From Resilience to Reconstruction: The Significance of the Central Bank Governor’s Meeting with Bank Owners
Eng. Mohamed Al-Shater Al-Amin Al-Hassan
The meeting between the Governor of the Central Bank of Sudan and representatives of commercial bank owners was not merely a routine administrative gathering. Rather, it was an implicit declaration of a strategic shift in the banking system’s role: from resilience in the face of war to preparing for economic recovery and reconstruction. The meeting conveyed three fundamental messages that deserve careful consideration, relating to financing, reform and policy integration.
The first message is that financing lies at the heart of the reconstruction effort. The Central Bank’s emphasis on strengthening the banking system’s capacity to support economic activity and provide the financing needed for productive and investment sectors underscores an important reality: the state cannot finance reconstruction on its own. The national budget cannot do so, and foreign grants will not be sufficient. Consequently, the banking system, with its deposits, expertise and extensive reach, must be the principal source of reconstruction finance.
The second message is that reform is a prerequisite for financing. The discussion of capital requirements, governance, and legislative and regulatory frameworks was not simply a matter of regulatory formality. Banks whose capital has been eroded by the war, and whose governance structures have been disrupted by displacement and forced relocation, are in no position to finance a factory or a farm. The sequence is therefore logical: put one’s own house in order first, then finance others. Any bank that fails to strengthen its capital base and improve its governance will inevitably fall out of the race to finance reconstruction.
The third message concerns policy integration. On the same day, the Governor held two further meetings. One focused on establishing a fund to finance strategic commodities with bank participation, while the other addressed export proceeds and the Higher Council for Exports. This shows that monetary policy, food financing, and export proceeds are interconnected issues that cannot be treated separately. Markets cannot be stabilised without strategic commodities; strategic commodities cannot be secured without foreign currency; and foreign currency cannot be generated without productive exports and strong banks.
What is now required of banks is to increase their capital, consolidate weaker institutions, and shift away from financing short-term trade towards financing production. The Central Bank, for its part, must provide a clear yet flexible regulatory framework that allows banks to operate and expand their activities without undermining their stability. Bank owners, meanwhile, must recognise that the era of easy profits from currency speculation is over, and that future profits will come from financing genuine reconstruction.
If these objectives are achieved, with the strategic commodities fund becoming operational and banks resuming their role in financing production, we will have genuinely moved from a war economy to an economy of recovery and development.
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