The Sudan Handbook

138 thE sudan handbook

and the global oil price boom. Nevertheless, this improved growth has

been from a very low base, and its geographical distribution has been

extremely uneven, leading to a further concentration of wealth around a

small urban elite. The precipitous drop in oil prices in late 2008 and early

2009 also demonstrated Sudan’s vulnerability to the global economic

downturn, reducing economic growth sharply.

The knock-on of oil-driven growth on other economic sectors has been

limited. Manufacturing, which long struggled owing to state domination

and a lack of investment, has benefited in recent years from economic

reforms, with the increased success of some food processing industries,

notably sugar refining. Khartoum has seen a localized real-estate boom

since 2005, driven in part by Arab investment. So also, to a lesser extent,

has Juba, the southern capital. But there has been little expansion in

construction elsewhere in Sudan.

Interest from the Gulf has also been behind some expansion in the

services sector, especially in telecommunications and financial services.

In the north of the country an Islamic financial system, which forbids

the charging of interest, operates about 30 commercial banks. Most of

these have prospered in recent years, despite some serious liquidity

problems in 2006–07, in addition to their difficulties in accessing dollars

as a result of US sanctions. In the south, by contrast, Islamic banks are

not permitted, leaving the area with too few banks, as those from neigh-

bouring African countries are not yet operating on a large scale.

Further Effects of the Oil Industry

The sudden rise in the importance of oil to the Sudanese economy makes

it worth looking at the development and prospects of that industry in

more detail. The original concession blocks (1, 2 and 4) in the Heglig

Basin, are operated by the Greater Nile Petroleum Operating Company

(GNPOC). GNPOC is a consortium between the China National Petro-

leum Corporation (CNPC), which holds 40 per cent of the company;

the Malaysian state oil company, Petronas, with 30 per cent; ONGC, a

The Sudan Handbook, edited by John Ryle, Justin Willis, Suliman Baldo and Jok Madut Jok. © 2011 Rift Valley Institute and contributors state-owned Indian company, with 25 per cent; and the Sudanese state-

(www.riftvalley.net).