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      • Sudan: From gloom to boom

Sudan: From gloom to boom

KHARTOUM — Khaleej Times was in Sudan to celebrate with the Sudanese people the 16th anniversary of the National Salvation Revolution.

 

During its stay in the Sudanese capital, Khaleej Times managed to have an exclusive interview with Sudanese Finance Minister Dr Zubair Mohammed Al Hassan, the man who took on his shoulders the responsibility of turning around the country’s economy to new heights over the last few years.

 

According to a country report of the International Monetary Fund (IMF), Sudan’s economy continued to grow in 2004. The GDP growth was estimated to go up from six per cent in 2003 to 7.03 per cent in 2004 owing to a strong performance in the oil, manufacturing, construction, power and services sectors.

 

Improvement in production capacity led to a 21 per cent expansion in oil sector’s GDP. Inflation rose to 8.04 per cent in 2004 as compared to 6.05 per cent in 2003, reflecting loosening of monetary policy in the first half of the fiscal year.

 

Dr Zubair Mohammed Al Hassan revealed to Khaleej Times the success story of Sudanese economy as well the story of discovering oil in Sudan.

 

Question: Can you tell us about the Islamic banking system in Sudan which is based on Shariah laws, and especially in the wake of the signing of the peace treaty?

 

Answer The peace treaty stipulates that the Islamic Shariah laws will be applied in the north, while the south will stay out of their gambit. Since the Shariah laws will not be imposed on the south, people of the region will be able to chose whatever laws they want as long as they comply with the country’s policy. Southern people have their culture and the laws will be in line with their customs.

 

As for the banking system to be carried out in Sudan, it is laid down in the pact that Sudan will have a unified Islamic banking system which will rely on the Islamic Shariah laws. The system will be implemented in the north of Sudan and at the same time the south will have its traditional banking system. Both systems will be implemented side by side in a cooperative manner and will be merged in the final stages of treatments to unify the financial policy of Sudan.

 

Question: But the two systems may lead to some sort of contradiction?

 

Answer: No, there will not be any contradiction as in many Muslim countries both systems function side by side without any problem. In Sudan we have selected the system to be able to manage the crux of differences between the northern and the southern parts of the country.

 

The central bank of Sudan is preparing a system which will enhance its role in controlling the national monetary policy. Through the Islamic banking system we are trying to control the monetary fluidity by issuing bonds based on the Shariah. These bonds have played a very important role in the open market where they help in pumping or controlling the monetary liquidity.

 

These bonds are known as sharing bonds and the other type depends on the due date contracts. These bonds can help a unified government in controlling or pumping the monetary liquidity. Southern states can also issue similar bonds but they rely on the international banking system which depends on interest (profit). Both systems should coordinate with each other. Especially the revenues of the Islamic bonds and the fixed interest in the traditional system can support each other. Most of the Gulf countries and the Arab World have that system.

 

Question: Can we say that by accepting such solutions which are against its principles based on the Islamic Shariah, the Sudan government has abandoned its principles?

 

Answer: Shariah laws have not been implemented in the south of Sudan particularly those which deal with personal behaviour of a non-Muslim. There is no punishment for drinking wine and following beliefs contrary to the injunctions of Islam.

 

In the peace treaty we overcome all the differences that stalled progress in the earlier agreements. We were specially very keen on removing differences on the banking system and the system of governance — whether it will be Islamic or secular.

 

We also succeeded in overcoming all hiccups that came up during negotiations before the peace treaty.

 

Any how the south of Sudan will be excluded from the Islamic Shariah laws. We have a grace period of six years to implement the peace treaty, after that south will have a right to join with the north in a permanent unification or set up its separate state.

 

The treaty is a kind of favour to the non-Muslim majority in the south under which they will have a right to decide after six years whether they want to continue with the north or set up their own state.

 

Question: What is your expectations about the future of Sudan, particularly after six years when the southerners will have a referendum to decide their fate? And are you ready for the possibility of a separation?

 

Answer: Both parties have agreed that they will work for the unification and it will be an attractive unification which means that we will make efforts to persuade people to vote for unification and give them an assurance they will never feel deceived as all parties believe in the unification based on equality.

 

We will also implement a comprehensive development plan in the entire Sudan which will be a reflective of the living standards of our people.

 

My personal expectations are that within six years we will be able to implement the terms of the treaty and people will have adopted the unification. It is in the nature of the Sudanese people that they forget their enemies after they get rid of their weapons and like to be unified. This peace treaty will not be a sort of warrior rest.

 

Since January 9, the date of the peace treaty, several teams have been formed at the federal level to evaluate the economic needs and programmes to be be implemented and, therefore, I am positive that after six months the choice will be the unification.

