Economy /

Egypt is working to woo the new administration in Sudan, amid national calls for beginning a new chapter with the neighbouring state, after decades of tension under ousted Sudanese president Omar al-Bashir.

New Sudanese Prime Minister Abdalla Hamdok arrived in Cairo on September 18 for his first visit to Egypt after his August 21 takeover as the head of the first post-Bashir government.

In Cairo, he met a host of top officials, including President Abdel Fattah al-Sisi, Prime Minister Mustafa Madbouli and Foreign Minister Sameh Shoukry. Hamdok said he wanted to take a leaf from Egypt, especially in how Sudan’s northern neighbour overcame its post-2011 revolution difficulties and started state rebuilding.

“We look with admiration at Egypt as a model,” the Sudanese premier said. “We especially want to learn from its success in addressing its economic problems.”

With Bashir and most of his regime officials now behind bars, Sudan seems to be opening a new chapter. Nonetheless, as it does this, Sudan’s conditions are much like those of Egypt, following the two popular uprisings it went through in 2011 and 2013. The uprisings and the political turmoil associated with them caused massive economic devastation, the flight of foreign investments and the closure of thousands of factories.

The inflation rate rose dramatically, the tourism sector was in tatters and the export movement came to a screeching halt. Egypt’s foreign currency reserves were depleted and its relations with most of the world were never worse. These are almost the same conditions in Sudan. The inflation rate rose to 53.13% in August, from 52.59% in July.

Foreign currency reserves at the Central Bank of Sudan are reportedly less than $1 billion and the country, according to Hamdok, needs about $10 billion in the coming two years to cover its import bill and rebuild its ravaged economy.

The Sudanese pound is also continually losing value against almost all foreign currencies, including the US dollar, the main import currency in this country. Sudan is heavily dependent on imports, but the lack of enough money in the state’s offers threatens its ability to pay for the imports.

While more and more countries pledge support, including so far, France, Germany, and the US, along with Saudi Arabia and the United Arab Emirates, Sudan is now almost totally isolated, as they are still on an international list of state sponsors of terrorism. The African Union has also suspended Sudan’s membership.

Egyptian Prime Minister Mustafa Madbouli said his country would help Sudan, referring to similarities between Sudan’s current conditions and Egypt’s conditions following its two revolutions.

“This is why Egypt is keen on helping Sudan,” Madbouli said. “We have strong confidence in the ability of the current government in Sudan in leading its country in a way that fulfils the aspirations of the Sudanese people.”

To get out of the economic morass it found itself in, following years of political and security unrest, Egypt had to take the painful road of economic reform.

It borrowed $12 billion from the International Monetary Fund, in a deal that entailed a series of painful measures, including the slashing of fuel, electricity, and water subsidies. In November 2016, the Egyptian government took the revolutionary move of ending a decades-old controlled exchange rate regime and floated the Egyptian pound.

The pound exchange rate liberalisation eradicated a then-thriving parallel foreign currency market. More importantly, it rendered the market more stable and boosted investors’ confidence in the Egyptian business environment.

The same measures opened the door for unprecedented increases in commodity prices, and consequently suffering for millions of Egyptians. The government tried to cushion the effects of the commodity price hikes by launching several social protection programs, including a cash aid program for thousands of needy families.

Nevertheless, the same measures are blowing new life into the economy as well as Egypt’s hopes for economic stability and prosperity. The Egyptian pound is regaining strength against the US dollar, the exports are rising, and the imports are going down.

The tourism sector is picking up; the inflation rate is coming down; the unemployment rate is dropping, and more foreign direct investments are flowing into the country. Egypt was the top investment destination in the African continent in 2019 and will continue to be so in 2020.

However, this was not an easy mission for either the people of Egypt or the government, which shuddered at the prospect of a political backlash from the economic reform. Sudan can opt for a similar route. Will the poor state and its people be ready to foot the bill?

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