan’s food security, are becoming increasingly difficult, a Khartoum-based trader said. Imports of home appliances like refrigerators across the land border with Egypt, where tens of thousands of Sudanese have fled north, have also slowed, said Alaa Ezz, secretary-general of the Federation of Egyptian Chambers of Commerce.
Michel Sidhom, a supply chain manager at a trading company operating in Egypt and Sudan, said its business in Sudan was “completely halted” as exports of Egyptian fertilizers and flour, typically around 10,000 tonnes a month each, were halted .
Egypt, Sudan’s second-biggest destination for livestock, a major export, said it wanted to diversify its sources in the wake of the unrest.
Sidhom says his company’s traders in Sudan have left Khartoum and no driver is willing to risk transporting his goods to the capital.
“They have closed and left Khartoum until further notice. Whoever stays in Khartoum stays on a battlefield,” he said.
SCARCITY, HIGH PRICES
In Khartoum, shortages of items such as flour and vegetables and price increases have been reported. Long lines are forming in front of bakeries and supermarkets in the capital.
According to a Reuters reporter, the price of a kilogram of lamb has risen by nearly 30% to £4,500 ($7.52), while the price of a kilogram of tomatoes has doubled to £1,000 ($1.67). .
A supermarket owner in Omdurman blamed rising fuel prices on the black market for inflation. A gallon of scarce fuel can now cost as much as £40,000 ($67), up from £2,000 ($3.34).
Even where fighting has eased, demand is low, an Omdurman butcher said. “All are left,” he said.
The Sudanese pound has lost about 600% against the dollar since 2018, prompting many to save money in dollars.
Merchants in Khartoum are facing a liquidity crisis and people are increasingly relying on an electronic wallet app called Bankak, which often suffers from outages, to pay bills.
The black market is skewed as relatives abroad try to sell dollars for bank transfers while those in the country seek dollars for safekeeping.
Forex traders are offering dollars at rates as high as £700 ($1.17) while buying for as little as £300 ($0.5014), with prices varying widely as transportation and communication become more difficult.
Sudan’s central bank said Sunday banks outside the capital were conducting withdrawal and deposit transactions. In Khartoum, the army and the RSF have accused each other of looting banks. The head of a bank in Khartoum said he was trying to temporarily move the bank’s headquarters out of the capital.
Another executive said that in years of economic reforms, coups and protests, “this is the biggest challenge facing the banking system and threatens an almost complete shutdown,” he said.
In the city of Atbara, northeast of Khartoum, crowds were seen outside banks, some of which had imposed withdrawal limits.
“My cash has run out because I haven’t received my salary and the banking apps aren’t working,” said Elhassan from Khartoum. ($1 = 598.2002 Sudanese Pounds)
(Reporting by Khalid Abdelaziz in Atbara, Sarah el-Safty and Nafisa Eltahir in Cairo; Editing by Aidan Lewis, William Maclean)
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