 

Question: After the peace treaty will Sudan have two national banks and one currency?

 

Answer: The terms of the treaty stipulate that Sudan will have one central bank which will have a branch in the south and it will be called the bank of south Sudan. This bank will be headed by a deputy of the Sudan central bank governor. The central bank of Sudan will be running be a board of directors who will be selected on the basis of their performance and their number will be determined by the treaty.

 

The sponsors who will run the bank will be specialists in the economic field. The board of directors will manage all policies of the banks in Sudan and their branches in every other state of Sudan.

 

Question: You recently apologised to the Sudanese people that you were forced to accept loans which are not in conformity with the Islamic Shariah. Why did you accept such loans particularly in view of the fact that the ruling regime has adopted the Shariah laws?

 

Answer: In fact Sudan is trying to implement the Shariah laws since 1983 – the period of former president Ja’afar Numairy — and the Salvation Government adopted the Shariah laws in the banking system in 1990. By the way we never admitted that interest on loans or profits based on the traditional banking system is Halal. We are forced to accept loans from countries which rely on the traditional interest-based banking system as we don’t have any other options.

 

The needs of the country usually force us to go for such loans. Moreover, Sudan is poor country and we have got a fatwa (religious decree) under which we are allowed to get interest-based loans if such a loan is necessary to finance development projects.

 

In the near future if Sudan’s income witnesses improvement and it is able to secure more sources of incomes we will not opt such kinds of loans. In fact I apologised to Sudanese people for securing interest-based loans which are against the principles of Islam. But these were necessary for building our infrastructure. There are many projects in Sudan in which we were forced to get loans on interest from foreign monetary funds.

 

Question: What is the size of Arabian investment in Sudan, particularly from the Gulf states?

 

Answer: To be frank, most of the investments in Sudan have come from the Far East and the Gulf region. Far East countries like Malaysia, China and Pakistan and India have mainly invested in the petroleum sector, while investment from the Gulf countries is in industries and agriculture.

 

In the year 2004, Sudan received about $1.4 billion investment in the non-petroleum sector, with most of it came from the Arab world. Apart from this amount, there was investment from Far East countries mainly in the construction sector and hotel industry.

 

Question: What about the UAE investments in Sudan?

 

Answer: The United Arab Emirates is one of the Gulf countries which has made a huge investment in Sudan, mostly in agriculture projects and construction. Besides industrial cooperation with Ras Al Khaimah in the ceramic field, we have investments in the banking sector, such as Al Salam bank and the under-construction Emirate Sudan Bank. In my opinion we have received great cooperation from the United Arab Emirates regarding investment in the communications sector where the Emirates Telecommunications Corporation (Etisalat) has a big share in the Sudan communication corporation (SUDATEL).

 

Question: What about the role and contribution of the Arab world in reconstructing the areas affected by the war and other areas like Jebal Al Noba in the south of the blue Nile area?

 

Answer: In fact not only the areas which you have mentioned are backward but you can say that most of Sudan’s areas are backward excluding the capital Khartoum. Even in Khartoum the situation is not very good which is evident from the infrastructure. But we have launched a comprehensive development plan to improve conditions.

 

All areas, north, south, east, west and the middle areas of Sudan are a victim of neglect and backwardness. They lack even basic infrastructure. However, soon after achieving improvement in the economic field we launched projects to alleviate poverty among our people and most of the projects are aimed at improving conditions at backward areas.

 

No doubt the situation had reached a dismal state but things have improved. No one can ignore the efforts of the government to improve the situation particularly in the transport field where the government puts on priority construction of roads as no progress could be made without having a proper network of roads. Besides, we have introduced a lot of services to most areas of Sudan such as drinking water, roads and education besides the health service.

 

We received various offers for such projects from several fund provides like the Islamic Development Bank which financed the water supply project in Darfur. We also received a financial gift of $10 million from the Economical Arab Fund for Development to finance water projects in south Sudan. In the education field, we received funding from the Islamic bank for 22 schools for the people of Jebal Al Noba and the south of the blue Nile and the states of east Sudan.

 

The Islamic Development Bank financed the construction of the Salvation Western Road which linked Darfur with the North of Sudan. The road is under constructing at present.

 

We also started a new road link between Khartoum and Attbara Haya till port Sudan besides another road to link Sudan with Ethiopia and extended to the east end. Another road is under construction which will connect the north and the south Sudan. This road is called the road of Bain Al Jableen (between the two mountains) and Malakal Al Rank. All these roads have been financed by the Arab Fund. The Arab Fund offers $75 million for the construction of a road which would link the northern part of the country with the south. In the Jebal Al Noba area we have constructed a ring road linking Jebal Al Noba areas with each other and connecting them with north Sudan. This road project was financed by the Islamic Bank for Development, while a part of the project was financed by the government through its own resources.

