Financing Institutions and the Demise of the Sudanese Agricultural Sector

Abstract

It is not an exaggeration to surmise that agriculture as an economic activity in Sudan is facing demise. The agricultural sector of Sudan has been facing by many problems for the past two decades. In the irrigated schemes, the government who officially owns most of them there were entrenched managerial problems that brewed for more than six decades. Moreover, the privatization policies of those schemes provoked many outcries and protests and undeclared strikes manifested in non-productivism or walk out. Large schemes like Gezira have collapsed with the predation of its infrastructure, i.e., inner railways, crops processing plants, irrigation and machinery departments. This year 2012, only 10% of its over one million hectares were cultivated. The rainfed farming is not different in the characteristic low productivity with lack of machinery, shortages of available labor and high priced agricultural inputs. It is did not fare better fate than the irrigated schemes. However, even if those problems were solved the main chronic impediment remains which are manifested in appropriate financing, e.g., lower interest rates, availability and accessibility which remain unsolved. The paper discusses the formal financing issues for the agriculture in Sudan. Empirical analysis is carried out which showed that there are problems in the previously described parameters, interest rates, availability and accessibility. The first, even with Islamic financing forms, there were high interest rates on loans. The second, availability showed that the current financing institutions have problems, specially financing with the banking branches and possible collaterals. Accessibility to finance remains a difficult task, because after the privatization and desertion of the official administration and finance, only large-size landholders have the privilege.

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Keywords: Financial Institutions, Agricultual Sector, Productivity, Privitization

JEL Classification: A00, A10, A19, B00, B10, B20, B21, B22, B23, N5, N57, O1, O10, O11, P34, P40, P41, P42, P44