Sudan plans to curb unemployment through micro-financing
May 21, 2013 (KHARTOUM) – Sudan intends to establish a specialised micro-finance bank with a capital of $ 5 million to fight poverty, raise standards of living, and curb unemployment.
The bank is a joint venture between Zain Telecom, the Gulf Program for Development, and Sudanese and foreign businessmen.
Sudan’s central bank had previously allocated 12 million SDG in a micro-finance program to fund the poor, youth, and graduates but it fell short of achieving its objectives due to lack of repayment guarantees.
The increasing unemployment rates have forced the Sudanese government to finance small investment projects of up to 20.000 SDG (equivalent to $3.000) through banks.
But rising inflation rates and high prices have negatively impacted micro-financing plans.
Officials of the new bank have held a meeting in Khartoum yesterday amid speculation that the bank would be a success story because it is inspired by the experience of lifting poor communities in Malaysia and other Asian countries.
The bank is expected to finance around 400.000 unemployed graduates to invest in small projects.
The preferred areas of investment in Sudan’s labour market include fields such as taxis and Rakshas (three-wheel taxi), restaurants and telecom market.
Economists believe that Sudan’s spending of 80% of its budget on defence and security and neglect of agriculture and industry forced millions of people to live below the poverty line.
Once hoped to be the breadbasket of the Arab world, Sudan’s agricultural sector has continued to deteriorate over the years mainly as a result of negligence, drought, mismanagement and the overall economic climate.
Last month, Sudan’s minister of agriculture, Abdel Halim Al-Mutafi, acknowledged that there is a serious shortage in agricultural finance, saying that last year’s allocated funds did not exceed 2.5 billion pounds (SDG) which represents only 2% of the total loans extended by the banks nationwide.
Al-Mutafi further questioned the possibility of achieving self-sufficiency and poverty alleviation, explaining that Sudan’s imports of food products exceed $1 billion, while spending on agricultural activities does not exceed a mere $600 million saying he expects a grain shortage of up to 76 thousand tonnes this year.
The chief editor of Ilaph economic newspaper, Khalid Al-Tijani, said that “a political compromise is the only way out of the economic crisis. The current solutions are nothing but “relievers” with limited effect .If you stop the war, the budget funds will be directed to development and this requires the ruling party to offer painful concessions in favour of the economic, political, and security stability”.
Sudan’s economy was hit hard since the southern part of the country declared independence in July 2011, taking with it about 75% of the country’s oil output.
(ST)