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Cash crisis tops Sudan’s economic woes

Many shops and service providers have stopped accepting bank cards, preferring cash

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Exchange rates are displayed at a foreign currency brokerage office in Khartoum.

Women queue for hours under the scorching heat in the hope of withdrawing cash from an ATM in the Sudanese capital, Khartoum. Sometimes it works, sometimes it doesn’t.

The hunt for cash has become a national sport in Sudan, where a deep economic crisis helped spark months of protests against veteran president, Omar Al-Bashir. Bashir’s departure last month, has done little to rescue the economy.

“I’ve been waiting on average, two hours a day for the last eight days (to withdraw cash),” says Halima Souleiman as she stood in an ever-lengthening queue of women on a Khartoum street.

“Each time, the money in the machine has run out.”

Rumours had spread that an armoured van had arrived to load the machine with cash, leading to a rush of customers.

“Today I’m hoping it will work,” says Halima, an unemployed biology graduate.

When she finally made it to the machine, she emerged smiling with a wad of banknotes.

Our Iftar, the meal that ends the daytime fast observed by Mulims during Ramadan, “will be bigger tonight”, she said.

Power cuts, Inflation

With withdrawals limited to 2,000 Sudanese pounds (around $40, 36 euros) a day, the cash shortage tops the list of Sudan’s economic woes.

It has been accompanied by persistent power cuts, fuel shortages and spiralling inflation.

Sudan is one of the poorest countries in the world — the United Nations last year, ranked it 167th out of 189 on its Human Development Index.

The economic crisis far predates the protests against Bashir that broke out in December.

It was exacerbated by widespread corruption and huge spending on a military response to multiple regional rebellions under Bashir’s repressive rule.

In 2011, South Sudan won its independence, taking with it, three-quarters of the country’s oil receipts and dealing a heavy blow to public coffers.

Sudan has also endured two decades of U.S sanctions over human rights violations and alleged support for “terrorist” groups.

The sanctions were lifted in 2017, but the country remains on the State Department’s blacklist of state sponsors of terrorism.

The potential penalties have kept foreign investors away.

Inflation has reached nearly 70 percent and Khartoum’s foreign debt stands at more than $55 billion (49 billion euros).

The International Monetary Fund has forecast its GDP will shrink by 2.3 percent in 2019.

Four months of mass demonstrations have only added to its woes, disrupting supply chains and aggravating shortages that have set the price of basic goods skyrocketing.

The lack of liquidity has been fuelled by the plummeting value of the Sudanese pound and the “lack of confidence in the banking system”, says Ibrahim Onour, a professor of finance and economics at the University of Khartoum.

The pound was devalued three times in 2018. At official rates, the dollar bought 6.75 pounds in 2017. It now buys more than 47.

On the black market, a dollar buys 55 pounds.

Some have started to withdraw pounds to convert them into other currencies.

That “has caused a rise in prices which in turn has led to more demand for liquidity”, Onour says.

Cheques, cards not accepted

Mondather al-Rifai, a 30-year-old trader, showed cheque books he says are now useless — nobody accepts cheques any more as the banks are reluctant to back them.

“I deposited my money in the bank but I cannot withdraw it anymore, or only in tiny tranches,” he said.

Many shops and service providers have stopped accepting bank cards, preferring cash, an Asian restaurateur said on condition of anonymity, adding that business was down by half.

“Most suppliers no longer accept credit cards or cheques”, making it difficult for restaurants to accept them either, he said.

Those who do accept cheques sometimes demand a 20 percent mark-up, he added.

Some are placing their hopes on a three billion-dollar credit line pledged by Saudi Arabia and the United Arab Emirates to help provide liquidity and ease the chronic shortages of basic goods.

Onour urged caution.

“This aid falls far short of the current needs of Sudan,” he says.

“Each time, the money in the machine has run out.”

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Uganda and Rwanda revisit trade talks

The meeting was aimed at boosting diplomatic relations between the two East African neighbours

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Uganda and Rwanda revisit trade talks

Officials from Uganda and Rwanda on Monday met in Kigali following a Memorandum of Understanding signed by the two countries in Angola in August.

