From Capital Flight to Asset Liquidation: Sudan’s Economy at Its Most Dangerous Stage

Mohannad Awad Mahmoud
In July 2025, we published an article examining the flight of Sudanese capital since 2019—how it gradually exited the country, then accelerated sharply with the outbreak of war. Economic activity shifted abroad, the role of the banking sector diminished, and confidence in the domestic investment environment eroded. At the time, we also noted that many owners were waiting for property prices to improve in order to return to Sudan and sell their assets, and that this waiting—combined with mounting economic pressures—would lead to a substantial oversupply and a broad collapse in values. This was not a passing description, but a forward-looking reading of a trajectory that was becoming clearer by the day. Today, just six months later, those expectations have been fully realised, and the most dangerous phase of capital movement has emerged: the shift from capital flight to the liquidation of assets inside Sudan.
What is happening today in the property market bears no resemblance to any previous period. Supply is surging, demand is almost frozen, and prices are falling to unprecedented levels. Houses that once exceeded one million dollars in neighbourhoods such as Riyadh are now being offered at four hundred thousand dollars—often less—without finding immediate buyers. In Omdurman, some areas, such as Al-Muhandisin, have undergone complete demographic change, with entire blocks sold and long-standing neighbours replaced, dissolving the familiar social fabric of these districts. This is not merely a property cycle; it is a silent reshaping of cities taking place outside any official vision or policy.
Those who had waited for prices to rise are now selling. With an abundance of listings and the absence of genuine buyers, assets have lost a large portion of their value in a short period, while the state looks on—without monitoring, analysis, or intervention.
This internal fragmentation extends beyond real estate into industry. Rebuilding Sudan’s industrial base today appears almost impossible, given the scale of destruction. More than 2,200 factories in Khartoum North’s industrial zone alone have gone out of operation, not to mention other industrial areas. Restoring them would require massive, long-term financing—an impossibility when murabaha profits have reached 40 per cent per annum or more at some banks. As a result, Sudanese manufacturers have taken the most rational decision available to them: relocating production abroad.
In Egypt, hundreds of Sudanese products are manufactured under private-label arrangements at lower cost, with industrial finance not exceeding 5 per cent per annum, and on planned industrial land priced at no more than 1,700 Egyptian pounds per square metre. In Turkey, cooking oils are produced using raw materials imported from Ukraine, refined and packaged there, and then exported to Sudan. Under this equation, returning to domestic production becomes an economically irrational decision—especially as most factory owners and businesspeople now live outside Sudan, with families settled in educational and service environments that cannot easily be abandoned.
This production shift places direct pressure on the currency. Instead of being an exporter or largely self-sufficient, Sudan has become an importer of goods that could have been produced locally, continuously increasing demand for dollars while production and exports decline due to high costs. Consequently, the dollar rises on the parallel market—not merely because of speculation, but because of a genuine structural imbalance.
In confronting this financial erosion, the insurance sector becomes a core instrument of stability. By developing a new banking product called “Capital Stability Insurance”—an international extension of inflation- and currency-volatility risk insurance—it is possible to protect banks’ financial positions from sharp declines in purchasing power. The concept compensates banks for losses in real value once inflation or exchange-rate depreciation exceeds a defined threshold, either by increasing the insured amount or by paying differentials that preserve capital in real terms.
Several countries offer practical models for such coverage. In Turkey, private banks have, since 2018, adopted CPI-linked insurance programmes to protect long-term portfolios, alongside the state’s Currency-Protected Lira Deposits (KKM) scheme, under which the Turkish Treasury covers inflation and exchange-rate differentials beyond a set limit. This hybrid model—combining insurance with government hedging—aims to restore confidence in the lira amid high inflation.
In Argentina, which has suffered from hyperinflation, financial institutions have used inflation-indexed insurance programmes tied to cost-of-living indices to preserve the real value of capital. Meanwhile, banks in Brazil have adopted similar protection mechanisms by linking insurance compensation to consumer price indices to mitigate credit-portfolio erosion.
In Europe, major reinsurance companies such as Munich Re and Swiss Re offer specialised products to protect financial institutions in emerging markets against inflation and currency depreciation risks. These products are used by a number of banks in Germany and the Netherlands to safeguard long-term portfolios, demonstrating that such coverage is not theoretical but an effective tool in volatile markets. It could enable Sudanese banks to continue lending rather than retreating into defensive contraction that paralyses economic activity.
As for exports, the sector has become increasingly fragile. In addition to rising costs and levies, financing costs have reached levels that render exporters uncompetitive in external markets—even where product quality is high. Coupled with new logistics costs, exports have lost their natural role as a source of foreign currency.
Here, it becomes clear that economic threats are no less dangerous than military ones. Without a viable economy, security cannot be sustained. The role of the General Intelligence Service—through its Economic Security Authority—must therefore go beyond uncovering economic crimes to building a preventive-security framework based on early monitoring and a deep understanding of capital flows and market shifts.
It is essential to establish a Strategic Centre for Economic Security Studies, bringing together economists, bankers, business leaders, and market practitioners to formulate realistic, implementable policies—rather than reports left in drawers. Sudan today needs precise, practical knowledge, not academic theorising detached from reality.
Financing policy must also be reformed immediately. Industrial finance should be reduced to a range of 10–12 per cent per annum, and export finance to 14–16 per cent, based on realistic studies of the productive sectors’ ability to operate with reasonable profitability. Banks should be encouraged to adopt partnership-based financing to protect their funds from inflation, while insurance companies should provide coverage against currency depreciation.
What is unfolding in Sudan is not a passing crisis but a deep structural transformation reshaping both the economy and society. Unless the state begins immediately to monitor, understand, and manage these shifts through realistic policies, the country will not only lose its money and assets—it will lose its entire economic future.

Shortlink: https://sudanhorizon.com/?p=10489