Sudan has experienced a catastrophic increase in violence since 15 April, particularly in Darfur and in the capital Khartoum. Heavy fighting between the RSF (Rapid Support Forces) paramilitary force and the SAF (Sudan Armed Forces) for control of the country – and its resources – is severely impacting the lives of most of Sudan’s population. While seemingly sudden, this battle needs to be seen as an intensification of Sudan’s extractive and violent political economy and government use of militia in fighting Sudan’s internal wars.

The current violence has added to the already huge need for humanitarian assistance, as well as creating many more obstacles to providing it.  Thousands of people have fled the country (to Chad, Ethiopia, Egypt, South Sudan) and millions are displaced within it.  The banking system has collapsed in parts of the country, internet and mobile networks are down or weak, and movement of food (including aid) across the country is blocked.

On 5 July 2023, a group of researchers, practitioners, refugees and diaspora, met virtually at a roundtable (organised by SOAS Food Studies Centre and the University of Khartoum/CEDEJ Khartoum). They shared knowledge about the war’s impact on Sudan’s financial systems, including remittances, diaspora aid, and cash transfers (as aid or social support) and attempted to answer the question in the title of this blog.  More specifically, we discussed:

• The destruction of financial and communication systems and it’s links to famine risks
• Efforts and constraints in supporting people in Sudan with cash (and its relevance)
• The need for a combined response and analysing its interaction with Sudan’s political economy

Accelerated destruction of Sudan’s formal financial system

In late April, pictures circulated of the Khartoum branch Central Bank of Sudan on fire – vividly symbolising the collapse of Sudan’s financial system.  Many banks closed, so cash withdrawals were no longer possible.  Digital money transfers became difficult but have remained possible to a limited extent. For many people, this has affected access to income, savings, remittances, and humanitarian aid.

The destruction of the Central Bank of Sudan (CBoS) has affected all financial transfers, greatly affecting people’s lives.  Following the 2019 revolution, hopes were high that international financial transfers would become easier with the lifting of previous economic sanctions.  For the upper and middle classes, Sudan had become almost a cashless society. Government salaries were paid via Faisal Islamic Bank using the Fawry mobile banking app.  The Bank of Khartoum developed the Bankak app.  People paid bills (water, electricity, school fees, fuel, telecoms/internet) digitally and shops replaced cash payments with mobile money. A new government-led Family Support Programme (a social safety net locally known as Thamarat), provided cash in the form of mobile credit vouchers, cash vouchers or bank transfer but only to limited numbers before it was halted with the October 2021 military coup.  In Darfur, banking apps were used because it was safer than holding cash.  Humanitarian food assistance had become digitalised, with the use of both e-vouchers and debit-like cards and banking agents visiting displacement camps.

A key issue now is that Sudan’s previous centralised Electronic Banking Services (EBS), and its national switch within the CBoS, is not working.  This means that transfers between banks are not possible.  Branches cannot gain remote access – and thus government salaries have mostly not been paid.  Bankak is still working because the Bank of Khartoum had its own independent switch.  Sending money from outside of Sudan is difficult because it requires finding someone with a Bankak account and access to cash, who is in close proximity or is known to the person who the money is being sent to.

Despite the image of a modern digitalised cashless society, much of Sudan’s cash was outside of the country’s formal financial system.  Gold and foreign currency traders kept their money outside of the banks, with the RSF as a key actor.  A military-security-industrial complex (including companies belonging to the RSF, Security Services and SAF) controlled most economic institutions (production, trade, transport, fuel, gold).  It also has shares in, and regulates, the telecoms industry.The Ministry of Finance and the Bank of Sudan had very limited oversight into these enterprises.  Maintaining control over these resources was the trigger for the October 2021 military coup, and then again, the post-April 2023 violence.

Displacement, famine and starvation

The destruction of Sudan’s formal financial system contributes to the risk of famine and starvation.  The destruction of the CBoS and communications shutdowns has made money transfers almost impossible, from outside or within the country.  This combines with the disappearance of state services- water, electricity, health care, fuel- impeding people’s access to objects essential for survival.  Markets were initially supplied by food that had been stored by traders, and later with looted goods.  Numerous (RSF) checkpoints and the risk of looting makes the movement of goods across the country (including food) difficult, which also means that food prices are increasing.

 

People have been affected differently, intensifying previous inequalities and marginalisation.  In Khartoum:

• The upper classes:loss of businesses, properties, and access to savings as they were highly dependent on mobile money. Living in the centre of the city, where fighting was heaviest in April 2023, they fled first(to northern or eastern Sudan cities but most of them ended leaving the country).
• The middle classes and formal sector: lost salaries or could not access it.  They lived further from the centre and left later(when basic services became scarce, and looting expanded) by which time transport out of the city was more expensive. Most moved to safer cities in other parts of Sudan.
• Shanty-town dwellers, include migrants and displaced previously(from war and drought-affected parts of Sudan).  They were dependent on casual labour which is no longer available. They are unable to move due to lack of money and social connections to safer places.

