Entering Its 4th Year: Undersecretaries and Experts Review their Recovery Plans Mention Prevalence of Parallel Economy

Sudanhorizon – Hala Hamza
The negative impact of the war launched by the Rapid Support Forces militia on April 15, 2023, and its economic consequences resulting in paralysis of sectors, continue to expand as the war enters its fourth year on April 15, 2026.
Economic experts have explained to Sudanhorizon the extent of the economic losses and the losses incurred by the banking sector, livestock, agriculture, and irrigation by the end of the third year of the war. They pointed to the parallel economy’s control over a significant portion of activity and the banking sector’s loss of its effective role in financial intermediation, while also presenting a recovery roadmap to overcome the crisis.
– Capital Flight
In an interview with Sudanhorizon, economic analyst Muhannad Sadiq categorized the economic sector’s losses into three levels: direct losses to assets and infrastructure resulting from the war; indirect losses due to production stoppages, disruptions to supply chains, and a contraction in economic activity; and other, more long-term losses, such as capital flight and loss of confidence, which are the most dangerous due to their long-term impact.
Sadiq told Sudanhorizon: “Specifically in the banking sector, the loss isn’t just in the looted funds, but also in the sector’s loss of its role as an effective financial intermediary. This means a partial paralysis of the overall economic cycle. Therefore, it can be said that the losses in the economic sector as a whole are compounded, because every loss in the banks is directly reflected in the rest of the sectors, and vice versa.”
– Parallel Economy and Non-Performing Loans:
Economic analyst Dr. Haitham Fathi explained that the Sudanese banking sector has suffered major losses and lost a significant portion of its assets. Furthermore, the war has led to a rise in the percentage of non-performing loans in Sudanese banks. Estimates indicate that 50% of bank loans and financing are now unrecoverable due to the disruption of economic activities and the destruction of many commercial and industrial facilities. This is compounded by the worsening liquidity shortage, the devaluation of the national currency, and other problems plaguing the banking sector.
Fathi added that the biggest challenge facing the banking system is the parallel economy, which controls a large part of Sudanese economic activity. This weakens the role of banks in financing and reduces the percentage of money circulating within the formal banking system.
Fathi stressed that the development of Electronic payment systems and the promotion of financial inclusion based on financial technology are essential. A strategy for currency development is needed, considering the optimal currency denomination, banknote exchange, security features, reducing the cost of printing banknotes, and moving forward with the use of new types of money to improve the management of the informal economy, enhance the implementation of monetary policy, and ensure its transmission.
He pointed out that the Sudanese banking sector has suffered significant damage since April 15, 2023. Many banks were looted, and the devaluation of the national currency eroded the capital of Sudanese banks, preventing them from meeting their customers’ demands for foreign currency and financing. Furthermore, approximately 70% of bank branches in war zones which have ceased operations. There are approximately 833 bank branches in Sudan, with Khartoum alone accounting for 435. This has resulted in the closure of approximately 583 bank branches across Sudan during the past years of the war.
– A War Economy:
The renowned economist Dr. Ahmed Al-Sharif told Sudanhorizon that the situation as the war enters its fourth year, has been characterized by profound challenges as the economy transitions from the initial shock phase to a new stage:The war economy, with the emergence of new structural features in the production and currency trading sectors.
Al-Sharif pointed to the continued and rising inflationary pressures despite the economic measures implemented by the government. He attributed this to the shortage of basic commodities and the decline in the purchasing power of the Sudanese pound, which led to a rise in the poverty rate to approximately 71%. Furthermore, the agricultural sector—the main engine of the economy—faced unprecedented challenges affecting value chains, manifested in declining productivity, rising operating costs, and an export crisis. Added to this was the destruction of infrastructure and vital facilities such as silos, warehouses, and strategic oil fields like Heglig, which hindered the ability to restore production to normal levels.
Regarding the labor market, Al-Sharif stated that unemployment rates have reached record levels, exceeding 50%, with millions of citizens in both urban and rural areas losing their livelihoods.
– Deep wounds:
For his part, former banker Numan Yusuf told Sudanhorizon that the April 15th war was not merely a passing shock to the Sudanese economy, but rather a structural earthquake that struck at the very core of the financial system.
Numan confirmed that estimates indicate the banking sector is facing compounded losses within a total economic bill ranging between $150 billion and $250 billion.
Youssef Jawhar explained the crisis, stating that it lies not only in book losses but also extends to the functional disintegration of the system.
This disintegration, he said, includes information exposure and partial loss of credit and customer databases, in addition to the paralysis of channels due to the disruption of real-time payment and settlement (RTGS) systems, and the emergence of monetary distortion through the phenomenon of dual currency and cash discounting.
Youssef pointed to the physical destruction and losses of liquid assets caused by the war through the systematic targeting of the banking system’s infrastructure. This led to the collapse of the branch network and the damage and disruption of between 60% and 70% of the total branches, with approximately 500 to 600 branches completely shut down over the past two years. He also noted the depletion of the cash reserves, estimating the amount of looted liquidity, particularly from Khartoum and Darfur states, at around $1 billion.
He further pointed out that any bank losing approximately 30% of its cash liquidity would technically means entering a state of credit insolvency and being unable to meet depositors’ obligations, in addition to experiencing operational paralysis and loss of human capital.
He confirmed that has led to a decline in efficiency and a drop in operational productivity to less than 30% due to the displacement and emigration of banking personnel at a rate ranging between 40% and 60%. The disruption of more than 70% of electronic banking services in the first months of the war also caused a decline in confidence in digital channels.
Youssef pointed to a rise in non-performing loans (NPLs), ranging between 50% and 80%, reflecting a collapse in the quality of credit assets and a 30-50% erosion of capital, necessitating immediate recapitalization.
He stated that the war contributed to the continued depreciation of the pound by 250% to 300%, leading to a significant erosion of the real value of loan portfolios.
He also highlighted the structural challenges represented by systemic risks, describing them as the most complex losses due to their impact on customer confidence and data integrity. He confirmed an information gap in the banking sector, with some banks losing between 10% and 40% of their data, hindering the collection of approximately 30% of loan portfolios.
In addition, the loss of supporting documents, checks, and physical guarantees led to a 70% decline in check transactions.
He stated that the war contributed to raising credit risks to unprecedented levels, creating a credit freeze and leading insurance companies to refuse to cover war risks, thus burdening banks with direct losses ranging from 20% to 40%.
He explained the emergence of a dual currency phenomenon and monetary distortion, where markets witnessed the development of a parallel monetary system based on a trade-off between available cash and bank balances, or between different currency issues:
Cash discounting: ranging between 10% and 30% on old currency or transfers.
– This resulted in:
The emergence of additional informal inflation and the central bank’s loss of control over the money supply circulating outside the banking system.
– A Roadmap for Recovery
Numan Youssef stated that the roadmap for recovery requires revitalizing the Sudanese banking sector by injecting liquidity and structural investments estimated at between $6 billion and $10 billion, and recapitalizing $3 billion to $5 billion to compensate for the erosion of capital bases.
He also emphasized the need to provide between $1 billion and $2 billion for technological upgrades, including rebuilding servers and branches, and allocating $2 billion to $4 billion for monetary stability to support liquidity and reserves.
Youssef put forward a series of proposals to overcome these losses, including establishing a Sovereign Wealth Fund to rescue banks in partnership with international financial institutions. This fund would recapitalize affected banks and digitize assets and documents through a national project to recover and document banking data and guarantees using secure cloud technologies.
He also advocated for unifying the monetary system through comprehensive monetary reform that would end the dual currency system and withdraw cash from the parallel market, activate deposit guarantees, and strengthen the role of the Deposit Guarantee Fund to restore depositors’ confidence and attract savings again.
He said that the banking sector crisis in Sudan has transcended the concept of financial losses to become an existential crisis for the banking institution. Restoring the role of banks as a pillar of the economy does not begin with figures, but rather with rebuilding trust, repairing information systems, and creating a legal environment that protects guarantees and contracts.
He added: recovery is possible, but it requires deep structural reform, not just financial palliatives.

