Liquidity Crisis Forces Sudan into Silent Trade
In Sudan, particularly in the western and southern regions, a severe liquidity crisis has led to a resurgence of 'silent trade,' a barter system reminiscent of ancient commerce. This phenomenon arises from the scarcity of cash, compelling citizens to exchange goods directly rather than relying on currency transactions. The ongoing conflict, which has persisted for over 18 months, has exacerbated the situation, resulting in the closure of 12 out of 18 branches of the Central Bank of Sudan. This closure has severely limited the bank's ability to monitor and manage the currency supply, further complicating the economic landscape.
Impact on Prices and Bartering Practices
The cash liquidity crisis has resulted in significant price distortions across Sudan. Goods purchased through banking applications are often priced 20% higher than those bought with cash. In regions like Darfur and Kordofan, where the Rapid Support Forces have significant control, the transfer fees for converting electronic currency to cash range from 10% to 30%. This has led many residents to revert to bartering agricultural products for essential goods, as the lack of cash hinders their ability to participate in traditional market transactions. Merchants in cities like Nyala and Al-Geneina report that despite the harvest season, citizens are unable to purchase new crops due to cash shortages, forcing them to engage in trade using alternative currencies, such as the Chadian franc.
Banking System Challenges and Future Solutions
The Sudanese banking system is facing unprecedented challenges, with approximately 70% of bank branches in conflict-affected areas ceasing operations. The Central Bank of Sudan has announced plans to introduce new currency denominations to stabilize the economy, while experts advocate for a shift towards electronic transactions to restore confidence in the banking sector. The ongoing looting of banks and currency printing facilities by armed groups has further complicated the situation, prompting the government to consider printing currency abroad. Experts suggest that enhancing digital banking services and improving internet connectivity are crucial steps to alleviate the liquidity crisis and facilitate smoother transactions in the future.
