• Home
  • news
    • 2010
      • Sudan Must Prepare for Oil Rich South Secession, Hassan Says

Sudan Must Prepare for Oil Rich South Secession, Hassan Says

Sudan must diversify its economy before the oil-producing southern region votes next year on whether to secede and form an independent state, said Sabir Hassan, Sudan’s central bank governor.

Southern Sudan’s oil fields account for most of Sudan’s crude production of 490,000 barrels a day, the third-biggest in sub-Saharan Africa, according to the BP Statistical Review of World Energy. About 70 percent of oil pumped in Sudan, Africa’s largest country by landmass, comes from the south, Hassan said.

“Therefore 70 percent of producing oilfields will be located in the southern country, the new country,” if it secedes, Hassan said late today in a lecture in Khartoum, the Sudanese capital. “If southern Sudan secedes, it could affect the economy negatively unless the government takes measures to counter it.” He said the event was perhaps the first time the economic implications of secession have been discussed publicly.

Sudan’s independence referendum, to be held in January, is part of a 2005 peace agreement that ended two decades of civil war between the mostly Muslim north and the south, which follows Christianity and traditional beliefs. Secession might bring more political instability to the country ruled by President Umar Hassan al-Bashir, who was indicted by the International Criminal Court last year for war crimes in the Darfur region of western Sudan.

Oil proceeds contribute more than 7 percent to Sudan’s gross domestic product, accounting for between 40 percent and 45 percent of the country’s revenue, Hassan said. Southern secession could also affect foreign currency reserves at the central bank, Hassan said.

Ethanol Production

Northern Sudan must develop agriculture and industries such as gold mining and ethanol production to decrease its dependency on oil, Hassan said. Even so, while an independent south would “affect GDP negatively and economic growth in general,” Hassan said that “we should not exaggerate in this matter.”

Under the peace accord, northern and southern Sudan split the proceeds from oil pumped in the south. If the landlocked south secedes, the north will remain its sole export route through a pipeline ending in Port Sudan at the Red Sea. The two sides haven’t reached an agreement on how to divide the revenue after the referendum.

Hassan urged the government to focus on agricultural development and direct government spending on the switched priorities “starting from now.” Non-oil exports including gold, ethanol and animal feed reached nearly $1 billion in 2009, and were worth $480 million in the first quarter of 2010.

• Disclaimer