Sudan’s ongoing crisis spells economic trouble for its neighbors

Chadian cart owners transport belongings of Sudanese people who fled the conflict in Sudan’s Darfur region, while crossing the border between Sudan and Chad in Adre. Reuters/File
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Updated 30 October 2023
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Sudan’s ongoing crisis spells economic trouble for its neighbors

  • Call for ‘conflict-sensitive human security approach to humanitarian response’

TUNIS: Sudan, currently mired in a protracted war and economic turmoil, stands at the center of a multifaceted humanitarian crisis that ripples across its neighboring nations.

With Sudan’s economy in decline, the adjoining countries, deeply intertwined with its economic prospects, grapple with the fallout — disrupted trade and skyrocketing inflation. These challenges pose the risk of social upheaval and political instability that extends beyond Sudan’s borders, impacting millions throughout the region.

Armed groups operating in Sudan have also shown a propensity to seize opportunities presented by the chaos. They engage in criminal activities such as arms smuggling, human trafficking, and illicit trade, further destabilizing the region. The unrestricted flow of arms and fighters across borders poses a direct threat to the security of neighboring nations, creating challenges for humanitarian organizations striving to uphold the sacred “do no harm” principle.

Additionally, the aid sector grapples with a glaring gap between the pressing need for assistance and its actual delivery. According to the UN, a staggering 18 million people in Sudan require humanitarian aid, but only 3.5 million have received any assistance thus far. This stark disparity underscores the dire circumstances faced by millions of Sudanese citizens and raises critical questions about the effectiveness of humanitarian efforts in this complex environment.

The destruction of infrastructure in the most heavily affected regions, namely Khartoum, Darfur, and Kordofan, is estimated at $60 billion, equivalent to 10 percent of its total worth, according to Ibrahim El-Badawi, Sudan’s former finance minister and an economics researcher. He predicts a potential 20 percent drop in the gross domestic product for this year.

The former minister emphasizes that if the conflict were to cease, Sudan would require emergency economic support ranging from $5 billion to $10 billion to resuscitate the economy. He warns that the continuation of the war would lead to the further deterioration of the Sudanese economy and the state itself.

Experts highlight that beyond the physical insecurity plaguing the nation, the financial underpinnings of the aid sector are entangled in a web of challenges.

Grace Ndungu, a communications manager at Mercy Corps, a global nongovernmental humanitarian aid organization, underscores this point, stating: “Armed groups operating in the region often seize opportunities presented by Sudan’s chaos.”

These groups’ involvement in criminal activities, coupled with their ability to exploit international and regional financing meant for humanitarian assistance, further complicates the situation. At the same time, disputes over vital resources like water and arable land escalate tensions along the country’s borders.

Historically, Sudan’s violent conflicts have often been rooted in contestation over revenue. The ongoing conflict that erupted in April 2023 follows similar patterns, partially fueled by warring parties’ strategies for self-enrichment, including looting, manipulation of international and regional financing, and smuggling of resources such as gold.

The heart of Sudan’s current conflict lies in its historic domination by Khartoum, where revenue sources were frequently concentrated, leaving economic peripheries, including Darfur and Red Sea State, in dependent relations. This inequitable political economy has fueled grievances against the Khartoum-led rule, leading to violent conflicts.

The country is now compelled to utilize its limited remaining resources to assist an internally displaced population that, when considering those previously displaced by past conflicts, totals nearly 7.1 million people, surpassing any other nation globally. According to UN data, more than 5.25 million out of Sudan’s 49 million citizens have been displaced since the conflict began. Over 1 million have sought refuge in neighboring countries, while more than 4.1 million remain within Sudan, facing mounting financial hardships.