 

We have also executed projects in electricity and health sectors, besides water desalination projects such as a desalination station on the Red Sea to supply water to the Sawaken and Senkat areas. In addition, several dams have also been constructed to store water.

 

In the east of Sudan, people had been facing an acute food shortage. We launched a campaign to supply food to the people put in place development programmes aimed at reconstruction of areas hit by the war.

 

The peace treaty stipulates that all areas of Sudan will share the country’s wealth and the revenue generated by oil or any other source of income will be used for executing development projects.

 

Question: Will oil help in developing Sudan economically and how Sudan plan to break the monopoly of the Western petroleum companies?

 

Answer: Before 1990 most of Sudan’s budget was based on external financial sources. At that time we did not have any technology to explore oil. There was no possibility to extract oil unless we have help from companies and countries which have such kind of technology. Oil was discovered in Sudan in 1975 by the Chevron Petrol Company but in 1983 the company stopped its prospecting operation citing insecure situation in the drilling areas as the reason which was justified. After the National Salvation Revolution Sudan tried to convince Chevron to resume exploration but the company always cited the insecure situation. Our efforts also collide with the obstinate political stand of the US.

 

Sudan succeeded in convincing Chevron to resell its right of privilege to excavate in Sudan. After that we entrusted the right of excavation with a small Canadian company which succeeded in extracting oil.

 

We set up a small oil refinery near Al Obayad and another small unit in Abu Jabra for the local market. In August 1999, a consortium of multi-national companies besides the Sudazit, the state company, succeeded in exporting the first freight of oil to the international market through Al Bashayer port. Later, we laid a 1600km oil pipeline from the oil wells to the port for export. In addition we built up an oil refinery in Al Jaily, north of Khartoum, which produced 60,000 barrels per day for local consumption. In 1999 our production stood at 150,000 barrels per day but now it is about 500,000 barrels per day and set to reach 650,000 barrels per day by the first quarter of the next year.

 

Producing oil in Sudan was possible due to the great cooperation between the south and the north. Developing countries like China, Malaysia, Pakistan and India helped Sudan in big way. This partnership was not linked with political reasons which meant no more pressure on us.

 

Some of the wells produced about 40,000 barrels per day such as the Al Foda well which is located in the west of Cordovan. There is no law and order problem in Sinar and al Jazeera or in the south of Sudan and all these places are secure specially after the peace treaty.

 

Question: Do you think the western oil companies will replace the Chinese and other companies?

 

Answer: See we never prohibited any company from coming to Sudan and explore oil. In fact the western companies are the ones who imposed a ban on themselves by taking a political stand against Sudan. But Sudan welcomes all companies and every company has a right to undertake excavation work in Sudan and will be able to run its work.

 

Question: Petrol is the root of all evils in the Arab world where most of the struggles are because of petrol. Is this going to happen in Sudan?

 

Answer: To be frank, the history of conflict in Sudan is so old as it started at 1955 and lasted till 1972. It stopped for a while after the Addis Ababa Agreement and then the war started again in 1983 till the current peace treaty which meant that struggle in Sudan was not due to petrol. But now we can see that petrol becomes a basic reason behind the conflict. The Western world has interest in Sudanese petrol, therefore, I think petrol in Sudan inflames the struggle. Sudan is also a target of Western countries because of its Islamic stand and that is why they supported other parties in the conflict financially, politically and militarily.

 

Question: What about agriculture in Sudan?

 

Answer: Basically Sudan is an agricultural country where 75 per cent of the total production comes from agriculture and the agricultural sector provides employment to 70 to 80 per cent people. We plan to invest revenues made from petrol in developing the agricultural sector and we will do our best to avoid relying only on petrol for our income.

 

Question: What about foreign investment in the agriculture sector in Sudan?

 

Answer: You will be surprised to know that the agriculture sector is exempted from tax which encourages investors from all over the world to come and invest in this vital sector. We do our best to encourage investors. We also have an industry based on agriculture production such as sugarcane and other industries.

 

Question: What about cooperation between Sudan and the UAE particularly in the banking sector?

 

Answer: There is a permanent cooperation between Sudan and the UAE in all sectors, specially in the banking sector. We have launched Al Salaam Bank which it is an Emirates bank working in Sudan and now the shares of this bank have been submitted for dealing in the stock. We also have the Emirates Sudanese bank which has been submitted for underwriting.

 

Question: Is the ministry of finance will be among the ministries which will be in the share of the SPLM in the next cabinet?

 

Answer: No one can give a confirmed reply to such a question. These are rumours and as I said no one can speculate what will happen after the 9th of this month. Everything is still under process and negotiation.

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