Gold in Sudan: The Resource That Never Became Wealth — A Vast Asset with No Developmental Impact

Mohannad Awad Mahmoud
Since Sudan lost the bulk of its oil revenues following South Sudan’s secession in 2011, gold has become the country’s most important source of foreign currency and, in some years, the largest component of its export structure. Yet despite the scale of this shift, it has not translated into economic growth, monetary stability, or improved living standards. Instead, it has exposed a harsh paradox: a resource whose figures continue to swell while its developmental impact remains largely absent.
The problem does not lie in the existence of gold itself, but in how it is managed and in the institutional environment within which it operates. The overwhelming majority of Sudan’s gold production comes from unregulated artisanal mining—an activity that is widespread but weakly supervised, poorly organised, and prone to rapid leakage outside official channels. This structure undermines control over value chains and deprives the state of the ability to convert the resource into stable revenues that feed into the public budget or support the banking system.
With the outbreak of war, the problem has escalated to a far more dangerous level. Because it is easily transportable and readily liquidated, gold has become one of the most widely used resources outside the formal financial system. As state authority receded, institutions fragmented, and decision-making became dispersed among multiple actors, local and cross-border networks emerged to extract, transport, market, and finance gold-related activities beyond the state’s oversight. Thus, gold has shifted from being a sovereign resource to a shadow economy that expands in direct proportion to the weakening of the state.
This reality has created an inverse relationship between gold and the exchange rate. Instead of gold revenues bolstering foreign currency reserves and easing pressure on the Sudanese pound, a significant portion of gold output exits official channels. Then it re-enters the economy in the form of additional demand for foreign currencies—whether to finance imports or to hedge against inflation. The economy is thereby locked into a vicious cycle: gold is extracted; revenues fail to settle domestically; pressure on the exchange rate persists; and precautionary behaviour in both gold and dollars intensifies.
This challenge is not unique to Sudan. Ghana and Tanzania—both among the world’s major gold producers—face similar difficulties: substantial production coupled with limited developmental impact due to weak value addition and the breadth of the informal economy. Even South Africa, once the world’s largest producer, has struggled to turn gold into a sustainable development engine in recent years, as the sector’s contribution has declined owing to rising costs, resource depletion, and eroding competitiveness.
By contrast, Eritrea offers a markedly different African model. There, the state completely bans artisanal mining and relies on international—particularly Canadian—companies to conduct exploration and production under long-term contracts and high technical standards. This approach is grounded in a firm, centralised economic decision that extends from the highest levels of the state to its base, ensuring full state sovereignty over the resource and preventing leakage or diversion outside official channels.
This policy has yielded tangible results: within a few years, Eritrea has built a regulated mining sector that has become the country’s primary source of foreign currency, with expectations of increased output through new projects such as the Bisha and Koka mines. The Eritrean experience stands out as one of the most disciplined and successful in Africa’s gold sector, particularly when compared with countries that possess larger reserves but lack robust institutional frameworks.
Along the same positive trajectory, countries such as Australia and Canada have succeeded in turning gold into a genuine source of economic strength. They achieved this by building highly regulated sectors under strict institutional oversight, establishing advanced refining facilities, developing value-added industries, linking gold revenues to sovereign investment funds, and providing stable legal environments that prevent leakage and enforce transparency. Their success demonstrates that the problem lies not in the nature of gold itself, but in the state’s capacity for management, oversight, and regulation.
The depth of Sudan’s structural failure becomes even clearer when gold is compared with the earlier experience of oil. Between 1999 and 2011, Sudan experienced a genuine financial boom driven by oil revenues and achieved notable growth. However, those revenues were not invested in building a sustainable, productive base; instead, they were largely channelled into security and defence spending, military industrialisation, and low-return infrastructure projects. When oil was removed from the equation after secession, the economy collapsed rapidly because it lacked an alternative productive pillar. Today, gold is reproducing the same mistake—but under far more fragile conditions, within a weaker state, and amid a war that expands the parallel economy and erodes the state’s ability to control its resources.
Despite this, gold remains the only resource capable—if properly organised—of playing a central role in rebuilding Sudan’s economy. Achieving such a transformation, however, requires reasserting institutional control over production; regulating artisanal mining; establishing certified refining systems; introducing value addition; linking revenues to agriculture and industry; and creating a sovereign wealth fund that insulates gold revenues from current expenditure, so that the oil-era error is not repeated.
In sum, any resource not managed by a unified, central state will shift from being a source of strength to a source of depletion. Sudan today faces a clear choice: either reclaim institutional sovereignty over gold so it becomes a foundation for economic reconstruction, or allow gold to remain a large figure without real wealth—a resource that finances disorder rather than development.

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