Against this background, Sudan’s cash crisis, coupled with soaring inflation rates, has exacerbated economic challenges for its citizens, limiting access to much-needed cash. Also, Sudanese state and non-state armed groups rely on the established network of profitable business interests to sustain their war chests, as they continue to control key aspects of the country’s financial landscape. The Military Industry Corp., responsible for concealing state control of businesses within a broader web of military-controlled companies, penetrates crucial sectors like manufacturing, gold, agriculture, and livestock production, contributing to Sudan’s complex war economy.

Over time, “the humanitarian aid has also become a resource leveraged by various armed groups and state institutions in Sudan,” Dallia Abdelmoniem, a Sudanese political analyst, told Arab News, as the groups occasionally co-opt humanitarian aid not only for financial benefits but also for legitimacy in the eyes of host populations.

She stresses that these challenges necessitate a conflict-sensitive human security approach to humanitarian response, rooted in cooperation with civic actors to mitigate risks. “Customized cash programming modalities can be a viable solution to navigate the intricacies of Sudan’s financial challenges,” Abdelmoniem said.

Experts say that in this tumultuous landscape of Sudan’s conflict and humanitarian crisis, proactive and sensitive approaches can mitigate risks and ensure that humanitarian assistance reaches those who need it most.

Ndungu advocates for collaboration and due diligence procedures to protect aid from being captured by Sudan’s security arena, thereby ensuring that it remains a lifeline for those in desperate need. “The struggle to ensure the safe transport of aid becomes a Herculean task in the face of political complexities.”

Abdelmoniem added that “as the aid theft has re-emerged as a distressing phenomenon in Sudan, perpetrated by both sides of the conflict and opportunistic looters, in order to navigate the intricacies of Sudan’s financial challenges and uphold humanitarian principles, international humanitarian actors must adopt a conflict-sensitive approach.”

She emphasizes that by focusing on collaboration, accountability, and civic engagement, the humanitarian sector can strive to alleviate suffering and support Sudanese civilians as they navigate the complex aftermath of conflict.

Ndungu echoes her views, proposing establishing forums for collaboration and due diligence procedures to vet financial modalities that can help protect aid from being captured by Sudan’s security arena.

“This approach should involve close collaboration with in-country civic groups and transparency initiatives to ensure that aid does not become a financial or political resource for combatants,” she added, stressing the importance of the role that regional and international actors play in shaping the dynamics of the crisis.


Syria to sign deal to import electricity from Turkiye, minister says

Updated 10 sec ago
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Syria to sign deal to import electricity from Turkiye, minister says

CAIRO: Syria is set to sign a deal to import electricity from Turkiye through a 400-kilovolt transmission line between the two countries “soon,” the Syrian state news agency cited the country’s energy minister as saying on Sunday.
Syria is also working on establishing a natural gas pipeline connecting the Turkish border town of Kilis and Syria’s northern city of Aleppo, minister Mohamed Al-Bashir said.
“The pipeline will allow the supply of 6 million cubic meters of gas per day to power plants in Syria which will contribute in improving the country’s energy situation,” he added.
Syria has suffered from severe power shortages. On separate occasions, the country said it was working with partners including Gulf states, in the energy and electricity sectors.


OPEC+ members to raise oil output by 411,000 bpd in June

Updated 15 min 21 sec ago
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OPEC+ members to raise oil output by 411,000 bpd in June

RIYADH: Eight OPEC+ member states, including Saudi Arabia, have agreed to raise oil production by 411,000 barrels per day in June as part of a gradual rollback of voluntary output cuts, the group has announced.

The decision was reached following a virtual meeting on May 3 and builds on an agreement made on Dec. 5 to gradually and flexibly restore 2.2 million bpd of voluntary cuts starting April 1, the Saudi Press Agency reported.

The June increase is equivalent to three monthly increments and reflects improving market conditions, including declining oil inventories.

The meeting included the Kingdom, Russia, and Iraq, as well as the UAE, Kuwait, Kazakhstan, Algeria, and Oman, all of whom had previously announced additional voluntary reductions in April and November 2023.

