Urgent and Critical Message to the Central Bank Governor: Microfinance on the Brink of Collapse

Nu’man Yousif Mohammed
At an exceptionally fragile economic moment, as many productive and service sectors crumble under the weight of war, Sudan’s microfinance sector is approaching a critical breaking point—threatening the loss of one of the most vital financial instruments that has, for years, supported vulnerable groups, financed small-scale activities, and mitigated poverty and economic fragility.
For nearly two decades, the microfinance sector has been one of the most important economic and social tools relied upon by the state to combat poverty, finance small producers, empower low-income households, and support fragile productive sectors. Through more than fifty microfinance institutions and companies operating across Sudan’s states, the sector has succeeded in delivering financial services to millions of citizens who remained outside the reach of the traditional banking system.
However, the war has struck the sector at its core. Productive activities have halted, markets have collapsed, supply chains have been disrupted, clients have been displaced, and the operational capacities of institutions have fallen to critical levels. As a result, more than three million microfinance clients have lost access to the financial services on which they depended to sustain their small businesses and livelihoods. These figures do not merely reflect the suspension of financial services—they signify the disruption of income-generating activities for millions of individuals and households, and the erosion of economic safety nets for the most vulnerable segments of society.
On the financial side, forced default rates in microfinance portfolios have exceeded 90% in some institutions due to war-related conditions—an alarming level that reflects the scale of collapse. Institutions are no longer able to recover funds, recycle financing, or even meet basic operational obligations. Microfinance companies and institutions are now facing acute financial distress: their portfolios have eroded, liquidity has dried up, resources have halted, and liabilities continue to grow, leaving management with shrinking options and little capacity to withstand the crisis without direct emergency intervention.
Today, more than 50 microfinance institutions and companies are effectively in a state of distress, awaiting urgent intervention from the Central Bank of Sudan through decisive and comprehensive measures to restore the sector’s capacity to survive and prevent its total collapse.
The collapse of the microfinance sector would not merely mean the failure of several financial institutions—it would represent the loss of one of Sudan’s most important mechanisms for economic and social empowerment. It would lead to severe consequences, beginning with rising poverty and unemployment, and extending to the contraction of small-scale production, weakened prospects for economic recovery, and increased complexity in post-war reconstruction efforts.
More critically, such a collapse would deprive the national economy of a tool that has proven its ability to reach underserved segments of the population. This would deal a direct blow to efforts aimed at financial inclusion, social stability, and grassroots development.
In this context, the national and financial responsibilities place this issue squarely before the Governor of the Central Bank of Sudan, as the regulatory authority tasked with safeguarding financial stability and ensuring the continuity of vital institutions.
What is required now is no longer routine oversight or general directives, but urgent and exceptional intervention. This must include restructuring existing financing obligations, providing emergency liquidity facilities, addressing war-induced defaults, temporarily easing regulatory burdens, and launching a genuine rescue package that gives microfinance institutions a chance to survive.
Any delay in taking these steps will only widen the scope of collapse and increase the cost of intervention until the sector reaches a point where recovery becomes far more difficult and complex.
The urgent message today to the Governor of the Central Bank of Sudan:
The microfinance sector is on the verge of collapse—and immediate intervention is no longer optional; it is a national necessity that cannot be postponed. Every day without decisive action means more defaults, more institutions at risk, and more families losing their ability to sustain themselves and produce.
Save the microfinance sector now, before collapse becomes irreversible.
Institutional Development Consultant – Microfinance Expert

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