Forex shortage threatens Sudan’s largest flour company

March 10, 2013 (KHARTOUM) – Sudan’s largest flour company has been forced to cut its production by 50% because of foreign currency shortage, Sudan Tribune has learned.

Sayga Flour Mills, which is part of DAL Group, relies on Byblos Bank, Abu Dhabi National Bank and Saudi Sudanese Bank to provide Guarantee Letters for the purposes of importing wheat and other production items.

Those banks informed Sayga that the Bank of Sudan did not inject the needed Forex supply in their accounts to issue new Guarantee Letters.

Sudan imports approximately $800 million annually worth of wheat to cover domestic consumption.

The Chairman of DAL group Osama Daoud Abdel-Latif informed officials at the central bank and these banks that Sayga’s bread production estimated at 8 million is now at stake over the issue of Forex shortage.

A banking source told Sudan Tribune that Sayga is forced at times to buy Forex from the black market which eventually leads to higher flour and bread prices.

Sudan is battling its biggest economic crisis for decades as it struggles with a severe shortage of hard currency following the loss of three quarters of its oil production due to South Sudan’s independence in 2011.

Oil revenues were the main source of revenue for Sudan’s budget and for foreign currency needed to pay for vital imports including food and medicine.

The Sudanese pound is currently trading at more than 7 pounds to the dollar compared to an official rate of 4.4.

Because banks and Forex bureaus are unable to supply enough dollars, the black market rate is seen as the benchmark for the real market value of the pound.

Since late last year Sudanese authorities started rounding up currency traders after the central bank announced that it will prosecute anyone dealing in the black market.

(ST)