The meeting was aimed at boosting diplomatic relations between the two East African neighbours.

The two sides were seen to be at loggerheads for some time earlier this year, culminating in the closure of their borders.

The August MoU included agreements on regional co-operation and security, setting the pace for the improvement of political and trade relations between Uganda and Rwanda.

The two leaders also agreed to “resume as soon as possible the cross-border activities between both countries, including the movement of persons and goods, for the development and improvement of the lives of their population”.

The Ugandan delegation is led by Foreign Affairs minister, Sam Kutesa while his counterpart in Rwanda spearheads the opposite delegation.

Angola and DR Congo played a key role in bringing the Ugandan and Rwandan sides to the negotiating table.

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Egypt resumes Nile Dam talks with Ethiopia, Sudan

Egyptian Foreign Minister, Sameh Shoukry has expressed unease in recent days over delays in negotiations

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Egypt resumes Nile Dam talks with Ethiopia, Sudan

Egypt says Ethiopia has “summarily rejected” its plan for key aspects of operating a giant dam. The country is building on the Nile, while dismissing Ethiopia’s own proposal as “unfair and inequitable”.

The comments, made in a note circulated to diplomats last week, show the gap between the two countries on a project seen as an existential threat by Egypt, which gets around 90% of its freshwater from the Nile. 

The note distributed by the Egyptian foreign ministry, a copy of which was seen by reporters, points to key differences over the annual flow of water that should be guaranteed to Egypt and how to manage flows during droughts. 

It comes as Egypt, Ethiopia and Sudan met on Sunday and Monday for their first talks over the hydroelectric dam in more than a year. A spokesperson at Ethiopia’s foreign ministry, Nebiat Getachew, said on Monday the meeting had so far produced no agreements or disagreements, and gave no immediate response to the Egyptian claims. 

Egyptian officials were not immediately available for comment, but after the talks, an Egyptian water ministry statement carried by local media said the meeting had been limited to procedural, rather than substantive issues. 

Egyptian Foreign Minister, Sameh Shoukry has expressed unease in recent days over delays in negotiations. 

The $4 billion Grand Ethiopian Renaissance Dam (GERD) was announced in 2011 and is designed to be the centrepiece of Ethiopia’s bid to become Africa’s biggest power exporter, generating more than 6,000 megawatts. 

In January, Ethiopia’s water and energy minister said that following construction delays, the dam would start production by the end of 2020 and be fully operational by 2022.

The dam promises economic benefits for Ethiopia and Sudan, but Egypt fears it will restrict already stretched supplies from the Nile, which it uses for drinking water, agriculture and industry.

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Tanzanian mining firms to pay royalty fees on mineral production

The Tanzania Mining Commission set a deadline of September 15 to enforce the directive

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Tanzanian mining firms to pay royalty fees on mineral production

Mining companies in Tanzania risk being denied transport permits to ferry their products if they have not adhered to section 18 of the country’s Mining Act of 2010 (and revised in 2017), which requires all producers pay royalty fees on the gross value of minerals produced.

The Tanzania Mining Commission set a deadline of September 15 to enforce the directive.

The issue came up when Tancoal Energy Ltd. claimed that the law was punitive and would make its products expensive. However, the permanent secretary in the Ministry of Minerals, Simon Msanjila, says that the royalty fees have been in effect since 2010 and other companies producing coal and other minerals were already applying it.

“Tancoal have been avoiding paying the fees all these years, despite expanding their coal exports portfolio to include clients outside the country,” said Prof Msanjila. He further added that “it’s about time they start paying as well.”

The law requires every authorised miner in Tanzania to pay royalty fees based on the gross value of their produce. The gross value is the market value of the minerals at the point of refining or sale.

Violation of the directive results in up to two years imprisonment, maximum Tsh10 million fine in the case of an individual, or Tsh50 million fine for a corporate.

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