In Darfur, the RSF and Arab militia gained more power, resulting in new attacks, destruction, and killings of particular ethnic groups.  In West and Central Darfur people have been completely cut off from food supply, water, medicines (and health care), communications and banks. Large-scale displacement has taken place to Chad and within Darfur. Without communications, the true nature and extent of atrocities is yet to be determined, but some acts are likely to amount to war crimes, including starvation.

 

Providing assistance: risks of exclusions and benefits to elites

 At the time of the roundtable that produced this piece, diaspora remittances were a key form of assistance to those suffering inside Sudan.  The main way of transferring money has been to find someone with a bank account (often the Bankak App) and who also has cash stored.  An international App (Altras) links with the Bankak App, and there are websites to check whether transactions are possible. With banks closed, traders, businessmen, bakers, were identified as those who had cash available.

Diaspora aid is patchy and highly location specific. Participants also considered it to be limited compared to the scale of assistance needed. Other concerns are that it will only benefit those with relatives abroad and that those who have cash stored will run out, increasing the risk of starvation.  An additional concern is who the traders and businesses with money actually are i.e., their economic interests and political affiliations.  As with any crisis, particularly in Sudan, there will be benefits for some.

Given these limitation, most will be excluded from international humanitarian assistance, which faces numerous obstacles.  By the end of June, less than 7% of those in need of food assistance had received any.  Like Sudanese generally, humanitarian organisations face the risk of attack and looting (offices and warehouses have already been looted), limited banks, electricity, communications networks, and difficulties in transporting physical aid across the country. Digital cash transfers need basic infrastructure and some functioning markets. Also, displaced populations or others without ID cards may be excluded. The involvement of business in aid presents further risks. Which banks, telecoms, fin-tech, traders and transporters, will be involved, and what are their links to the military-security-industrial complex? Sudan has a long history of aid feeding into its extractive political economy.  Social protection or welfare programmes will face similar challenges.

In contrast, local civil society actors such as the neighbourhood committees, and their ‘emergency rooms’, have provided safe passage out of Khartoum for those who needed it, emergency medical care, and cooked food. These efforts are currently small scale, but how these groups operate, and ways of supporting them needs to be explored urgently.

 

What can, and needs be done?

 This blog started with a big question: whether cash transfers can prevent state collapse and starvation in Sudan.  Facilitating cash transfers (as remittances, as social assistance, and humanitarian aid) will undoubtably be part of the response, but much more is needed.

If lives are at risk, the humanitarian imperative is to respond. Our roundtable participants felt a combination of cash responses should be part of the response. For example: banks partnering with fin-tech companies, credit vouchers through telecoms companies, and support for traditional Hawala.  A range of channels is recommended because contexts within Sudan vary and to minimise the risk of exploitation of any one channel. All of this will be dependent on some functioning of markets, financial institutions, and telecoms. Ideally, an independent civilian-run central bank will be created but this will not be easy to implement given the current military regime.

Huge issues remain to be addressed to halt the violence and to work towards a civilian democratic government.  People cannot simply be provided with cash (or food) and then left to fend for themselves.  Humanitarian assistance (including negotiations for humanitarian corridors) has to be part of a broader interconnected package of transforming the country’s political economy, including a citizen-centred security sector, compatible with democratic transition.  Genuine peace needs to be negotiated through inclusive dialogue instead of the prevailing modality of power sharing between warring elites who have created Sudan’s extractive political economy.  Internationally led neoliberal policies (lifting subsidies, currency devaluation, austerity measures), eroded the legitimacy of the 2019 revolution, facilitated the 2021 coup, and should be abandoned.  Until these structural issues are addressed, humanitarian assistance will be needed and will be manipulated by those in power. Supporting civil society, in particular ‘emergency rooms’ and local NGOs will be important, as is holding the RSF accountable for war crimes in Darfur.

For any food assistance, it will be essential to understand how it interacts with prevailing political and economic processes in Sudan.  The destruction of the unitary state will make exploitation of people, of resources, and of aid, easier.  Our research project on ‘Digitalising food assistance: Political economy, governance, and food security effects across the Global North-South divide’ will be exploring these issues over the coming 3 years.

EndNotes: 

*With thanks to Farouk Kambareesi for contributing to the roundtable with his knowledge of the Central Bank of Sudan, to Mark Duffield for discussions on the context of political economy and war, and to C. Sathyamala for her comments on an earlier draft.