How economic liberalisation is driving price chaos in Sudan

Chaos is consuming Sudan's markets, with the relevant authorities failing to monitor and control prices. Observers say that the policy of price liberalisation and the subsequent withdrawal of the state has led to the current upheaval.

As prices of goods vary wildly from one shop to another for the same product, angry consumers are accusing the bodies responsible of not undertaking their monitoring duties.

Dr Nasr-Eddin Sholgame, head of the National Agency for Consumer Protection, has called for the authorities to combat the ensuing price chaos. He says the uncontrolled manner in which prices are skyrocketing is due to the annulment of a law which had previously dealt with setting commodity prices – a task previously part of the powers of the Ministry of Commerce.

Sholgame is calling for a commodity exchange to be set up under the supervision of the Ministry of Commerce, and for it to work to combat market brokers. "The Consumer Protection Agency is powerless in the face of the market chaos," he said.

"The rate of inflation in Sudan is among the highest in the world"

Controlled by the powerful

Experts say that over recent years Sudan's government has pursued a policy of economic liberalisation which has enabled a small group of traders, influential figures, and capitalists to control the bulk of Sudanese commercial activity.

As a result, monopolistic practices have spread in major commodities like sugar and construction materials, as well as in a significant proportion of the import and export sectors.

"Many argue that monitoring campaigns require huge expenditure to cover transport and qualified staff to allow the ministry to access the hundreds of markets and thousands of stores in the many different regions," Sudanese economist Babikir Ismail told Al-Araby Al-Jadeed, The New Arab's Arabic language sister publication.

However, he says this does not absolve them. "If they can't handle this assignment and bear responsibility for it they should leave".

Ismail adds that resolving this chaos will require intensive monitoring and making sure shops attach price tags to the goods they sell. He also believes more discounted goods stores need to be established and that cooperatives should be set up in neighbourhoods and workplaces to provide consumer goods at cost price.

The government must cover transport and operational costs for these places and exempt them from fees and levies to guarantee that goods will reach consumers at the lowest prices possible, he says.

Prices soar

The most recent official statistics on inflation revealed that prices are continuing to soar to record levels. The annual growth of inflation in Sudan slowed to 192 percent in May, a drop from 220.71 percent in April, according to the Central Bureau of Statistics. However, the rate of inflation in Sudan is still among the highest in the world.

The reasons for this are complex and linked to the declining value of the Sudanese pound, which has plunged to an average of 570 pounds to the dollar from 375 pounds to the dollar since the currency was floated in March 2022.

Moreover, the country is experiencing fluctuations in the availability of foreign currency, which raises import costs and makes the final consumer bear the differences in the exchange rates. Besides these issues, prices are also rising globally, especially in fuel and food.

Economist Mahmoud El-Zain believes that "the price chaos worsened after a random wage increase was implemented in 2020". He argues for steps to be taken to ease the negative effects of the declining value of salaries, or even the absence of any income among some groups after cash support payments were halted last October.

"Sudan's government has pursued a policy of economic liberalisation which has enabled a small group of traders, influential figures, and capitalists to control the bulk of Sudanese commercial activity"

He says the government needs to undertake an active role in monitoring and controlling prices to resolve problems like price manipulation, stockpiling, and the monopolising of goods. He states that ending the role of middlemen will play a decisive part in stabilising prices.

"The state needs to intervene to stop negative activities which are harming the national economy, among them traders imposing prices on a whim, the spread of speculative practices and currency trading. But handling the issues should be done according to planned economic measures rather than through coercion".

El-Zain said that a mistake which had not been addressed was the government's decision to leave the economy to the private sector, which had failed to bring foreign revenue into the country, replace imports, or increase exports. 

The government must quickly implement urgent policies to gain control over the situation by reducing the use of the dollar and the partial nationalisation of banks to a rate of 52 percent, says El-Zein, concluding that "the government has failed to steer the economy, so now they need to leave managing the economy to those who know what they’re doing".

Multiple middlemen

"The multiple intermediaries and confusion in distribution networks are two major causes for the steep hike in prices," a ministry of trade official (who wished to remain anonymous) told Al-Araby Al-Jadeed. 

He confirmed that logistical difficulties, including electricity cuts and transportation and distribution problems, were also hindering the effective provision of goods.

Due to electricity shortages, industrial and commercial companies are being forced to use generators, and the consumption habits of ordinary citizens have changed to adapt to the frequent cuts, further adding to their daily living costs.

Sudan's Ministry of Energy and Mining confirmed in recent reports that 60 percent of Sudanese were no longer served by the national electricity grid, and this could increase to 80 percent, blaming the finance ministry for failing to allocate necessary funding for fuel supplies and the maintenance of power stations.

The ministry of trade official expressed hope that state-led programmes to ease the cost of living crisis would be successful.

Among these was the 'My goods' initiative which focuses on delivering a number of basic commodities directly from producers to consumers without them passing through multiple intermediaries. Additionally, the government has helped set up markets selling goods at discount prices with a number of producers in the country.

Monitoring campaigns are not enough

Previously, the Ministry of Commerce and Supply organised a national campaign to monitor markets, assigning 21 inspectors to the task. The campaign aimed to control the prices of consumer goods by price-tagging products and reviewing their validity.

They also targeted smuggled goods on sale in markets, streets, and neighbourhoods and aimed to combat the greed of some merchants, while raising awareness that citizens have the right to file a complaint and seek assistance from the state if they think there is an issue with uncontrolled prices in a market.

However, observers view the campaign as unfeasible because traders can’t be forced to stick to specific prices in a chaotic and unregulated economy as there is no commodity price database, and the existence of multiple exchange rates makes it difficult to determine profit margins for traders.

They said addressing the problem requires clear and coherent policies which don't affect the cost of transport, storage or the fees imposed on traders and importers.

Khartoum's markets are suffering from a wide-scale recession as citizens' purchasing power deteriorates even further, which has left what traders dub the 'seasonal revival' period suffering a slump, with most shops suffering from a lack of demand.

Meanwhile, commodity prices - such as those for meat, oils, and vegetables - continue to rise.

This is an edited translation from our Arabic edition. To read the original article click here.

Translated by Rose Chacko.

This article is taken from our Arabic sister publication Al-Araby Al Jadeed and mirrors the source's original editorial guidelines and reporting policies. Any requests for correction or comment will be forwarded to the original authors and editors.

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