In a joint statement, the countries emphasized that the planned increases remain subject to change or temporary suspension depending on market developments, allowing the group to retain flexibility in supporting price and market stability, according to SPA.

The members also reiterated their full commitment to the Declaration of Cooperation, including the additional voluntary cuts agreed during the 53rd meeting of the Joint Ministerial Monitoring Committee held on April 3, 2024.

The statement affirmed that participating countries are determined to fully compensate for any excess production recorded since January 2024.

OPEC+ said it would hold monthly meetings to track market conditions, compliance levels, and progress of the compensation plan. The next meeting is scheduled for June 1 to set production targets for July.


Saudi Arabia opens May round of Sah savings sukuk with 4.66% return

Updated 19 min 45 sec ago
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Saudi Arabia opens May round of Sah savings sukuk with 4.66% return

RIYADH: Saudi Arabia launched the May issuance of its Sah savings sukuk, offering retail investors a fixed return of 4.66 percent as the government continues to push savings participation. 

The sukuk, part of the country’s broader local bond program, is issued by the Ministry of Finance and managed by the National Debt Management Center. It is available for subscription from May 4 at 10:00 a.m. until May 6 at 3:00 p.m. local time, the NDMC said in a statement. 

As part of the Vision 2030 Financial Sector Development Program, the initiative aims to boost personal savings by encouraging regular fiscal habits, expanding product access, and promoting financial literacy to support future goal planning. 

The offering, denominated in riyals, also supports the goal of raising the national savings rate from 6 percent to 10 percent by the decade’s end. 

The sukuk carries a one-year maturity and can be purchased in increments of SR1,000 ($266), with a cumulative cap of SR200,000 per individual across all program issuances.  

Allocation is scheduled for May 13, with redemption occurring between May 18 and 20. Payments will be disbursed on May 25.   

The Sah sukuk is accessible through digital platforms operated by SNB Capital, Al Rajhi Capital, and AlJazira Capital, as well as Alinma Investment and SAB Invest. 

The May issuance of the Sah savings product follows the fourth round issued in April, which offered a 4.88 percent return under the Ijarah sukuk structure. Available through the digital platforms of approved financial institutions, the bonds featured a one-year savings term with fixed returns payable at maturity. The minimum subscription was SR1,000, with a maximum cumulative limit of SR200,000 per user across all issuances during the program period.

Sah is Saudi Arabia’s first Shariah-compliant savings instrument for individuals. Structured under the Ijarah model — where returns are derived from leasing-based assets — the product is designed to offer a low-risk, fixed-income alternative with no fees and exemption from Zakat.  

Returns are paid upon maturity, with early redemptions allowed during set windows but without profit entitlement. 

NDMC CEO Hani Al-Madini said in March that Sah that the sukuk serves as a catalyst for private sector cooperation and participation in developing and launching various savings products tailored to diverse demographics. These initiatives could involve partnerships with banks, fund managers, financial technology companies, and more.  

In late February, the NDMC confirmed it would continue using the Ijarah format for future issuances to provide accessible, low-risk savings solutions. 


Saudi fintech startup Nqoodlet secures $3m in seed funding

Updated 39 min 4 sec ago
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Saudi fintech startup Nqoodlet secures $3m in seed funding

RIYADH: Saudi fintech firm Nqoodlet has announced the successful closure of a $3 million seed funding round aimed at accelerating its mission to streamline financial operations for small and medium-sized enterprises.

The round was led by Waad Investments, with participation from Omantel, Sanabil 500 Investment, OQAL, Seed Holding, and a group of strategic investors.

Founded by Mohamed Milyani and Yara Ghouth, Nqoodlet offers an integrated digital platform that includes smart corporate cards, real-time expense tracking, and financial automation tools. The startup is focused on transforming financial management for SMEs across Saudi Arabia and the wider Gulf Cooperation Council region.

