JR-Publications-Sudan-Handbook-1

fRom slaVEs to oil 131

Oil has dramatically boosted government revenue in north and south,

but has also created new demands for spending and decentralization. As a

result, fiscal discipline has slipped in recent years, with both the national

and the southern governments struggling to balance their budgets. This

has had a negative impact on the banking sector and put pressure on the

exchange rate. It has also further boosted the large public debt, most of

which is in arrears.

The growth of the petroleum sector has had even more dramatic

consequences for patterns of trade and investment in Sudan, with oil

now accounting for around 95 per cent of export revenue, and import

spending rising to fund oil-related expansion and infrastructure. China

has emerged as the country’s principal trade partner. Flows of money

out of the country have increased, owing in part to repatriation of profits

by foreign firms, resulting in a widening of the current-account deficit –

financed largely by Asian investment in the oil sector. Sudan’s post-oil

economy is therefore increasingly dependent on international partners

• and vulnerable to a new set of domestic and international risks.

The Pre-oil Era

Like most African countries, Sudan depends on the exploitation of natural

resources for its economic growth, and the distribution of the benefits

from the extraction of those resources has been a key factor deter-

mining the country’s social and political structure. Over many centuries

before the European colonial era, a pattern was established whereby

the resources found to the south – gold and ivory and people – were

traded down the River Nile to the north. Slaves, generically known as

‘Nubians’, were raided from outlying regions and traded to Egypt by the

kingdoms established along the central Nile. In 1820, when the Egyptian

ruler Muhammad Ali invaded Sudan, exploitation of these resources

was one of his major aims. The slave trade peaked in the 1870s. Under

the Mahdiyya, civil disorder in northern Sudan led to a decline in the

trade. Under the Anglo-Egyptian Condominium it was banned, but the

The Sudan Handbook, edited by John Ryle, Justin Willis, Suliman Baldo and Jok Madut Jok. © 2011 Rift Valley Institute and contributors early years of the Condominium saw a similar pattern of other resources

(www.riftvalley.net).