– Livestock Sector: Widespread Damage
The livestock sector suffered extensive damage during the three years of war.
Undersecretary of the Ministry of Livestock, Ammar Al-Sheikh, revealed to Sudanhorizon that his ministry had prepared a study six months prior on the losses caused by the ongoing war.
He stated that the greatest losses were the destruction of several key facilities, such as the central laboratory in Soba, which ceased producing vaccines that supplied all of Sudan, in addition to the destruction of the ministry headquarters building in Al-Shajara, some quarantine facilities like Al-Kadaru, dairy farms, fish farms, and the cessation of training.
The Undersecretary indicated that the livestock sector suffered an 80% decline, and the dairy sector suffered a similar decline, with the latter completely ceasing production. He added that the poultry sector was also severely impacted, with its production plummeting over the past two years. While it has begun to recover, it still requires access to feed, production inputs, medicines, and other requirements. These inputs are being sought through companies requesting customs and tax exemptions to facilitate imports.
The Undersecretary revealed that poultry production has more than doubled, from 30 million to 80 million chickens. He anticipated the resumption of poultry exports as production continues to increase.
He explained that the Ministry is working to revive the dairy sector by importing cows and implementing artificial insemination for existing herds. The Ministry is also focusing on training personnel and attracting experienced individuals who wish to return from displacement camps to contribute to the sector’s reconstruction.
He further disclosed plans to establish a comprehensive livestock production city that will employ a significant number of workers.
– Agriculture Sector:
The Undersecretary of the Ministry of Agriculture and Irrigation, Engineer Dhawalbeit Mansour, told Sudanhorizon that the sector witnessed systematic destruction affecting a number of agricultural institutions and major projects such as Rahad, Suki, and Gezira.
The Gezira Scheme alone suffered 150 breaches in its main irrigation canals as a result of the war, which impacted irrigation operations, in contrast to the Halfa Scheme, which has largely remained safe.
Mansour stated that the Ministry faced harsh conditions in addressing the problems of these projects during the past two years of war, and was able to successfully resolve them with the support of the Armed Forces. This contributed to the stability of farmers, enabling some of them to cultivate an area of 30,000 feddans, particularly in the northern section of the Gezira Scheme, which contributed to the success of agriculture in all projects last season.

Shortlink: https://sudanhorizon.com/?p=12838