Retention of Export Proceeds in Exporters’ Accounts: Between the Bank of Sudan and the Reserve Bank of Zimbabwe

Habiballah Abdel Wahab
For years, the Bank of Sudan has consistently followed a repetitive pattern in its export policies, targeting export proceeds through a range of restrictions that, in our view, have constituted major risks. These policies remain one of the principal reasons behind the weak contribution of export revenues to building adequate foreign exchange reserves within the country’s banking system, despite the actual size of Sudan’s exports. The clearest evidence of this is the chronic trade deficit that has become a defining feature of Sudan’s economy for decades.
It is worth noting that the Bank of Sudan has repeatedly reaffirmed, through its various export circulars over the years, a specific rule regarding the period exporters are allowed to retain export proceeds in their accounts. Most of these regulations stipulate that exporters may keep foreign currency proceeds for only three weeks, during which they may either use the funds to finance their own imports or transfer them to another importer. Once that period expires, any unused proceeds are compulsorily converted by the central bank into Sudanese pounds at the official exchange rate.
Although we believe the central bank’s intention behind this policy has been to direct and regulate foreign exchange flows in order to secure sufficient hard currency for imports, enable commercial banks to meet their external obligations, and stabilise the national currency, the policy has clearly failed to achieve its objectives. Official statistics themselves indicate that the banking system has not succeeded in attracting the true export proceeds generated by the country.
In our view, this failure stems from the fact that many exporters regard the time restriction as a major financial risk that threatens their capital and undermines their ability to survive in the market. The enormous gap between the official exchange rate and the parallel market rate magnifies this risk. Exporters finance their operations with their own resources, all of which are effectively valued at the parallel market rate, since most domestic commercial transactions are conducted on that basis. Consequently, the restriction on holding export proceeds has pushed many exporters towards difficult alternatives: either withholding export proceeds entirely, resorting to the practice of “paper trading” (warraqa), abandoning export activities altogether, or even leaving Sudan in search of more stable opportunities abroad.
In contrast, several African countries with relatively stable economies have adopted far more flexible and realistic policies regarding export proceeds, enabling them to build substantial foreign exchange reserves and maintain greater economic stability.
For example, the Central Bank of Nigeria (CBN) allows exporters to retain export proceeds in their foreign currency accounts indefinitely, without compulsory conversion into local currency, provided the funds are used for imports or other approved commercial activities. As a result of broader economic reforms, Nigeria reportedly generated foreign exchange inflows of around US$48 billion at the beginning of this year.
Similarly, Tanzania and Ethiopia permit exporters to retain 50 per cent of their export proceeds indefinitely in foreign currency accounts, while the remaining 50 per cent must be converted into local currency. The retained portion may then be used to settle foreign obligations, including import financing.
However, the Zimbabwean experience deserves particular attention because the country’s economic challenges, structural imbalances, and untapped resource potential bear striking similarities to Sudan’s situation.
Through a series of ambitious and realistic economic reforms over the past three years, Zimbabwe has moved from hyperinflation, chronic trade deficits, and severe foreign currency shortages to a period of notable economic recovery. Inflation, which had reached 667 per cent in 2023 and 736 per cent in mid-2024, reportedly fell to 15 per cent by the end of 2025 and further declined to 4.1 per cent at the beginning of this year — a remarkable achievement given the depth of the crisis and the short timeframe involved.
On the foreign exchange front, Zimbabwe increased hard currency inflows to US$13.3 billion by the end of fiscal year 2024, rising further to US$16.2 billion by the end of 2025. The country also achieved a trade surplus of US$240 million in 2025 — the first surplus in decades — followed by an additional US$113 million surplus in January alone this year.
How did Zimbabwe manage to revive one of Africa’s weakest economies?
The answer, according to the author, lies in a policy of incentives and carefully designed flexibility led by the Reserve Bank of Zimbabwe (RBZ). Zimbabwe’s economy relies heavily on gold, tobacco, and remittances. To strengthen foreign exchange reserves, the government instructed the state-owned Fidelity Gold Refinery to purchase gold from artisanal and small-scale miners entirely in US dollars. Large mining companies were required to surrender 30 per cent of their production in exchange for local currency (ZIG), while retaining the remaining 70 per cent in US dollars.
At the same time, exporters were permitted to retain export proceeds indefinitely in foreign currency accounts, with broad freedom to use them. These policies reportedly boosted gold production from 30 tonnes in 2023 to 36 tonnes in 2024, and then to 47 tonnes by the end of 2025, while agricultural exports, such as tobacco and cotton, also increased substantially.
The Reserve Bank of Zimbabwe also succeeded in building reserves of both gold and US dollars, providing real backing for the national currency and shielding it from collapse despite the country operating under a multi-currency system that includes the US dollar and the South African rand alongside the local currency.
Although Sudan differs from Zimbabwe in terms of its economic model, political complexities, security conditions, and the impact of war and sanctions, the author argues that Sudan possesses even greater economic potential. Gold alone could generate close to US$10 billion annually, while agricultural exports could contribute around US$3 billion despite the war. Remittances from Sudanese abroad could add another US$3 billion, excluding additional opportunities in mining, oil, agro-industrial production, and livestock development.
The article concludes that, despite the significant challenges facing Sudan’s economy, the country still has genuine opportunities to achieve strong economic growth, reduce inflation to single digits, and build meaningful foreign exchange reserves.
To achieve this, the author argues, the Bank of Sudan must adopt bold, realistic, and flexible monetary policies regarding export proceeds. These could include extending the retention period for export proceeds from the current 21 days to at least 12 months — as practised in countries such as Indonesia — before eventually moving towards an open-ended system similar to those adopted by several stable African economies. The author also proposes allowing exporters to surrender only a reasonable percentage of proceeds at the official exchange rate, while broadening the permitted uses of retained foreign currency balances in order to restore exporters’ confidence in the banking system.
Ultimately, the author maintains that boosting foreign exchange inflows depends on sustainable, flexible trade and monetary policies rather than temporary interventions.

Shortlink: https://sudanhorizon.com/?p=14151