According to the company, more than 600 SMEs have already adopted the platform, resulting in reported gains such as an 80 percent improvement in process efficiency and average annual cost savings of SR200,000 ($53,330) per business.

“This funding gives us the rocket fuel to scale faster, go deeper with banks, and bring financial clarity to thousands of businesses who deserve better,” said Milyani.

Yaser Al-Ghamdi, chief investment officer at Waad Investment, said the firm backed Nqoodlet because “they are not just building a product — they are building an entirely new future for financial technology.” 

With the new capital, Nqoodlet plans to enhance its technology infrastructure, launch open banking integrations, develop automated tax solutions, and expand strategic partnerships within the regional fintech ecosystem.

“This isn’t just a funding round. It’s a statement: GCC is ready for the next generation of fintech,” said Ghouth.


Saudi insurance firm Al-Etihad retains Moody’s A3 rating with stable outlook 

Updated 53 min 53 sec ago
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Saudi insurance firm Al-Etihad retains Moody’s A3 rating with stable outlook 

RIYADH: Saudi-based Al-Etihad Cooperative Insurance Co. has retained its A3 financial strength rating from Moody’s, reflecting the firm’s strong market position and disciplined underwriting. 

Moody’s cited several key strengths supporting the rating, including Al-Etihad’s solid market position as the Kingdom’s eighth-largest insurer, its conservative investment strategy — where high-risk assets represent just 28.2 percent of equity — and its strong capital adequacy.  

The agency also highlighted the company’s five-year average return on capital of 7.7 percent and a healthy combined ratio of 95.2 percent. 

“However, these strengths are partially offset by Al-Etihad’s concentration to the Saudi insurance market which has an elevated level of competition, as well as Al-Etihad’s concentration to motor and medical insurance, which are the Saudi insurance market’s most competitive lines of business,” Moody’s said. 

This marks the second consecutive A3 rating for Al-Etihad since August, when Moody’s initially assigned the grade, citing similar strengths such as asset quality and profitability. At the time, the agency emphasized the insurer’s ability to navigate competitive pressures while maintaining financial resilience. 

Al-Etihad, a mid-tier property and casualty insurer, offers a range of commercial and personal insurance products. The A3 rating places the company in the upper-medium grade category, indicating low credit risk and a strong capacity to meet its financial obligations. In its August update, Moody’s also affirmed Al-Etihad’s Governance Issuer Profile Score of G-2, reflecting its conservative risk management practices and experienced leadership.  

The insurer’s 2023 financial performance further strengthened its standing, with net profits surging 639 percent year-on-year to SR93.89 million ($25.02 million), driven by increased revenues in the motor insurance segment. 

Looking ahead, Al-Etihad’s ability to sustain profitability while effectively managing market risks will be critical to maintaining its current rating. 

Moody’s review did not incorporate explicit support from Al-Etihad’s largest shareholder, Kuwait’s Al Ahleia Insurance, but acknowledged governance benefits from the partnership. The agency’s following assessment will evaluate any material changes in the company’s credit profile. 

For now, the stable outlook signals confidence in Al-Etihad’s strategic direction, even as it faces sector-specific challenges in Saudi Arabia’s evolving insurance landscape. 

The Kingdom’s insurance sector has experienced robust growth, with revenues surging 16.9 percent year on year in the third quarter of 2024, driven by strong demand for motor, medical, and property insurance.  

According to a KPMG report, this expansion is fueled by Vision 2030-driven regulatory reforms, including mandatory health coverage and stricter auto insurance requirements.  

The sector’s net profit before zakat and tax jumped 25.9 percent to SR3.90 billion, while total assets grew 20 percent to SR84.91 billion, reflecting deepening market maturity.  

The Insurance Authority’s 2023 establishment and adoption of IFRS 17/9 standards have further strengthened governance and transparency. 

With S&P Global projecting 10-15 percent revenue growth in 2025, the sector remains a key pillar of Saudi Arabia’s economic diversification.