PORT SUDAN (Reuters) – A move by the Sudanese government to introduce new banknotes and compel people to open bank accounts has boosted bank deposits and with them the army’s war effort, finance minister Jibril Ibrahim said, though some critics say it has excluded millions from the financial system.
The army’s two-year war against the paramilitary Rapid Support Forces has devastated the economy – with the currency losing three-quarters of its value – and driven half the population into hunger.
Unlike in previous currency exchanges, in order to receive the new 500 ($0.20) and 1,000 ($0.50) pound notes people have had to deposit their old notes in a bank and are then allowed to withdraw limited amounts daily, drawing funds from a largely unbanked society into the system.
Ibrahim said the initiative, launched in December with the explicit aim of making funds looted by the RSF worthless, had been a success, though he did not give a figure on how many Sudanese pounds had been deposited.
“This helps the banking sector, and when you help the banking sector that helps the state to finance projects, including the war effort and productive activities,” Ibrahim told Reuters in an interview this week.
Since the outbreak of the war, when RSF soldiers looted dozens of banks and blocked farming, the army-aligned government has struggled to pay salaries and finance essential goods such as medicine.
Jibril said that the country had produced 64 tonnes of gold last year, and officially exported around half, implying that the proportion of looted gold in army-controlled areas had fallen.
A source at Sudan’s central bank said the new notes had been printed in Russia, one of several foreign powers that have intervened on both sides.
Critics say that the impact of the decision has been to exclude the millions who remain in the roughly half of the country controlled by the RSF from the financial sector and render their savings useless, in effect splitting the country.
The RSF has said the move is illegal and cited it as one of the reasons for forming a parallel government in territory it controls.
Residents of areas under RSF control report using the old notes, as well as electronic transfers, U.S. dollars and, in some places, Chadian rials.
But even in Port Sudan, the army’s wartime capital, some residents have protested over the new banknotes.
Traders say the process has dampened sales as many people still lack identification papers needed to open a bank account while more lack smart phones for online transfers.
“All of our capital is deposited in the bank. When you need cash in the future, they won’t give you. You might spend a whole day to get 50,000 pounds ($20) or 100,000 ($40),” said fishmonger Ali Moneeb.
(Reporting by Eltayeb Siddig in Port Sudan, additional reporting by Nafisa Eltahir and Khalid Abdelaziz; Editing by Alex Richardson)
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