When South Sudan Broke Away From Sudan In 2011, It Took Most Of The Country’s Riches With It

Sudan’s permission for private merchants to export gold as a countermeasure to smuggling and help the country’s cash-strapped government raise foreign money may come under attack after yesterday’s coup.

Sudan’s central bank has long been the only institution authorized to purchase and export gold and set up facilities where small-scale miners may sell their metal.

Sudan produced 93 tons of gold in 2018, making it Africa’s third-largest producer behind South Africa and Ghana. Sudan’s Energy and Mining Minister Adil Ibrahim gave Reuters the exact figure in November. Before domestic banking rules were implemented, the central bank used to buy gold at a discount to the world market price. According to government sources, 70-80% of it was smuggled out of the country.

Economic and development realities in Sudan’s industries have both direct and indirect consequences. A low level of technology and a lack of diversification are seen in the manufacturing exports of the nation, which are heavily dependent on the basic metal extractive sub-sector. Basic metals account for approximately 88.5 percent of Sudan’s exports, according to an analysis of the country’s industrial subsectors in 2016. Low-tech sectors such as food and beverage manufacture and leather and footwear manufacturing are examples of other industrial exports. Estimates indicate that mining contributes to Sudan’s economy, with over 15% of the workforce employed in this sector. The agriculture sector is where the vast majority of them came from (73%).

In light of mining’s severe environmental effects, health dangers to workers, and the security apparatus’s participation and control of the industry, the government has significant challenges in accomplishing its sustainable development objectives and achieving political stability. The mining industry’s circumstances resemble a trend evident in Sudan’s petroleum sector a decade ago.

Exports of crude oil from Sudan accounted for 85 percent of total exports between 2000 and 2011. Even though South Sudan’s market share fell to only 24% in 2012, an examination of the industry demonstrates that a rapid loss in sector capacity was unavoidable. Ministry presentations at the Sudanese National Economic Conference in September 2020 revealed a focus on developing wells in areas where oil had previously been detected. Neglect for investing in exploration wells to define new oil reserves, leading to a situation where all the Sudanese oil exported in the last two decades had been produced from wells explored and explained in the 1970s and 1980s. Since the nation has made no public announcements about reducing oil output, this course of action could not be strategically justified. The Sudanese Ministry of Energy cited the preference for private sector return on investment above strategic development objectives as the reason for the low proportion of exploratory work (just 23% of all wells drilled from 2000 to 2019). Additionally, mining and oil production accounts for a large portion of exports. Still, they’ve also been a source of social unrest due to disputes between industry opponents and local populations over environmental harm caused by these sectors, as well as unmet developmental needs.

In addition, local communities have pushed and forced their way into the policymaking process to promote and protect their agendas. For example, environmental laws and audits of gold manufacturers were implemented due to community struggles in gold mining regions, leading to the closure of some and the relocation of others. In oil-producing communities, residents have also pushed for and won increases in the local share of earnings. Local communities in both the public and commercial sectors have been able to negotiate varied levels of participation on audit committees with the help of the two parties. These communities have a vested interest in economic growth that is both sustainable and inclusive.