Sudan finds itself grappling with a dual currency crisis. Since the implementation of a partial currency swap on December 10th, the nation has effectively become a “two-currency country,” leading to stark economic divisions between regions governed by opposing factions. The situation has been closely monitored and reported by various media outlets, including a detailed examination by Asharq Al-Awsat.
The economic chasm is evident as the seven states under the control of the Sudanese army have stopped accepting the old 500 and 1,000 Sudanese pound notes. In contrast, the 11 states, partially or entirely controlled by the Rapid Support Forces (RSF), face severe banking restrictions, with the RSF outright banning the circulation of the new currency within their territories.
This monetary policy shift has left civilians in RSF-controlled areas in a state of anxiety over their savings. The challenges are compounded by the non-functioning banks, inadequate communication networks, and the security risks involved in traveling across state lines with cash. Analyst Mohamed Latif cautions that this financial division might solidify the country’s separation, particularly in RSF-held regions rich in monetary reserves and production capabilities, potentially isolating them from the national economic system.
In army-controlled territories, banks are overwhelmed by crowds as citizens rush to deposit old notes, limited by a daily withdrawal cap of 200,000 pounds. The RSF has decried the new currency as a “malicious conspiracy” orchestrated by the “Islamic movement,” accusing them of attempting to divide the nation further.
Experts like Abdul Latif Othman have criticized the timing of the currency swap, describing it as exacerbating the turmoil at an estimated cost of $138 million. Ahmed Khalil, another seasoned economist, warns that the RSF could resort to printing an alternative currency or even adopt currencies from neighboring countries, which could precipitate the formation of a parallel government.
The situation draws uncomfortable comparisons to South Sudan’s 2011 secession, where a “one country, two systems” approach led to two unstable states. The economic divide is mirrored in the plummeting value of the Sudanese pound, which has dropped from 500 to the dollar in April 2023 to a staggering 2,500 to the dollar now.
The army-backed government justifies the currency swap as a measure to “protect the national economy and combat criminal activities” such as counterfeiting. However, the implementation has paralyzed trade and transport, especially in Port Sudan, the nation’s primary export hub. Reports indicate that bus drivers, petrol stations, and store owners have refused the old banknotes, while banks struggle with limited supplies of the new notes.
The currency swap has sparked protests, with dozens of Sudanese demonstrating outside government offices in Port Sudan. The administration extended the deadline for exchanging old notes until January 6, as announced by Information Minister Khalid Al-Aiser. Nevertheless, the measure’s critics argue that it imposes an undue burden on the war-weary population and risks deepening the economic divide between regions.
As Sudan navigates this precarious economic landscape, the international community and economic analysts will closely observe how this currency crisis will impact its already fragile economy in both the short and long term. The ongoing conflict and the currency crisis highlight the urgent need for comprehensive economic reforms and peacebuilding measures to stabilize the nation and promote unity.
Exclusive insights from financial specialists suggest that without swift intervention and dialogue between the warring factions, Sudan’s economic fragmentation may become a more permanent feature, further destabilizing an already volatile region. The unfolding situation requires vigilant monitoring and proactive measures to ensure that the economy does not become a victim of the ongoing political and military turmoil.
