The Sudanese government, in an effort to stabilize its crumbling economy, has introduced new banknotes and compelled the largely unbanked population to open bank accounts.
The initiative, launched in December, aims to render funds looted by the paramilitary Rapid Support Forces (RSF) worthless.
According to Finance Minister Jibril Ibrahim, the initiative has been successful, though he did not specify the amount of Sudanese pounds deposited.
Sudan has been embroiled in a two-year conflict between the army and the RSF, which has severely damaged the economy, devalued the currency by three-quarters, and left half the population facing hunger.
Ibrahim stated that the government’s move has significantly boosted bank deposits. “This helps the banking sector, and when you help the banking sector, that helps the state to finance projects, including the war effort and productive activities,” Ibrahim told Reuters in an interview.
Limited amount to be withdrawn daily
- To receive the new 500-pound and 1,000-pound banknotes, citizens have been required to deposit their old notes in banks and are allowed to withdraw limited amounts daily. This strategy has drawn funds from a largely unbanked society into the formal financial system.
- Since the onset of the war, RSF soldiers have looted numerous banks and obstructed agricultural activities, making it difficult for the army-aligned government to pay salaries and finance essential goods such as medicine.
- Ibrahim noted that Sudan produced 64 tonnes of gold last year and officially exported about half, indicating that the proportion of looted gold in army-controlled areas has decreased.
- A source at Sudan’s central bank revealed that the new banknotes were printed in Russia, one of several foreign powers intervening in the conflict.
What you should know
- However, critics argue that this development has excluded millions from the financial system, particularly those in regions controlled by the RSF.
- Residents in RSF-controlled areas continue to use old notes, electronic transfers, U.S. dollars, and, in some places, Chadian rials. Even in Port Sudan, the army’s wartime capital, some residents have protested against the new banknotes.
- Traders report that the process has dampened sales, as many people still lack identification papers needed to open bank accounts and smartphones for online transfers.
“All of our capital is deposited in the bank. When you need cash in the future, they won’t give you. You might spend a whole day to get 50,000 pounds ($20) or 100,000 pounds ($40),” said fishmonger Ali Moneeb.
On April 15, 2023, Sudan was plunged into conflict as longstanding tensions between army chief Abdel Fattah al-Burhan and paramilitary Rapid Support Forces (RSF) leader Mohamed Hamdan “Hemedti” Dagalo erupted into war.
More than half of all attacks, 4,858 or 54 per cent of all recorded incidents, have been documented around the capital, Khartoum.
